Civil Liability for Nuclear Damage Act, 2010

By Shivani Gupta, HNLU Raipur

Editor’s Note: By using a miniscule of nuclear matter, the problem of immeasurable human needs for energy can be resolved. However since nuclear energy also has the inherent potential for catastrophic destruction, one should be extremely mindful of the consequences should a mischance occur. Bearing this in mind, the Government of India has enacted the Civil Liability for Nuclear Damage Act, 2010.

In this backdrop, the project examines the Government’s point of view as to the requirement of nuclear energy and sufficient precautions being taken for the use of the same. It then analyses that although the Legislature’s goal was to minimize the odds of a nuclear calamity by enacting a strict piece of legislation, the Act has ended up breaching several Constitutional mandates and has infringed upon fundamental rights in addition to several other settled principles of law. The project tests the credibility of the Act on the touchstone of constitutional provisions.

INTRODUCTION

The world with rapid developments in different fields has come to a stage where the society is exposed to a lot of activities which are hazardous to the mankind. Nuclear energy is one amongst them which has the effect of the Damocles’ sword. However, the never-ending human needs and the extinction of the non-renewable resources act as force majeure for the society resorting to the use of nuclear energy which casts a responsibility upon the user to take high standards of care so as to avoid any misfortune.

However, practically, complete denial to any calamity would be equivalent to giving a false blanket of security vide historic and recent incidents of similar nature. In light of the same, along with sufficient precautionary measures, a mechanism to provide relief in the after hours of the incident becomes the primary matter of concern. Considering all such circumstances at one platform, the legislature has come up with the Civil Liability for Nuclear Damage Act, 2010, and has tried to incorporate the same reasoning by way of principles of liability and compensation in any such event against the user. Unfortunately, this legitimate attempt of the Legislature has backfired and has ended up in gross violation of several Constitutional and human rights which the Act otherwise sought to protect.

THE ACT AND THE CONSTITUTION: Assumed Harmony

The whole Act embodies the scheme of substantive due process of law.

Rights to life, liberty, and the pursuit of happiness can only be taken away by due process of law[1], or the procedure established by law.[2] ‘Procedure established by law’ in Article 21 means the procedure prescribed by the law of the State[3] which should not be arbitrary, unfair or unreasonable.[4] The procedure established by law is proper since the exceptions so laid are reasonable, fair and not arbitrary.

The Act in question is passed by the Parliament with the objective to provide for civil liability for nuclear damage and prompt compensation to the victims of a nuclear incident,[5] and even though it lays down certain exceptions for the liability of the operator,[6] remains the toughest piece of legislation on the subject anywhere in the world.[7]

The Act is in consonance with the Polluter Pays Principle

Polluter Pays Principle mandates that polluter should bear the cost of measures to reduce pollution according to the extent of either the damage done to society or the exceeding of an acceptable level of pollution”.[8] In the last few decades, international and national environmental liability laws are invariably based on strict liability[9] which goes hand in hand with the Polluter Pays Principle mandating the cost-internalization principle.[10]

In view of the above, it can be said that the polluter pays principle is being upheld in the present action because firstly, the Act clearly provides for compensation in case of damage.[11]

Secondly, the Proviso to section 6 (2) of the Act clearly lays down that the government can review the amount of operator’s liability from time to time and specify, by notification, a higher amount.[12] Therefore, the act does not put a cap on the liability of the operator.

Thirdly, the Act also ensures channeling of the liability to the supplier in case of a nuclear accident[13] by providing recourse to the operator.

Exceptions to the liability are justified

By indemnifying the operator in certain cases,[14] the Act highlights the genuine inability to take action in inevitable situations though it had acted with diligence and carefulness in maintaining its safety standards which render the procedure laid down by the Act as reasonable. The Act lay down that in case of a grave natural disaster of an ‘exceptional character’, the operator is not liable.[15]

By doing so, it does not try to blanket the liability of the operator rather tries to provide a reasonable situation where the operator would not be forced to pay compensation, i.e., the situation of grave need where the operator, which is government in the present matter, anyway would be trying to provide solace to the victims of the said natural disaster. Forcing it to pay additional compensation would be not reasonable. Also, the phrase “grave natural disaster of exceptional character” has to be construed taking into consideration facts and circumstances in each and every case and the judiciary is there to play its role.

