Civil Nuclear Liability

By Apurv Jain, NUALS

Editor’s Note: Civil Nuclear Liability has recently gained a lot of momentum after India entered into agreements with nations like the United States of America, France, and others. Also now India is a part of the Convention on Supplementary Compensation (CSC). With a history of Bhopal Gas Tragedy, India is now much more vigilant about the latest developments in this sector. 

Therefore, it has become imperative to analyze the liability regime in the background of international conventions such as the Vienna Convention 1963, Paris Convention 1960, Convention on Supplementary Compensation, 1997 and others. Also, the present Indian legal scenario in this regard which is derived from Civil Liability for Nuclear Damages Act, 2010 and Civil Liability for Nuclear Damages Rules, 2011 have also been extensively discussed in the paper.

Introduction

With the advent of mankind’s potential to harness nuclear substances for peaceful purposes, arose to regulate the functioning of the facilities established for the peaceful purposes of power generation. Following the wide-scale production of clean nuclear energy,  the international community which had developed firm roots by then under the auspices of United Nations set down to the task of formulating laws which will help deal with the aspects of nuclear energy as in the case of any other industry.

The outcome of the efforts of the global parties shaped into international conventions which provided for an international common nuclear regime for third party liability. These Conventions have been successful in setting down the questions of operator liability and claims arising in case of a nuclear accident.  Chernobyl Disaster was an example of the threat which humankind can be subjected to as a result of negligent handling of nuclear substances.

These conventions, therefore, distinctly deal with the issue of after disaster situation when the affected persons approach the courts of the states where they reside for the damage suffered, which in most cases, as has been deduced from past instances, mainly life and physical injury. To eliminate the embarrassing last minute hassles, states define the liability which might arise in the case of a nuclear accident, regardless of the fault of the operator. The special nuclear liability regimes were pointed out as vital and necessary in the Brookhaven Report of 1957. The report had dealt with the long and far-reaching effects of nuclear substances and the risks which were associated with civilian nuclear power. This can be considered as the first chapter in the history of nuclear liability regime.

The long chain of events which had been actuated by the signing of 123 nuclear cooperation deals between India and United States of America has finally culminated in the agitations held regarding the liability issues concerning the under-construction Kundankulam Nuclear Plant under the auspices of Russian Government. Issues primarily concerned liability indemnity to Russian operators in the case of an accident with offsite implications.

Most of the contracts have been kept beyond public accessibility but reliable sources have confirmed the ‘liability exclusion’ clause in the contracts to encourage the Russian operators to function post-cold war nuclear reactors in India at Kundankulam. This has been a matter of concern for activists and other NGO’s who have comprehended this as indifferent attitude of the government for notions of safety which it is duty bound to extend to its civilians. The protests, however, have been conclusive in creating awareness on the topic of civil nuclear liability among the legal circles which have been for long remained an archaic concept.

The dearth of a comprehensive legislation incorporating the principles of nuclear liability has been, in recent times, considerably felt. Since most of the reactors are controlled and operated by the Indian Government, the stance has always excluded any private players.

Therefore any accident or similar circumstances which had been raised were to be compensated by the government out of its own funds. India, which had not been a signatory to major conventions dealing with third party nuclear liability, has recently, as a policy measure, entered into Convention of Supplementary Compensation (CSC) as the last step to seal the nuclear agreement between India and United States of America. This has been an incentive for India to frame its own liability regime and the same was achieved by the means of the Civil Liability for Nuclear Damages Act, 2010.

Several other countries have established municipal laws with international principles and conventions at their heart dealing with the relief and liability issues. As in the case of the USA, which has developed advanced systems of nuclear power generation, the Price-Anderson Act talks set down the liability of an operator and imposes a maximum ceiling amount as compensation at 10$ billion. Granted the three-mile island disaster which had stayed in the government files as a secret project until the disaster, the US operator liability were hiked and more stress was laid on a comprehensive regime to address accidents and disaster having transboundary radiation effects.

Japan, another state which majors in the production and usage of nuclear energy, has a strict and absolute operator liability who must provide a financial cover of JPY 120 billion($1.4 billion). However, Post Fukushima, owing to the grave circumstances the government has widened the scope of the relief funds for claims to expedite the redressals of the damages caused to the victims. The national government in Japan has extended out a state aid totalling JPY 5 Trillion (62 billion). German Law imposes an unlimited operator liability and requires that Euro 2.5 billion must be provided as the financial cover by a plant operator.

