[WSF-Discuss] The Civil Liability for Nuclear Damage Bill 2009 (in India): An Update and the Grave Danger that it Portends
Sukla Sen
sukla.sen at gmail.com
Tue Mar 16 03:41:52 UTC 2010
The major objections to the proposed draft Bill are as under:
*I*. *The Bill paves the path for private participation as "operator" of
nuclear power plants* in India. Its very central element is to define the
"liability" of a "private operator" in case of any nuclear accident.
Till now all nuclear establishments/ventures, including power plants, are
run by the state through affiliated bodies. The power plants are run by the
NPCIL..
Given the unique character of the nuclear industry in terms of
safety hazards and the catastrophic potentials of a nuclear power plant as
so chillingly demonstrated by the Chernobyl disaster on April 26 1986, in
particular, and given the profit maximisation drive as the very raison detre
of any private enterprise giving rise to the intrinsic and inevitable
tendency to cut corners in the field of "safety" *this is an open armed
invitation to disaster*.
A regulatory body at best can mitigate this trend, not eliminate it by any
stretch. Given the tremendous clout of the private operators in this field
given the scal eof investment required, the efficacy of
any regulatory bodyin any case would be highly suspect.
Hence, this has got to be resisted tooth and nail.
*II. A*. The *Bill* also *proposes to limit the "total liability" *(of the
"operator" plus the "state") *regardless of the scale of the disaster. This
is just unacceptable*.
The eminent jurist, and former Attorney General, Soli Sorabjee has opined
that such a provision is in contravention of the Article 21 of the Indian
Constitution guaranteeing right to life.
*II. B*. On top of that, the "total liability" has reportedly been "capped"
at "three hundred million Special Drawing Rights [SDR]". This works out to
just over Rs. 2,100 crore and slightly below 460 million US$.
In case of Bhopal Gas Disaster, the Supreme Court had approved
a deal between the contending parties providing compensation to the victims
amounting to US$ 470 million. That was way back in 1989, more than two
decades ago. Even at that time this was considered grossly inadequate.
So, *while whatever "cap" on liability is unacceptable; this "cap" on "total
liability" or the "maximum amount of liability"*, as the draft Bill appears
to have put it, *is woefully paltry*. More so, given the fact that
a catastrophic nuclear accident may very well dwarf the Bhopal Gas Disaster
in terms of devastations.
*III.* *The liability of a private "operator" has reportedly been "capped"
at a mere Rs. 300 crore*. Just one-seventh of the total or "maximum"
liability. The difference between the actual compensation to be paid and the
"liability" of a private "operator" would be borne by the Indian government
i.e. the Indian taxpayers/people.
So, while the very concept of "cap" is unacceptable and the total "cap"
could very much turn out to be woefully inadequate; the "cap" on individual
private "operator is abysmally low - just one-seventh of the total "cap".
*It's evidently an attempt to brazenly favor a private "operator" at the
cost of the Indian masses.*
Not only that, reportedly there is also a provision that this "cap" for an
individual "operator" may be fixed lower or higher than the normative "cap"
of Rs. 300 crore, but in no case lower than than Rs. 100 crore.
So nothing stops the Indian government to fix such caps, while
actually operating this provision, at Rs. 100 crore. In that case, the "cap"
for the private "operator" becomes only one-tenth of the total/"maximum"
"cap?. That's just ridiculous.
Furthermore, with passage of time, the Indian Rupee is expected to
depreciate against the SDR. With the total or "maximum" "cap" having
been defined in terms of SDR and and the "cap" individual private "operator"
in terms of Indian Rupees, the proportion of the financial burden to be
borne down by a private "operator", in case of a catastrophic accident,
would further go down!
Note:
*I. Even if the "liability" of an individual private "operator" is Rs. 500
crore, as being reported in the media, and not Rs. 300 crore - the figure
available with this commentator, the essential scenario remains unchanged.*
*II. The argument by some commentators that without this Bill being enacted,
the American companies would be at a disadvantage appears to be somewhat
confused and only partly true. The American vendors will conceivably no at
any disadvantage to their competitors as the vendors are routinely
"indemnified for consequential damages". However, they will be at a
distinct disadvantage as prospective "operators".*
*These critics, known to be otherwise knowledgeable, have rather pitiably
missed this central point that the essential thrust of the Bill is to usher
in private players as "operators".*
*Hence the draft Bill must be immediately opened up for fair and
transparent public debate and discussions sincerely engaging all the
stakeholders. All further steps must await the outcome of such
public consultations.*
Sukla Sen
P.S.: Please visit <http://www.petitiononline.com/no2cap/petition.html> and
sign up.
I/III.
http://www1.voanews.com/english/news/India-Defers-Introduction-of-Civil-Nuclear-Liability-Bill-87646437.html
India Defers Introduction of Civil Nuclear Liability Bill
Anjana Pasricha | New Delhi15 March 2010
The nuclear power plant in Grohnde, Germany as seen in this 31 Aug 2009 file
photo
The Indian government has deferred the introduction of a bill considered
crucial for American companies to tap into India's nuclear power market. The
legislation seeks to limit the liabilities of companies establishing nuclear
power plants in India, but has been slammed by opposition parties.
The Civil Nuclear Liability Bill was to be introduced in parliament Monday,
but the Speaker announced that the government has changed its mind.
Political analysts say the bill was deferred because its passage may not be
easy with main opposition parties vowing to block it.