Force Majeure as an exception is also a reasonable ground to exempt the operator’s liability

Force majeure has long been accepted as precluding wrongfulness[16] in the international liability regime[17] followed by European Union[18] and says that compensation cannot be claimed when damage is caused by war.[19] The Atomic Act of UK[20] also excludes war from the liability of the operator along with the Convention on Supplementary Compensation.[21]

Hence the Act by providing civil war, hostility, insurrection, terrorism etc creates nothing which could be said as unjustified. Furthermore, the liability of the operator should not be imposed considering the inevitability of these exceptions which have become sine qua non to the existence of the human society.

DISCORD BETWEEN THE ACT AND THE CONSTITUTION

The Act overlooks the fundamental right to life as against the Constitutional Mandates.

The Civil Liability For Nuclear Damage Act, 2010[22] by laying down exceptions to operator’s liability; by capping the financial liability of operators and by making suppliers not liable violates the ‘absolute liability’ principle and the ‘polluter pays’ principle which has become recognized as part of the law of the land under Article 21 patently violates the Constitutional mandates under Article 21 of the Constitution and hence is unconstitutional.

Violation as to non-compliance of procedure established by law

Right to life includes the right to decent[23] and healthy[24] environment. Any disturbance of the basic environmental elements would be hazardous to life within the meaning of Article 21 and thus violative of the same.[25] Furthermore, it is an obligation on the State to protect and improve the environment[26] with the fundamental right to live in a healthy environment[27] which could be only taken away by the procedure established by law.

‘Procedure established by law’ in Article 21 means the procedure prescribed by the law of the State[28] which should not be arbitrary, unfair or unreasonable.[29] On a complaint of deprivation, courts, in the exercise of its power judicial review, has to decide whether the procedure prescribed by that law is reasonable, fair, just, and not arbitrary, whimsical and fanciful.[30]

The present Act, by creating exceptions for liability of the operator[31] in case of a nuclear accident, violates the said rule. In process of carrying out an ultrahazardous work, the level of accountability shall be much higher than in general cases.[32] It has been well recognized that those who indulge in inherently dangerous activity should bear the cost of all consequences of accidents, without availing any defenses recognized for ‘strict liability’.[33] In case an accident happens, if the operator is exempted from liability to make good all the losses without any exception to it, would not be the proper procedure established by law.

An enterprise which is engaged in a hazardous or inherently dangerous industry owes an absolute and non-delegable duty to the community to ensure that no harm results to anyone on account of the activity which it has undertaken,[34] and if harm results to anyone on account of such activity, the enterprise is strictly and absolutely liable to compensate all those who are affected by the accident.[35] This liability is not subject to any of the exceptions which operate vis-a-vis the tortious principle of strict liability.[36] The said principle was followed in a plethora of judgments and subsequently by getting Statutory Recognition,[37] has become the law of the land.[38] The impugned Act by laying exceptions to the principle makes a clear departure from what otherwise is settled law.[39]

By providing exceptions to the absolute liability principle, the right to free and healthy environment is compromised upon which is recognized as part of Article 21. The exceptions i.e. accident attributable to any grave natural disaster of an exceptional character or to an armed conflict, hostility, civil war, insurrection or terrorism[40] cannot be taken as reasonable on account of the harm which would result out of the accident. The mere fact that the activity is of ultra-hazardous nature and results in an accident, it is sufficient to impose liability absolutely on the operator.[41]

Whatever be the cause of the accident, the bare truth which remains is the irrevocable and magnified effect of the accident.[42] It is thus submitted that the exceptions so mentioned will create laxity on part of the operator in taking safety measures thereby exposing the society to the wrath of the activity being carried out[43] and such activities on being added with any inevitable event, earthquake in the present matter, magnify the amount of loss which otherwise would be caused by the event.

