In its final form as legislated, the Civil Liability for Nuclear Damage Bill, 2010 represents an improvement over the government's initial and intermediate drafts. Weaknesses remain but Parliament has done well to exclude private nuclear operators from the ambit of the law, widen the scope of the operator's right of recourse against suppliers, and raise the liability cap of an operator in the event of an accident to Rs.1,500 crore. The earlier limit of Rs.500 crore was woefully inadequate. Even though the new cap will not cover the scale or extent of nuclear damage in the event of a serious accident, the law at least allows future governments to raise the cap. The most important change introduced is, of course, in Section 17(b), dealing with the right of recourse. The first draft allowed the operator to recover damages from a supplier in the event an accident was caused by gross negligence on the latter's part. Under pressure from foreign companies and governments, the United Progressive Alliance government tried to delete this section or nullify its significance by linking its operation to the existence of a contract or to mens rea on the part of the supplier. Eventually, however, it was forced to swallow the strengthening of this provision. The operator will now have a right of recourse against the supplier if a nuclear accident is caused by equipment with latent or patent defects or by sub-standard services.

Predictably, foreign and Indian private sector lobbyists like the U.S.-India Business Council and various chambers of commerce have launched a campaign against 17(b). They say the section is inconsistent with international norms and will lead to a collapse of the Indian nuclear industry because private vendors won't supply equipment for fear of being held liable. These arguments are untenable. International ‘norms' in such matters do not fall from the skies but are the product of market conditions. With India looking to buy as many as 40 large reactors over the next decade or so, it has every right to expect that suppliers shoulder at least the liability burden from an accident caused by defective products. Moreover, the operator will be able to make a claim only if it can prove in court that an accident for which it has paid compensation was actually caused by an act of the supplier. If some private lobbyists are worried about the supplier being held liable after “80 years” for products sold now, they should at least concede that the operator will not find it easy to establish fault liability eight decades on. In any event, with operator (and hence supplier) liability capped around $320 million for a plant likely to be sold for more than $5 billion, the insurance burden will be far from onerous — especially if it is set against the human lives, welfare, and futures at stake.

More In: Editorial | Opinion