It is a done deal, and the Indian nuclear liability law stays. Happy, you Indians?
Well, there need not have been any doubt in the first place that there would be an agreement on nuclear commerce between India and the US—the Indian liability law is one that barks, but does not bite.
Much posturing was made against the India’s Civil Liability for Nuclear Damage Act, or the CLND, against just two of its provisions.
First is the Section 17 (b), which in effect confers on the plant owner—the Nuclear Power Corporation of India—the right to be indemnified (right to recourse) by the supplier (such as GE, Westinghouse), even if there is no specific provision granting such a right in the commercial agreements between the owner and the supplier. The section uses the words “shall have the right to recourse”.
The right to recourse is a commercial issue, so why make it automatic under law, ask the foreign suppliers. After the Bhopal gas leak experience, where the victims were paid paltry sums as compensation, what else would one expect the Indian legislators to do?
The Second objection has been on Section 46 which says the supplier can be sued under any Indian law, not just under CLND.
However, it has always been clear that neither of these sections could possibly be a deal-breaker. First of all, there is a cap on the liability. If any nuclear accident happens, it is the duty of the owner of the nuclear plant to compensate the victims. In India, the owner can only be the public sector Nuclear Power Corporation of India Ltd.
Now, the Rule 24 of the Civil Liability for Nuclear Damage Rules, 2011, which mandates the owner to restrict the liability of the supplier to the owner’s liability or the value of the contract, whichever less. NPCIL’s liability has been capped at Rs 1,500 crore. Therefore, the maximum liability of a supplier of a nuclear reactor, such as GE or Westinghouse or Rosatom, cannot exceed Rs 1,500 crore, about $ 250 million. A quarter billon dollar is nothing very big. The $40+ billion that BP is having to pay for its Gulf of Mexico oil spill (11 people died in the accident), puts this in the perspective.
“The cap of Rs. 1,500 crore appears atypically lower in comparison with liability amounts in other countries which can run into billions of dollars for a single accident. Similarly, a cap based on the ‘value of the contract’ risks being lower than even this amount,” notes a study of the nuclear liability law made by the legal think-tank, Vidhi Centre for Legal Policy.
NPCIL further has a right to waive its right to be compensated by incorporating a specific provision to that effect in its contracts, though it is doubtful if it would get away with it if it does.
Second, the supplier is liable only if the defect of the product is traced back to it, which, as any nuclear expert will tell you, is next to impossible.
The Americans have been more worried about the Section 46, than Section 17 (b), because a group of victims could sue the reactor supplier directly under some other legislation, such as law of torts. But then, this right is always there as a principle of natural justice and Section 46 does nothing more than to highlight that right.
Besides, the Russians and the French have shrugged off these issues and are getting down to business. Would the US have sat on legal technicalities and watched all the business slip from its hands?