The legislation will cap the liability of foreign companies at about $450
million in the event of an accident at a nuclear power plant. It would also
make the operator and not the supplier liable for these damages.
The government says without this key legislation, foreign companies will
hesitate investing in India 's civil nuclear field.
A landmark 2008 deal between India and the United States ended three decades
of sanctions imposed on New Delhi for conducting nuclear tests, and opened
the door for India to get civil nuclear technology. Since then American,
Russian and French companies have been lining up to establish nuclear power
reactors in the energy-starved country.
However until the Civil Nuclear Liability Bill is cleared, American
companies are at a competitive disadvantage. This is because American
companies are privately owned, while French and Russian companies are fully
or partly state owned, and their accident liability is underwritten by their
governments.
But critics in India have slammed the bill. A top leader of the Bharatiya
Janata Party, Ravi Shankar Prasad, says the cap on compensation at $450
million is too low.
"Therefore, the cost of the life of an Indian is too cheap," said Prasad.
The issue is especially sensitive in a country that experienced one of the
world's worst industrial disasters in 1984, when a gas leak in a Union
Carbide factory in the city of Bhopal killed an estimated 8000 people. The
Indian government was severely criticized for accepting what was called a
"paltry compensation" of about $470 million for the victims.
Opposition parties are also angry that the responsibility for doling out
compensation will rest on the operator - likely to be India 's state owned
nuclear corporation - and not the foreign companies building the power
plants.
Minister Prithviraj Chavan in the prime minister's office defends the bill,
and says it has been drafted in line with international norms.
"We just want to become part of international regime, now that we have been
allowed to participate in international civil nuclear commerce and trade,"
said Chavan.
The government wants to have the bill passed before a possible visit by
President Obama to India later this year.
II.
http://timesofindia.indiatimes.com/india/Govt-defends-nuclear-liability-bill-as-afterthought/articleshow/5688307.cms
Govt defends nuclear liability bill as afterthoughtTNN, Mar 16, 2010,
03.23am IST
NEW DELHI: As the nuclear liability bill predictably ran into rough weather
in Parliament, the government embarked on a 13th hour “explanation” and
defence of the bill.
Prithviraj Chavan, MoS in PMO, led a slew of government departments in
explaining details of the complex legislation on Monday. It’s clear the
government should have done so much earlier, but there was no attempt until
Monday to clarify what the government said were misconceptions of the new
bill.
Deep political polarization has made the passage of the bill difficult, but
it also higlights the government’s limitations in managing its affairs. For
instance, both France and Russia have insisted India enact a nuclear
liability legislation for their reactors to take off in this country. While
the French requirement was made clear in the bilateral civil nuclear
agreement signed in 2009, the Russian demand is at least a decade old.
It was the Koodankulam reactors 3 and 4 that gave birth to the first studies
on a liability law as early as 2000 by V B Coutinho, which was submitted in
2001. The US, of course, has been vocal in the demand that India enact such
a law as it allows its firms to take part in nuclear commerce.
III.
NUCLEAR LIABILITY LAW IN DEVELOPING COUNTRIES - INDIAN CASE
B. B. Singh
M/s Hooseinally Visram & Co.
Advocates, Solicitors & IPR Attorneys, 211-Yusuf Building, Veer Nariman
Road,
Fort, Mumbai – 400 071,
drbbsingh at iprpluslalw.com ; drbbsingh at mtnl.net.in
*Abstract:*
The Civil Liability for Nuclear Damage Bill-2009 is proposed to be discussed
in the Indian Parliament. It caps the total liability at 300 million SDRs (≈
US$ 468 million) and the Operator's maximum liability at Indian rupees 300
crores (equivalent of US $ 64 million). The paper discusses the futility of
such provisions in view of world-wide maturity achieved in the nuclear
industry and particularly in India. This provision is contrary to the rule
of law laid down by the Supreme Court of India in several cases where the
Court had occasion to discuss sustainable development of India's economy.
This provision is also not in conformity with the international conventions
to which India is not a signatory even otherwise.
*Keywords:* Nuclear Liability Bill-2009, Civil Nuclear Liability, India's
Nuclear Liability.
* *
*Biographical Notes:* Dr.B.B.Singh has been associated as a scientist with
India's Atomic Energy programme for almost 4 decades at the Bhabha Atomic
Research Centre. He has also worked for several years with the International
Atomic Energy Agency, Vienna. He holds Ph.D. degree in Physics from UK and
Master's Degree in Law from Mumbai University. He is Fellow of the Indian
Academy of Sciences and also National Academy of Science of India and is
presently a practicing lawyer at the Bombay High Court.
* *
*I. Introduction:*
The international Conventions on third party liability for civil nuclear
damage appear to be superficially serving the interests of the developing
countries although many of the developed countries do not subscribe to any
of these and have instead developed their own legislation. The United States
of America is one such example which propounded and actively participated in
the development of nuclear liability Conventions but enacted its own
Price-Anderson Act and continues to follow it after amending it from time to
time. India having come out of the nuclear isolation, is now at the verge of
entering into the world nuclear market in a big way as a purchaser as well
as a supplier of nuclear power reactors. The Hyde Act 20061 permitting the
execution of the Indo-US 123-Agreement and the implications of these
legislative documents in India's nuclear programme that culminated into
Nuclear Supplier Group (NSG) countries agreeing to deal freely with India in
nuclear materials has been discussed earlier2-3. Although presently the
subject of nuclear energy in India is exclusively State-owned, private
players shall soon enter this arena. Any legislation on compensation for
nuclear damage would always have conflict of interests. While the operators
would like to have their maximum liability fixed at the lowest possible
level, the State with a poor economy may not be able to afford paying for
the balance of the claim awarded to victims of nuclear accidents.
