Why in News?

• The issues regarding India’s nuclear liability law - the Civil Liability for Nuclear Damage Act (CLNDA) 2010 - are holding the six nuclear power reactors in Maharashtra’s Jaitapur.
• The 9,900 MW project at Jaitapur is the world’s biggest nuclear power generation site which has been under consideration for more than a decade.

 What‘s in Today’s Article?

• Why are Laws on Nuclear Liability Needed?
• Laws Governing Nuclear Liability in India
• Salient Provisions of the CLNDA
• Supplier Liability and CLNDA’s position on it
• Why did CLNDA Introduce the Concept of Supplier Liability?
• Why is the Supplier Liability clause an Issue in Nuclear Deals?
• Stalled Projects in India
• What is the Indian Government’s stand?

 Why are Laws on Nuclear Liability Needed?

• They ensure that compensation is available to the victims for nuclear damage caused by a nuclear incident/disaster and set out who will be liable for those damages.
• The international nuclear liability regime consists of multiple treaties and was strengthened after the 1986 Chernobyl nuclear accident.
• The umbrella Convention on Supplementary Compensation (CSC) was adopted in 1997 with the aim of establishing a minimum national compensation amount.
• The amount can further be increased through public funds (to be made available by the contracting parties), if the amount to compensate for the damage is insufficient.

 Laws Governing Nuclear Liability in India:

• India was a signatory to the CSC, but ratified the convention only in 2016.
• To keep in line with the international convention, India enacted the CLNDA in 2010, to put in place a speedy compensation mechanism for victims of a nuclear accident.
• India currently has 22 nuclear reactors with over a dozen more projects planned.
  • All the existing reactors are operated by the state-owned Nuclear Power Corporation of India Limited (NPCIL).

Salient Provisions of the CLNDA:

• The CLNDA provides for strict and no-fault liability on the operator of the nuclear plant, where it will be held liable for damage regardless of any fault on its part.
• It also specifies the amount (₹1,500 crore) the operator will have to shell out in case of damage and requires the operator to cover liability through insurance.
• In case the damage claims exceed ₹1,500 crore, the CLNDA expects the government to step in.
• The Act has limited the government liability amount to the rupee equivalent of 300 million Special Drawing Rights (SDRs) or about ₹2,100 to ₹2,300 crore.

Supplier Liability and CLNDA’s position on it:

• The international legal framework is based on the central principle of exclusive liability of the operator of a nuclear installation and no other person.
• This is because excessive liability claims against suppliers of nuclear equipment would make their business unviable and hinder the growth of nuclear energy.
• This is also to avoid legal complications in establishing separate liability in each case and to make just one entity in the chain to take out insurance.
• However, the CSC lays down two conditions under which the national law of a country may provide the operator with the “right of recourse”, where they can extract liability from the supplier.
  • If it is expressly agreed upon in the contract
  • If the nuclear incident results from an act or omission done with intent to cause damage
• However, India went beyond these two conditions and introduced the concept of supplier liability over and above that of the operator’s in the CLNDA.

 Why did CLNDA Introduce the Concept of Supplier Liability?

• Section 17(b) of the CLNDA: The operator of the nuclear plant, after paying their share of compensation, shall have the right of recourse where the nuclear incident has resulted as a consequence of an act of the supplier or his employee.
  • This includes supply of equipment or material with patent or latent defects or sub-standard services.
• Defective parts were partly responsible for historical incidents such as the Bhopal gas tragedy in 1984.

Why is the Supplier Liability clause an Issue in Nuclear Deals?

• Foreign suppliers of nuclear equipment as well as domestic suppliers have been wary of operationalising nuclear deals with India.
• Concerns about potentially getting exposed to unlimited liability under the CLNDA and ambiguity over how much insurance to set aside have been sticking points for suppliers.
• For example,
  • Section 46 of CLNDA allows victims of a nuclear catastrophe to seek claims for damages against the operator or the supplier under criminal law, even though such legal actions fall beyond the purview of the CLNDA.
  • Absence of a comprehensive definition on the types of ‘nuclear damage’.

 Stalled Projects in India:

• The Jaitapur nuclear project has been stuck for more than a decade - the original MoU was signed in 2009 with France’s Areva.
• Other nuclear projects, including the nuclear project proposed in Kovvada (Andhra Pradesh) have also been stalled.
• Despite signing civil nuclear deals with a number of countries, including the U.S., France and Japan, the only foreign presence in India is that of Russia in Kudankulam - which predates the nuclear liability law.

 What is the Indian Government’s stand?

• The Indian law is in consonance with the CSC. For example, Section 17(b) “permits” but “does not require” an operator to include in the contract or exercise the right to recourse.