The Act is also in contrast to Polluter Pays Principle

Polluter Pays Principle, which first appeared in a legal context in a document prepared by OECD[44] and later adopted in the Rio Declaration[45] is an international guideline for environmental policy formulation and environmental liability[46] which mandates that polluter should bear the cost of measures to reduce pollution according to the extent of either the damage done to society or the exceeding of an acceptable level of pollution”.[47] It is an attempt to make polluters bear the “real” social cost, thereby bringing pollution to the optimal level.[48] Indian judiciary has incorporated this principle as a part of the law of the land.[49] The said Act departures from the above said principle in two ways: by putting a cap on the liability of the operator under Sec 6 and under Sec 17, by providing immunity to the nuclear supplier from any liability on account of any mis-happening.

Sec 6 of the impugned Act limits the liability of the operator to 1500 crore rupees[50] and states that the remaining damage may be made good by the Government at the cost of the Exchequer,[51] which is against the principle laid down in Indian Council for Enviro-Legal Action v. Union of India.[52] The court held that “Under the principle, it is not the role of Government to meet the costs involved in either prevention of such damage or in carrying out remedial action, because the effect of this would be to shift the financial burden of the pollution incident to the taxpayer.[53] Also, the compensation so awarded must be correlated to the magnitude and capacity of the enterprise[54] and the harm caused by it[55]  to create a deterrent effect.

It is thus submitted that the very low operator’s liability, which is not enough to cover the harm expected to arise out of a nuclear accident, forget to create a deterrent effect, tends to relax the operator’s diligence in ensuring a high level of nuclear safety in his plant and will allow the operator to transfer a bulk of his responsibility to the tax-payers and thus imposing suspending threat to life and property.

By limiting the liability of the operator to 1500 crore rupees, the safety of nuclear installations is subjected to danger. Cost of a single reactor can be as high as Rs. 30,000 crores.[56] So the cost of the reactor can be 20 times the amount of liability. This means that it might be cheaper for the operator to take the risk of paying the maximum liability than to spend, say, 10% extra to add safety features to the plant. Moreover, the fact that cost of disaster exceeds the liability mentioned in the Act and failure to come up with an estimate of the damage that can be caused in the event of an accident is not only arbitrary but also hugely insufficient.

Though the operator has recourse to the supplier in a case of his fault,[57] the Act does not make him liable to the public, no matter what the cause of the accident is, including the case of faulty design of the reactor. It is submitted that without liability, an environment is facilitated where operators and suppliers would prefer to invest and develop cheaper nuclear reactor rather than safer reactors.[58]

Additionally, the recourse to the supplier is also made limited by setting the limit as the extent of the operator’s liability under Section 6 or the value of the contract itself whichever is lesser.[59] It is evident that these clauses are not in the interest of the people but in the interest of nuclear suppliers and corporate houses. This clearly violates the Right to wholesome Environment enshrined in Article 21 of the Constitution.

CONCLUSION

The Sovereign Republic of India in its 60th year of Constitutional Rule of Law is reinventing the liability jurisprudence to detriment of people. It can also be condemned because it promotes all terms of nuclear suppliers and corporate houses at the cost of people and future generation by putting a cap on the liability of the operator and by exempting the supplier form direct liability.

The clause as to the payment of the remaining money by the Government exchequer is being questioned by the activists and the jurists as to why the state should take responsibility for the damage which might be caused in nuclear accidents resulting from nuclear reactors by enacting self-imposing liability legislation. Also, the exemption of the supplier from the direct liability clearly shows an attempt to secure foreign direct investment at the cost of lives of the citizens.

Formatted on February 27th, 2019.

BIBLIOGRAPHY

[1] Mugler v. Kansas, 123 US 623 (1887).

[2] Article 21, The Constitution of India, 1950.

[3] A.K. Gopalan v. State of Madras, AIR 1950 SC 27.

[4] Maneka Gandhi v. UOI, AIR 1978 SC 597; Inderjeet v. State of U.P., AIR 1979 SC 1867; Francis Corallie Mullin v. Union Territory, AIR 1981 SC 746; M. Nagraj v. UOI, (2006) 8 SCC 212.

