An asset-turned-liability

The current Civil Liability for Nuclear Damage Bill proposed by the Indian government does not protect prospective victims in the eventuality of a nuclear accident caused by corporate negligence.
Basil James
2 August 2010

The latest controversy to hit India’s ruling UPA government is the Civil Liability for Nuclear Damage Bill, popularly known as the Nuclear Liability Bill. The bill, as the name suggests, deals with liabilities in case of a nuclear disaster in India. The government has come in for stinging criticism from many quarters as opposition accuse it of bowing to American pressure and conceding the sovereignty of the nation to capitalistic powers in the form of U.S. nuclear suppliers.

India and Pakistan are the only nuclear capable countries who do not have such a law in effect. All that is set to change as India ushers in the new Nuclear Liability Bill. So far, so good. Where the government has hit the road block is in certain features of and other proposed amendments to the bill which are perceived to be a result of U.S. pressure on the government.

A nuclear plant is supplied to a country by nuclear suppliers. They design and build the nuclear reactors until it is fully functional. When the reactor is handed over to a country, a nuclear operator is hired to operate the plant. The operator deals with the day-to-day running of the plant. According to the international and the proposed Indian law, in case of a nuclear accident, victims are entitled to compensation from the operator of the plant. This law has been made so that, wherever the fault leading to the accident may lie, the victims get speedy compensation as any confusion regarding the source of the aid is removed. The operator can then seek to get compensation from the supplier in a court of law.

The most controversial aspect of the Nuclear Liability Bill has been the proposed amendment to Article 17 (b). This section deals with the compensation a nuclear operator can get from the nuclear suppliers. Nuclear supplier companies based in the U.S. has conveyed their objection to Article 17 (b) to the UPA government. They fear that this part of the bill would expose them to criminal and tort proceedings. American nuclear companies have historically been reluctant to operate in countries which could take them to court over accidents and disasters. If the article is scrapped or amended in favour of nuclear suppliers, the opposition argues, the suppliers would have almost no incentive to concentrate on the safety of the plants they provide and thus would lead to nuclear disasters. The Article 17(b) is a vital part of the Bill. It is the part which ensures speedy and fair compensation to the victims of a disaster and facilitates a fair remuneration to the operator from the supplier. If the government scraps or drastically amends the bill as has been suggested, the whole procedure of bringing the wrong-doers to justice is thrown out of the window.

The major nuclear accidents across the world - Chernobyl, Three Mile Island, Crystal River, Brookhaven etc - have all been caused by flaws in the design of the nuclear plants and drawbacks in the safety measures provided. The design of a nuclear power plant is done exclusively by the nuclear plant supplier. Thus any fault in the design can be squarely laid at the door of the supplier. It is interesting to note that the operator may have no idea about the flaws in the design. The safety measures too are primarily installed by the nuclear supplier. If the Article 17 (b) is amended in favour of the supplier, then they will have almost no incentive to provide effective and fool-proof safety mechanisms and to construct designs that are not prone to accidents of any kind. The government should desist from any attempt to tamper with the article. Rather it should ensure that the article covers every contingency and strengthen it to ensure that no guilty part goes unpunished.

The Article 17 (b) is not the only problem with the Nuclear Liability Bill. The government should take a look at the USA’s equivalent of the Bill and realise how much value the American government places on an American life.

The Clause 6 of the Indian Bill states that the maximum financial liability in case of a nuclear accident is 300 million Special Drawing Rights (SDR), which translates to $458 million or Rs. 2087 crores. The compensation set by the American constitution for an accident in the U.S. is $10.5 billion or Rs. 50000 crores. The Indian government should effectively tell the world that lives are not cheaper in India. If the U.S. government has set such high compensation amounts when accidents affect American citizens, why not so in India. The government should assess this situation and increase the amount set as compensation. What is more, the only operator that would be running the plants in India is the NPCIL, the government run agency. So, when a nuclear disaster happens, the Indian public would effectively be paying the compensation to themselves out of their own pockets!

The maximum amount that can be reclaimed by the operator from the supplier is now set as Rs. 500 crore, which is significantly less than the Rs. 2087 crore NPCIL would have to pay. Obviously, the supplier would rather pay the compensation to the operator rather than investing much more money into developing a faultless design and safety system. A potential tort feasor will optimise their behaviour on the basis of artificially low damages they would have to pay.

India plans to accede to the Convention on Supplementary Compensation (CSC). The CSC is basically a forum or a group of nations that have a common consensus on the issue of Nuclear Liability. The financial details that have been set in the Indian Bill is in accordance to the CSC. However, the CSC is not exactly the premier organisation in these matters. Only a mere thirteen countries have joined the CSC of which only four have ratified it. The Vienna Convention on Civil Nuclear Liability is a much better option. It has only a floor regarding the amount associated with operator recourse in stark contrast with the cap CSC has put in place. It also allows countries to operate independent liability regimes. Moreover, the CSC will only enter in to force if a major nuclear power joins it, a remote possibility. Only if every country in the world were to join the CSC, would the aforementioned amount of 300 million SDR be raised. At the current level, only 50 million SDRs can be raised.

Another drawback to the proposed Bill is that it restricts the time period allowed for claims of compensation to 10 years. Ten years is too short a time frame to assess the physical impacts a nuclear leak has on a population. The time frame should be lengthened to at least 30 years so that the nature of the impact can be fully and effectively assessed. The Bill should also make provisions to include health and environmental experts to assess the impacts, a feature that has been left out of the current bill.

The current international law regarding liability of nuclear suppliers is largely lenient to the suppliers. These laws were drafted in the days when the nuclear power industry was a fledgling one and was in the process of evolving in to a major industry. However, today the nuclear industry flourishes like a green bay tree and so does not deserve any leniency. International institutions should deal with mishaps on the part of suppliers in the same manner as it would deal with disasters in any other industry.  

The current Civil Liability for Nuclear Damage Bill is almost half baked and is not exactly fit to be passed by the Indian Legislature. The Bill requires some serious amendments to ensure that the welfare of prospective victims is always the foremost priority of the government. India is one of the largest emerging markets of nuclear energy. India should use this power to negotiate with foreign and Indian suppliers to ensure that the Bill does not let these companies get away with negligence. An ordinary citizen can only hope that the government has learned crucial lessons from the Bhopal disaster of 1984 and the horrendous mismanagement of the investigation and prosecution.

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