The Manmohan Singh government may accede to an international liability treaty in the run-up to President Barack Obama's visit next month as a means of short-circuiting American pressure to amend the recently passed nuclear liability Act.
In a September 2008 letter of intent, India told the U.S. it would sign the Convention on Supplementary Compensation for Nuclear Damage (CSC). American nuclear suppliers had insisted on this because they said the existing Indian and international law would leave them exposed to potentially unlimited claims for damages by Indian victims in the event of a nuclear accident involving U.S.-supplied reactors.
The CSC prescribes in its annexe a draft national law that signatories are supposed to model their domestic legislation on. India believes its new liability law conforms to the CSC but the U.S. disagrees. In specific, American officials say the Indian provisions on the nuclear operator's right of recourse against a supplier (Section 17(b)) and on allowing tortuous and criminal liability (Section 46) in the event of an accident are incompatible with the international convention.
Though the U.S. is demanding changes in the law to accommodate the concerns of American companies, the only diplomatic leg it has to stand on is India's September 2008 LoI. But by calling out New Delhi for “going back on its September 2008 commitment to sign the CSC,” the American side has provided an exit route for India. Which is to sign the treaty and announce the fulfilment of the last pending American condition for nuclear commerce between the two countries to begin.
Sources said India could well take such a step before Mr. Obama comes since the only requirement for accession is a signature. The CSC has no provision for one signatory to object to another's national law or for the International Atomic Energy Agency — which is the depository authority — to pass judgment on this issue.
“We said we would sign the CSC and we are going to do that. We never said we will give up, for example, criminal liability,” the sources said, noting that U.S. membership of the CSC did not mean its national laws would no longer apply.
Asked whether an Indian signature was imminent, all that the sources were prepared to say was “when we sign, you will know.” They said India's desire to join the CSC predated the Indo-U.S. nuclear agreement by several years and was linked to its desire to be in a position to deal with cross-border nuclear accidents.
Indian officials also believe that the continuing U.S. stridency on the supplier liability issue springs from its fear that the provisions India introduced into its liability law might find takers in other countries going in for nuclear energy expansion.
Acknowledging that U.S. and even Indian suppliers had reservations about the new liability Act, the sources said the government was willing to “sit down and explain to them how the law would work.” But they ruled out any change or amendment in its provisions.