Ever since the Clinton visit, rumours have been flying fast and furious. Insiders claim that India has fast forwarded the Nuclear Civil Liability Bill, and the media has held forth at length on the probable facts and interpretations. Some angst is misplaced, for example the exclusion of the jurisdiction of civil courts.
One would have thought that victims would be better off before a dedicated quasi-judicial body not disadvanta-ged by backlog.
The controversy on the draft Bill revolves around the onus and quantum of liability. The operator who is defined as “the person operating the installation” is the only person liable for all damages and losses, and as things stand, the state-owned Nuclear Power Corporation of India Lim-ited will be the sole oper-ator. There is a technoph-obic school of thought that feels that the Bill should not have absolved the supplier from liability.
There is also a palpable sense of betrayal on the cap of $450 million on the compensation payable by the operator. The heartburn this has caused perhaps is warra-nted as it is less than the Bhopal gas settlement, and apparently the concept of liability evolved by the Indian courts on “polluter pays” principles, i.e, not just compensation for victims, but also for the restoration of damage caused by environmental degradation, preventive measures in sync with the concerns on climate change,seem to have been thrown to the winds.
Operators are not the only players in the civilian nuclear fuel supply chain. While the location, operation and safety of nuclear installations are paramount, there are potential environmental hazards at various stages – mining and milling of raw material and wastes, being one such. Though initially India will be heavily dependent on imports, there are plans in the pipeline for optimisation of India’s thorium resources, which requires plutonium fuelling for conversion. Conversion, enrichment and fuel fabrication are various stages of processing which go to form pallets, which are assembled and loaded into the reactor. Again, assuming that these operations will initially at least take place offshore, they do not seem to have been addressed.
The civil liability bill, as in any nuclear state, is a domestic regime restricted to damages emanating from radiation emitted by a source or fuel in an installation or the nucl-ear substances under transportation. It does not provide any clarity on whether in an incident occurring outside the jurisdiction or being attributable to a party outside the Indian territory, the courts of that party will have jurisdiction. Does it need to? One may recall that in the case of the Bhopal gas tragedy, the action taken in the US courts was not entertained on grounds of forum of non-conveniens. On the other hand, if the bill is restricted to damages within the installation state, without a global overreach, it is in the nation’s interest.
The assumption that any liability over and above the capped limit will be a sover-eign liability has evoked memories of Enron deal. The involvement of the foreign players is not likely to be limited to supplies alone, participation in the manufacture, installation, commissioning sta-ges, and in continuing technical assistance is likely to be significant. The apprehension is that the foreign players will not be brought to book for their commissions in Indian territory.
The consternation and criticism on the bill should be viewed in moving a step back and not rushing to an emotional and possibly uninformed interpretation.
Given the international nature of the industry and the serious risk of transborder damage, under the fundam-ental principles in the International Conventions liability is restricted to a sin-gle point. It must be kept in mind that the losses arising from nuclear damage, whether human or environmental, are not based on various condition precedents or attribution of negligence or commission of faults – the injured party has to establish causation and damage – nothing further. The channelling of single point liability on the operator is to prevent multiplicity of proceedings, jurisdictional and enforceability conflicts.
The cap should not be the end of the road – depending on its insurance cover, the convention India becomes party to, there could be other resources — public funds, guarantees pooled funds — recent initiatives, which are neither tried nor tested — fortunately. There is also no restriction to provide for indemnification or providing compensation sharing in the project or supply agr-eements.
And in the worst scenario, the Indian Supreme Court Ruling on Absolute Liability can be relied on for giving meaningful relief if so warranted, reading down the covenants of limited liabil-ity, the opportunity missed out in Bhopal.
