the story So Far: Issues related to India’s nuclear liability law have stalled a more than a decade-old plan to build six nuclear power reactors at Jaitapur in Maharashtra, currently the world’s largest nuclear power generation site. An official from the French energy company Électrique de France (EDF) submitted its techno-commercial offer for the construction of the 9,900 MW project two years ago. Hindu that issues arising from liability law “have to be resolved before any contract” can be signed with India.
What is the law governing nuclear liability in India?
Laws on civil nuclear liability ensure that compensation is available to victims of nuclear damage caused by a nuclear incident or disaster and determine who will be liable for those damages. The international nuclear liability regime includes several treaties and was strengthened after the 1986 Chernobyl nuclear accident. The Comprehensive Convention on Supplementary Compensation (CSC) was adopted in 1997 with the aim of establishing a minimum national compensation amount. The amount can be further increased through public funds, (to be provided by the contracting parties), if the national amount is insufficient to cover the damage caused by a nuclear incident.
Even though India was a signatory to the CSC, the Parliament ratified the convention only in 2016. To keep in line with international convention, India enacted the Civil Liability for Nuclear Damage Act (CLNDA) in 2010, to put in place a speedy compensation mechanism. For the victims of the nuclear accident. The CLNDA provides for strict and no-fault liability on the operator of a nuclear plant, where it will be held liable for damages regardless of any fault on its part. It also specifies the amount that the operator will have to pay in case of damages caused by the accident of ₹1,500 crore and requires the operator to cover the liability through insurance or other financial protection. In the event of damage claims exceeding ₹1,500 crore, the CLNDA expects the government to step in and limit the government’s liability to the equivalent of 300 million Special Drawing Rights (SDRs), or approximately ₹2,100 to ₹2,300 crore. Is done. The Act also specifies the amount and time limits when action can be taken against the operator for compensation.
India currently has 22 nuclear reactors and plans for a dozen more. All existing reactors are operated by the state-owned Nuclear Power Corporation of India Limited (NPCIL).
What does CLNDA say on supplier liability?
The international legal framework on civil nuclear liability, including the Annex to the CSC, is based on the central principle of the exclusive liability of the operator of a nuclear installation and no other person. In the early stages of the development of the nuclear industry, foreign governments and industry agreed that excessive liability claims against suppliers of nuclear equipment would make their business unviable and hinder the development of nuclear power, and that it was a threat to countries’ national interests. It became an accepted practice for laws to give nuclear liability to plant operators with only a few exceptions. Two other points of reasoning were also stated while accepting the exclusive operator liability principle – one was to avoid legal complications in establishing separate liability in each case and the other was to create only one entity in the chain, which would be responsible for taking out the insurance. was the operator for Get your own insurance instead of suppliers, building contractors etc.
Clause 10 of the CSC’s contract lays down “only” two conditions under which the national law of a country may confer on the operator a “right of recourse” where they can extract liability from the supplier – one, if it is expressly Have agreed in a contract or two, if the nuclear incident is “the result of an act or omission with intent to cause harm”.
However, India, going beyond these two conditions, for the first time introduced the concept of supplier liability over and above the operator in its civil nuclear liability law, CLNDA. The architects of the law recognized that defective parts were partly responsible for historical events such as the Bhopal gas tragedy in 1984 and added clauses on supplier liability. Therefore, in addition to the contractual right of recourse or when “intent to cause damage” is established, there is section 17(b) of the CLNDA, which states that the operator of a nuclear plant, shall pay its share of the compensation for the damage. The Act will have a right of recourse where “a nuclear incident has occurred as a result of the act of the supplier or his employee, including the supply of equipment or materials with patent or latent defects or sub-standard services”.
Why are supplier liability clauses an issue in nuclear deals?
Foreign suppliers of nuclear equipment to countries as well as domestic suppliers have been wary of implementing nuclear deals with India as it has the only law where suppliers can be asked to pay damages. Concerns about potentially unlimited liability under the CLNDA and ambiguity over how much insurance to set aside in case of damage claims have been sticking points for suppliers.
Suppliers have taken issue with two specific provisions in the law, Section 17(b) and Section 46. The latter clause goes against the central objective of the Act to act as a special mechanism to enforce channeling of liability to the operator to ensure expeditious compensation to the victims. , Section 46 provides that nothing shall prevent proceedings other than those which may be brought under the Act to be brought against the operator. This is not unusual, as it allows criminal liability to follow where applicable. However, in the absence of a comprehensive definition on the types of ‘nuclear damage’ notified by the central government, section 46 potentially allows civil liability claims to be brought against operators and suppliers through other civil laws such as the law of tort. While liability for operators is limited by the CLNDA, it exposes suppliers to an unlimited amount of liability.
What are the existing projects in India?
The Jaitapur nuclear project has been stuck for over a decade – the original MoU was signed in 2009 with EDF’s predecessor Areva. In 2016, EDF and NPCIL signed a revised MoU, and in 2018, the heads of both signed an agreement on an “industrial way forward” in the presence of Indian Prime Minister Narendra Modi and French President Emmanuel Macron. In 2020, EDF submitted its techno-commercial proposal to build six nuclear power reactors, but an EDF official pointed out that the issue arising from India’s nuclear liability law remains on “the agenda of both countries”. Even after several rounds of talks, no consensus has been reached on this issue. Other nuclear projects, including the proposed nuclear project at Kovvada in Andhra Pradesh, have also come to a standstill. Despite signing civil nuclear agreements with several countries including the US, France and Japan, the only foreign presence in India is that of Russia in Kudankulam – which predates the nuclear liability law.
What is the stand of the government?
The Central Government has said that Indian law is in line with the CSC. Regarding section 17(b), it said the provision “permits” but “does not require” an operator to engage in a contract or exercise the right of recourse.
However, legal experts have pointed out that a plain reading of section 17 of the CLNDA shows that sections 17(a), (b) and (c) are distinct and separate, which means that even if recourse against the supplier Rights not mentioned. in contract [as provided by Section 17 (a)], the other two sections are standing. This effectively means that the supplier can be prosecuted if defective equipment is provided or if it can be established that the damage was caused by intent. Further, it would not be good public policy if NPCIL, a Government entity, enters into a contract with a supplier and waives its right to take recourse to the contract, notwithstanding the fact that the law provides for such recourse. provides for.
In addition, the Ministry of External Affairs had stated that Parliament’s debate on the CLNDA had ruled out amendments to include the supplier, and therefore the supplier could not be liable under such a “class-action suit”. However, private sector players were not convinced and experts point out that during a trial, consideration will be given to what is contained in the statute and what was discussed in Parliament.
For the Jaitapur project, the government has said liability law issues will be settled before French President Emmanuel Macron’s visit to India, which was earlier scheduled for March but was postponed to September.