India needs to clear ambiguities on civil liability in case of a nuclear incident

Moneycontrol, August 15, 2023 

By Pradeep S Mehta & Saloni Mishra

A pertinent question regarding the operation of nuclear reactors is that of civil liability for damages in the event of an accident. It became evident during nuclear incidents such as the Three Mile Island (1979), the Chernobyl (1986), and the Fukushima Daiichi (2011). Now, the discourse is even more relevant considering the geopolitical tensions around the Zaporizhzhia Nuclear Power Plant in Ukraine. In this context, the Civil Liability for Nuclear Damage Act, 2010 of India (CLND Act) has been a subject matter of discussion in countries investing in India in the nuclear energy field. It would therefore be significant to look at liability provisions under domestic legislations of India, the US, France, Canada and Russia to find points of convergences and divergences.

The international legal regime includes agreements such as the Paris Convention 1960, the Brussels Supplementary Convention 1963, the Vienna Convention 1963, the Convention on Supplementary Compensation for Nuclear Damage 1997, and so on. The International Atomic Energy Agency (IAEA) has also recognised general principles of nuclear liability based on the abovementioned treaty regimes. These principles are (a) strict and exclusive liability of operator of nuclear installation; (b) minimum amount of liability; and (c) mandatory financial coverage of operator’s liability.

Here, it is important to mention that domestic legislations in most countries are, in general, coherent with international obligations. However, some countries have made certain deviations considering their policy objectives and national interests.

Liability of operators

The domestic legislations of all these countries provide for strict liability of operators of nuclear installations in case of a nuclear incident. The liability is based on the ‘no-fault principle’ — that is, an operator is liable for damages without any fault on its part. However, laws in India and Russia provide for certain exceptions to operators’ liability due to factors like force majeure, grave natural disasters of an exceptional character, military operations, armed conflict, hostility, civil war, insurrection or terrorism, etc.

The liability is exclusively of operators of nuclear installations. The rationale is to swiftly channelise the liability of the operator for prompt and adequate compensations to victims. In most jurisdictions, operators have the right of recourse where they can shift the liability. However, the scope of right to recourse varies. For example, while the French law and the Canadian law strictly delimit this right, the Indian law provides for a comprehensive right of recourse for operators.

In the Indian context, Section 17 of the CLND Act provides right of recourse to operators in three cases:

— when expressly provided in a written contract;

— nuclear incident is a consequence of the act of supplier; and

— nuclear incident is a consequence of the act of an individual with intent to cause nuclear damage.

Cause for apprehension

Such an unparalleled and extensive provision for right of recourse is causing apprehensions among countries like the US and France that are interested and investing in various nuclear power projects in India. Furthermore, Section 46 of the CLND Act, 2010 keeps the doors open for proceedings, other than that under the Act, to be brought against an operator. Considering the background of the Bhopal gas tragedy in India in 1984 and consequent inadequate compensation to victims, the concerns of India are not misplaced and need to be understood in this context.

Domestic legislation in some countries limits the liability of operators to a certain maximum amount, which is covered through mandatory financial mechanisms such as insurance. For example, the Price-Anderson provisions of the Atomic Energy Act, 1954 of the US comprehensively cover provisions regarding insurance mechanisms. The US aims to progressively increase operator’s liability, backed by indemnity mechanisms, in order to provide prompt and adequate compensation to victims.

In such a regime, in case damages caused by a nuclear incident extend beyond an operator’s liability, respective countries are required to provide for compensation. However, under the said US law, the US Congress may take actions including appropriation of funds.

In general, usual country practices are consistent with their obligations under international treaty regime. Any deviations, such as under the Indian law, have a historical background to it and such legitimate concerns should be taken into consideration in future nuclear deals between countries.

Clear ambiguities

However, India needs to address ambiguities around Section 17(b) and Section 46 of the CLND Act. With regard to the latter section, the government rightly mentions that it is a general provision and there is no other civil nuclear liability law in existence in India. Thus, it should not cause apprehension in the minds of investors.

The government also claims that Section 17(b) is consistent with international obligations as its operationalisation depends upon contracts between operators and suppliers. However, a thorough reading of the text implies that Sections 17(a) and 17(b) are separate provisions and the latter doesn’t depend upon the former for its implementation.

Thus, India needs to address this ambiguity in order to build trust among relevant stakeholders and continue its journey towards energy security. Additionally, India should build confidence in the India Nuclear Insurance Pool created to cover not only operators’ liability, but also liability of suppliers.

Pradeep S Mehta is Secretary General and Saloni Mishra is Senior Research Associate, CUTS International, a global public policy research and advocacy group. Views are personal, and do not represent the stand of this publication.

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