China, not being a party to any international conventions has municipal laws which more or less are based on the international norms dealing with nuclear liability. Russian Operators have insurance covers which aggregate to $350 million as a liability amount. Moreover, these compensation ceilings can be improvised and increased to meet the anticipated damages which can be caused in the case of a nuclear catastrophe.

International Framework for liability laws in nuclear industry stands on the dual footing provided by Vienna Convention drafted by International Atomic Energy Agency and Paris Convention set down by Organisation for Economic Cooperation and Development where one had worked to the exclusion of  the other in case of an accident. The Installation State would follow the Convention to which it has been a signatory to. Until recently, the position regarding the application of the law and jurisdiction were not settled.

With the passing of Joint Protocol in 1988, the two conventions now work in conformity with each other thereby, expanding the scope of the Conventions and avoid any circumstances in which relief cannot be provided due to the lack of jurisdiction, as we will see later in the course of this paper. The fundamental norms which provide the foundation to any comprehensive legislation or conventions can be classified on lines of compensation and strict liability. Therefore we can summarise these principles under five heads as follows:

  1. Strict Liability of the operator of a nuclear plant, enrichment facility or reprocessing unit is one of the basic norms which prescribe that no burden of proof shall lie for the victim to establish guilty on the part of the operator. It, therefore, significantly reduces the impediments in dealing with the technicalities related to the nuclear field in proving the occurrence of an accident.
  2. Exclusive Liability of the operator is considered to be an important presumption while dealing with cases relating to damage caused by the nuclear incident. The liability falls on the operator by the virtue of the principle of strict liability and thus, all claims for relief must be enforced against the operator. One key issue which the exclusive liability mandate seeks to solve is the protection of nuclear suppliers or builders from the legal channeling of the liability.
  3. Mandatory financial coverage by the means of an insurance pool or private insurance is rendered necessary as a precautionary aspect in the operation of a nuclear facility. With a prospective attitude, the object sought to be achieved is the sufficiency of funds at the time of legal claims. This minimum limit has been a subject to International Convention as well as municipal laws which at the discretion and common consent can be increased as well. Recent practice goes on to show the increment in the mandatory insured amounts from time to time.
  4. Exclusive Jurisdiction principle settles the question of jurisdiction in the favor of the state where the nuclear installation responsible for the accident is situated. The grounds for vesting the exclusive undisputed jurisdiction in the state where the nuclear installation is located is to facilitate the filing of legal claims in the competent court nearest to the source of damage so that the victims do not have to travel far to apply for their claims. Another noteworthy reason which this principle serves is to prohibit people to abuse the process of the municipal courts and defeat the provisions of the relevant law by approaching courts in a different state which may provide a more amicable settlement than the municipal courts.
  5. Limitation of financial and temporal obligations concludes the list of norms governing the liability of nuclear operators. This specific principle, however, has stirred up contentious debates in the past and has presented hurdles in the peaceful settlement of claims. Owing to limitations, especially with respect to operator liability, the states or nuclear operators themselves might be subjected to the payment of excess amounts of compensation. Therefore, we can conclude that the states themselves are aware of the risks involved and since they do not raise objections or set any limitations, the tacit acceptance by the states can be deduced.

After keeping these principles in the present context we will analyze the different international conventions and establish the nexus between the international norms and the concerned conventions. Furthermore, the Indian Municipal Law which has been provided for under Civil Nuclear Liability Act, 2010 to deal with the issues of liability will be scrutinised in the context of the relevant conventions such as Convention on Supplementary Convention and other relevant conventions as well as the state practice under the IAEA, with special emphasis on the liability ceilings on nuclear operators and other topics such as right to recourse which have dominated the global attention from the hour  it has been passed.

 International Nuclear Liability Regime

International liability scenario is currently dominated by Vienna Convention on Civil Liability for Nuclear Damage 1963 which was revised by a protocol in 1997 and Paris Convention on Third Party Liability in the Field of Nuclear Energy, 1960 which has been revised in 2003 (has not assumed force yet ). Vienna Convention was drafted by International Atomic Energy Agency (IAEA) and entry is open for all states to accept the convention. Along with the Vienna Convention, other Conventions which have been framed by IAEA, therefore with open access for world-wide states to conform to, are Convention of Supplementary Compensation for Nuclear Damage, 1997 (not yet in force) and Joint Protocol Relating to Application of Vienna Convention and Paris Convention, 1988. Vienna Convention stands amended by the protocol for the amendment of Vienna Convention in 1997 which had assumed force since then. On the other hand, Paris Convention governs only the Organisation for Energy Cooperation and Development (OECD) states and thus is concluded at a regional level encompassing only the OECD members. Other Convention which governs the OECD states, provided that they have entered into it, is the Brussels Convention Supplementary to Paris Convention, 1963. The Protocol to amend the Paris and Brussels Convention was motioned in 2004. However, the Revised Paris and Brussels Conventions have not been enforced till now. The Vienna Convention has by far the widest participation, with 33 Parties15 compared to the Paris Convention’s Parties. There are no States party to both, but there are 25 Parties to the Joint Protocol.

