The country's imminent liabilities

The country's imminent liabilities

The draft of the Civil Liability for Nuclear Damage Bill, 2010, which the Centre wished to enact as a follow-up to the Indo-US nuclear deal, has evoked strong reactions. The Bill seeks to establish the liability standards for nuclear plant operators from any part of the world. In addition to the US operators, companies from Europe and India are equally interested in a lenient liability Bill.

The damage in the event of a nuclear accident is so enormous that insurance companies have consistently refused to extend full coverage. Should the state decide to use the nuclear option to diversify its energy sources, it must also agree to bear that part of the cost that any operator, public or private, cannot bear on their own. In other words, the nuclear power industry is a hazardous business.

Since successive governments in India have consistently endorsed the nuclear energy option, ways have to be found to ensure that the citizens are protected in the event of a nuclear accident. The Bill attempts to address this issue.

The Atomic Energy Act, 1962, within whose framework the Indian nuclear power industry has evolved so far, contains no provision about nuclear liability or compensation for nuclear accidents and no other Indian law deals with these matters. The proposed Bill is trying for the first time to fix liabilities in this field in India.

Keeping in view that the Indian government has not encouraged an informed debate about the stakes involved in exercising the nuclear energy option, let us examine a few crucial issues unaddressed in the Bill.


The Bill confers exclusive powers to the Atomic Energy Regulatory Board to decide what constitutes a nuclear accident. Scope must be provided for involving independent experts in this regard.

A number of problems exist with the way the Bill deals with the issue of claims. Individuals other than bureaucrats and judges cannot be members of the Nuclear Damage Claims Commission, a body that will be constituted in the event of a nuclear accident. It is desirable to include local legislators and independent experts as members. Also, by restricting the compensation claim period to 20 years within the incident, the Bill ignores the inter-generational aspect of damages. Further, it is silent on the issue of liabilities emerging after a nuclear power plant ceases to function. The state will probably have to bear the liability in such scenarios.

The Bill allows only the Centre to be the plaintiff in case of an offence committed in violation of the Bill’s provisions. The Bhopal experience does not inspire confidence in this regard. Not allowing citizens or citizens’ groups to file cases in the event of the operator’s illegal conduct is unjust.

A few key provisions of the International Atomic Energy Agency supported Convention on Supplementary Compensation (CSC), after which the Bill is fashioned, have been ignored.  The clause prohibiting discrimination in victim compensation on grounds of nationality and domicile is absent. And, only the lower limits of the state and operator liabilities and the claim validity period in the CSC have been chosen. The CSC stipulates both strict and absolute liabilities, whereas the Bill does not do so. Unlike the CSC, the Bill altogether exempts the operator in accidents caused by terrorist attacks. It appears, therefore, that the Indian state will have to bear all the costs of providing security for the private nuclear power plants.

The Bill fixes the limit of the operator liability at Rs 500 crore and that of the state at Rs 1,750 crore. Whereas the limits of state liability is expressed in terms of Special Drawing Rights (presently, 1 SDR = $1.5), those of the operator are expressed in rupees. At current rates, a 20 per cent increase in the value of SDR can increase the burden on the public exchequer by Rs 450 crore and significantly alter the initial shares of state and operator liabilities. The operator liability amount is also not required to adjust for inflation. Since the state bears the difference between the total and operator liability amounts, these terms will heavily strain its resources.  In any case, the difference between the operator liabilities in the West and India is stark even after controlling for differences in exchange rates, life expectancies, and average incomes. The minimum operator liability is $300 million in the US and 700 million euros in Finland.

We have considered only a few key issues that need further discussion. It is a matter of concern that a Bill on an issue of fundamental importance was drafted without public debate.  Since it has not been introduced in parliament yet, we have to use this opportunity to not only arrive at a maximally responsible Bill, but also to reopen the debate on the nuclear energy option itself.

(The writers are faculty at CSSE, National Law School of India, Bangalore)