[5] Objectives to The Civil Liability for Nuclear Damage Act, 2010.

[6] Sec 5 and 6, The Civil Liability for Nuclear Damage Act, 2010.

[7] Siddharth Varadarajan, “A New Paradigm for Nuclear Liability” available at: http://www.indiaseminar.com/2011/617/617_siddharth_varadarajan.htm (Visited on Oct. 19, 2012).

[8] Principle 16, Rio Declaration on Environment and Development, United Nations Conference on Environment and Development, U.N. Doc. A/CONF. 151/5/Rev.1 (1992), reprinted in 31 I.L.M. 874 (1992).

[9] Commission of the European Communities. Communication from the Commission to the Council and Parliament: Green Paper on Remedying Environmental Damage, COM (93)47 Brussels, 14 May 1993.

[10] Bergkamp Lucas, “Liability and Environment Private and Public Law Aspects of Civil liability for Environmental Harm in an International Context” Draft 10, April 2001 available at: http://papers.ssrn.com/paper.taf?abstract_id=266365 on Feb 5 2012 (Visited on Oct. 19, 2012).

[11] Sec 6, The Civil Liability for Nuclear Damage Act, 2010.

[12] Proviso, Sec 6(2), The Civil Liability for Nuclear Damage Act, 2010.

[13] Sec 17 (a) & (b), The Civil Liability for Nuclear Damage Act, 2010.

[14] Sec 5(1) (i) and 5(1) (ii), The Civil Liability for Nuclear Damage Act, 2010.

[15] Sec 5(1) (i), The Civil Liability for Nuclear Damage Act, 2010.

[16] William C.G. Burns, “Potential Causes of Action for Climate Change Damages in International Fora: The Law of the Sea Convention” http://policy.miis.edu/programs/BurnsFT.pdf (Visited on Oct. 20, 2012).

[17] Draft Articles on Responsibility of States for Internationally Wrongful Acts, in Report of the International Law Commission on the Work of Its Fifty-third Session, U.N. GAOR, 56th Sess., Supp. No. 10, U.N. Doc. A/56/10 (2001), Art. 1.

[18] Article 191(2), TEFU, Directive 2004/35/EC, European Parliament and of the Council, April 21, 2004.

[19] P. Ledrup, Laerebok i erstatningsrett 257-278 (4th ed. 1999).

[20] Sec. 13 (4) (a), Nuclear Installations Act, 1965 (UK).

[21] Article 3(5) (a), Convention on Supplementary Compensation for Nuclear Damage (Reproduced in document INFCIRC/567).

[22] Hereinafter referred to as ‘The Act’.

[23] Shantisar v. Narayan, AIR 1990 SC 630; In re: Bhavani River-Sakthi Sugars Ltd., (1998) 2 SCC 601; M. C. Mehta v. UOI, (1998) 6 SCC 60; M.C. Mehta v. UOI, (1999) 6 SCC 12.

[24] Banhua Mukti Morcha v. UOI, AIR 1984 SC 802.

[25] Ramji Patel v. Nagrik Upbhokta Marg Darshak Manch, (2000) 3 SCC 29; T. N. Godavarman Thirumalpad v. UOI, AIR 2003 SC 724; Andhra Pradesh Pollution Control Board v. M V Nayudu, (1999) 2 SCC 718.

[26] Municipal Corporation Ratlam v. Vardichand, AIR 1980 SC 1622.

[627]Charan Lal Sahu v. UOI, (1990) 1 SCC 613; Rajiv Ranjan Singh v.  State of Bihar, AIR 1992 Pat. 86; Vellore Citizens Welfare Forum v. UOI, (1996) 2 SCC 594.

[28] Gopalan, A.K. v. State of Madras, 1950 SCR 88.

[29] Maneka Gandhi v. UOI, AIR 1978 SC 597; Inderjeet v. State of UP, AIR 1979 SC 1867; Francis Corallie Mullin v. Union Territory, AIR 1981 SC 746, M. Nagraj v. UOI, (2006) 8 SCC 212.

[30] Narinderjeet Singh v. UOI, (2002) 2 SCC 210.

