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Liable to cause more confusion

Responsibility should rest on the operator. The supplier is accountable under existing laws.

india Updated: Aug 23, 2010 23:29 IST

The Indian Parliament is showing itself in the worst possible light in the debate on the Civil Nuclear Liability Bill. The language of the legislation has been debated, literally over single words, and every bogey of the old India ranging from ‘Foreign Hands’ to ‘Corporate Coffers’ has made an appearance. What is striking about the debate is how little the basic principles of what is being discussed is understood, either by the political parties, the media or even many supposed experts.

The most confused, and therefore most controversial, issue is that of restricting suppliers’ liability. Opponents of the Bill argue that this will allow foreign firms to get away with murder in case their components are responsible for an accident. This is simply false. If a nuclear supplier is guilty of direct responsibility for such an accident it can be sued for damages on the basis of existing product liability laws and the law of tort, embodied in numerous Supreme Court judgments. This is completely separate and different from the compensation provided by nuclear liability norms. So much so that a victim of a nuclear accident can be provided compensation under both product liability and nuclear liability.

Here is the crux. He can only be compensated under product liability if it can be proved that a supplier, operator or even plumber was directly responsible for the accident. Nuclear liability doesn’t care who is responsible for an accident. It’s similar to an ex gratia payment and seeks only to provide speedy compensation to a victim. The international norm is to fix this compensation on the reactor operator. Suppliers are not responsible because a single reactor can have thousands of component providers and, given the life cycle of a reactor, many of these suppliers may no longer exist. The present parliamentary demands for, in effect, making suppliers liable for damages even if they are not to blame for an accident will not merely scare away foreign component suppliers. Worse, they will also drive up the insurance costs for India’s homegrown nuclear component-makers, potentially driving many of them out of business. Suppliers’ liability should be — and is — part of normal product liability, which is about compensation on the basis of fault. It is not part of nuclear liability, which is about compensation regardless of fault.