* *
* *
*II. Peculiarities of Nuclear Law *
The nuclear liability law has certain peculiarities unknown in common tort
law. Hence, a brief description thereof would greatly facilitate
understanding the present situation. It is to be kept in mind that the
nuclear technology being very complicated, it would be impossible for the
victim to pinpoint the cause of nuclear accident or assign the fault to any
particular person. In addition, there are too many players in the nuclear
installation and the victim would find it very difficult to initiate
multiple litigations. Thus it is argued that in order to facilitate the
victim to claim damages, several new concepts were to be brought in the
legal frame which are not part of the common tort law. The salient features
of Nuclear Liability Laws may be culled out from the Paris4 &
Vienna5Conventions as follows:
*(i) *The 'strict liability' or ‘absolute liability’ of the
operator that allows the victim to sue the operator once the incident occurs
and is well enunciated in the Article 3 of the Paris Convention as “-----
the operator of a nuclear installation shall be liable ---- for (a) damage
to or loss of life of any person and (b) damage to or loss of any property
other than nuclear installation itself and any other nuclear installation,
including a nuclear installation under construction on the site where that
installation is located and any property on that same site which is used or
to be used in connection with such installation”. And this liability is
established “upon proof that such damage or loss was caused by a nuclear
accident in such installation or involving nuclear substances coming from
such installation …. “. This simply means that the victim does not have to
prove the fault of the operator which would have been impossible for the
victim considering the complexities involved in nuclear facilities. This is
more specifically spelt out under Article IV(1) of the Vienna Convention as
"The liability of the operator for nuclear damage under this Convention
shall be absolute."
While this so claimed 'victim friendly' provision is highly debatable since
the victim has still to prove the relationship between damage and the
nuclear incident as mentioned above. In addition, the operation of nuclear
facilities is regulated with a multitude of rules and regulations, violation
of any thereof may not be very difficult to prove by the victim.
*(ii) *The 'legal channeling' or 'exclusive liability' concept is
believed to help the victim to sue only the operator and not run after
numerous other joint players in the nuclear installation. However, the
operator is exempt from liability if the incident is caused due to
intentional fault of third parties involved in the nuclear installation in
which case the common law of tort shall apply.
*(iii) *Only the Courts in the installation country where the
incident occurs shall have the jurisdiction to try suits for claims.
It is further understood that in lieu of these facilities, the victim makes
certain compromises.
*(iv) *First and the foremost is the maximum limit on the
compensation claim in a nuclear incident. This restriction has been
justified on the grounds that if nuclear industry has to mature and grow, it
will need private participation and to encourage that there has to be some
protection against ruinous compensatory claims in any incident which may be
nothing less than a total catastrophe. While unable to pay the claim awarded
to the victim(s) the operator may declare insolvency in which case the
victim gets insufficient compensation and in the ultimate result, both the
operator and the victim suffer. This aspect has been seriously considered in
drafting the nuclear legislation.
*(v) *While the decision on the amount of maximum liability is
left to the Installation State, the law requires that that amount be insured
or guaranteed in any other form.
While deciding the amount to be insured the State takes into consideration
the capability and willingness of the insurance companies
*(vi) *Another highly complicated aspect of the nuclear law is the
question of limitation within which time the victim must claim the damages.
A nuclear incident causes not only immediate danger to the human life but
also induces life-threatening diseases like cancers in the survivors long
after the nuclear incident had occurred. The genetic abnormalities in the
subsequent generations of the survivors is well documented which certainly
warrant compensation. The time limitation for the victim to sue for damages
for such somatic and genetic damages under the nuclear law therefore remains
uncertain. While the existing time limit to claim damages is 10 years after
the accident has occurred in respect of the loss of property, the nuclear
operator shall be responsible for loss of life and personal injury upto 30
years under the Protocol to the Paris Convention and Vienna Conventions (See
ref6). It is however provided under the Vienna Convention that the suit for
claim must be presented within 3 years from the date the damage came to the
knowledge of the victim.
*(vii) *Damage to properties of the sufferers is not only temporary
but it may render environment uninhabitable and vast fertile lands unusable
for hundreds of years to come. Furthermore, these environmental effects
require reinstatement and refurbishing at very heavy costs in money and
time. The nuclear law must provide compensatory relief in such cases as
well.
*(viii) *The exemption to the nuclear liability is best described in
Art. 9 of the Paris Convention as follows:
“The nuclear operator shall not be liable for damage caused by a nuclear
incident directly due to an act of armed conflict, hostilities, civil war,
insurrection or, except in so far as the legislation of the Contracting
Party in whose territory his installation is situated may provide to the
contrary, a grave natural disaster of an exceptional character”.
It is understood that under the international Conventions, the operator is
not exempted against terrorist attacks.
*III. Specifics of Developing Countries*.
