After the Bhopal gas tragedy judgment fiasco, all eyes are on the nuclear liability bill. The civil liability for nuclear damages bill is one the most contentious bills that is listed for consideration and passing in this monsoon session of Parliament. The bill has received a lot of criticism from the opposition parties and civil society on the ground that it has been introduced under US pressure.

Though the bill was approved by the Union Cabinet by November 2009, it could only be introduced at the end of the 2010 budget session. Due to an opposition walkout following its introduction, the bill was referred to the Standing Committee on Science and Technology, Environment and Forests. On June 24, the standing committee invited comments and suggestions on the bill from the public. The government is expecting the committee to come up with its report shortly following which the bill will be tabled in the parliament.

The nuclear liability bill is introduced by the central government with the stated object of fixing nuclear liability arising out of nuclear accident and for joining an appropriate international liability regime. The government (through Science and Technology minister Prithiviraj Chavan) has said that it wants India to enter the Convention on Supplementary Compensation for Nuclear Damage (CSC), 1997, so that supplementary funds are available. The idea to join the CSC itself was originally propounded by a committee set-up by the Vajpayee government.

The bill caps the total liability of any incident at a maximum of 300 million Special Drawing Rights (Rs.2100 crores). Of this amount, the liability of the nuclear operator is fixed at Rs.500 crores while the central government shall be liable for the rest of the amount upto the fixed limit.

Current liability framework

Though nuclear liability is not expressly provided for in any Indian law, right to life under Article 21 of the Constitution, has been interpreted to include within its ambit, the protection and preservation of environment from pollution. The Supreme Court in the Oleum Gas Leak case ruled that an enterprise which is engaged in a hazardous or inherently dangerous industry with the potential to cause widespread environmental damage, owes an absolute and non-delegable duty to the community to ensure that no harm results to anyone.

The bill caps the total liability of any incident at a maximum of Rs.2100 crores. Of this amount, the liability of the nuclear operator is fixed at Rs.500 crores while the central government shall be liable for the rest of the amount.

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It held that in case of an accident, irrespective of negligence, the enterprise shall be strictly and absolutely liable to compensate all those who are affected. As nuclear enterprises deal with hazardous material which has the potential to cause widespread environmental damage, under the present legal scenario, it would be strictly liable to compensate all affected by a nuclear accident.

Another important environmental principle which has been recognised both in international law and domestic law is the polluter pays principle. This principle, adopted to further sustainable development, extends the liability of an enterprise not only to compensate the victims of pollution but also the cost of restoring the environmental degradation. In the Indian Council for Enviro-Legal Action case, the Supreme Court applied this principle to hold that it is the polluting industry which will be liable for the damage it caused and not the government. Applying the polluter pays principle to nuclear liability, liability should lie exclusively with the nuclear enterprise and not the government.

On the topic of nuclear liability there are four major international conventions - the 1960 Paris Convention, the 1963 Vienna Convention, 1997 Protocol to Amend Vienna Convention and the 1997 Convention on Supplementary Compensation for Nuclear Damage (CSC). The CSC, which is still not in force, is only available to members of either the Paris or the Vienna conventions and countries that have enacted a domestic law in compliance with the law annexed to the CSC.

As India is not party to any of these conventions, it has to get a national law which complies with the provisions of the CSC annex for it to be a party to the CSC. The CSC does not require a limit in the liability and provides for supplementary compensation which would be provided through contributions from the different state-parties.

Major issues with the bill

The most contentious feature of the bill is that it caps the total liability of any nuclear incident at a maximum of 300 million Special Drawing Rights (around Rs.2100 crore at current conversion rate). Nuclear accidents are known to cause widespread damage to life and property. If the damage caused by the incident amounts to a larger amount, the compensation cannot be increased.

An absolute cap on liability violates the right to full compensation which, as interpreted by the Supreme Court, is part of the fundamental right to life. Though the claim is that capping liability is essential for entering the nuclear liability regime, the CSC does not have any such limit. In fact, the maximum liability which the bill proposes (300 million SDR) is actually the minimum liability amount prescribed by CSC annex. Also, if the total liability is capped, access to international funds provided by CSC may be blocked.