Vienna Convention and the Paris Convention mirror similar liability principles as embedded in the international civil nuclear liability law. The comprehensive legislation provided under both the convention is highly identical and stands similar on many grounds. The Brussels Convention to supplement the Paris Convention finds its identical match in the Convention of Complementary Convention where both these conventions seek to widen the liability in terms of financial cover which is mandatory to operate a nuclear installation.   However there are few noteworthy differences which can be pointed out on a brief perusal into the provisions of the convention. The similar pattern which both the conventions follow can be charted out under the following heads-:

  1. Both the conventions commence with the nuclear terminology, defining concerned terms in the field of nuclear industry in relation to liability. Words such as ‘nuclear fuel’ and ‘nuclear substances’ have been defined in both conventions. By giving a concrete meaning to the words associated with the nuclear field, the conventions seek to remove any ambiguity which might arise later in the course of the proceedings.
  2. The operator’s liability in case of a nuclear incident has been dealt with right in the beginning. The factual premises within which the operator will be held liable have been defined in the two conventions. The right to recourse can be availed of by the operator, when it includes acts of omission committed with intent to cause the damage, against that person. Liability arising out of incidents involving carriage of the nuclear material has been dealt with in a detailed manner. The two conventions also leave the room open for situations where the  liability can be traced back to more than one operator with respect to accidents occurred during the transition or storage of the nuclear material thereby, holding them jointly or severally liable.
  3. The operator has been excluded from any liability for a nuclear accident which has transpired due to an armed conflict, hostilities, civil war, insurrection or a grave disaster of exceptional character which the legislation of the installation state may provide. Both conventions have the liability exclusion clause which can be taken aid of by the operator in absolving the liability in situations where the operator could not be reasonably expected to have any control on the events following such exceptional contingencies.
  4. Mandatory insurance amount forms as a provision common to the two convention and can be found incorporating the same precautionary tenor in securing a prospective amount in the case of a nuclear accident to cover the amount of compensation in the course of proceedings. The Installation state may specify, under the state law, the insurance amount which must be registered with an insurer so as to meet the nuclear damages and the same is to be exclusively for the payment as compensation to the victim if an accident takes place. In the events of inadequacy of insured amount to settle the claims, the state may provide the necessary funds to fill the gap between the insured amount and exact amount of damages suffered by the claimants. A notification period of two months has been prescribed under the both conventions if the insurer wishes to cancel the provision of insurance to the nuclear operator. This specific provision follows the important premise that a nuclear facility in operation must at all times be protected from liability by the means of insurance. The two months notice, however, inclines in the favour of the insurer who can dispose the responsibility at the proposed date in accordance with the notice.
  5. The vesting of the jurisdiction in the Contracting party where the accident has occurred has been accepted as the reasonable answer to the question of jurisdiction. The two convention specify the situations where the jurisdiction to enforce the claims will lie only with the Installation state. However, due notice has been given to the effects of the incidents affecting more than one contracting party. For such a situation where the damages cannot be ascertained then in such case the jurisdiction will lie with the courts of the other contracting state as well, though, only with respect to the damages suffered.
  6. The temporal limitations have been specified clearly in Vienna as well as Paris Convention. The time period which has been stated in these conventions is the same and stands at 10 years from the date of the accident within which the enforcement of claims can take place. However, this time period can be extended by the courts in the course of proceedings for compensation if under the law of the installation state covers liability of the operator for a period more than 10 years by insurance, other financial securities and state funds. In case of an accident where the nuclear material had been stolen, jettisoned or abandoned, the temporal limit is exhausted after a period of 20 years from the date at which the nuclear material had been missing on accounts of theft, jettisoned or abandoned. A time-restraint created by the two conventions in respect of the minimum time limit, at the expiry of which the right to compensation can be extinguished, which the installation state has to abide by and cannot impose a lesser period of limitation where the person suffering from nuclear damage had received knowledge of the incident and his rights under the Convention.
  7. Lastly, a liability ceiling for the damages caused by a nuclear incident has been laid down by the Vienna Convention and Paris Convention. It can, however, be noted that the amounts and amount limit differs in the two conventions. The consensus of opinion can be derived when both convention acknowledge that this amount is not to be considered as compensation for the victims and is exclusively for the purposes of the settling the liability.

