In a possible way around the practical hurdles posed by the supplier liability clause in the civil nuclear liability law, the government is all set to make it clear in the rules and regulations of the law that a supplier will be liable only for a fixed time period and not for the entire lifetime of a reactor.
Also, it may be allowed to cap the quantity of compensation.
Almost all negotiations for new reactors ? be it with the US, France or Russia ?have been largely grappling with this problem. Both foreign and Indian suppliers are seeking greater clarity on the practical implications of Clause 17 (b) in this newly passed legislation.
This clause provides the operator?in this case the Nuclear Power Corporation of India Ltd (NPCIL)?the right to recourse to the supplier if a nuclear incident has ?resulted from the wilful act or gross negligence on the part of the supplier of the material, equipment or services, or of his employee?.
Having put it in the law to reflect the ?sentiments? emerging from the Bhopal gas tragedy case, this clause has complicated commercial negotiations. Some 60 per cent of the equipment — maybe even more — at a nuclear reactor site would be from Indian companies and, hence, it is not just a problem of foreign companies. On the other hand, foreign suppliers are arguing why they should be responsible for a reactor incident say 20 years after its delivery, by when the operator would have recovered the cost of purchase and would presumably be making profits.
While the government has made it clear that there is no question of a change in legislation now, sources said senior officials want to find a solution that satisfies both sides. By quantifying both the time and cost of liability, there is an assurance to the supplier that NPCIL?s right to recourse is not valid for the entire lifetime of a reactor.
A ?reasonable? time-frame and cost quantum would then become a function of the contract. Depending on the equipment, the contract with the supplier will reflect this.
These details are, however, still being worked out by the Department of Atomic Energy which is doing the complicated task of framing these rules and regulations. Subsequently, suppliers can then create a fund by pooling their resources from where liability expenditure could be channeled if the need arose.
On the commercial side, the positive development for NPCIL is that US companies GE and Westinghouse have got what is known as the Part 810 certifications from the US government. This gives them the green signal to start technical talks, which also means they can now discuss product specifications. An official explained that firstly, there are multiple suppliers?NPCIL, for instance, would be responsible for the transportation, assembly of the reactor and then its operations. In doing these tasks, besides setting up the reactor site, several other suppliers would come into the picture along the chain. All these contracts would have to reflect the supplier liability issue as it is mandated by law.
The second aspect is multiplicity of failures in case of an incident. As an official explained, there are many ?barriers? at a reactor site to prevent an incident. If an incident were to happen, it can be assumed that all these barriers failed.
However, the NPCIL would be in a legal quandary as, technically, the blame would fall on the last barrier — and only a supplier or a particular set of suppliers would be held responsible. With the clause throwing up such issues, sources said, one way out is to bring this legislation in line with the law of torts and the law of limitations. By placing a fixed time-frame and quantifying the liability, this could somewhat be achieved.