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Liability clause impractical, says Govt’s own N-operator

india Updated: Aug 24, 2010 01:46 IST
Jayanth Jacob
Jayanth Jacob
Hindustan Times
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Even as the BJP and the Left cry foul and claim the supplier liability provisions in clause 17 (b) of the Civil Liability for Nuclear Damage Bill 2010 aren’t strong enough, the state-owned Nuclear Power Corporation of India (NPCIL) — the country’s sole operator of nuclear plants — has hit out against the existing provision, saying its terms are "neither practical nor implementable".

This highlights the growing unease among India’s domestic nuclear industry that the Bill, by going beyond existing product liability legislation and driving up insurance and litigation costs, will make supplying products for reactors unviable and thereby force these firms out of the nuclear components business.

"Undoubtedly, the Government has powers to make laws, but in the process of making laws we should not defeat the purpose for which the laws are made. With the current formulation of 17 (b), no manufacturer, Indian or foreign will be able to serve the nuclear power industry,” said Sudhinder Thakur, executive director (Corporate Planning) of NPCIL in a note, of which HT has a copy.

NPCIL’s concerns are the latest twist in the convoluted trajectory of clause 17. In the original Bill (before it was sent to the parliamentary standing committee) the operator could take recourse against the supplier only if there had been “willful and gross negligence” on the part of the latter.

The committee suggested modifying the clause to allow recourse whenever “the nuclear incident has resulted as a consequence of latent or patent defect, supply of sub-standard material, defective equipment, design or services, or from the gross negligence on the part of the supplier of the material, equipment, design or services.”

The report also recommended the insertion of the word ‘and’ between the two parts of clause 17, (a) and (b). The BJP and the Left said inserting ‘and’ made it mandatory for the operator to enter into an agreement with the supplier for claiming any liability from the latter, diluting the operator’s right of recourse. Subsequently ‘and’ was dropped. The government then changed it to “the nuclear incident has resulted as a consequence of an act of supplier or his employees, done with the intent to cause nuclear damage, and such act includes supply of equipment or material with patent or latent defects or sub-standard services.”

The Opposition again took strong objection, arguing the government’s intent was to let suppliers “off the hook.” Lawyer Suhaan Mukerji, of Amarchand Mangaldas and member of FICCI’s nuclear working group, said: “The Opposition’s stance calls into question an existing operator-supplier liability system that has led to no major nuclear incident for 40 years and which no previous government has sought to amend.”

Responding to the expanded scope of the clause 17 (b) in operators right to take recourse, Thakur wrote that “a review on domestic legislation of different countries reveal that the Operators right to recourse wherever available is limited to willful act or gross negligence by the Supplier”.

He noted that even Article 4 (Rights of Recourse) in the South Korean Act – one of the most stringent in the world and commonly cited during the debate – says the “nuclear operator shall have a right of recourse only insofar as there has been a willful act or gross negligence by the supplier of the materials concerned or by his employees”. The NPCIL official wrote “clearly it is not the same in clause 17 (b).”

In his note, Thakur pointed out that even in the Bhopal tragedy, Union Carbide was held responsible because it was the operator of the factory.

"Same is the case with the Bhopal gas tragedy, the liability is on Operator (UC), but not on Supplier of the valve which did not function well. This is between the Operator and the Supplier. In the liability regime that came into being after Bhopal disaster, there is no recourse for the operator”, Thakur argued.