India's civil nuclear programme: Price of political opportunism

On July 31, 2014, Gen V K Singh, Minister of State for External Affairs, admitted to pressure from American nuclear reactor component manufacturer Westinghouse to dilute India’s civil nuclear damage liability regime, but assured that his government would not give in.

Speculation still abounds whether the dysfunctional Indian civil nuclear programme had been part of the agenda during Modi’s recent visit to the US.

A pressing concern will have been his government’s need to find nuclear reactor parts suppliers willing to work around the stifling legal regime on civil nuclear damage liability today.

Meanwhile, India remains committed to cut back on its dependence on fossil fuels (currently, about 68 per cent of energy needs) in favour of what it perceives to be cleaner nuclear energy (currently about 2 per cent).

The India-US Civil Nuclear Agreement, which was to result in transfer of nuclear material, equipment and reactor components between the two countries may have contributed toward this aim.

However, it never managed to emerge unscathed from the partisan debate surrounding it at the time of its passage, which mainly focussed on the erstwhile opposition party accusing the ruling UPA-II of ‘mortgaging’ India’s sovereignty by agreeing to scrutiny of its civilian nuclear facilities by the IAEA, as part of the deal.

Curiously, however, on July 25, 2014, the NDA government ratified the Additional Protocol to an Agreement on the Application of Safeguards to Civilian Nuclear Facilities.

This allows the IAEA similar inspection rights in respect of civilian nuclear facilities as the ones the BJP so vociferously combated whilst in opposition.

This may well be part of the Indian agenda to become part of Wassenar group, which address issues of WMD proliferation. In the absence of explicit articulation, such a move signals a culture of political opportunism on the part of a political party, whose actions are guided by expediency rather than a cohesive ideological framework.

This is echoed in a diplomatic cable from US Embassy Charge d’affaires Peter Burleigh, made public in 2011, which highlighted how L K Advani in 2009 had played down the BJP’s opposition to the Civil Nuclear Agreement in private conversations, and had indicated that his party would not scuttle the deal if it came to power.

The agreement has not helped by the passage of the Civil Liability for Nuclear Damage Act, 2010 without adequate deliberation and public discussion. The Act, for the first time in industry practice, introduced in Section 17(b) the concept of a widely expanded supplier liability.

This meant that in case of a nuclear incident where the operator of the nuclear facility was liable to pay damage, it had a right of recourse against a supplier if the incident occurred due to a patent or latent defect in the material supplied.

While such a right is not uncommon in the event of wilful negligence on the part of the supplier or its employees, the legislation went a step ahead in introducing a liability regime for manufacturing defects without specifying how such a right, which accrues to the nuclear facility operator, was to be operationalised.

Attempts by the UPA to harmonise the provisions of the Act with international practice were portrayed as being detrimental to Indian interests by both the BJP and the Left, as well as certain sections of civil society.

Supplier liability

This is problematic for three reasons. The first is that this liability regime requires a supplier to be insured against recourse claims from the operator, who is already statutorily required to obtain insurance cover for the maximum amount of liability.

This may result in certain projects being economically infeasible due to the high cost of securing double insurance cover.

The second problem arises with India having signed the widely accepted Convention on Supplementary Compensation for Nuclear Damage (CSC) in 2010, in order to adhere to international best practices, the model supplier liability provisions of which are inconsistent with the Act.

The CSC provides that an operator’s right to recourse would only arise if such a provision was explicit in a contract between the operator and supplier, or against an individual if the nuclear incident was caused as a result of their intentional act or omission.

It is clear that the liability regime under the Act is broader than the CSC, and while India is yet to ratify it, even its signature is likely to play on the minds of its policy makers due to their glaring inconsistency.

The third problem is Section 45 of the Act, which does not specify whether any damages to be paid under the Act is independent of any other damages under any other laws.

Indian law provides for monetary compensation in case of damage to life or property under its environmental legislations, constitutional and tort law. Unless the Act clarifies that all damages arising from a nuclear incident would only be payable under the regime it establishes, suppliers will continue to shy away.

This has ensured that both domestic and international interest in the supply of nuclear facility materials is waning. Modi’s charm has so far failed to work on Japan, with persistent concerns about supplier liability and India’s reluctance to agree to a moratorium on further nuclear tests.

A recent agreement with Australia also only pertains to the supply of uranium.

Modi now has the option to move past the previous intractable BJP position as opportunism that he had nothing do with and salvage the nuclear programme, or allow it to languish in the legal quagmire of his party’s making.

It is clear that the existing constraints in India’s nuclear programme are the culmination of a process of political partisanship and opportunism. Its price, however, is being borne by an entire nation.

(The wrier is an advocate and a Graduate Fellow, School of Policy & Governance, Azim Premji University, Bangalore)