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India’s civil nuclear liability law

The Civil Liability for Nuclear Damage Act (hereafter “Liability Act”) was a controversial legislation introduced in 2010. While the surrounding controversy seems to have died down in light of other issues (Telangana/ upcoming Lok Sabha elections), it continues to remain a sore point for the government. Notwithstanding the fact that the Liability Act was intended to act as a tool to operationalise the Indo-US nuclear agreement, it seems to have had quite the opposite effect.

Recently, Prime Minister Manmohan Singh rated the conclusion of the Indo-US Nuclear Agreement as the best moment of his term[1]. Critics’ opinions have labelled the point as the worst moment for the country[2]. In order to analyse the Liability Act, it would also be important to consider the Indo-US Nuclear Agreement as a whole. The idea’s first form can be sourced from a joint statement issued on July 18, 2005 by the Indian Prime Minister and the President of the USA. Subsequent posts will provide an outline of the process which led to the Agreement and passing of the Liability Act in Parliament.

Today, critics point towards the negative impact of the Liability Act on two broad grounds. First, it is contended that it has failed to generate a tangible, positive impact on India’s domestic civilian nuclear power programme. This aspect is especially highlighted in light of the possible presence of equally efficacious alternatives which can help India achieve energy security. Second, it is also contended that these measures have de facto aligned India with the USA, and have led to a scenario wherein Indian foreign policy has been dovetailed to the USA’s policies.

With regard to the first issue, it has been argued that India possesses sufficient potential to harness energy from other sources, such as hydropower, solar power and wind energy. Additionally, it has also been pointed out that removing existing inefficiencies and redundancies from the system would raise output. For instance, it has been argued that India can add a significant chunk to its current power output by simply reducing transmission and distribution (T&D) losses – attributed to old, defective or faulty equipment. Some estimates suggest a loss of about 27%, while the adoption of international best practices can reduce this to about 7% – resulting in savings of about 40,000 MW.[3] For reference, the operational Kudankulam reactor generates about 1000MW.

With regard to the second ground, the concerns are more strategic in nature. Especially in light of the first ground, this issue assumes greater significance. Was this Agreement (and the Act) worth the costs that India will have to bear at the domestic and international front (especially considering the fact that these measures did not in any way guarantee participation of foreign fuel or reactor suppliers)?

Traditionally, India has shared a close relationship with countries such as Russia and Iran – countries which have helped India especially in fields such as defense and energy. For instance, before the US or Israel entered the picture, Russia was (by far) the biggest supplier of weapons and weapons systems to India. While ties continue to remain strong, the entry of other players has significantly altered the extent of India’s reliance. This can be seen in two ways – a diversified pool of suppliers reduces dependency on a single supplier. However, it may also change the way India is viewed internationally. Once a staunch Russian ally, will things change now? The Russians have always maintained (even before the NSG waiver) that they had complete faith in India’s non-proliferation record, which also translated into increased activity over the past decade[4]. Interestingly, the Liability Act has now given rise to some concerns in the Russian camp as well, in addition to those raised by almost every other supplier in the world[5].

Proximity with the USA also complicates matters for India’s long-standing and mutually beneficial relations with countries like Iran, with India’s increasing sensitivity to international pressure becoming apparent over the past few years. There are several other concerns as well – the impact on India’s indigenous research (thorium based/fast breeder reactors[6]), military nuclear programme and policy towards controversial instruments such as the NPT. The fact that the Agreement itself was seen as a strategic tool by the USA has been clear for quite some time now, and is underlined every now and then (with US officials expressing their intentions and assessing the impact on bilateral strategic ties)[7].

The Liability Act itself is problematic not just because of the manner in which it was introduced, but also (expectedly) because of its content. The provisions remain unsatisfactory for both the public, and the foreign supplier organisations. The Act places a cap on operator liability (which is, arguably, low considering the expected extent of costs involved with a nuclear accident), while also opening the possibility of extending liability to suppliers in case of patent/latent defects. International firms are especially concerned over the manner in which a supplier has been defined, potentially including a firm which manufactured a single pump, motor or assisted in design work. The Attorney General of India’s opinion – that the govt. may contract out of the liability provision, created quite a controversy before it was clarified that the government did not intend to do[8] (clearly, still not addressing the legal issue).

Several other problem areas have been identified – treatment of the parliamentary standing committee’s recommendations, provisions allowing the govt to grant exemptions from liability, standard of proof, jurisdiction of civil courts (except writ jurisdiction), role and powers of the Claims Commissioner, requirement for notification of nuclear accidents, among others. In this post, I have provided a background for the research project. In subsequent posts, I will discuss several important issues which are part of the project. As part of my research, I plan to assess:

  1. The terms of the Indo-US Nuclear Agreement and the manner in which it was negotiated
  2. The strategic impact of the Agreement and associated legislative changes (USA and India)
  3. Relevant provisions under the international civil nuclear liability framework
  4. Developments at the international front involving the IAEA/NSG
  5. Provisions of the Liability Act, extent of Parliamentary scrutiny and strategic implications
  6. Policy decisions/processes connected to the Agreement/Liability Act

[1] PM’s N-Deal that changed landscape of Indo-US ties stalled over Nuclear Liability Act, http://articles.economictimes.indiatimes.com/2014-01-06/news/45918562_1_india-us-ties-nuclear-liability-act-west-asia

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