Civil Liability for Nuclear Damage Act, 2010

Recent Facts: (05/02/2016)

  • India ratifies Convention on Supplementary Compensation for Nuclear Damage (CSC). The CSC is a convention that allows for increasing the compensation amount in the event of a nuclear incident through public funds pooled in by contracting parties based on their own installed nuclear capacities. It entered into force on April 15, 2015.
  • The move has been among steps that the U.S. government and private nuclear suppliers GE and Westinghouse have been demanding before they conclude any talks on setting up nuclear reactors in India after they raised concerns over two sections of the Indian law.
What is CSC?
Convention on Supplementary Compensation (CSC) pertains to civil liability in the event of a nuclear accident in any of the acceding countries.
What are the concerns?
is CLNDA truly in conformity with the CSC, as Indian officials have repeatedly claimed, or does it cast a shadow of doubt on supplier liability, which is a matter of critical importance to U.S. nuclear corporations? The ambiguity stems from two clauses of CLNDA, Sections 17(b) and 46. Under Section 17(b), liability for a nuclear accident can be channelled from the operator, which is the Nuclear Power Corporation of India, to suppliers of nuclear material, specifically if the accident is due to an act of the supplier or his employee, which includes supply of equipment or material with patent or latent defects or sub-standard services. Section 46 permits victims of a nuclear incident to sue the operator or the supplier for damages applying tort law, even though such proceedings would be beyond the scope of CLNDA and its liability cap, and thus exposing suppliers to unlimited liability. Both clauses are likely to raise suppliers’ cost of insurance cover, possibly beyond what is feasible commercially and within the confines of competitive energy pricing.
How does some of the provisions of the Civil Liability for Nuclear Damage (CLND) Act of 2010 affect average Indian? Critically examine.
(200 Words)
The Civil Liability for Nuclear Damage (CLND) act was passed in 2010 with its focus on setting liabilities on suppliers in case of a nuclear accident. However it has acted as a bone of contention in moving ahead the India-US civil nuclear agreement deal signed in 2008.
The CNLD law affects average Indian in following ways:
  1. The CNLD law capped all the liabilities to 300 million Special Drawing Rights or Rs 2610 crore. The government will create an ‘Nuclear Insurance pool’ of Rs 1500 crores of which it will contribute Rs 750 crore. In case of Nuclear damage government will be liable to additional Rs 1110 crores (1500+1110=2610). Hence in doing all these, the government will end up spending the Indian taxpayers money which should be the suppliers liability.
  2. The suppliers will be paying nominal premium to the ‘Nuclear Insurance Pool’, hence this cost will be added in the total cost of building a nuclear plant and thus will finally have to bear by Indian consumers.
  3. The capped amount of Rs 2610 will not be sufficient in case of a Nuclear accident as we have seen in the Fukushima nuclear disaster. The potential victims will suffer due to this.
  4. The section 17 of CNLD acts specifies that the right to recourse of an operator is not mandatory but merely an enabling clause. This it will prohibit operators to sue suppliers. Thus overall it will make victims more vulnerable to potential accidents.
  5. Section 46 prevents the Indian victims from moving to a foreign court. It also prohibits from claiming compensation under other laws.
The CNLD act was primarily designed to protect the victims of any unfortunate nuclear accident but ended up virtually putting the burden on average Indian as a taxpayer, energy consumer, and potential victim of any nuclear accident.
Highlight the important features of the Nuclear Liability Act while throwing light on grounds on which it was criticized both domestically and by foreign suppliers. Add a note on the recent breakthrough in this regard. (200 Words)
India’s energy is heavily skewed in favor of conventional fossil fuels. To diversify our energy sources, India made crucial deals with USA, France and Russia with regard to supply of nuclear reactor and materials. In 2010, India enacted Civil Liability for Nuclear Damage Act (CLND) to provide compensation to victims in case of nuclear accident through no-fault liability to operator.
USA suppliers GE and Westinghouse have made objections to financial liability stipulated in sections 17(b) and 46 of CLND Act saying that these clauses are violating the norms of International Convention on Supplementary Compensation (CSC) for nuclear damage.
Section 17(b) gives operator (NPCIL) right to claim compensation directly from supplier in case of supplying sub-standard device and faulty nuclear material with no fault from operator.
Section 46 makes supplier liable for damages under other Indian laws such as Tort law.
With no cap on liability in terms of time and quantum, suppliers are not able to get insurance as premium are high and very subjective to assess. Domestic suppliers are not able to take gigantic risk given the damages claim, Vendors don’t want to be harassed by other Indian tort laws which can impose several criminal charges as well.
To clear the logjam, Washington and New Delhi agreed on civil nuclear deal braving all challenges. India agreed to provide insurance pool that will indemnify American suppliers in case of nuclear damage. This deal will deepen the ties between strategically allied countries and give India much needed energy to drive its economy.



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