Nuclear Civil Liability Bill in India
UPA government is scheduled to table the bill for Civil Liability for Nuclear Damage 2010 in second half of the current session of the parliament. The bill was to be brought in right away but had to be stalled due to strong opposition. The fact is that the bill has not been cleared by the standing committee of the parliament and is reportedly being rushed to meet the requirements of the US suppliers. The Issues: The bill seeks to hold the operator of the nuclear plant solely liable for the claims in the event of any accident with capped limit of liability of Rs. 500 crores. If the claims exceed this cap the government has to step in with additional burden of maximum Rs. 2,200 crores. The time limit for liability is set at 10 years. The arguments against the bill can be grouped in three categories, namely, responsibility of operator v/s supplier of equipment, time limit of 10 years to be longer due to unknown nature of damages to even next generation caused by radiation effects and the limited amount of compensation of Rs. 500 crores. The Experience: We should be guided by the past experience on these issues. Fortunately, we have no experience of nuclear accident barring minor leakages etc. However, my mind goes to Bhopal Gas tragedy due to negligence of Union Carbide which is still reverberating for thousands of effected people even after 25 years. The lessons from this tragedy have been well documented. Nevertheless, unpreparedness of the government agencies to deal with the accident, the claims, court procedures, and endless wait for justice for decades are the highlights of this experience. The magnitude of this tragedy is comparable with leakages, failures of components etc. from nuclear plants as the gas leak of Bhopal was not less lethal. However, the nuclear tragedy may unfold even after decades and has that uncertainty of cause effect relationship for much longer duration for speedy accountability and settlement of claims.
Chernobyl nuclear accident has been better known nuclear accident involving people. However, the full facts may not come out due to iron curtain effect of erstwhile Soviet Union. Nevertheless, some experience sharing with Russia is available for factoring in our approach to tackle this issue. Liability of Equipment Suppliers: The product liability laws in US, European Union and Japan have been very stringent and all international suppliers are liable to damages for any claims of accidents due to faulty operation or manufacturing defects in any product. In India, there is no statute which deals with product liability claims. Any such claims may be made under Consumer Protection Act, breach of contract etc. These may not be adequate to deal with a nuclear catastrophe. The nuclear equipment suppliers from US, Europe and Japan are well protected with established and evolved laws to deal with product liability claims. It is but natural that the provisions of such existing laws would get dovetailed into any agreement with India. Therefore, time limit of ten years for claims, limited liability and accountability of the operators are the principles directly flowing out of product liability laws in these countries. We should therefore not just try to point out one sided arguments against the US suppliers. India should simultaneously work on separate comprehensive product liability laws and workers compensation as well as third party liabilities based on the international code as we get integrated with global markets and have access to latest technologies like nuclear or space to deal with. Options for Claims Settlement: It is obvious that no business entity can ever undertake unlimited liabilities for any accident for fault of operator in violation of user manuals and guidelines of use provided by the manufacturers. Even in case of manufacturing defect the liability can be limited to free replacement of defective parts.
The unforeseen side effects of a defective part in nuclear plant can be very important in case of an accident. Since the technologies are continuously evolving, the manufacturers may prefer to shirk the responsibility, if possible, under the “Development Risk Defense” clause of product liability. This clause provides the escape route to manufacturers on the pretext that at the time of manufacturing there was no better knowledge or technology in the society to anticipate and prevent the defect which may have shown up at a later date. This is definitely the grey area in the field of nuclear defect liabilities as it will be difficult to pin down the supplier. So India must guard against such possibilities. While the limit of Rs. 500 crores may not be adequate and the government has to bear the additional burden up to Rs 2,200 crores, we must ensure that the nuclear plant operators have recourse to the suppliers also under product liability laws of their country of origin as well as Indian laws when ready. That is the only way to spread the liability to so called “partners in progress”. The operators should create and build up a corpus for any eventuality to take care of any claims. It may be desirable to have a mix of insurance of third party liabilities & workers compensation along with a fund of its own so that cash out flow on insurance premium is optimal. Legal Framework: The UPA government would do well to develop comprehensive laws to take care of the interests of the Indian operators, the suppliers and the partners with an eye on the common man who should not have to run from pillar to post from one generation to the next for settlement of any claims. Vijay M. Deshpande Corporate Advisor, Strategic Management Initiative, Pune March 19, 2010
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