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The Bill, atomised

The Nuclear Liability Bill isn’t the con job it’s been made out to be. It’s strictly for operators, says Ravi Visvesvaraya Prasad.

india Updated: Mar 16, 2010 23:32 IST
Ravi Visvesvaraya Prasad

Suppose you ate at a restaurant and contracted food poisoning. Would you complain to the restaurant and its chefs? Or would you directly find fault with the butcher who supplied rotten meat to the restaurant, and the grocer who supplied it rotten vegetables?

Obviously, you would do the former, and leave it to the restaurant to resolve later whatever grouses it has with its suppliers of equipment and raw materials.

The principal objection of the BJP and the Left to the Civil Liability for Nuclear Damage Bill, 2010, is as inane as this. They want the vendors who supply equipment, components, raw materials, etc. to the operator of the nuclear power plant to be held directly liable to compensate the victims of nuclear accidents.

There is no doubt that India needs a law to govern compensation to be paid to the victims of nuclear accidents. India is the only major country — already operating as many as 18 nuclear power plants — which is not a member of either the 1963 Vienna Convention on Civil Liability for Nuclear Damage of the International Atomic Energy Agency (IAEA), or the 1960 Paris Convention on Third Party Liability in the Field of Nuclear Energy of the Nuclear Energy Agency of the Organisation for Economic Cooperation and Development (OECD).

In fact, India’s Department of Atomic Energy (DAE) proposed the passage of such a Liability Bill as long ago as 2000, and it has since formulated several drafts.

This is because there is no provision in the 1962 Indian Atomic Energy Act — or indeed in any other Indian Act — about liability for nuclear accidents.

Indeed, the liability cap of an Indian operator at Rs 500 crore per incident is well above those of several other countries. China has a liability cap of Rs 205 crore, Canada of Rs 335 crore, and France is about the same at Rs 575 crore.

The arguments of the Left parties are based on a faulty understanding of the US’s Price Anderson Act. In the US, all nuclear power plants are operated by the private sector, unlike in India, France and Russia where they are all operated by government companies. In the US, all the operators and equipment suppliers have pooled together to form a fund with a corpus of $10 billion. Compensation to the victims of a nuclear accident will be paid out of this fund according to a complex formula. The US government has no obligation whatsoever to compensate the victims of a nuclear accident. The Left parties are falsely claiming that the US has a liability cap of $10 billion. Payments out of this corpus for any one particular accident would be far far less than $10 billion.

It is not that suppliers of faulty equipment can get away scot-free. Clause 17 of the Bill permits the operator of the nuclear power plant to sue the equipment vendor for damages. This goes well beyond the provisions of IAEA’s model law. In particular, clause 17(b) of the Bill grants the Indian operator a ‘Right of Recourse’ against “wilful acts or gross negligence on the part of the supplier of the material, equipment or services, or of his employee”.

Indeed, the present Bill, which was pulled out last minute from being presented in the Lok Sabha on Monday, adheres to international best practices and is far better than the national laws of many advanced nuclear countries.

In addition to wanting vendors of equipment and raw materials to be directly liable, the BJP and the Left parties are also criticising the Rs 500 crore limit on the liability of the operator (Clause 6.2) as being far too low, and the supplementary liability of the Indian government beyond the operator’s liability of Rs 500 crore up to 300 million Special Drawing Rights (SDR), that is Rs 2,087 crore according to current exchange rates (Clauses 6.1 and 7a) as passing on the burden to the Indian taxpayer. They are also criticising the 10-year limit for claiming damages (clause 18) as being too short, arguing that several instances of biological damage show up only after several years.

But all these objections are contrary to both the Vienna and Paris Conventions, signed by over 80 countries. According to the IAEA, both the Vienna and Paris Conventions are based on the civil law concept and share the following main principles:

* Liability is channeled exclusively to the operators of the nuclear installations;

* Liability of the operator is absolute, i.e. the operator is held liable irrespective of fault;

* Liability is limited in amount. Under the Vienna Convention, it may be limited to not less than US $5 million, but an upper ceiling is not fixed. The Paris Convention sets a maximum liability of 15 million SDR;

* Liability is limited in time. Compensation rights are extinguished under both Conventions if an action is not brought within ten years from the date of the nuclear incident;

* The operator must maintain insurance of other financial security for an amount corresponding to his liability; if such security is insufficient, the Installation State is obliged to make up the difference up to the limit of the operator’s liability;

* Jurisdiction over actions lies exclusively with the courts of the contracting party in whose territory the nuclear incident occurred;

* Non-discrimination of victims on the grounds of nationality, domicile or residence;

In fact, the present Bill cuts short prolonged litigation by making the operator directly and immediately liable to pay compensation, without waiting to determine which piece of equipment from which specific vendor was defective. In a situation where an operator integrates thousands of pieces of equipment from myriad suppliers, it would not be easy to determine whose equipment was at fault.

A specific criticism of the Left parties is that the Bill is designed to favour American equipment vendors such as General Electric and Westinghouse. But the Bill does not mention suppliers from any particular country — its provisions are applicable to suppliers from all countries. Indeed, the Bill will benefit Indian vendors of nuclear equipment such as Larsen & Toubro, Walchand, Tatas, GMR and Lanco.

Essentially the Bill meets all international norms, and the objections of the BJP and the Left parties against it are not valid.

Ravi Visvesvaraya Prasad heads a group on C4ISRT (Command, Control, Communications and Computers Intelligence, Surveillance, Reconnaissance and Targeting) in South Asia.

The views expressed by the author are personal.