It is thus clear that in designing nuclear legislation striking a proper
balance between social justice and societal needs in developing countries
including India could be an extremely tricky and difficult task and at the
same time a highly controversial issue due to the scientific, technological
and economical complexities that exist therein. This surely provides enough
scope and opportunities for exerting pressures on law-makers and the
legislators to maneuver the provisions of law in favour of the rich and
influential industrial houses and conglomerates at the cost of human life
and public safety which could be a quite serious matter particularly in the
developing countries where corruption abounds. Without any aspersions on
individual groups like the politicians or the public officials, it may not
out of place to mention that in 2009 the Transparency International has
ranked India7 at 84 with the Corruption Perception Index (CPI) of 3.4 along
with countries like El Salvador, Guatemala, Panama and Thailand.
The requirement of electrical power for the economic growth of India is
undisputed. While the conventional sources of energy from fossil fuels add
to global warming and ought to be discouraged, nuclear energy is being
advocated and it appears as the most attractive alternative though it is
unfriendly vis-à-vis capital investment. India plans to increase its nuclear
power generation from the present 4120MWe level to 60,000 MWe by 2030 and
would need about 50-60 new Nuclear Power Plants each costing US$4-5 billions
in capital investment. Thus the present Indian nuclear market is worth about
US$ 200-250 billions. Over and above this8, there would be the costs for
fuel, reprocessing of spent fuel, waste disposal and decommissioning of the
reactor etc. running into several hundred billion US dollars
Still further, as revealed by the last Chairman of Atomic Energy
Commission Anil Kakodkar in 2008, the Indian dream is to achieve 500-600
thousands MWe power generation during the next 3 decades after 20309. This
all will not be possible without international participation in the Indian
nuclear power programme. Hence the future of foreign investment in nuclear
industry in India is extremely bright with enormous opportunities. All this
requires India’s active participation in international markets and
compliance with international rules and regulations.
India is presently at the verge of enacting the Nuclear Civil Liability Act
which is essential for international players particularly from the US to
enter into the Indian markets. With such high stakes, industrial lobbying
and maneuvering at every stage of nuclear power development in India cannot
be totally ruled out as was evidenced from the Parliamentary proceedings
during the passing of the Indo-US 123-Agreement on July 22, 2008 which are
allegedly tainted10 with financial maneuverings and bribery accusations.
*IV. International Conventions on Civil Nuclear Liability*
The two major international conventions appeared during the early sixties of
the last century while nuclear power industry was just developing. The first
one is the "Convention on Third Party Liability in the Field of Nuclear
Energy dated 29th July 1960" also called "Paris Convention"4 which was under
the auspices of Nuclear Energy Agency (NEA) of the OECD countries followed
by the Brussels Supplementary Convention of 31st January 1963 to the Paris
Convention hereinafter referred to as "Brussels Supplementary Convention".
The second one has been developed under the auspices of the International
Atomic Energy Agency known as "Vienna Convention on Civil Liability for
Nuclear Damage of 21st May 1963" which shall hereinafter be referred to the
"Vienna Convention"5. Both these Conventions are based on almost similar
basic principles of nuclear law as discussed above but they may differ
marginally in respect of damage claim amounts, procedures and territorial
jurisdictions. The Paris Convention is confined to the Western Europe,
Slovenia and Turkey while Vienna Convention is valid world-wide
After the Chernobyl accident on 26th April 1984, both the Paris and Vienna
regimes were amended as follows:
(i) A Joint Protocol Relating to the Application of the
Vienna Convention and the Paris Convention was adopted in 1988. It combined
the two conventions and broadened the jurisdictional scope while maintaining
their basic principles of nuclear law. It was intended to avoid any conflict
of law when the damage or cause of damage extended beyond the boundaries of
one country and it came into operation in 1992.
(ii) Under the auspices of IAEA, two new legal instruments were
evolved;
(a) "The Protocol to Amend the 1963 Vienna Convention on
Civil Liability for Nuclear Damage" hereinafter to be referred as "Protocol
to the Vienna Convention" that entered into force on 4th October 2003 but it
had limited success with only five countries as members till 2008 (see ref
6) namely Argentina, Belarus, Morocco and Romania.
(b) The Convention on Supplementary Compensation for Nuclear
Damage11 or more frequently referred to as "CSC" is a Convention to be
signed independently of the Vienna or Paris Conventions. This was open for
signature on 12th September 1997 but had not come into force with only four
countries having ratified it till October 2008 (see ref. 6).
(iii) The legislation under the NEA regime also went through
several changes and two additional instruments were brought in for
signature;
(a) Protocol to Amend the Convention on Third party Liability in
the field of Nuclear Energy of 29th July 1960, hereinafter referred to as
"Protocol to Paris Convention" and
(b) Protocol to amend the "Brussels Supplementary Convention''
or the Protocol to amend Convention of 31st January 1963 Supplementary to
the Convention of 29th July 1960 on Third Party Liability in the Field of
Nuclear Energy. These instruments were open for signature on 12th February
2004 but till July 2008 none of these were in force. (see ref.6)
Thus there exist two generations of international nuclear liability
legislative regimes all totaling to 8 instruments in number but their
success has been extremely disappointing.
Significantly, US is not a signatory to any of these Conventions and has in
place instead The Price-Anderson Nuclear Indemnity Act 1957 originally
enacted for 20 years which has been amended in 1975 and extended for 12
years. In 1988 the Act was amended and further extended for another 15 years
till 2002. In February 2002, the Act was extended for a short period till
December 2003 and under great criticism and a fierce debate it was extended
till 2017. In 2005 the Act has been further extended to remain in force till
2026. The constitutional validity12 of the Act has been unsuccessfully
challenged in the Supreme Court of the US.