[31] Section 5, The Civil Liability For Nuclear Damage Act, 2010.

[32] M.C. Mehta v. UOI, AIR 1987 SC 1086.

[33] Ibid.

[34] Ibid.

[35] Ibid.

[36] Indian Council for Enviro-Legal Action and Ors., v. UOI and Ors., AIR 1996 SC 1446.

[37] The Public Liabilities Insurance Act, 1991, Act No. 6 of 1991.

[38] Indian Council for Enviro- Legal Action v. UOI, (1996) 3 SCC 212.

[39] Section 5, The Civil Liability For Nuclear Damage Act, 2010.

[40] Section5(1) (i) and (ii), The Civil Liability For Nuclear Damage Act, 2010.

[41] supra note 33.

[42] Rerence could be made to Fukushima accident(Japan,2011), Chernobyl Disaster(Russia, 1986), Three Miles Islands Case(Pennsylvania, 1979), Chalk River Breakdown (Canada, 1952), Windscale Nuclear Accident Case (1957), Tsuruga Nuclear Power Station Accident (Japan, 1981) which prove that the damage that can occur as a result of a natural disaster is immense and people need to be protected from the same.

[43] Dr. A Gopalakrishnan, “Nuclear Liability Bill Must Cover Nuclear Submarine Too” New Indian Express, available at:  http://www.countercurrents.org/gkrishnan240810.htm (Visited on Oct. 6th, 2012).

[44] Environment and Economics: Guiding Principles Concerning International Economic Aspects of  Environmental Policies, Annex 1, OECD Doc. C(72)128, (May 26, 1972), 1972 WL  24710.

[45] Principle 16, Rio Declaration on Environment and Development, UNCED, June 3-14, 1992, U.N. Doc. /CONF.151/5/Rev. 1.

[46] Shruti Rajagopalan, “The Polluter Does Not Pay Model For Environmental Protection In India” Emle Master Thesis 2007-08 available at: http://www.emle.org/_data/Shruti_Rajagopalan__The_Polluter_Does_Not_Pay_Model_for_Environmental_Protection_in_India.pdf  (Visited on  Oct. 6, 2012).

[47] Glossary of Environment Statistics, Studies in Methods, Series F, No. 67, United Nations, New York, 1997.

[48] Førsund R. Finn., “The Polluter Pays Principle and Transitional Period Measures in a Dynamic Setting” The Swedish Journal of Economics, Vol. 77, No. 1, Public Finance: Allocation and Distribution, (March 1975), 56-68.

[49] Indian Council for Enviro- Legal Action v. UOI, (1996) 3 SCC 212; Vellore Citizens Welfare Forum v. UOI & Ors, supra note 28; Thilakan v. Circle Inspector of Police, AIR 2008 Ker 48; Soman v. Geologist, 2004 (3) KLT 577; S. Jaganath v. UOI, AIR 1997 SC 811, M.C. Mehta v. Kamal Nath, (1997) 1 SCC 388, Ramji Patel v. Nagrik Upbhokta Marg Darshak Manch, (2000) 3 SCC 29.

[50] Section6(2) (a), The Civil Liability For Nuclear Damage Act, 2010.

[51] Section7(1) (a), The Civil Liability For Nuclear Damage Act, 2010.

[52] (1996) 3 SCC 212.

[53] Ibid.

[54] supra note 34.

[55] Deepak Nitrite Ltd v. State of Gujarat, (2004) 6 SCC 402.

[56] “Cost of Nuclear Power” available at: http://nuclearinfo.net/Nuclearpower/WebHomeCostOfNuclearPower (Visited on Oct. 6, 2012).

[57] Section 17 (b), The Civil Liability For Nuclear Damage Act, 2010.

[58]The Three Mile Island accident, in Pennsylvania is testament to the fact that major nuclear accidents can occur due to faulty design; S.K. Agarwal, Nuclear Energy: Principles, Practices And Perspectives 86 (1st ed., New Delhi: APH Publishing Corporation, 2003).

[59] Rule 24, The Civil Liability For Nuclear Damage Rules.

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