Liability Bill changes may open a can of worms

The Bhopal outcry may make the introduction of changes in the draft Nuclear Liability law inevitable but the downside for the Manmohan Singh government is that each measure to strengthen the Bill in favour of potential victims is likely to anger the U.S. government and American nuclear suppliers.

After all, the latter have made no bones about their need to be protected from ‘Bhopal type litigation' in the event of a nuclear accident.

Senior officials acknowledge that the American side is demanding changes in two provisions of the Bill. Section 17(b) allows nuclear operators, who are otherwise strictly and absolutely liable for any nuclear accident, to exercise a ‘right of recourse' against their suppliers if the latter have been grossly negligent in any way. And Section 46 clarifies there will be no derogation from existing Indian laws on criminal and tort liability for any company whose negligence along any part of the nuclear supply chain might be responsible for an accident. Both of these provisions, U.S. nuclear industry sources say, would expose American suppliers to law suits in India.

In an email to The Hindu in March, an American nuclear industry source had complained about the absence of ‘absolute liability' for the operator as well about sections 17(b) and 46, both of which he said were violative of the Convention on Supplementary Compensation (CSC).

Since then, one amendment has already been introduced quietly. The Standing Committee was told on Wednesday that the Bill will now include the word ‘absolute' in the description of operator liability to ensure strict channelling of liability as envisaged by the CSC.

Indian officials say inclusion of the word ‘absolute' makes no difference to the structure of the Bill, which anyway envisages channelling of liability to the operator. This would not affect the law's provisions on the right of recourse or on tortuous and criminal liability. They insist the draft law is fully compliant with the CSC. As of now, they said, the government has no appetite to accommodate the American objections on these two points, especially given the divisive nature of the domestic Indian debate.

In Tuesday's meeting, MPs questioned Dr. Banerjee on the Bill's provision (6(ii)) allowing the government to reduce the amount of operator liability below Rs. 500 crore. The idea, they were told, was to take account of differential risk in various nuclear activities. Japan's nuclear liability law, for example, provides for three categories of facilities, with the highest liability attached to the ‘riskiest' —reactors with a capacity greater than 10 MW — and the lowest to those with less than 0.1 MW. In India, Dr. Banerjee said, any reduction in statutory liability would be notified before hand and not after an accident.