There presently exist 17 nuclear power plants in India spread over the
length and width of the country with overall capacity of 4120 MWe. There are
5 nuclear power plants under construction with total additional capacity of
2660 MWe13. India is also not a party to any of the aforesaid international
conventions and it need not be since till date the overall nuclear industry
in India is State-owned. The Atomic Energy Act 1962 does not provide for
private industry players in the nuclear power generation and no proposal is
indicated to amend it to allow private investment. Hence there is no fixed
upper limit on damage claims. Fortunately, so far no serious accidents have
occurred at any of the nuclear reactors to call for damage claims.
Notwithstanding the aforesaid "The Civil Liability for Nuclear Damage
Bill-2009" hereinafter referred to as the “Bill-2009” is likely to be
introduced in the Indian Parliament. While it is not the intention of this
communication to analyze the whole Bill *per se*, the emphasis will be
mainly on the limit fixed on the monetary compensation and to the time
period available for the victim to sue for damages.
* *
*V. The Bill-2009*14
A. Compliance with international nuclear laws
One of the significant departures from the international conventions is
Sec.5(1)(a)(ii) in the Bill wherein the operator is exempted from the
liability from any nuclear damage if such damage is caused by a nuclear
incident directly due to and act of ------------ ‘terrorism’. Unlike the
provisions under International Conventions this liability is thrust upon the
Central Government along with the nuclear incidents caused due to grave
natural disasters of exceptional character and armed conflicts, hostilities,
civil war and insurrections which are certainly in the domain of the State
as a whole.
*B. Limitation on the amount of compensation to victims.*
Section 6 of the Bill describes the provisions relating to the
quantification of liabilities of the operator.
6.(1). The maximum amount of liability in respect of each nuclear
incident shall be rupees equivalent to three hundred million Special Drawing
Rights (SDRs).
(2) The liability of an operator for each nuclear incident shall be
rupees three hundred crores;
Provided that the Central Government may, having regard to the extent of
risk involved in a nuclear installation, by notification, either increase or
decrease the amount of liability of operator:
Provided further that where the amount of liability is decreased, it shall
not be less than rupees one hundred crores;
Provided also that the amount of liability shall not include any interest or
costs of proceedings.
In view of what has been stated above, and in view of the Section 6(2) read
with Section 6(1) of the Bill 2009, the operator contributes only rupees 300
crores (US$64 million) out of the total liability fixed at 300 million SDRs
(US$468 million). The balance shall be the responsibility of the State i.e.
tax-payers. At the very first look the aforesaid provisions of The Bill-2009
appear to have been drafted in consonance with or rather inferior to the
out-dated 1957 version of the Price-Anderson Act which prescribed the
operator's liability at US$60 million and government's share of liability at
US$ 500 million. It totally ignores the recent version of the Act that
absolves the State from any liability below US $ 10,761 millions and places
the responsibility for this amount on the operator alone. Oddly enough in
the Bill-2009, the operator's liability has been capped in Indian currency
at rupees 300 crores instead of SDRs and it is no secret that the rupee
value has been declining steadily every year. The value of the maximum
compensation presently so fixed, it is horrifying to think that if an
accident occurs a few decades later whether the victims will receive enough
compensation to feed themselves for even a few weeks or days. Still more
strange is the objective of the law-makers that the proviso to the Section 6
provides that the Government may increase or decrease the cap amount on the
operator’s liability but never it to be less than rupees 100 crores. Such
departures from the provisions of international conventions cannot but be
viewed with suspicion and malafides in favour of the operator and against
the welfare of the Indian populace. If at all it was essential that the
operator's maximum liability be fixed in local currency whether at Rs. 300
crores or 100 crores, this ought to have been linked to the Cost of Consumer
Index or the Cost of Inflation Index (CII) as annually announced by the
relevant authorities India as discussed hereinbelow.
* *
*C. Limitation on time to claim compensation.*
Section 14 sub-section (1) of the Bill-2009 describes the person(s) who can
make application for compensation in respect of nuclear damage and the
sub-section (3) thereof states that “subject to the provisions of Section
17, every application under subsection (1) shall be made within a period of
three years from the date of knowledge of nuclear damage by the person
suffering from such damage. The section 17 referred therein states “The
right to claim compensation for any nuclear damage caused by a nuclear
incident shall extinguish if such claim is not made within a period of 10
years from the date of incident notified under Section 3”. The nuclear
damage as defined under Section 2(f) of the Bill-2009 means loss of life or
personal injury to a person or loss of, or damage to property. Whereas
nuclear damage can be immediate in terms of death of persons or destruction
of properties by fire or blast or damage on exposure to lethal doses of
ionizing radiations, there are long term latent effects like induction of
various cancers which may occur even 3-4 decades after exposure to
non-lethal doses of radiations emitted during the accident. For such well
documented nuclear damages the Bill-2009 does not provide any succor as
available under the Protocols to Vienna and Paris Conventions where the
limitation has been fixed at 30 years. The Bill-2009 appears to have been
drafted without proper application of mind and without consideration of the
available scientific data on radiation-induced carcinogenesis in Hiroshima
and Nagasaki survivors where the latency extends beyond 45 years15. The
scientific naivety of the Bill - 2009 thus cannot be denied.
Further more, there seems to an undue haste in presenting the Bill-2009 as
is evident when Section 8(1) of the Bill is read with the Section 6(2) with
the first and second proviso thereto which undermines the seriousness of the
lawmakers.
