Necessity of the Bill

This is in-fact one of the last steps needed to activate the Indo-U.S. Civilian Nuclear Agreement, 2008 as the US nuclear reactor manufacturing companies require to know the provisions relating to the Liability of the parties, in case of a nuclear accident. The Bill, in the present form, is contained in 28 pages. It has 7 chapters constituted of 49 clauses and also ‘statement of objects and reasons’ and ‘notes on clauses’ following plus two memoranda. The government spokesperson had stated that various reputable international suppliers i.e. from France, Russia, U.S. etc, require India to enact a civil liability regime based on established international principle. So, in order to meet this requirement, it is necessary for India to enact a Nuclear Liability Act. India also has to become a signatory to a convention on nuclear liability so as to declare that it complies with the established international practice on the same. Even the Statement of Objects and Reasons of the Bill states that the Bill is meant to facilitate India’s entry into an international nuclear liability regime. It explicitly states that India intends to join the Convention on Supplementary Compensation for Nuclear Damage i.e. CSC, which was adopted in 1997.

The UPA government has argued that it would provide India access to an international fund to compensate victims of nuclear accidents, for which India too has to make its own contribution. But the opposition party contends that the CSC has not yet come into force since it requires the ratification of at least 5 more states with a minimum of 4,00,000 MW of installed nuclear capacity (as provided in Article XX of the CSC ). So, India joining the CSC will not make the convention operational – it does not have enough installed capacity to cross this number of 4,00,000 MW capacity. Instead of asserting on joining CSC, it should become a signatory of any of the other conventions on nuclear liability which are already in force.

Is CSC a preferable option to other international conventions?

On comparison of various provisions of CSC to that of the other international conventions, it can be found that it is beneficial for India to join CSC. The reasons for the same are as under:

• Firstly, CSC has enhanced the definition of “Nuclear Damage” by explicitly identifying five additional categories of Damage relating to impairment of environment, preventive measures and economic loss that must be compensated (as provided in Article I of the CSC).


• Secondly, CSC updates the principle of Exclusive Jurisdiction to cover not only nuclear incidents in the territory or territorial sea but also nuclear incidents in its EEZ (as provided in Article XIII of the CSC).


• Thirdly, CSC assures availability of an adequate amount of compensation. It provides for a three tier of compensation [as provided in Article III (1) of the CSC].


• FIRST TIER » Amount fixed at 300 million SDR. If funds from liable operator are insufficient, the difference amount is to be covered by the installation state by making public funds available.


• SECOND TIER » In case the claims for compensation exceeds 300 million SDR, CSC requires the member countries to contribute to the international fund which would provide the second tier of compensation.


• THIRD TIER » CSC also permits its member states to establish third tier of compensation to include nuclear damage not covered by the first two tiers.

Objectives of the Bill

• To attract international companies involved in nuclear commerce such as General Electric and Westinghouse.


• To legally and financially bind the ‘operator’ and the government to provide relief to the affected population in the case of a nuclear accident.

Major points of concern in the Bill
A look at the provisions of the Bill shows that there is merit in some of the concerns raised by the naysayer.

The major concerns in the bill are as under:

• The bill proposes to cap the Maximum amount of Liability

  According to clause 6(1) of the Nuclear Liability Bill, the maximum amount of liability in case of a nuclear accident has been fixed at ‘three hundred million special drawing rights’. This figure works out to be just around 450 million US$. Under clause 7(1), it has been reiterated that the central government, may assume full liability for a nuclear installation not operated by it. Firstly, by incorporating such a proviso to clause 7(1), emphatically it seems an attempt to lure foreign enterprises to enter nuclear industry to meet India’s enormous energy requirements. But, to achieve this, the bill has ultimately burdened taxpayers. Secondly, it has been quoted by Jurist Soli Sorabjee in his opinion to Greenpeace that “Under Article 21 of the Constitution of India, there is no warrant or justification for capping Nuclear Liability”. So such an attempt of limiting the compensation, by the government, is in defiance of the Supreme Court judgments and contrary to the interest of citizens of India and their fundamental rights under article 21 of the Constitution  

