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The trouble around supplier liability

delhi Updated: Aug 22, 2010 23:25 IST
Jayanth Jacob
Jayanth Jacob
Hindustan Times
supplier liability

Against the backdrop of the N-liability row, a pattern observed in the global liability regime is that it has been mostly operator-centric. However, in India, supplier liability has become a bone of contention.

Countries like Hungary and South Korea provide for the operator’s right to recourse with suppliers whether or not there is a written agreement between operator and supplier. The Nuclear Liability Bill envisages such an agreement and has pegged the liability of an Indian plant operator in the event of a nuclear accident at R1,500 crore.

As of now, Civil Liability for Nuclear Damages Bill, the liability for each accident is US$ 455 million (300 million SDR). But the victims can move High Court and Supreme Court against award of compensation, the panel has recommended.

The examples being cited when one talks of supplier liability is that of the Bhopal gas tragedy. “The recommendation to enhance the operator’s liability cap from R500 crore to

R1,500 crore is hardly significant, since total liability for each nuclear incident remains capped at 300 million SDRs (

R2122.40 crore or $455 million) as per Clause 6 (1). This amount is less than even the Bhopal

settlement of $470 million, which has been acknowledged as grossly inadequate by the Government itself,” says Prakash Karat, CPM general secretary.

On the other hand, British Petroleum was made to pay US$ 20 billion towards compensation and clean-up operations. A fund of $100m was set up to compensate unemployed oil workers.

The government counters this saying it is imperative that the victims get compensation immediately, and if the operator and suppliers get into a tussle over compensation the victims suffer.

“Pay the victims immediately. That’s the objective of the Bill. There are hundreds of suppliers of each nuclear plants. So why make the victim suffer,” Subbirami Reddy, chairman of the standing committee on Science and Technology that deliberated the Bill, says.

So is the compensation package in the proposed liability regime is enough?

“There is not a single compensation of a nuclear accident yet where a liability regime was in operation. But one needs money to take care of the victims,” points out G. Balachandran, of Indian Defence Studies and Analysis.

The government’s argument is the operator cap is necessary for plant operator getting insurance as no firm will agree for an open-ended insurance.

“For the purpose insurance the cap is necessary,” argues Reddy. “Indian liability fund is better than many, and as the nuclear industry grows the fund too will naturally have the scope of expanding, says Balachandran.