As similarities between the Vienna Convention and Paris Conventions have been stated, we can certainly infer that the both the conventions have set the predicament for the national nuclear liability laws to incorporate within. The international legal regimes were serving effectively mainly because it had not stood the test of a nuclear incident of catastrophic magnitude. It was Chernobyl disaster was an eye opener on the point of coverage of the two conventions where the parties to one convention could not enforce claims before the courts of the parties to the other convention in the case of a nuclear accident occurring in a state belonging to one convention adversely affecting the state party to the other convention. This posed a difficult problem with respect to enforcement of the claims of the victims.

It was proposed that it was unnecessary to have two international conventions operating in parallel to each other and therefore must have either an immediate link or must be joined harmoniously to tackle with the situation similar to Chernobyl disaster. The Joint Protocol 1988 was outcome of the proposal to actuate the two conventions for speedy relief and convention and relief and to unravel the jurisdictional maze which was created as a result of the two conventions working parallel and in exclusion to the each other. The essence of the Joint Protocol is that the operator of a nuclear installation situated in the territory of a Party to the Vienna Convention shall be liable in accordance with that Convention for nuclear damage suffered in the territory of a Party to both the Paris Convention and the Joint Protocol, and vice versa for the Paris and Vienna Convention.

 However, the problem could not be solved by the Joint Protocol because the lacunae had existed in the Conventions itself. To equip the conventions with wider powers it was argued that amendments should be brought in to alter some specific portions of the conventions like coverage, operator liability, temporal limitations and others. Hence the two conventions, consequently, were altered by the amendment protocols. Vienna Convention was restructured by the Protocol for amendment of Vienna Conventions in 1997 and the Paris Convention was first bolstered by the Brussels Convention in matters of maximum liability limit and then by Protocol for Amendment in 2004. The difference brought about can be understood simply from the following table-:

International Conventions Vienna Convention,1963 New Vienna Convention,1997 Paris Convention 1960 and Brussels Convention, 1963 New Paris and Brussels Convention,2004 (NIY)
Damages Covered Personal Property and any other loss allowed by the competent court. Covers areas covered under Vienna Convention, 1963 and also environmental damages, of preventive measures taken to minimize damage, reinstatement measures and income losses. Personal and Property damages. (Non discrimination principle) Personal, property, economic loss, cost of preventive measures, loss of income and environmental states.
Territorial Scope Contracting State’s Parties can be extended to damages recoverable. Incident anywhere, but national laws of Contracting State can exclude Non-Contracting State with nuclear installation but without reciprocal benefits. Contracting States and Non Contracting States if the national laws allow it. Contracting States, Vienna Convention and New Vienna Convention States, Joint Protocol Sates, Non-Nuclear States and Non Contracting Parties-Nuclear States with reciprocity laws that resemble the Paris Convention principles.
Coverage of Damages in Non-Contracting State Silent, but covers incident in Contracting states and Non-Contracting States. Not covered. If national law of Contracting Parties. Non Nuclear States are covered. Nuclear states are not covered unless it has a law with reciprocal benefits.
Amount 5 million US Dollars as minimum amount. (No maximum) 300 million SDR as minimum amount. Contracting States can fix 5 million SDR in lower nuclear risk activities. Operator’s Minimum Liability is 5 million SDR.

Installation State liability is 175 million SDR. (BSC)

Contracting State’s Public Funds is 125 million SDR. (BSC)Operator’s Minimum Liability 700 million Euro.

Installation State Liability- 700 million Euros.

Contracting State’s Liability- 300 million Euros.TimeWithin 10 years from the date of the accident.

National Law of Contracting States can permit longer period provided that operator liability is secured.Within 30 years from the date of the incident but only in the case of personal injury and deaths only. 10 years for other damages.Within 10 years from the date of the nuclear incident. National Law can permit longer period provided that the operator liability is covered.Within 30 years from the date of nuclear incident for loss of life and personal injury only. 10 years for other damages only.

The Amended Vienna Convention or the New Vienna Convention 1997 is said to have rectified the shortcomings in the Vienna Convention 1963 which were exposed by the Chernobyl disaster. The amended convention provides for increased limits either to SDR 300 million or from $ 5 million to $ 150 million where the remainder amount will have to be received from the state funds to bring the total amount to SDR 300 million. A transitional period is permitted by the protocol which reduces the compensation amount to SDR 100 million for the first 15 years from the date on which the convention is entered into by the party. Furthermore, the protocol also permits the operator to have any liability insurance if the state is voluntary to underwrite the SDR 100 million. This significantly reduces the operator liability by two-thirds and is therefore a potential subsidy.

