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Opinion: The dangerous leaks and lacunae in the 2010 Nuclear Liability Bill

nuclear
nuclear
The new 2010 Civil Liability for Nuclear Damage Bill is a double-edged sword full of loopholes and unanswered questions that are more likely to cut the Indian public than protect it from disastrous scale nuclear disasters, argue Hammurabi & Solomon advocates Sangmitra Sawant and Vishnu Anand.

In view of the increasing numbers of nuclear power plants in India our government has introduced the Civil Liability for Nuclear Damage Bill 2010 proposing for the Indian nuclear industry to provide compensation and/or damages for any damage it causes to any person or property.

There were previously no specific provisions relating to the liability of an operator of nuclear facilities in the event of a nuclear accident. At the international level there are four instruments for nuclear liability - the Paris Convention 1960, the Vienna Convention 1963, the 1997 protocol to amend the Vienna Convention and the 1997 convention on supplementary compensation for nuclear damage. It is noteworthy that India is not party to any of the nuclear liability conventions and the other countries engaged in nuclear power generation have their own pieces of legislations qua liability for nuclear damage and some of them are parties to the above stated international conventions.

India has been prevented from obtaining commercial nuclear fuel, nuclear power plant components and services from the international market because it is a non-signatory member of the Nuclear Non-Proliferation Treaty.

The primary reason for the enactment of the Civil Liability for Nuclear Damage Bill is to enable the American nuclear fuel suppliers to supply nuclear fuel to India as otherwise they would not have been insured in their country without India having a liability law for nuclear damages. Hence, the central government chose to enact the Bill to further the Indo-US nuclear deal.

The Bill seeks to legally and financially bind the operator of the nuclear installation and the government to provide relief to the victims of nuclear accident that may happen in India, but the question is has it successfully bound the operators? The present Bill which is based on the Price Anderson Act 1957 has been revised several times and its latest revision the Energy Policy Act of 2005 is applicable until 31 December 2025.

The Bill's nucleus

1.    The capping of the liability amount payable by the operator at Rs 500 crores may be increased or decreased by central government by notification.
2.    The Central Government shall be liable to pay the remaining amount in the event that nuclear damage caused exceeds Rs 500 crores subject to a maximum of $300m of special drawing rights.
3.    The operator of the nuclear installation shall be liable for nuclear damage caused by a nuclear incident in the following cases:
(a) If the incidence occurs within the nuclear installation premises; or
(b) Involves nuclear material coming from, or originating in, that nuclear installation; and
(c) Involves nuclear material sent to that nuclear installation.
4.    The central government’s liability arises in cases where:
a)    The liability exceeds Rs 500 crores payable by the operator.
b)    The nuclear damage occurs in the nuclear installation owned by it.
c)    It occurs directly due to a grave natural disaster of an exceptional nature or by acts of armed conflict hostility, civil war, insurrection or terrorism.
5.    Exemption to the operator  for any nuclear damage:
a)    If caused to a person on account of his own negligence.
b)    If caused to a nuclear installation itself on the site where installation is located or to any property or means of transport.
6.    In the event two or more operators are liable for the nuclear damage their joint liability shall not exceed Rs 500 crores.
7.    The operator to take mandatory insurance cover of Rs 500 crores.
8.    The appointment of claims commissioners for adjudicating the claims for compensation in respect of nuclear damage.
9.    Establishment of claims commission for special cases.

Lacunae in the Nuclear Damage Bill

1.    Section 2 (h) defines the term "nuclear incident" as any occurrence or series of occurrences having the same origin which causes nuclear damage or creates a grave and imminent threat of causing such damage. The act needs to specify at what point a person/private operator can determine that there is a grave and imminent threat of nuclear damage. What will be the identification signs for the operators situated in the area to realise that such a danger exists and that necessary preventive measures should be undertaken?

2.    Section 2 (l) defines the term "operator" in relation to a nuclear installation. It means the person designated by the central government as the operator of that installation. The following changes must be incorporated:
•    The term operator should be modified to the extent of specification of whether both private and public companies are eligible to be operators or just public companies;
•    A new section should specify the eligibility criteria for being an operator and the process by which the central government shall select the operator. A schedule providing guidelines for the selection of the operator should be added. It is imperative that an operator selected is an entity or a person that possesses the right qualification, knowledge, experience and the infrastructure to make sure that nuclear fuel is used in an efficient manner and the nuclear plant is run safely.
•    Another section or schedule should be added that specifies the mandatory safeguards and precautions that a designated operator should take and implement.
•    A section stating the functions and duties of the operator should also be specified.

Unrestricted and absolute power cannot be bestowed on the central government as these are open to abuse. This Bill should be preventive in nature and should beforehand create strict provisions and guidelines to act as a deterrent for the central government and the operators from acting arbitrarily.

3.    Section 2(n) defines "preventive measures" as any reasonable measures taken by a person after a nuclear incident has occurred to prevent or minimise damage referred to in sub-clauses (i) to (v) and (vii) of clause (f), subject to the approval of the central government.

The phrase "reasonable measures" used in the definition is highly ambiguous and vague, as what is considered to be reasonable and what is not differs from person to person and is highly relative. Legal history shows that whenever a phrase "reasonable" is used whether it is used in context of time or prudence, its interpretation led to dispute, which invariable resulted in the Supreme Court of India ultimately providing some clarity. Therefore, in order to prevent unnecessary litigation which may result out of the ambiguity of the definition and leading to possible deprivation of rightful claims of victims of nuclear damage, the above definition should be modified.

