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Getting round the specifics

india Updated: Aug 26, 2010 23:49 IST
India-specific rules

New Delhi has a liking for India-specific rules. This is not uncommon among nations in the international system. France’s national motto has almost been ‘Vive la difference’ and the expression ‘American exceptionalism’ was coined to describe that country’s belief it was a world apart.

Faced with such demands, the international system then has to decide whether it can — or should — stretch itself to accommodate such quirkiness. The Indo-US civilian nuclear deal was about adjusting an existing non-proliferation regime to embrace India. This proved possible in large part because Washington fully supported New Delhi in this effort. The Civil Liability for Nuclear Damage Bill, in the form passed by Parliament, is another case where India has broken from accepted international norms. It will now await to see whether the world and, therefore, its own domestic nuclear industry, will bend to accommodate the new requirements.

The main area where India’s legislation has moved away from what is otherwise accepted international practice is to insist that the suppliers of nuclear components will be liable for damages, beyond the normal liability they face under the law of tort. Around the world, and even in international agreements like the Convention on Supplementary Compensation, nuclear liability lies solely with the operator of the reactor. The supplier’s liability is determined by the terms of its agreement with the operator. Some will argue that India’s action is not overly radical. In most industries which mess around with dangerous substances, companies simply buy insurance to cover this liability. However, there is no such animal for nuclear supplier liability. No insurance company offers such coverage. And it has not been provided for the 300-strong Indian nuclear suppliers sector.

The assumption, stated by many Indian politicians, is that the Indian market is so lucrative it will be just a matter of time before such liability insurance is created or suppliers find some other instrument to cover themselves. This would not be unreasonable in the case of most industries. However, the nuclear industry is unusual because its liabilities are much larger than most and there are so many dangers inherent in the substances that it deals with. This makes the industry extremely conservative and loathe to wander off the beaten path. Over the next few months it will be seen whether the international system bends. If it does, India specificity will have notched up a remarkable accomplishment. If not, India will be seen to have succumbed to hubris and Prime Minister Manmohan Singh’s claim to have closed the chapter on nuclear apartheid just a bit premature.