Context:
The issues regarding India’s nuclear liability law continue to hold up the more than a decade-old plan to build six nuclear power reactors in Maharashtra’s Jaitapur, the world’s biggest nuclear power generation site under consideration at present.
Relevance:
GS II: Government Policies and Interventions
Dimensions of the Article:
- Nuclear Liability Law in India
- Supplier Liability in CLNDA
- Issues with Supplier Liability Clause in India’s Civil Nuclear Liability Law
- Existing Nuclear Projects in India
- Government’s stand on India’s Nuclear Liability Law
Nuclear Liability Law in India
The nuclear liability law in India deals with compensating victims of nuclear damage caused by a nuclear incident or disaster and sets out liability for those damages.
- International Nuclear Liability Regime: The regime comprises several treaties and was strengthened after the 1986 Chernobyl nuclear accident. The Convention on Supplementary Compensation (CSC) was adopted in 1997 to establish a minimum national compensation amount.
- India’s Adoption of CSC: India ratified the CSC in 2016, and to align with it, enacted the Civil Liability for Nuclear Damage Act (CLNDA) in 2010.
- CLNDA: The CLNDA enforces strict and no-fault liability on the nuclear plant operator and sets the amount at ₹1,500 crore for damage caused by a nuclear accident. It also requires the operator to cover liability through insurance or financial security.
- Government Liability: In case the damage claims exceed ₹1,500 crore, the government’s liability amount is limited to the rupee equivalent of 300 million Special Drawing Rights (SDRs) or about ₹2,100 to ₹2,300 crore.
- Limitations: The Act also specifies limitations on the amount and time when action for compensation can be brought against the operator.
- NPCIL: The Nuclear Power Corporation of India Limited (NPCIL) operates all 22 existing nuclear reactors in India, and more projects are planned.
Supplier Liability in CLNDA
The Civil Liability for Nuclear Damage Act (CLNDA) in India introduced the concept of supplier liability in addition to that of the operator’s liability in the international legal framework on civil nuclear liability.
Background:
- The international legal framework is based on the exclusive liability of the operator of a nuclear installation.
- Two conditions under which the national law of a country may provide the operator with the “right of recourse” against the supplier are mentioned in the annex of the Convention on Supplementary Compensation (CSC).
CLNDA:
- Section 17(b) of the CLNDA states that the operator of the nuclear plant shall have the right of recourse against the supplier if the nuclear incident results from an act of the supplier or their employee, which includes supply of equipment or material with patent or latent defects or sub-standard services.
Rationale:
- The clause on supplier liability was added to the CLNDA as the architects of the law recognised that defective parts were partly responsible for historical incidents such as the Bhopal gas tragedy in 1984.
Exceptions:
- Apart from the contractual right of recourse or when “intent to cause damage” is established, the CLNDA is the first instance where the concept of supplier liability has been introduced in addition to that of the operator’s liability in the international legal framework on civil nuclear liability.
Issues with Supplier Liability Clause in India’s Civil Nuclear Liability Law
- The CLNDA, India’s civil nuclear liability law, has a clause on supplier liability which is unique compared to international legal frameworks on civil nuclear liability.
- Foreign and domestic suppliers of nuclear equipment have been hesitant to enter into nuclear deals with India due to concerns about potentially unlimited liability under the CLNDA and ambiguity over how much insurance to set aside in case of damage claims.
- The two specific provisions in the law that suppliers have taken issue with are Section 17(b) and Section 46.
- Section 17(b) states that the operator of the nuclear plant can have the right to recourse against the supplier in case of damage caused by defective parts or sub-standard services provided by the supplier, beyond the operator’s share of compensation for damage.
- Section 46 potentially allows civil liability claims to be brought against the operator and suppliers through other civil laws such as the law of tort, exposing suppliers to unlimited amounts of liability.
- These concerns have hindered the growth of nuclear energy in India and caused delays in the operationalization of nuclear deals.
Existing Nuclear Projects in India:
- Jaitapur nuclear project with EDF’s predecessor Areva, signed in 2009, has been stuck for more than a decade.
- In 2016, EDF and NPCIL signed a revised MoU, and in 2018, the heads of both signed an agreement on the “industrial way forward” in the presence of Indian Prime Minister Narendra Modi and French President Emmanuel Macron.
- In 2020, the EDF submitted its techno-commercial offer for the construction of six nuclear power reactors, but the issue arising from India’s nuclear liability law remains an item on the “agenda for both countries”.
- Multiple rounds of talks have not yet led to a convergence on the issue of nuclear liability law.
- The nuclear project proposed in Kovvada, Andhra Pradesh, has also been stalled.
- Despite signing civil nuclear deals with countries such as the U.S., France and Japan, the only foreign presence in India is that of Russia in Kudankulam — which predates the nuclear liability law.
Government’s stand on India’s Nuclear Liability Law:
- The Indian government maintains that the CLNDA is in line with the CSC.
- The government argues that Section 17(b) allows but does not require an operator to include the right to recourse against the supplier in the contract.
- Legal experts point out that a plain reading of Section 17 of the CLNDA suggests that the other two clauses stand even if the right to recourse against the supplier is not mentioned in the contract.
- The Ministry of External Affairs has stated that Parliament debates over the CLNDA had rejected amendments to include the supplier, and therefore the supplier cannot be liable under a class-action suit.
- However, private sector players remain unconvinced, and experts point out that during a trial, what would be considered is what is enshrined in the statute and not what was discussed in Parliament.
- The government has said that the issues regarding the liability law would be resolved before French President Emmanuel Macron’s visit to India, which was first scheduled for March but has been pushed to September.
- The government argues that it would not be sound public policy if the NPCIL waived its right to recourse against the supplier in the contract, even if the law provides for such recourse.
- For the Jaitapur project, the government has stated that the issues regarding the liability law would be resolved before the visit of the French President.
-Source: The Hindu
