Editorial: Nuclear still unclear

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Published: February 6, 2016 12:23:33 AM

Does ratification of CSC fix problems of nuclear law?

Now that India has ratified the Convention on Supplementary Compensation (CSC) for Nuclear Damage, the question is whether this paves the way for firms like GE, Westinghouse and Areva setting up nuclear plants in India or whether the Indian Civil Liability for Nuclear Damage (CNLD) Act still effectively acts as a deterrent. Considering that, on his visit to India less than six months ago, GE CEO Jeff Immelt was quite dismissive of the changes proposed by India, it would appear it isn’t quite the done deal that was made out by the government which, after the ratification in Vienna, said “this marks a conclusive step in the addressing of issues related to civil nuclear liability in India”. While in India, Immelt had said “the world has an established liability regime … it has been accepted and adopted … I can’t put my company on risk … India can’t reinvent the language on liability”. All that the ratification means, for all practical purposes, is that India considers its nuclear liability law to be in conformity with the CSC; it doesn’t mean that the CSC will now override the Indian law. Indeed, as the FAQs released by the ministry of external affairs (MEA) last year in February make clear, India has believed its law to be in conformity with CSC for a long time. “Based on the presentations by the Indian side …”, the MEA’s FAQs read, “there is a general understanding that India’s CLND law is compatible with the CSC”; at another place, the FAQs states “the provisions of the CLND Act are broadly in conformity with the CSC”.

The MEA sought to downplay the concerns of investors like Immelt on Clauses 17 and 46—and, to a lesser extent, even clause 6—of the CLND. While clause 6 talks of the central government, from time to time, reviewing the operator’s liability, clauses 17 and 46 deal with supplier liability and possible suits based on this—the initial no-faults liability under the law is that of the operator of the plant, not the supplier, but the operator can file a damages claim against suppliers later. As the MEA points out, clauses 17(a) and (c) are similar to those in the CSC. Clause 17(b) which deals with supplier liability, the MEA says, is part of a standard contract between the buyer—in this case, the government-owned Nuclear Power Corporation of India Limited (NPCIL)—and the supplier; in other words, the difficulty posed by the CLND law can be fixed through the contracting with NPCIL. As the MEA puts it, “it is not a mandatory but an enabling provision”. In the case of clause 46 which allows a suit for damages to be filed, the MEA says “the CLND Act channels all legal liability … exclusively to the operator (in this case, NPCIL)” and not the supplier—indeed, the MEA says, there were two amendments to this clause that specifically tried to include suppliers in the provision but these were not adopted by Parliament. And, apart from the funds that will be available from the CSC—each nuclear supplier contributes to this fund which is to be used in case of an accident—the government also talks of the R1,500-crore Indian nuclear insurance pool set up which potential suppliers can use to insure themselves. The question, the lawyers of nuclear suppliers are asking, is: in case of an accident, will courts go by the written law or by the MEA’s FAQs and the government’s intent in creating the insurance pool. Immelt made his answer quite clear; that of the other suppliers is not clear as yet.

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