The Protocol also expands the jurisdiction of the convention providing jurisdiction to the coastal states to deal with the incidents which have occurred in the Exclusive Economic Zone. The Protocol significantly stretches the definition of the nuclear damage and extends the time limit for the claims to be enforced from 10 years to 30 years. However, the only bone of contention which remains unresolved is that the protocol fails to deal with the contracting parties to the protocol and conventions. In other words, Parties which join the Protocol but not the Convention are bound by the lower limits in the Vienna Convention unless they state otherwise at the outset, but Parties which join the Convention but not the Protocol are not bound by the higher limits of the Protocol in any event. This has been referred to as a major loophole existing in the protocol which fails to subject the states parties to convention to a higher liability amount if they become signatory to the Protocol as well. The protocol has initialised a new dispute resolution system which provides for binding determination by arbitration or International Court of Justice. Hence, the improvements made by the way of the protocol can be called as significant in establishing a regime in the interest of victims and their rights which come into existence in the case of a grave nuclear accident.

The Paris Convention was revised in 2004 to increase limits and broaden the definition of damage. The 2004 Protocol would increase the minimum liability to €700 million, although the Installation State could reduce that amount to €70 million for installations, “having regard to the nature of the nuclear installation involved and to the likely consequences of a nuclear incident originating therefrom, or €80 million for the carriage of nuclear substances, “having regard to the nature of the nuclear substances involved and to the likely consequences of a nuclear incident originating therefrom.” A Contracting Party may subject the transit of nuclear substances through its territory to the condition that the maximum amount of liability of the foreign operator concerned be increased if it considers that such amount does not adequately cover the risks of a nuclear incident in the course of the transit, provided that the maximum amount thus increased shall not exceed the maximum amount of liability of operators of nuclear installations situated in its territory except where, under international law, there is a right of entry in cases of urgent distress into the ports of such Contracting Party or a right of innocent passage through its territory. This provision is limited to transit through territory and would not apply to passage through Exclusive Economic Zone.

With the amendment protocols rectifying the two conventions to meet global nuclear contingencies in the present context, they now provide the necessary framework of laws which must be in force by the states which operate nuclear plants. However, sparse participation stands as a strong argument against the international regimes created by the two conventions. Most of the states choose to have their own legislation based on the nuclear liability principles purported by the conventions. Since the parties who are not a party to any of the conventions have recently joined Convention for Supplementary Compensation (CSC), which is not yet in force but is gaining momentum. Recently, India has also entered into CSC. The Convention on Supplementary Convention, which is not in force, would increase the limitation amounts under either Convention to 300 million SDR (about €357 million) and supplement it by public funds.

It is only open to States party to the Vienna Convention or the Paris Convention, or to a State which declares that its national law complies with the provisions of the Annex to the CSC. That Annex requires for instance that no liability shall attach to an operator for nuclear damage caused by a nuclear incident directly due to an act of armed conflict, hostilities, civil war or insurrection, or for a grave natural disaster of an exceptional character. It also has provisions to allow the United States to join.

The CSC predicates its application to Contracting Parties and their territory, maritime zones, Exclusive Economic Zone (but only in connection with the exploitation or the exploration of the natural resources of Exclusive Economic Zone continental shelf), and nationals and ships. Jurisdiction except for incidents within Exclusive Economic Zone lies only with the courts of the Contracting Party within which the nuclear incident occurs. But where it is not clear where the incident occurred, or where it occurs outside the territory of any Contracting Party, rather than lying with the State where the damage was suffered, jurisdiction lies only with the courts of the Installation State. CSC, on the perusal of its annex, follows a similar trend like the amended conventions on the points of the jurisdiction and liability exclusion. In essence, CSC, according to McRae, does guarantee global availability of meaningful compensation in the event of a nuclear incident, subject to state membership[1]. CSC established contribution formula for states contribution to international fund. 90% of the contribution comes from nuclear active states on the basis of their installed nuclear capacity. 10% of the contribution comes from all member states including nuclear states on the basis of their UN rates of assessment. However, the CSC is not yet in force and in order to pass into force the CSC must be ratified by five countries with a minimum of 400 GW thermal of installed nuclear capacity. Currently the only ratifying party with significant nuclear generating capacity is the USA (300 GWt). Fourteen countries have signed it, now including India, but most have not yet ratified it. The CSC is set to enter into force on the 90th day after date of ratification by at least five States who have a minimum of 400,000 units of installed nuclear capacity.

