Indian Nuclear Disaster Victims Cannot Sue Foreign Suppliers

NEW DELHI/ INDIA: The Indian government has released details of an understanding it has reached with the U.S. recently that says foreign suppliers of atomic reactors to India cannot be sued for the damages by victims of a nuclear accident but can be held liable by the operator who has the right of recourse.

The Ministry of External Affairs said the understanding on the policy hurdles were reached after three rounds of discussions between the Indo-US Nuclear Contact Group, which met last in London, just three days before U.S. President Barack Obama arrived in Delhi on January 25.

During Obama’s trip, the two sides agreed on the administrative arrangement for the nuclear deal, and it is now up to companies to build atomic reactors through contracts consistent with Indian laws, it said.

A press note released by the Ministry which had 19 frequently asked questions makes it clear that the government is not making changes to the Civil Liability for Nuclear Damages Act (CLND) 2010, but will read the Act to mean that supplier’s liability is not a mandatory part of the contracts to be signed.

The Civil Liability for Nuclear Damage Act, 2010 or Nuclear Liability Act aims to provide a civil liability for nuclear damage and prompt compensation to the victims of a nuclear incident through a no-fault liability to the operator, appointment of Claims Commissioner, establishment of Nuclear Damage Claims Commission and for matters connected therewith or incidental thereto.

The requirement for supplier’s liability has been raised in the recent past after the Fukushima nuclear plant disaster in Japan raised questions about the manufacture of the reactor and parts, and the possible damages.

However U.S. manufacturers and even Indian suppliers have raised concerns over India’s CLND law saying that it would be unviable for them to conduct nuclear business in India with the risk of that kind of liability being “channelled” to the suppliers.

The Ministry of External Affairs makes it clear that immediate liability for any incident would be channelled only to the operator, in this case PSU Nuclear Power Corporation of India Ltd. (NPCIL).

The ministry also rejected suggestions that there was no ‘right of recourse’ for an operator against foreign suppliers, saying the Section 17 of CLND provides right of recourse.

The frequently asked questions also listed out, “While it provides a substantive right to the operator, it is not a mandatory but an enabling provision” which can be included in the contract between the operator and the supplier for having a risk sharing mechanism.

“As a matter of policy, NPCIL (Nuclear Power Corporation of India Ltd.), which is a public sector undertaking, would insist that the nuclear supply contracts contain provisions that provide for a right of recourse consistent with CLND Rules of 2011.”

The amount of liability will be capped, and paid for from Insurance pool.

The frequently asked questions also speak of the liability in case there is a nuclear incident, which will be capped at $300 million SDRs (Special Drawing Rights) or Rs. 2610 crores. In addition, the operator NPCIL is only liable up to Rs.1500 crores, and the Union government would pay the balance RS 1110 crores. Any damages above this would come from an international fund, once India ratifies the international Convention on supplementary compensation for Nuclear liability or CSC.

India’s liability law also provides that the government may establish a “Nuclear Liability Fund” by charging such amount of levy from the operators, in such manner, as may be prescribed. The move may result in a nominal increase of 2 to 5 paise per electricity unit to the consumer, according to sources.

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