Seven key revisions needed in India’s nuclear-accident liability bill

HOT POTATO

BRAHMA CHELLANEY, STRATEGIC AFFAIRS EXPERT

Revisions in N-liability bill a must

DUE TO EXTRAORDINARY MOLLYCODDLING, THERE ARE NO RISKS FOR FIRMS ENTERING INDIAN MARKET, ONLY PROFITS TO RAKE IN

The Economic Times, April 6, 2010 http://u.nu/35v48

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 it 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 because they are in an exceptionally happy
situation. The Indian 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. It also is freeing them from
the task of generating electricity at marketable rates. The government will run
the reactors through the state operator, subsidizing the high-priced
electricity generated. To top it 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 ought to follow the example set by US law, which
permits “economic channelling,” but not “legal channelling,” of liability,
thereby allowing civil suits 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
U.S.
has become party to the Convention on Supplementary Compensation (CSC), which
is still not in force. The CSC,
as the name
suggests,
is about compensation, to be paid
“supplementary” to the liability limit. The CSC 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 Central Government’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 specious 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.

■Six, the
powers of
Indian courts must not be curtailed.
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. Indeed, 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
more reasonable timeline, given that damage to health from exposure to severe
radiation can be transmitted to future generations. The 10-year time 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.

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