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India’s Civil Nuclear Liability Law


Authored By- Shreya Venkatesh

Keywords: Civil Liability for Nuclear Damage Act, 2010, Right to recourse, no-fault liability, Strict liability


Abstract

Over the course of time, there have been major developments in the nuclear energy sphere. Nuclear fusion and electricity generation processes have been explored and have been found to be more energy and resource-efficient than fossil fuels. Nuclear energy has immense developmental scope. According to India’s planning on nuclear energy production, it aims to produce 27,000 MWe of electricity by 2032 and 25% of its total electricity requirements by 2050. International Law relating to nuclear liability has been in the work for about 5 decades now. India passed its liability law in 2010. This paper will be exploring the various aspects of the Act.


Introduction

India re-engaged with the nuclear community post the 2005 India-United States Nuclear Cooperation agreement and set out to enact its own nuclear liability law. The Civil Liability for Nuclear Damage Act, 2010, or Nuclear Liability Act that was passed through both houses of the Indian parliament is considered to be the last step in finalizing the 2008 Indo-US Civilian Nuclear Agreement. Liability law is required because the major nuclear leak catastrophes have had a major impact on the onus of liability and consequences. The Bhopal Gas tragedy, Chernobyl accident 1986, Hiroshima and Nagasaki bombings, and the 2011 Fukushima accident highlighted the importance of a robust liability regime, both domestically and internationally.


Civil Liability for Nuclear Damage Act, 2010

The Act, through its provisions, defines the onus of liability for nuclear damage and specific procedures to be taken care of after a nuclear incident with regards to clean-up and compensation of victims. It fixes a no-fault liability on the operators, meaning that the operators will be liable to compensate the victims whether or not their direct actions are responsible for the incident. Since it fixes such liability on the operators, it also gives them a right to recourse. Under Section 17 of the Act, the operator can exercise his right to recourse with the supplier after paying the compensation. Here, the operator and supplier have a contract of indemnity where the operator is the indemnity holder and the supplier is the indemnifier. Therefore, the suppliers are contractually obligated to indemnify the operators for an amount not less than the extent of the operator’s liability under the Act, or the value of the contract, whichever is less, under Rule 24 of the Civil Liability for Nuclear Damage Rules, 2011. Therefore, the operator is strictly liable for consequential nuclear damage except in the case of a force majeure event, in which case the central government will take on the onus of liability. The operator’s liability is capped at Rs. 15 Billion, which is about USD 238 million. The overall liability of the central government in this regard is capped at an equivalent of 300 million Special Drawing Rights which is taken from the IMF’s basket of currencies made for this specific purpose. This is equivalent to around USD 415 million. The Indian government, in 2015 announced that it is setting up a Rs. 15 billion insurance pool, funded by Indian insurers and the government with the intent of mitigating the operator’s liability. Further, under the provisions of the Convention for Supplementary Compensation for Nuclear Damage (CSC), contracting states are essentially under obligation to fund liabilities exceeding the 300 million SDR.


Consequences for Suppliers under Section 17

Under the contract of indemnity, the suppliers have to indemnify the operators. The base amount of Rs. 15 billion is stated, however, there is no mention of an upper limit to the amount of compensation. This essentially means that the suppliers don’t have an upper cap on the extent of their monetary liability. Section 17 gives three possible situations under which the supplier could be liable:

· When the right to recourse is expressly provided for in a written contract

· If the nuclear incident is a result of the consequence of the act of the supplier or his employee. This included the supply of equipment, material with patent, latent defects, or sub-standard services.

· If the nuclear incident is the result of an individual’s act of omission or commission done with the intention of causing damage.


India ratified the Convention on Supplementary Compensation for Nuclear Damages (CSC) in 2016. This came as a direct initiation from the Ministry of External Affairs. This required India to declare that its national law complies with the annex of the convention. This is not true, however, since Section 17(b) is in direct contravention with Article 10 of the convention.


Article 10 states that the operator shall have a right to recourse when:

· It is expressly provided for in the written contract

· If the nuclear incident is a result of the act or omission done with an intention to cause damage, against that individual.


Article 10 allows only two conditions whereas Section 17 allows for a third. 17(b) is technically not permitted by the CSC but this clause was added in the act on the recommendation of an expert standing committee as prior to this, the right to recourse against suppliers was provided only in instances of “wilful acts or gross negligence”. 17(b) was added because establishing this requires proof of intention which is difficult to establish in law. The controversy arises because this clause allows operators to exercise their right to recourse if they wish to or waive it otherwise. Although it is unlikely that the operator would just waive their right, rule 24 of the Rules as previously stated prevents this. India will however look weak if they revoke this clause as their public policy will be irreparably harmed and this uncapped liability on the suppliers makes them skeptical about investing in India as, even if they arrange for insurance claims, they might still have to bear a partial burden.


Tort Liability Claims

Section 46 of the Act states that its provisions shall be in addition to, and not in derogation of any other law when it is in force. It further states that nothing contained within the act shall exempt the operator from legal proceedings instituted against the operator on other fronts. The operator is strictly liable under this act for which he has recourse under Section 17 as previously stated. This is where it becomes complicated because the provision is slightly ambiguous. The interpretation can go both ways. On one hand, this section says that operators shall not be protected against any other legal claims by victims but on the other, it also gives them the right to recourse. It has no mention of whether or not the suppliers are liable in a tortuous claim filed by a victim claiming an economic loss, but at the same time, the Act binds the supplier to the operator through the indemnity contract. Therefore, it is possible that according to the court’s interpretation, the supplier might be liable to compensate the operator with regards to tortuous claims against him as well. It is also at the discretion of the court whether tortuous claims can be instigated against the supplier in circumstances of negligence causing death, damage to property or personal injury. The amendment to add “suppliers” to this section was rejected and this brings into question the constitutional validity of Section 46.


Further, the possibility of Indian victims moving foreign courts for compensation from foreign suppliers is also unclear. The MEA stated that they can’t and it still remains to be seen how a court from a foreign jurisdiction would deal with such claims. However, it is possible that a foreign court will reject the claims based on Article 13 of the CSCND which states that jurisdiction over actions regarding nuclear damage which is a direct result of the nuclear incident shall lie within the courts of the contracting party within which the incident occurred.


Conclusion

India’s rationale behind the implementation of the act is valid because it is obligated to protect its own interests in the wake of the Bhopal Gas Tragedy 1984 caused by Union Carbide India Ltd. The 2010 Act clearly established the liability of the operators and suppliers, although the latter’s liability is more inconclusive. The consequences of a nuclear disaster with respect to clean up of the toxic chemicals, compensation and rehabilitation of victims are tremendous and can easily put a country into a state of economic deficit or loss. Therefore, ensuring a framework to promote nuclear energy production needs to keep in mind national interests which is why it is difficult to balance with international standards. If the suppliers decide to test the waters and invest in India’s nuclear energy market, it will be beneficial to India. Although the suppliers are skeptical on this matter, India has to protect the legitimate interests and concerns of the public, which is why this Act shows improvement with regards to Indian policy even if it is criticized.



References

· https://www.mondaq.com/india/energy-law/395640/civil-nuclear-liability-law-in-india

· https://www.gatewayhouse.in/indias-nuclear-liability-stand-unchanged/

· https://www.prsindia.org/uploads/media/Nuclear/Final%20Brief%20-%20civil%20liability%20for%20nuclear%20damage%20bill.pdf

· https://thewire.in/diplomacy/indias-nuclear-liability-regime-is-still-up-in-the-air

· The Civil Liability for Nuclear Damage Act, 2010.

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