Revisions in N-liability bill a must

After the national furore, the government has begun to redraft its nuclear-accident liability bill. It was left with little choice. Unlike the 123 agreement or the latest reprocessing accord with the US, the proposed new law on liability has to go before Parliament for scrutiny and approval.

The bill, circulated to members of Parliament last month, attempted to fashion a new principle in international law — profits are private, accident-related liabilities are all public. The bill gave foreign reactor suppliers a free ride at the Indian taxpayer’s expense.

Limits on liability traditionally have been designed in the world to limit the financial risks of private firms engaged in the business of nuclear-generated electricity. But in India the state intends to own and operate all nuclear power plants. That is the reason why the Atomic Energy Act, which shuts out the private sector from nuclear power generation, is not being amended.

But foreign reactor suppliers cannot complain as they are in a happy situation. The government has earmarked separate nuclear parks for each of the two American reactor-exporting firms as well as for the sole French and Russian companies. It is acquiring land for them and freeing them from the task of generating electricity at marketable rates. The government will run the reactors through the state operator, subsidising the high-priced electricity generated. Above all, foreign suppliers will have no direct accident liability.

So, given this extraordinary mollycoddling, there are no risks for foreign firms in entering the Indian market, only profits to rake in. Against this background, the liability bill must contain seven essential revisions.

One, there is no need for a limit on liability as the Indian state, in any case, will be the sole owner and operator. There is no maximum cap on liability in the US, Germany, Finland, Japan, South Korea and Switzerland. The proposed Indian law must mesh with the doctrine of absolute liability and “polluter pays” principle set by the Supreme Court in response to the Bhopal gas disaster.

Two, the minimum cap should reflect the international trend of providing enough to deal with the long-term public health problems likely to be caused by a nuclear accident. For example, Japan’s minimum liability is 120 billion yen ($1.33 billion).

Three, the revised bill should not relieve foreign companies of direct liability for any accident. Nor should victims be stripped of their right to sue a culpable foreign firm in an Indian court, or through a foreign court.

India must follow the example set by US law, which permits “economic channelling”, but not “legal channelling”, of liability, thereby allowing criminal proceedings and other lawsuits against any party in courts. That is the main reason why the US has not joined the Vienna or Paris convention — the two main international liability instruments. But the US has become party to the Convention on Supplementary Compensation (CSC). The CSC is about compensation, to be paid “supplementary” to the liability limit. It permits either “economic channelling” or “legal channelling” of liability.

Why shouldn’t India emulate the US example and permit economic (but not legal) channelling of liability to the operator? That will leave suppliers (foreign or Indian) legally liable for an accident, but allow for speedy disbursement of compensation to victims following an accident.

Four, the Indian taxpayer ought to be the insurer of last resort, not of first resort. In the existing bill, all liability falls on the Indian taxpayer, whether it is the state operator’s slice or the Centre’s share. By contrast, America’s Price-Anderson system is without cost to the American taxpayer. It ensures that there is at least $10.5 billion in private-sector funds available to cover a nuclear accident. As the US has no cap on liability, the US Congress serves as the insurer of last resort. If a catastrophic accident were to occur, Congress could raise its contribution not by burdening the taxpayer but by imposing additional taxes and other levies on the nuclear industry.

Five, the new bill must do away with the distinction between the operator and the government when, in the Indian context, both are fused. Throughout the existing Bill, the pretence of a US-style separation between the operator and the government in maintained.

Under the existing bill, all nuclear-damage claims will be dealt with by a Claims Commissioner or a Nuclear Damage Claims Commission, and any award made “shall be final” and cannot be appealed in any court. It declares that “no civil court shall have jurisdiction to entertain any suit or proceedings” or grant any “injunction”.

Seven, while limiting liability in time, the bill must set a reasonable timeline, given that damage to health from exposure to radiation can be transmitted to future generations. The 10-year limit set in Clause 18 of the existing Bill is simply untenable.

( Brahma Chellaney is professor of strategic studies at the Centre for Policy Research.)