India on Wednesday signed the Convention on Supplementary Compensation for Nuclear Damage (CSC), thereby delivering on the last of its commitments stemming from the landmark 2005 nuclear agreement with the United States.

The international covenant — which provides a framework for channelling liability and providing speedy compensation in the event of a nuclear accident — was signed at the International Atomic Energy Agency offices in Vienna by Dinkar Khullar, India's Ambassador to Austria. The IAEA is the “depository” of the CSC, which has so far been signed by 14 countries and ratified by four, including the U.S.

The CSC will enter into force only when at least five countries with a minimum of 4,00,000 units of installed nuclear capacity ratify the treaty. Even if India ratifies it — and Indian officials say this is unlikely to happen soon — the CSC will not enter into force unless at least one or two countries with a large civilian nuclear programme also do so.

With India signing the CSC and the Obama administration issuing the requisite ‘Part 810' licensing certifications, the stage is now set for the Nuclear Power Corporation of India Ltd. to begin full-fledged commercial negotiations with General Electric and Westinghouse for supply of two 1,000-MWe reactors. Three rounds of discussions have already been held, Indian officials say, but these have largely been exploratory in nature.

India promised the U.S. in 2008 that it would sign the CSC, a treaty that requires signatories to pass a domestic liability law in conformity with a model text. Washington's aim was to ensure that its companies were legally exempted from any liability burden in the event of an accident occurring in an American-supplied nuclear reactor.

Though India passed its liability law last month, the U.S. has objected to Sections 17(b) and 46 of the Act which open the door for legal action against nuclear suppliers if an accident is caused by faulty or defective equipment. Washington says these provisions violate the CSC, a charge New Delhi rejects.

With GE and Westinghouse lobbyists up in arms, the U.S. side initially suggested that the Manmohan Singh government find a way to delete or negate the two offending sections. When the impossibility of this was pointed out, they suggested that NPCIL be asked contractually to accept the entire liability burden of its suppliers in the event of an accident. This suggestion has also been vetoed.

Leaving aside the explosive political implications of a public sector company granting a free pass to an American supplier, legal advisers have pointed out that neither NPCIL nor the government can sign away the provisions for tortious and criminal liability that have been embedded in the new law.

Now that the CSC has been signed, Indian officials hope the U.S. will ease up on its pressure. “We have delivered on all our commitments. Now there is nothing which stands in the way of American companies having commercial negotiations for the sale of their reactors,” a senior official said.

The CSC provides no forum for signatories to challenge each other's national laws. Article XVI allows for arbitration as well as adjudication by the International Court of Justice, in the event of a dispute. But the U.S. entered a reservation while ratifying the Convention in 2008 declaring “that it does not consider itself bound by [these] dispute settlement procedures.” When it eventually ratifies the treaty, India is likely to make a similar declaration.

That would leave the Supreme Court of India as the only forum competent to rule on the compatibility of the Civil Liability for Nuclear Damages Act, 2010 with India's international obligations stemming from its accession to the CSC.

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