  The UPA spokespersons have argued that most countries have caps and these caps are of similar order. But as per the information provided on IAEA website, the caps on liability put by other countries are high. For example, Japan has a cap of 1.2 billion US$ on the operator but not the Japanese government. The Japanese state has unlimited liability. Germany and Finland have no cap on operator’s liability. US after various amendments have fixed its maximum liability at 10.761 Billion US$. Even in 2004 Protocol to amend Paris convention the Total Liability has been fixed above EUR 1500 million. Even in the case of Bhopal gas disaster, the Supreme Court had approved deal between the contending parties providing compensation to the victims of the disaster, amounting to 470 million US$. That was way back in 1989 i.e. more than two decades ago. Even at that time this was considered inadequate. So it is apparent that the maximum liability amount proposed in the bill is meager in comparison to the destruction caused by a nuclear accident

• The Provisions of the Bill caps the Liability of the operator

  One of the main concerns in the draft bill is that the financial liability of the operator has been ‘capped’ at ‘Rs 1500 crores’ in respect of nuclear reactors having thermal power of 10MW or more [clause 6(2) of the Nuclear Liability Bill]. The government spokesperson defended the Rs. 1500-crore limit on compensation payable by operators on the ground that the proposed Bill gave the government flexibility to review the liability of operators from time to time. Firstly, the point to be examined here is that without knowing whether the likely damage will be of the order of Rs 10 crores or Rs 10000000 crores, how can there be any discussion of where the liability limit will be placed. Before the government even drafted such a bill, it should have launched a transparent and comprehensive evaluation on what the likely financial damage would be in case of a nuclear accident under Indian circumstances. Secondly, operator’s liability being capped at Indian currency instead of Special Drawing Rights has been cited by experts as other grey areas. The Indian rupee is expected to depreciate against SDR. So the proportion of financial burden to be borne by the operator in case of a nuclear accident would further go down.

• Suppliers Liability substantially weakened

  According to clause 17(1) of the nuclear liability bill the operator of a nuclear installation after paying the compensation for nuclear damage shall have a right to recourse if it is explicitly stated in the contract. It is contrary to the principles laid down under contract law, where recourse of operators to claim damages is inherent. It is evident that the contract of buying nuclear reactors with any other country will explicitly exclude any liability on the part of the suppliers and moreover, by inclusion of such a clause, the suppliers are being let off the hook.

• Concept of Judicial Review ignored

  According to clause 16 of the Nuclear Liability bill the matters of nuclear damage claim in case of a nuclear accident will only be dealt by a “Nuclear Damage Claims Commissioner” and any decision by the commissioner would be final. By including such a clause in the bill, the drafters have ignored the basic concept of Judicial Review under Indian Constitution. On the contrary, section 2210(n)(3)  of US (equivalent Law) Price Anderson Act, has no such provision relating to the finality of the decision by the management panel, set up under the district court, for disposal of cases pertaining to claims in case of a nuclear accident.

• Time limit prescribed for the filing of the application and claiming of the compensation.

  Clause 18 of the draft bill limits the time to make a claim within 20 years. This is very less as compared to the long term damage that may be caused by a nuclear accident. Even it has been quoted by Praful Bidwai that “in case of exposure to nuclear radiation, the injuries caused thereby would be mostly in the form of cancer, which may take much longer time to manifest.”Under 2004 protocol to amend the Paris Convention the time limit has been fixed at 30 years from the date of nuclear accident. Even nuclear liability legislation of countries like South Korea, Netherlands and Romania the time limit for claiming compensation has been fixed at 30 years

• On the one hand is the risk faced by the suppliers and the operators that they may, some day, be forced to pay large amounts of compensation for a  nuclear accident, the chances of which can be lowered by their actions but never eliminated,


• On the other hand, there is the interest of people at large who might be stuck with the burden of cleaning up the results of a nuclear accident.

The technological developments in nuclear reactors have significantly reduced the probability of a nuclear accident. But, it is still necessary to keep in mind the negative aspects of nuclear energy and since an impending disaster is unforeseeable, adequate measures must be taken to prevent the same. A good law on nuclear liability would also ensure speedy and adequate compensation without delay. So, the government should consider all pros and cons of the bill and, make further amendments as mentioned below, in order to accomplish its objective, by keeping the interest of people at the centre of legislation.

•  Firstly, the Government should further increase the limit put on maximum amount liability in case of a nuclear accident as well as the limit on operator’s liability up to an amount which would be widely acceptable and corresponds the limit set by other countries. It should carry out various evaluations to know what likely damages would be in case of a nuclear accident and fix the cap accordingly.


• Secondly, it should also leave some scope for judicial review by courts, for cases where victim feels that the ‘nuclear damage claims commissioner’ was biased in fixing up the compensation.


• Thirdly, the time limit for filling of application and claiming of compensation should be increased up to a justifiable limit.