Overall we have summarised the merits of the international legal regimes provided by two different conventions. Even when the corpus of international laws related to nuclear liability provides sufficient measures to determine and deal with damages to life and property arising out of a nuclear incident, there are still some disadvantages which can be attributed to the same. The procedural channelling of liability gives exclusive jurisdiction to the Installation State which creates it a legal nightmare for foreign victims to enforce their claims. Other drawback is that all situations are not covered in the conventions whereby military nuclear installations have been excluded. The liability against third party, which in ordinary course would be liable, is excluded. After several jurists have expressed their opinion highlighting the redundancy in the number of international convention and therefore have progressed towards the view that there must be one nuclear liability regime, for the very reason that gamma radiation affects us all, which will serve as the umbrella for all international customary laws to operate in conformity with the municipal laws of the state affected. The counter argument to the proposal is forwarded in respect to the CSC which contains in its Annex under Article 2 which is referred to as the ‘grandfather clause’ which forms the bone of contention because only United States’ national law has satisfied the conditions mentioned under this clause for it to be deemed as an annex state. This in turn allows United States to maintain its national law as it is and since the U.S’s liability legislation Price Anderson Act channels the liability economically and not legal. Since, international regimes follow legal channelling of liability; this clause becomes a stumbling block in achieving a global nuclear regime.

INDIAN POSITION

The Indian Nuclear Liability Regime is currently governed by the Civil Nuclear Liability Act, 2010 and the rules published under the Act namely Civil Nuclear Liability Act, 2011. The Civil Liability for Nuclear Damages Bill, 2010 was passed by both Houses of the Parliament in late August 2010. The Bill was introduced with the primary object to provide a legal framework for the Indo-U.S 123 nuclear agreement to be enforced. The germ for the civil nuclear liability bill had already been planted in the year 2001 which finally came into existence with the passing of the bill in 2010. The bill had initially drawn heavy criticism on account of loopholes and inadequate liability. Even when the recommendations made by the Parliamentary Standing Committee were accepted and the relevant clauses were amended and the existing lacunae were filled, some provisions stipulated under the Act still need consideration.

The Bhopal Gas Disaster had served as a benchmark for the government to keep in mind in determining the modalities of compensation, speedy and adequate. Learning from this bitter experience, the government has substantiated enough provisions to effect immediate relief to the victims. The Act has concretely defined nuclear industry terminology and defined terms such as ‘nuclear damage’, nuclear installations, ‘operator’ etc which go on to include important scopes of liability such as loss of earnings, economic loss, environmental protection reinstatement costs and other prevention measures and entry of private players. The inclusion of aforementioned heads of damage under ‘nuclear damage’ has been observed in tune with recent amendments to International Conventions. It must come without astonishment that the Act has been significantly constructed in line with the CSC which has recently been entered into by India. This explains the extended scope of the Act to Exclusive Economic Zone specified under Maritime Zones Act, 1976.

 In case of a nuclear incident, the Act provides for the appointment of a claims commissioner who will be adjudicating upon the claim arising out of the damage to life and property. In the circumstances of an enormous number of claims the Act also authorises the Central Government to set up a Claims Commission to expedite the process of compensation. The Act lays down the composition and powers of the Commission. The award and decision given by the Claims Commissioner and Claims Commission shall carry the authority of a Civil court and shall be final. Only the High Court under Article 226 and 227 and Supreme Court can entertain appeals in regard to the decision delivered by the Claims Commissioner or Commission.[2]

The Act therefore has made an improvisation in the bill which sought to exclude judicial review. The recommendation by the Standing Committee in the direction of vesting the Apex Court and High court with the appellate jurisdiction. The Indian Nuclear industry witnesses government as its primary and only operator where private players had not been allowed. The Act now has removed the barriers for the private players to enter the nuclear market under Section 2(m).[3]

The definition of the ‘operator’ describes Government Company where the minimum participation of the government has to be 51% thereby, leaving the rest for the private operators to indulge in. This clause, therefore, has been labelled as the ‘entry clause’ for allowing participation of private investors. This clause had been entered in the context that the nuclear facilities in India are regulated and controlled by the Central Government which seeks to play a major role in the administration of nuclear facilities to avoid another Bhopal Gas disaster.