Section 8(1) states
“The Operator shall, before he begins operation of his nuclear installation,
take out insurance policy or such other financial security, covering his
liability under sub-section (2) of the Section 6, in such manner as may be
prescribed.”
The first proviso to the sub-section (2) of the Section 6 authorizes the
Government to, by notification, decrease this amount, subject to the second
proviso of this Section, to be not less than 100 crores.
It cannot be denied that insurance provides immediate financial relief to
the victims but considering the catastrophic nature of nuclear accidents
though with very low probability, the insurance companies are reluctant to
enter into this risk market. The insurance amount is thus restricted and is
based on the operator’s accessibility to insurers and it is actually set in
consultation with the insurer. Unfortunately, in the Indian context, prior
to the presentation of the Bill this exercise does not seem to have been
done at all since the Insurance Regulatory Development Authority has just
started deliberating on it16 *poste* Bill approval by the Cabinet of the
Ministers.
* *
*VI. The Issues*
In view of what has been discussed above the following issues arise:
1. *Is the capping of compensation necessary? *
Historically the concept of capping the maximum liability of the operator
was evolved in fifties and early sixties of the last Century considering
that the nuclear industry was then an unexplored area but had a great
potential for human welfare and if it had to grow, it needed private
industry participation. At the same time, this industry was fraught with
catastrophic accidents causing such huge damages to life and environment
that if the industry had to compensate fully as per the law of torts, it
would go insolvent and bankrupt resulting in inadequate compensation to
victims. Hence the industry needed protection in some form of subsidy from
public funds. All the international conventions and national laws of nuclear
power countries maintained this philosophy. Whether almost 6 decades later
in the year 2010, the nuclear industry can still demand in the name of
research and development this kind of subsidy from the State is highly
debatable. Undoubtedly research and development activities in any industry
are continuing processes and are not peculiar to the nuclear industry alone
but none of the other industries are being provided such preferential
protection by the State.
1. *Is the capping of compensation rationale? *
The nuclear industry has been dynamic which is well reflected in the
Price-Anderson Act wherein initially the operator's maximum liability was
limited to US$60 million and the government was to take-up a further
liability of US$ 500 million. In the 1982 amendment the operator's liability
was increased to US$160 million and that of the Government was decreased to
US$ 400 million still making the total maximum liability to US$560 million.
In the 2005 amendment, the Government's share became zero and the total
liability of the operator increased to US$10,761 million and all of it has
to be assured and indemnified17. In addition, the maximum amount of
compensation provided in the Bill-2009 is also totally out of tune with the
current amendments proposed in the Vienna and Paris Conventions or
Convention on Supplementary Compensation (CSC) a summary whereof extracted
from the paper by Faure & Borre 6 is reproduced below:
Compensation in US $ millions
Convention
Contributor
First Generation
Current Generation
Paris Convention 1960
Nuclear Operator
8.218
1,112
Brussels Convention 1963
Installation State or
Operator
279.414
794.40
Collective State Fund
205.451
476.64
*TOTAL NEA REGIME*
* *
*493.083*
*2,383*
Vienna Convention 1963
Nuclear Operator
5.000
246.542
Collective State
---
246.542
*TOTAL VIENNA *
* *
*5.000*
*493.083*
CSC (Convention on Supplementary Compensation for Nuclear Damage – 1997)
Operator/Installation State
493.083
Collective State Fund
493.083
*TOTAL CSC*
* *
* *
*986.166*
*US The Price-Anderson Act *
Nuclear Operator
60
* *
State
500
*TOTAL*
560
*10,761*
*The Bill – 2009*
* *
* *
* *
* *
Nuclear Operator
64
*--*
* *
State
404
*--*
*Total*
*468*
*468*
India is not yet a signatory to any of the aforesaid Conventions but it is
reported18 that India would soon sign CSC-1997 the provisions whereof are
more than double as provided in the Bill-2009 as shown in the above table. On
May 21, 2008 the US Mission to International Atomic Energy Agency in Vienna
announced that on advice and consent of the US Senate in August 2006, the
required legislation for ratification of CSC was enacted in December 200719
It is significant to mention that till that date, thirteen countries had
signed the CSC including Argentina, Australia, the Czech Republic,
Indonesia, Italy, Lebanon, Lithuania, Morocco, Peru, the Philippines,
Romania, Ukraine and the US but only four of these including the US,
Argentina, Morocco and Romania had ratified it. Hence the Convention has not
yet entered into force since it requires at least five States with a minimum
of 400,000 MW of thermal power from nuclear reactors to have ratified it. As
mentioned hereinabove, the US has its own Price-Anderson Act-1957 (as
amended 2005) governing the domestic nuclear damage liability which is
capped at a far higher value of US$10.761 billion than that provided under
CSC for which now the US operators shall have the liability for their
nuclear installations in other countries. As far as the Bill-2009 is
concerned the Bhopal Gas Tragedy can be taken as a rough guideline for
setting a maximum liability limit on the nuclear operator though a nuclear
accident could be far more disastrous. In the Bhopal Tragedy the
compensation was settled at US$ 470 million and confirmed by the Supreme
Court of India on 3rd March 199120. On the basis of the present (2009) Cost
Inflation Index of 63221 with that of 1991 as 199 having base of 100 in
1981-82, it would be understandable if the maximum liability had been capped
at US$1500 millions instead of US$468 millions.
