Indian liability bill passes lower house

26 August 2010

An earlier version of this story incorrectly stated that the language on supplier liability required a claimant to show 'the intent to cause nuclear damage' on the part of the supplier. The correct wording is shown below. 


India's controversial Civil Liability for Nuclear Damage Bill was passed by the Lok Sabha (lower house) on Wednesday, but includes unusual provisions and continues to face strong opposition. 

The long awaited and debated bill is crucial to ensuring the supply of nuclear equipment to India. It caused a walk-out of the opposition Bharatiya Janata Party (BJP) and Communist parties when it was first tabled in May this year.


Their major concerns were that the limit on operator liability, Rs 500 crores ($110 million), was too low and that an exemption from supplier liability might potentially give rise to a 'new Bhopal' wherein foreign companies could escape without paying their fair share of compensation in case of a disaster.


The subsequent parliamentary review produced its conclusions last week, and amendments were quickly agreed to by both the government and the BJP. Passing the lower house means the new bill seems back on track to become law before an official visit by US President Barack Obama later in the year.


Strict liability 


Like nuclear liability legislation the world over, the basic premise of the bill is to provide for swift and sufficient levels of compensation to the victims of a nuclear accident. It relies on the premise of strict liability, under which a victim is not required to prove supplier fault. However the bill has some clauses which are unique to India, a few of which have caused concern overseas.


Chief among these is clause 17, which provides operators with a right of recourse against suppliers in certain circumstances. Specifically, item 17b of the new bill states that an operator may seek financial recourse from suppliers after they have first provided the necessary compensation, if 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."


This clause runs contrary to provisions for supplier liability in all other countries and international conventions which include no mention of patent or latent defects. While some provision for supplier liability does exist in the case of pre-arranged contractual agreement to the effect or in the case of willful intent to cause harm; for most purposes suppliers are generally considered exempt from liability with responsibility lying solely with the operator. 
Other amendments affect the amount of compensation to be made available and whom is to provide it. The existing bill saw a cap on operator liability of Rs 500 crores with government carrying the burden of any excess up to a maximum liability amount of 300 million special drawing rights ($450 million). The new bill triples operator liability to Rs 1500 crore ($330 million) for reactors greater than 10 MWt, and allows government to increase the country liability limit by simple decree if it deems necessary. This new amount compares quite favourably to the maximum operator liability in some Western countries - it is higher than for the UK and Canada but lower than for the US, France and Germany. Like nuclear power plant operators in these countries, Indian operators will be required to provide proof of insurance or financial security taken out to the value of their maximum potential liability.


Another amendment allows a right of appeal for victims to the high court. Courts do not play a central role in determining compensation under the current bill. Instead, special claims commissioners would be appointed from senior government or judicial positions. The right of appeal provides victims with an extra level of protection. Under the definition of 'damage' in the bill, they are entitled to claim if either their health or property are damaged as a result of an accident.
Despite the bill being broadly in line with the requirements of the international treaty frameworks governing nuclear liability, such as the 1960 Paris (and Brussels supplementary) convention, the 1963 Vienna convention and the as yet un-enforced 1997 Convention on Supplementary Compensation (CSC), the clause on supplier liability and a clause which allows for lawsuits under other national laws means that the bill does not comport with these treaties and India will be effectively prevented form joining them.  


The question of whether to join CSC in particular had proven very sensitive in India and has contributed to the tension surrounding the bill. 


Despite passing the test of the lower house, opposition to the bill remains strong as it enters the upper house.
By David Hess
for World Nuclear News