Liability for Nuclear Damage Arising out of Peaceful Use in India

Article for Blog Post Writing Competition 2011 | by Upasana Dasgupta

May 11th, 20117:43 pm

Liability for nuclear damage arising out of peaceful use is a controversial topic all globally. The international liability regime puts a cap on such liability and according to critics, the cap that has been put on operator’s liability in such cases is to meager compared to the huge damaged caused. Thus, there are two sets of ideology regarding the nuclear liability- one believing that the liability should not be limited and other that that there should be a limit fixed on the operator’s liability. However, there has been a shift towards the latter one in the global scenario. This is because the private players are not interested to invest in the nuclear power market unless the liability is capped.

The International Regime

At international level, there were primarily two conventions: the 1960 Paris Convention on Third Party Liability in the Field of Nuclear Energy (The Paris Convention) and the 1963 Vienna convention on Civil Liability for Nuclear Damage (The Vienna Convention). The Paris Convention basically applied to member organizations of OECD in respect of liability for damage caused by nuclear incidents which ensured the growth of nuclear industries and that their progress is not burdened by an intolerable burden of liability. Parallel to this was the Vienna Convention to which a number of International Atomic Energy Agency (IAEA) Member States from Central and South America, Asia-Pacific, Africa and Eastern Europe became members. So the Vienna Convention has a more world wide coverage than the Paris Convention. These Conventions were linked by the Joint Protocol adopted in 1988 to bring together the geographical scope of the two after the Chernobyl incident combining them into one expanded liability regime. For example, if a nuclear incident occurred in Chile which is a party to the Vienna Convention and the Joint Protocol, then Turkey being a party to both the Paris Convention and the Joint Protocol would be able to claim compensation from Chile on the basis of Vienna limits.

Both the Conventions were governed by similar principles:

a) The operator of a nuclear installation is exclusively liable for nuclear damage

b) Strict or no fault liability of the operator

c) Exclusive jurisdiction is granted to the courts of one state, to the exclusion of courts of other states

d) Liability is limited in amount and time

e) Mandatory financial coverage of the operator’s liability

In 1997, Protocol to amend the 1963 Vienna Convention on Civil Liability for Nuclear Damage was adopted and also a Convention on Supplementary Compensation for Nuclear Damage (CSC) at a diplomatic conference. The CSC, consistent with principles set forth in previous international agreements governing nuclear liability, is an instrument to which all States may adhere regardless of whether they are parties to any existing nuclear liability conventions or have nuclear installations on their territories. The Convention shall come into force on the ninetieth day following the date on which at least 5 States with a minimum of 400,000 units of installed nuclear capacity have ratified it. India signed the CSC in October 2010 though it is not a party to the Vienna and Paris Conventions. One of the purposes of joining CSC is to get contribution – to get the coverage beyond the national limit (cap) when there are trans-national implications of a nuclear accident. If there is no national limit, there is no question of getting any benefit from the CSC.

Situation in India

The Civil liability for Nuclear Damage Act, 2010 which provides limited liability in case of a nuclear accident, was introduced so as to implement the Indo-U.S. nuclear deal. Without it, serious questions are raised as to whether any nuclear company would bear the risk of doing business in India. The Act is critical for USA company’s like Westing House who are willing to invest in India. It is also important for India if it wants to import nuclera technology from the U.S. and other nations. This bill was introduced in Lok sabha on 7th May 2010. After lot of opposition and heated debates, the Lok Sabha passed the Nuclear Liability Bill on August 25, 2010 and on 30th August by Rajya Sabha , paving the path for opening India’s civilian nuclear power industry to private investment.

The Act provides for civil liability for nuclear damage, setting up of a compensation fund, the appointment of a Claims Commissioner, the establishment of a Nuclear Damage Claims Commission, and refers to matters connected with or incidental to all of these.

1. “Operator’s Responsibility”

The Act puts the onus of responsibility for nuclear damage on the operator of nuclear installation. The liability of the operator of the Nuclear Installation shall be strict and shall be based on the principle of No Fault Liability. In case there is more than one operator liable for the nuclear damage, then they are jointly and severally responsible for the same. [Section 4(2)]. However, the operator is not liable for nuclear damage where such damage is caused by a nuclear incident due to a grave natural disaster of exceptional character or an act of armed conflict, civil war, hostility, insurrection and terrorism.[ Section 5 (1)]. Also, if a person suffers nuclear damage due to his own negligence or from his acts of commission or omission, the operator shall not be liable. [Section 5(3)].

2. Quantum of Liability/ Legal Cap.

The maximum amount of liability in each nuclear incident is fixed as the rupee equivalent of 300 million special drawing rights (SDR) or higher value as notified by central government. [ Section 6 (1)].

The maximum amount of liability of an operator has been fixed as 1500 crores INR in Section 6(2) of the Act. However, the Central Government may, review the amount of Operator’s liability from time to time, and specify, by notification, a higher amount.

3. Paving the path for private participation as “operator” of nuclear power plants in India

The Act defines the “liability”, arising out of any nuclear accident of an “operator” who is an individual independent of and unaffiliated with the Government of India. It defines ‘operator’ as a person designated by Central Government as operator of nuclear installation. There is no restriction put by the Bill that only corporate bodies can be operators. According to the Act, private parties can be operators of nuclear installation unlike the prevailing situation now- where only the government operates such installations. Thus it opens up huge market for private industries and investors, in India and outside India.

4. The total or “maximum” “liability” has been “capped” at “three hundred million Special Drawing Rights [SDR]”

The maximum liability of private operator, unless otherwise notified by Central government, is 1500 crores INR whereas when government is the operator the liability is 300 million SDR, unless otherwise notified. Thus in case the Central government is the operator the liability is much more than that of private operator.

5. Liability of supplier

The Act does not exempt the supplier from liability. It simply provides that as far as the victim is concerned, the operator will be liable subject to the applicable cap and it should be a welcome step for the victims as it sets a single point of responsibility. But it does not prohibit the operator from making the equipment vendor liable on account of an accident  That the bill doesn’t talk of exemption of liability of suppliers vis-a –vis operator is clear from Clause 17 of the bill which states that the operator of a nuclear installation shall have 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 suppliers or his employees, which includes supply of equipment or material or patent or latent defects or sub standard services.

The Act simply holds the operator liable vis-à-vis victims so as to have a easy way of getting compensation for the victims and should be taken as a welcome step.

The Act sets up a regime in consonance with the international liability regime on nuclear damage. Though it has been heavily criticized, we must understand that such an Act was necessary in light of the growing power needs in India. In any case, nuclear power is more eco-friendly than the traditional thermal power which pollutes the environment by producing greenhouse gases. Such an Act would encourage private parties and foreigners to enter into and invest in nuclear power industry in India. The Supreme Court has time and again given rulings that there has to be the right balance between developmental and environmental needs, reliability and adequate compensation to the victims. The Act tries to strike at that balance and hence should be welcomed.


Article by-

Upasana Dasgupta

Student, IVth year,

Dr Ram Manohar Lohiya National law University, Lucknow

[Submitted as an entry for the Blog Post Writing Competition, 2011]


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