1. *Is the capping of compensation beneficial? *
This issue may be discussed in 2 parts. Firstly, the operator’s liability
being limited to a meager sum of just rupees 300 crores, does not provide
sufficient incentives to the operator to prevent nuclear accidents. It may
be argued that operation of nuclear installations is strictly regulated by
rules and guidelines laid down and regularly reviewed and updated from time
to time by international regulatory authorities like International Atomic
Energy Agency (IAEA) and the Atomic Energy Regulatory Board (AERB) of India,
there still remains ample scope for the operator to innovate further safety
and preventive measures as it is the operator who has more information on
its installation than the regulatory authorities. In the absence of such
incentives the operator follows routinely the rules and regulations that are
obligatory and shies away from innovating newer strategies for preventing
accidents. In the end, the operator turns complacent.
Secondly, the State’s liability for the balance of the compensation is an
indirect subsidy towards the nuclear industry. It results in an artificial
competition in favour of the nuclear operator who ought to have absorbed the
full cost of risk in the value of the product at the consumer end. Thus the
cost of say electricity from nuclear reactors becomes artificially more
competitive leading to its unrealistic public appreciation and an undue
State favour as against other alternative sources of energy like solar, wind
etc. the development whereof may be more fruitfully encouraged from public
funds.
*4. Is the capping of compensation adequate? .*
It is almost impossible to predict the damage and the costs of a nuclear
accident without being fraught with severe criticism and uncertainties.
Before the Price - Anderson Act came into being, the US Atomic Energy
commissioned report known as Wash-740 estimated that in a worst nuclear
accident the cost of damage to property alone would reach US $ 7 billion in
fifties of the last century. This estimate of property damage has been
revised in 1964-65 to US$17 billion. Yet another later study WS-1400 during
1975 estimated personal injuries as 3,300 early fatalities and 45,000 early
illnesses to be added to the liabilities as damage to life. In November 1982
the US Nuclear Regulatory Agency sponsored yet another programme CRAC2
(Calculation of Reactor Accident Consequences) which estimated cost of US
reactor accident to be as high as US$314 billion. In July 1986, the United
States General Accounting Office (GAO) report stated that a $6.5 billion
limit on liability would cover 95 percent of the reactors in the country but
a serious accident could be up to 10 times greater than this (see ref.22)
although the US Nuclear Regulatory Agency later sponsored study
"State-of-Art Reactor Consequences Analyses" (SOARCA) disputed the earlier
estimates23. The maximum liability limited to 300 million SDRs as provided
in the Bill-2009 is low and absurd.
1. *Is the capping of compensation ethical and constitutional?*
The damage in nuclear accidents should be partitioned into personal damage
to life and property and the damage to the environment and ecology. In case
of damage to life and property of persons the basic principle of Tort Law is
that the injurer be obliged to fully compensate the victim. The compensation
for damage to environment is regulated by the international principle of
“Polluter Pays” as has been repeatedly held by the Supreme Court of India. A
legislative enactment putting a cap on the liability of the injurer would be
a highly unethical proposition and a blatant violation of Environmental Laws
and Constitution of India.
Firstly, unlike in the European countries and Americas, Indian populace is
relatively uneducated and poor and most of it is not covered under any
insurance scheme either for life, or property or for medical treatment. The
population living around Indian nuclear installations would be, by and
large, economically very weak and shall depend solely on the compensation.
Any limit on the compensation to the affected persons fixed by legislation
favouring the commercial establishments would therefore be against the basic
duties of the elected representatives who are to protect the interests and
welfare of their electorates.
Secondly, it is pertinent to remember that the injury to the environment and
ecology and sustainable development of the country has frequently been a
subject matter before the Supreme Court of India. Notwithstanding the US
Supreme Court’s ruling of 26th June 1978 in Duke Power Co. v. Carolina
Environmental Study Group setting aside the judgment of the lower Court
wherein the constitutional validity of the Price-Anderson Nuclear Industries
Indemnity Act -1957 was challenged and upholding the Act on importance of
the nuclear industry12, the Supreme Court of India has taken a different
view. Indeed, the socioeconomic conditions in India are different from those
prevailing in the developed and western world. India has formulated its own
Constitution and enacted multitude of legislation, Acts and Rules that are
commensurate with its own cultural ethos, economy, and policy of sustainable
development. Hence, in the matter of *Vellore** Citizens Welfare Forum v/s
Union of India*24 decided on 28th August 1996 His Lordship Mr. Justice
Kuldeep Singh speaking on behalf of a three Judge Bench of the Hon’ble
Supreme Court of India stated:
“It is no doubt correct that the leather industry in India has become a
major foreign exchange earner and at present Tamil Nadu is the leading
exporter of finished leather accounting for 80% of country’s export. Though
the leather industry is of vital importance to the country as it generates
foreign exchange and provides employment avenues it has no right to destroy
the ecology, degrade the environment and pose a health hazard.”
Their Lordships further quoted from an earlier judgment
“Once the activity carried on is hazardous or inherently dangerous, the
person carrying on such activity is liable to make good the loss caused to
any other person by his activity irrespective of the fact whether he took
reasonable care while carrying on his activity. The rule is premised upon
the very nature of the activity carried on” Consequently the polluting
industries are absolutely liable to compensate for the harm caused by them
to the villagers in the affected area, to soil and to the underground water
……… The Polluter Pays principle as interpreted by this Court means that the
absolute liability for harm to the environment extends not only to
compensate the victims of pollution but also the cost of restoring the
environmental degradation …….. and as such the polluter is liable to pay the
cost to the individual sufferers as well as the cost of reversing the
damaged ecology”.