The Act, in spite of the efforts to strike a balance between the public interest and economic needs coupled with rising energy demands, has been considered to be a bit inclined towards the corporate interests. It must be admitted that the Indian Law on Nuclear Liability does not assume the tenor and principles laid down in the International Conventions which form the crux of the international legal regime for nuclear liability. We shall find the strength of this argument in the fact that India has not been able to finalise contracts ever since the Nuclear Suppliers Group (NSG) has granted it an exemption with any country with which it had entered into an agreement. Therefore, for the purposes of perusal into the mainstream provisions of the Act which have drawn flak from the legal community, the provisions can be categorised as under-

  1. Operator and Total Liability-the Act specifies the liability of the operator under three categories.
    (1) in respect of nuclear reactors having thermal power equal to or above ten MW, rupees one thousand five hundred crores;
    (2) in respect of spent fuel reprocessing plants, rupees three hundred crores;
    (3) in respect of the research reactors having thermal power below ten MW, fuel cycle facilities other than spent fuel reprocessing plants and transportation of nuclear materials, rupees one hundred crores.
    The maximum amount of liability has also been provided in the Section 6 of the Act which stands at 300 SDR. However, the Central government has retained the power to increase the maximum liability and the operator liability by the way of a notification. The maximum liability was termed to be too insufficient to cover a major catastrophe and had stirred a huge debate in the context of the compensation of $470 million which was awarded in the Bhopal Gas Disaster. It has been accepted by the government itself that the compensation owing to inflation and glacial-paced litigation had been rendered inadequate and unsatisfactory. The issue debated in the parliament was that the maximum liability should be adjusted along with the operator liability. Prescribing the maximum amount does not only restrict the liability which in the event of a nuclear incident cannot be ascertained but would also tantamount to immunity after a certain point. Most International conventions define minimum liability so as to extend it to cover the damages or a very high ceiling to ensure that the compensation does not exceed the liability limit set under the Convention. Countries like South Korea and Sweden have set operator’s liability at 300 million SDRs, not total liability. The operator’s liability in the US is $ 11.9 billion. Countries like Japan, Russia and Germany do not have any cap on total liability. Setting a low ceiling for the total liability has been termed as activists as a compromise by the government, which has been striving to achieve self sufficiency in fulfilling the expanding energy needs of the developing nation.
  2. Right to Recourse– The right to recourse has been stated in Section 17 of the Act under which the Operator has a right to recourse and channel the liability to the supplier. This right to recourse against the supplier has been referred to as an uncomfortable innovation of the Indian Drafting Committee. No international conventions or any nuclear legislation of a country have specified a right to recourse which will channel the liability back to the supplier on account of patent or inherent defects in the equipment or material. Operator’s right to recourse has been heavily argued as a clause which will have repercussions on the Indian Nuclear Industry. Not only have foreign suppliers been unwilling to supply India with any nuclear facility or system or component, except for fuel supply agreements, more recently, the domestic indigenous suppliers of such facilities, systems and components to the Indian nuclear power industry have also been expressing their reservations about the Indian nuclear liability law, and hence their unwillingness to engage in nuclear supply trade with Indian operators. This has led to stagnation in a market place which had been predicted to burst into life with the finalisation of a nuclear trade agreement between India and the USA in 2008. Majority of the conventions have been silent on extending the right to recourse to cover the supplier’s as well and hold them liable. American Suppliers apprehend the Indian Law to be too harsh and constricted which includes both operators and suppliers to account for the nuclear damage. The U.S has been adamant about the indemnity clauses which had been provided in the case of Kundankulam Plant to the Russian operators and suppliers. The U.S suppliers have contended that the sole responsibility should lie with the Indian Operators. The Government has argued in the favour of the right granted to the operator, subject to fulfilment of certain condition, to channel the liability to the supplier. The reasoning provided is based on the enforcement of due diligence and quality standards in manufacturing the equipment.
    To tackle the complex situation posed by this clause and relax the stringent stand taken by the Act, the Central government has recently issued Civil Liability for Nuclear Damages Rules, 2011. The Rules draw our attention towards Rule 24 which seeks to remove this impediment by explaining to suppliers the amount of ‘recourse’ they may potentially be exposed to. This will be for an amount that “shall in no case exceed the actual amount of compensation paid by [the operator] up to the date of filing such claim” or “the value of the contract itself, whichever is less”. The time limitation within which the right of recourse will be applicable would extend for the initial duration the supplier has been issued an initial license under the Atomic Energy Rules, 2004 or the product liability period, whichever is longer. The product liability period has been defined in the Act has been provided under the Rules which states as the period for which the supplier has undertaken the liability for patent or latent defects or sub-standard services under the contract.
    Furthermore, section 17 of the Act has created an ambiguity regarding the interpretation of the three conditions. The three clauses have not been properly connected thereby leaving behind an uncertainty as to whether all three conditions will have to be fulfilled or just one condition is to be satisfied for the application of the right to recourse against the supplier. The absence of ‘or’ and ‘and’ creates a haziness with regard to the supplier’s liability.
  1. Temporal Limits– The time limitation which has been provided under the act for the claims to be enforced before the Claims Commissioner to be enforced has been laid down as 10 years with respect to damage to property and 20 years with respect to the loss of life and personal injury. This has been touted by many as an unreasonable deviation from the International Conventions like Vienna and Paris Convention which unequivocally set similar timeframe for the claims in case of loss of life and personal injury at 30 years. The limitation set in case of a nuclear material which had been stolen or jettisoned or abandoned has also been set as low as 10 years from the date such nuclear material had been stolen or jettisoned. This limit frustrates the one set by other international regimes which extends to as long as 20 years. The radiological and gamma effects, as reports have shown, tend to surface after a very long time period from the date of exposure. The congenital harm can be confirmed only after one generation where deformities appear only in the next generation. Hence, there have been demands to increase the limitation period taking into account the long lasting effects of harmful radiation and gamma pollution.