Out of the maximum amount, the operator of a nuclear plant shall be liable for Rs.500 crores. The central government will be liable for damages in excess of this upto the set limit of Rs.2100 crore rupees (300 million SDR). Fixing the amount of operator liability to Rs.500 crores is much lower than the terms of the CSC annex which states that the liability of the operator may be limited “to not less than” 300 million SDRs, or in cases where the state compensates the remaining loss, not less than 150 million SDRs, which is Rs.1100 crores.

A less noted and discussed aspect of the bill is that the liability amount for the operator can be further decreased or increased by the central government as long as it does not go below Rs.100 crores.

The rock bottom limit of Rs.100 crores has been allowed, following a similar proviso in the CSC's annex to cover post-incident cases where the government has evaluated risk and damages and has then decided to lower the liability cap.

Only 4 countries have ratified the CSC so far, and no country has a cap on the total liability of a nuclear incident. The US, a party to the CSC, has the a domestic liability law (Price-Anderson Act ) which provides for more than $10.5 billion (around 23 times India's limit) in liability from the private nuclear industry and the US Congress can decide to give more compensation if the amount is not sufficient.

By fixing the operator liability at such a low level, India's bill fails to provide sufficient incentive to the operator to prevent nuclear accidents. Moreover, the state’s liability for the balance can be seen as an indirect subsidy towards the nuclear industry and a burden on the taxpayer. By avoiding full compensation and making the government liable for the larger portion of the compensation, the bill violates the polluter pays principle applied by the Supreme Court. More worrying is the fact that the nuclear operator is not liable at all if the accident has occurred due to a grave natural disaster and in cases of terrorism and other armed conflicts. These exceptions violate the absolute liability rule laid down by the Supreme Court.

A crucial concern is that the bill restricts the victim of a nuclear accident from filing cases against the different players in the nuclear industry. The government is also accused of protecting the foreign nuclear suppliers by channeling all the liability to the nuclear operator, which under the present system is a state agency. However the bill gives the nuclear operator a right to sue the nuclear supplier/builder where it is expressly provided in a written contract and the nuclear incident was a result of a willful act or gross negligence of the supplier.

Another issue is that the bill leaves the determination of the occurrence and gravity of a nuclear accident exclusively to the Atomic Energy Regulatory Board (AERB) which is already entrusted with the task of regulation of nuclear plants. The worry is that the AERB may not work as a fully independent body as it was created by a government order and is answerable to the Atomic Energy Commission. The bill also ensures that all nuclear damage claims are only dealt by a Nuclear Damage Claims Commissioner or a Nuclear Damage Claims Commission. The bill denies a victim’s right to appeal against the decision of the Commissioner/Commission whose award “shall be final”.

Another problematic aspect of the bill, especially after the experience of the Bhopal gas tragedy, is that it fixes a limitation period of 10 years for filing cases. Damage from radioactive release, as the environment ministry pointed out, involves changes in DNA and hence takes a long time to manifest. By putting a short limitation period, people who acquire diseases long after the incident will not be allowed to sue.

Summing up

The nuclear liability bill presents a clear departure from the existing legal principles on liability applied by the Supreme Court. The rationale behind such an exception for the inherently hazardous nuclear industry is not clear. The premise that limiting liability is essential for joining an international convention like CSC does not have any merit as the convention does not require the state to limit the liability.

The rationale behind fixing the liability of the operators at a very low amount seems to be for allowing the nuclear operators to easily acquire the mandatory insurance cover required by the bill. With the passing of the Indo-US Nuclear Deal, private companies are expected to start its operations in India. The bill seems to be an effort to lure foreign enterprises to enter the nuclear industry to meet India’s enormous energy requirements. However, to achieve this, the bill has burdened the taxpayer and has restricted the right of victims protected by the Constitution.

As noted earlier, the Supreme Court has followed the polluter pays principle. Moreso, because the bill denies the right to full compensation which is a part of the fundamental right to life (Article 21), the bill in its current form, if passed, is likely to be struck down by the court if someone challenges it.