4.    Section 4(2) states in the event two or more operators are liable for nuclear damage, their joint liability shall not exceed Rs 500 crores. It needs to be clarified whether this clause pertains to one nuclear installation. Secondly, as per Section 8 an operator has to take an insurance of Rs 500 crores to cover his liability. Therefore, each operator, where there are more than two shall have insurance covers. The lacuna lies in the proviso of the sub-section (2) of Section 4 which states that where nuclear damage is caused by more than one operator then the total liability of both the operators shall not exceed Rs 500 crores. Hence, the said sub-section should be amended to the extent that in case of an event involving more than one operator in which the cost of nuclear damage exceeds Rs 500 crore, insurance cover of both the operator should be allowed to be used in order to compensate for the loss caused by the nuclear damage. Total liability in the event there are more than one operator should not be made subject to cap of Rs. 500 Crore.

5.    Section 5 (1) (i) states that an operator shall not be liable for any nuclear damage where such damage is caused by a nuclear incident directly due to – (i) a grave natural disaster of an exceptional character. The said clause (i) of Section 5(1) is very vague and ambiguous. Such exceptions should be detailed and what constitutes a grave natural disaster of exceptional character should be clearly stated in order to prevent any operators who might flimsily take this ground to escape liability. A grave natural disaster can be the following:
a)    Hurricane
b)    Tsunami
c)    Earthquake (however in order for this natural calamity to be considered, an earthquake which measures high on a Richter Scale say above 4)
d)    Flood (again how many centimeters rainfall that led to flood can be qualified as grave natural disaster should be specified)
e)    Typhoons.

6.    Section 5 (2)  which states that other exceptions in which the Operator shall not be liable for on site nuclear damage caused to the nuclear installation or to any property or means of transport. It is clear that an operator is a person who is wholly and solely in charge of the nuclear installation. Therefore, he should be liable for any on site nuclear damage as well.
Further it is pertinent to observe that section 7 of the Bill states that central government shall be liable to pay only in following circumstances:
a)    Where the liability exceeds the amount of liability of an operator specified under sub-section (2) Section 6, and only to the extent that such liability exceeds the liability of the operator;
b)    Occurring in a nuclear installation owned by it; and
c)    Occurring in account of causes specified in clauses (i) and (ii) of sub-section (1) of Section 5.
Hence, the question arises if the operator shall not be liable for nuclear damage caused under section 5(2) and the central government shall not be liable, then who shall compensate the injured person or pay for preventive measures for damage to the environment caused by such nuclear damage?

Section 5 (2) should be modified by imposing the liability on the operator as it is the entity reaping the benefit out of the nuclear Installation and logically it should be liable for any liability related to the nuclear installation.

7.    Since the essence of this act is to provide speedy justice to the persons injured or to replenish the damaged environment it is required that some kind of penalty may be imposed in the eventuality of any procedural delay on the part of claim commissioner / claims commission. There is no deterrent section in the entire bill which imposes any liability on the adjudicating officers for any procedural delays. In this view it is suggested that in the event there is a delay in adjudicating claims a certain rate of interest on an individual claim or cost of proceedings should be reimbursed to the injured person by the government which shall be made effective from the day period of adjudication as prescribed under the bill: i.e. 3 months ends.

Sharp edges, blunt shield

At present the Bill seems to be like a double edged sword for the Indian public that it claims to protect.

On the one hand it limits the amount of primary insurance that a nuclear operator must carry - i.e. Rs. 500 crore - and on the other hand it caps the liability of the operator to Rs. 500 Crore, thereby providing a clear escape route to the operator who in the event of a nuclear incident shall claim the insurance and leave the taxpayers on the hook for most damages, as the amount paid over and above the capped limit shall be paid by our Government.

Hence, the nuclear operators actually end paying nothing. If our legal history has taught us anything, that is lack of foresight of future probability of disputes and contradictions that may arise due to ambiguity and vagueness of legislation.

Changes must be brought in the present Bill before enacting it, as the subject matter of this Bill is highly sensitive. It must be kept in mind the reason and intent behind the Bill is to not only deter the Operators from being negligent with such hazardous substance but also in the event a person or property is injured justice is delivered to the victim swiftly.

As is apparent from the present draft Bill, it has miserably failed to achieve those objectives and suffers from ambiguity and vagueness, which unless cleared is going to defeat the very purpose of enacting the Bill in future.

Vishnu Anand
Vishnu Anand
advocate_sangmitra_sawant
advocate_sangmitra_sawant
Advocate Sangmitra Sawant (left) is an advocate specialising in civil and company litigations in Delhi District Courts, the Delhi High Court and the Supreme Court and is an associate with Hammurabi & Solomon.


Vishnu Anand (right) is an advocate specialising in corporate law with a particular focus on mergers & acquisitions and is an associate with Hammurabi & Solomon.

Ms. Sangmitra Sawant, Advocate, who is enrolled with Bar Council of Delhi (Enrollment No: D/981/2008). She has been practicing in the area of Civil & Company Litigations in Delhi District Courts, Delhi High Court and Supreme Court of India. 

 

 

 

 

 

Mr. Vishnu Anand, Advocate, enrolled with Bar Council of Delhi (Enrollment No: D/1568/2009). He has been practicing in the area of Corporate Law specially Mergers & Acquisitions.

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