CONCLUSION

After summarising the above arguments made, on a comparative scale it can be deduced that the Indian liability regime lacks certain basic principles on which the International Conventions have been founded. The temporal and financial obligations as we can observe are on wholly different platforms. India has currently signed the CSC, which is not yet in force, is largely seen to be the major reason behind the passing of the Civil Liability for Nuclear Damages Act. The Act also provides the legal platform for the nuclear agreements to work. The Author, however, concludes with a view that the legal framework drawn aims at striking the principle of sustainable development.

The Act forms the sole corpus of principles and law in the field of nuclear liability and keeping in mind the rising energy demands this Act can be said to have established the basic legal provisions for the nuclear operators and the Central Government to adhere to. The Act does require amendments on the issues discussed above relating to the total financial liability and limitation period. The right to recourse which has been the source of unrest and debates in the Parliament has to be given reconsideration while keeping in mind the repercussions that it might have on the government’s ambition to expand the nuclear energy potential. It has to kept in mind that India is a developing country with a wide population and the adverse effects of a nuclear incident will be demographic. The Act deals with every topic which has been rendered necessary according to modern notions in the International instruments on nuclear liability, such as broad definition of nuclear damage, wider jurisdiction and ample provisions to ensure speedy compensation.

Given the current international climate which had inclined in the favour of the Indian Nuclear Industry, the Indian regime on nuclear liability has taken a resolute stand without fearing the repercussions. After the Nuclear Supplier’s Group had lifted the ban on India in 2008, it has been seen as a necessary measure to remove the hurdles for the United States to conclude the Nuclear Agreement between the two states. India passed the Civil Liability for Nuclear Damages Act with a view to have a stable platform for civil liability which, in turn, will attract foreign suppliers and operators to enter into the Indian Nuclear Industry. India has high ambitions regarding the production of clean nuclear energy and thus wishes to generate it in large amounts while realising the maximum potential. But the dichotomy viewed in the drafting the liability provisions for the suppliers and operators do not set right with foreign and national entrepreneurs. On one hand, the liability set for the operator is being reported as very low and inadequate and on the other hand the liability is extended towards the supplier’s has induced fears among the private investors who see it as a risky venture thereby causing stagnation in the Indian Nuclear Industry. The Act therefore has inherent defects which need to be set right and conclusive on the concepts of liability before the nuclear industry can see any private investors.

 

 BIBLIOGRAPHY

 [1] 2(m) “operator”, in relation to a nuclear installation, means the Central Government or any authority or corporation established by it or a Government company who has been granted a licence pursuant to the Atomic Energy Act, 1962 for the operation of that installation;

[2] 6. (1) The maximum amount of liability in respect of each nuclear incident shall be the rupee equivalent of three hundred million Special Drawing Rights or such higher amount as the Central Government may specify by notification:

Provided that the Central Government may take additional measures, where necessary, if the compensation to be awarded under this Act exceeds the amount specified under this sub-section.

[3] The operator of the nuclear installation, after paying the compensation for nuclear damage in accordance with section 6, shall have a right of recourse where-

(a) such right is expressly provided for in a contract in writing;

(b) the nuclear incident has resulted as a consequence of an act of supplier or his employee, which includes supply of equipment or material with patent or latent defects or sub-standard services;

(c) the nuclear incident has resulted from the act of commission or omission of an individual done with the intent to cause nuclear damage.

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