Press reports suggest that yet another twist has been added to the continuing story about the proposed “The Civil Liability for Nuclear Damage Bill, 2010”, with the government coming up with a fresh draft of the Bill, accepting most of the amendments suggested by the Parliamentary Standing Committee on Science and Technology (SCST), which had released its report on the Bill after examining a range of official and non-official witnesses, but modifying one of them dealing with Section 17(b) of the Bill, which is likely to keep alive the controversy over the Bill. The SCST had made a number of recommendations — the number varies from 14 to 18 depending on the reading of the report. Whatever be the number, all the recommendations, except for two in respect of clause 17 dealing with the operator’s right of recourse, are non-controversial in their international implications, although one of the non-controversial recommendations dealing with the entry of private operators in civil nuclear energy production might have some serious implications on the future growth of nuclear energy in India. Nevertheless, all the recommendations of the SCST, except for these two, are fully acceptable and indeed seem to have been accepted by the government, and even of these two, the rejection by the government of one of these, in respect of 17(a), has been welcomed by the critics of the Bill.
The nuclear liability Bill makes the operator of a nuclear facility absolutely responsible for any damage without any need to establish any proof of their liability. This is done, as in all nuclear liability Acts worldwide, to make it possible for the victims of any nuclear accident to get compensation expeditiously within a specified time period without having to establish any liability on the part of the operator or anybody else before any court or similar authority. All such Acts, including the one proposed in India, further enact provisions to make sure that the operator has adequate resources by way of insurance cover to cover all accidents except for the most grave kind such as the one that took place at Chernobyl. An accident such as the Chernobyl one, which was really one of its kind, is beyond the financial resources of any operator, private or public. The India Bill sets the operator’s liability at Rs 1,500 crore with the government providing additional amount to the extent of the rupee equivalent of SDR 300 million if Rs 1,500 crore proves inadequate to cover all claims. It is worth mentioning here that except in the case of Chernobyl, so far no nuclear accident has ever resulted in damages exceeding $200 million, let alone Rs 1,500 crore.
So, as far as the victims of a nuclear accident are concerned, the Indian Act, like others, fully protects the interests of the victims, who are least interested whether the compensation comes from the operator or anybody else, including the government.
The really contentious recommendation deals with clause 17(b) of the Bill, dealing with the operator’s right of recourse. And, in particular, against the suppliers of equipment to the operator. The international conventions give the operator the right of recourse against a supplier where “(a) such right is expressly provided for in a contract in writing; or (b) the nuclear incident has resulted from the act of commission or omission of a person done with the intent to cause nuclear damage”. (Vienna Convention Article X, Paris Convention Article 6(f).)
The original Bill proposed by the government had these two conditions as respectively 17(a) and 17(c), plus another condition, namely 17(b), which gave the operator the right of recourse where “the nuclear incident has resulted from the wilful act or gross negligence on the part of the supplier of the material, equipment or services, or of his employee”, which is an exact replication of the text in the South Korean nuclear liability Bill. Since the international suppliers have had civil nuclear commerce with South Korea without having objected to the Korean formulation of the operator’s right of recourse, its inclusion in the Indian Bill should not have any effect on foreign suppliers.
However, the SCST in its recommendations had modified 17 (b) to read as “the nuclear incident has resulted as a consequence of latent or patent defect, supply of substandard material, defective equipment or services, or from the gross negligence on the part of the supplier of the material, equipment or services”, thereby nullifying the requirement of “wilful act or gross negligence” and contrary to the international conventions and indeed the language in almost all other nuclear liability Acts in other countries. Further, even in countries such as the US, which is cited frequently as allowing for suppliers’ liability, such liability is always economically channelled through the operator, i.e. whatever liability the supplier is held responsible for, it has to be paid for by the operator. In short, nowhere else in any of the 28 countries that have a nuclear liability Bill is the supplier held responsible for any liability payment unless either of the two conditions enunciated in the international conventions applies. Acceptance of the recommendation of the SCST in full would have resulted in a nuclear liability Act that would not have conformed to the accepted international norms and would have resulted in the boycott of the Indian market by foreign nuclear suppliers to the grave detriment of the advancement of civil nuclear energy in India.
The current modification suggested by the government seeks to bring the Indian Bill in line with international conventions by adding the requirement that there be “intent” to cause a nuclear accident in the supply of any defective equipment. It has been suggested that indemnifying the suppliers would make them lax in their efforts to make their equipment and technology safer. Ultimately it is the operator and the nuclear regulator who are best suited to judge the effectiveness of a supplier, especially the operator who stands to lose the most if the supplier’s equipment is defective as she is the one who is liable for damages. If needed, the operator’s maximum liability can be increased to an unlimited one without in any manner detracting from the merits of the Bill and still conforming to international conventions. In such a case, the operator, more than any regulator, would be interested in forcing the supplier either to improve her equipment or sign a contract giving the operator a right of recourse against the supplier far more effectively than any liability Bill.
In short, the new formulation suggested by the government accepting 17 of the 18 reported recommendations and rejecting one, does not in any manner whatsoever compromise the interests either of the public in realising adequate and timely compensation in case of a nuclear accident, or that of the operators in their right of recourse while at the same time adhering to international standards.