The Apex Court of India further reiterated that:
“The Precautionary Principle and the Polluter Pays principle have been
accepted as part of the law of land ……. “.
The Supreme Court of India has, time and again till date, relied upon and
applied this principle and has held that it is enshrined in the Constitution
of India and is being implemented through various domestic laws including
the Environmental Law 1986.
In *Karnataka Industrial Development Board v/s Sri.C.Kenchappa & Ors*.25 His
Lordship Mr. Justice Dalveer Bhandari of the Supreme Court of India speaking
on behalf of the Bench as recently as on 12th May 2006 reiterated the rule
earlier laid down in *Indian Council for Enviro-Legal Action & Ors. v/s
Union of India*26 and elaborated thereon:
“The Polluter Pays principle demands that the financial cost of preventing
or remedying damage caused by the pollution should lie with the undertaking
which caused the pollution, or produce the good which cause pollution. *Under
the Principle it is not the role of Government to meet the costs involved in
either prevention of such damage, or in carrying out the remedial action,
because the effect of this would be to shift the financial burden of the
pollution incident to the tax payer.”*(Emphasis intended) **
* *
*VII. Conclusion*
India is adjudged internationally as a highly responsible Sovereign State in
all fields of activities including nuclear sciences. The nuclear industry in
India has reached and has demonstrated its full maturity despite its 35
years of isolation due to sanctions imposed by the world community in early
seventies of the last century. India is now a willing partner in the process
of globalization without compromising its interests nuclear or otherwise.
India is not a signatory to NPT or CTBT or any of the abovementioned
Conventions of civil nuclear third party liabilities. Hence India need not
have drafted a legislation presumably based on the out-dated 1957 version of
the Price Anderson Act which in itself has undergone several incarnations
and is perhaps today the best under the present circumstances. The
provisions in the Bill-2009 particularly relating to the capping of the
operator’s liabilities and that of the State’s responsibility therefore
appear to be unwarranted, unethical and unconstitutional and would be
against the various decisions taken by the Supreme Court of India as also
opined by the former Attorney General of India27.
*VIII. References:*
1. The Henry J. Hyde US±India Peaceful Atomic Energy Act 2006
http://www.coherentbabble.com/signingstatements/PublicLaws/HR5682PL109
±401.pdf.
2. Singh, B.B. (2007) `The Hyde Act 2006: India's nuclear dilemma',
Atoms for Peace: An International Journal, Vol. 1, No. 4, pp.307±319.
3. Singh, B.B. (2008) INDO-US 123 agreement – a saga of controversies
and compromises’, *Int. J. Nuclear Law*, Vol. 2, No. 1, pp.78–90.
4. http://www.nea.fr/html/law/nlparis_conv.html
(downloadedon 06.01.2010)
5. http://www-pub.iaea.org/MTCD/publications/PDF/Pub1279_web.pdf
6. Faure, Michael G. and Borre, Tom V (2008) Compensating Nuclear
damage: A Comparative Economic Analysis of the US and International
Liability Schemes Environmental Law & Policy Review Vol.33, pp219-286.
7. (http://en.wikipedia.org/wiki/Corruption_Perceptions_Index:
(downloaded on 01.01.2010).
8.
http://business.rediff.com/report/2009/dec/11/us-nuclear-firms-close-in-on-indian-market.htm
(downloaded on 06.01.2010)
9. Nuclear India Vol.42, 1-2, 2008 Published by Department of Atomic
Energy, India.
10. http://www.telegraph.co.uk/news/worldnews/asia/india/2445203/
<http://www.telegraph.co.uk/news/worldnews/asia/india/2445203/%20indian%20-governments->
indian -governments-<http://www.telegraph.co.uk/news/worldnews/asia/india/2445203/%20indian%20-governments->victory
(downloaded on 02.01.2009)
11. http://www.iaea.org/Publications/Documents/Conventions/supcomp.
html (downloaded on 06.01.2010)
12. http://en.wikipedia.org/wiki/Price%E2%80%93Anderson_Nuclear_Industrie
s_Indemnity_Act (downloaded on 03.01.2010)
13. http://www.npcil.nic.in/main/AllProjectOperationDisplay.aspx
14. Greenpeace India (Personal Communication-courtesy Ms. Karuna Raiana)
15. http://www.ratical.com/radiation/CNR/RIC/chp17F.html#tab17b
16.
http://www.ptinews.com/news/450621_IRDA-examines-insurance-cover-for-nuclear-accidents-
(downloaded 06.01.2010)
17. Energy Policy Act, Public Law No.109-58, 119 Stat.594 (2005) as
quoted in http://ssm.com/abstract=1503327
18. http://www.blonnet.com/2009/01/09/stories/2009010951800500.htm
19. http://vienna.usmission.gov/08-05-21_csc/.
20. AIR1992SC248
21.
http://incometax.indlaw.com/display.aspx?791408D0-A994-4972-B1AC-852C578ADE17,
22. http://www.nuclearpowerprocon.org/pop/Price-Anderson.htm
23.
http://www.nrc.gov/about-nrc/regulatory/research/soar/overview.html#3
24. AIR 1996SC2715
25. AIR2006SC 2039
26 AIR1996SC1446
27 Soli J. Sorabjee (2009);
http://www.thehindu.com/2009/12/14/stories/2009121455150800.htm (downloaded
on 06.01.2010)
--
Peace Is Doable
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