ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

GUJARAT NATIONAL LAW UNIVERSITY DIGVIJAY S REWATKAR 11A045

UNDER THE VALUABLE GUIDANCE OF: Mr. VIVEK DUBEY, ASSISTANT PROFESSOR OF LAW, GUJARAT NATIONAL LAW UNIVERSITY.

digvijayr11@gnlu.ac.in

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ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

ACKNOWLEDGEMENT

I deem it to be my utmost privilege to present this research on this very pertinent issue- ‗CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010‘. At the outset, I would like to express my deepest gratitude to the Respected Director, Mr. Bimal Patel, Gujarat National Law University, for granting this wonderful opportunity to research for which I shall remain indebted forever. At this juncture, I would like to express my deepest gratitude to Mr. Vivek Dubey, Assistant Professor of Law at the Gujarat National Law University for his immense resourcefulness and precious guidance in the course of preparing this research paper. It is indeed impossible to mention the names of everyone- friends, fellow students, resourceful bloggers and legal experts who have helped me formulate my ideas through stimulating discussions. Therefore, all in all, I take this opportunity to express my heartfelt gratitude to one and all under whose valuable support my crude brainwave has finally materialized into this cogent and coherent document.

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ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

LIST OF ABBREVIATIONS

MW MWe US a.k.a SDR NPCIL

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Mega Watt Mega Watt energy United States also known as Special Drawing Rights Nuclear Power Corporation of India Limited

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ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

TABLE OF CONTENTS

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 Acknowledgement  List of Abbreviations Abstract..........................................................................................7 Civil Liability for Nuclear Damages – An Introduction................9 Liability of the Operator................................................................10  Exceptions  Monetary Liability of the Operator  Extent of Liability of the Supplier  Economic Consideration of the Bill Debatable Sections of the Bill.......................................................14 Claims Procedure...........................................................................18 Conclusion.....................................................................................21 Bibliography/ Table of Authorities………………………………23

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ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

ABSTRACT

The Civil Liability for Nuclear Damages Bill, 2010 (a.k.a Nuclear Liability Bill, 2010) was a highly controversial bill that was passed by both the houses of the Indian Parliament. The government had to face fierce opposition at the offset of the presentation of the bill in the Lok Sabha. The matter of controversy was that the, opposition believed that the bill had some „Unconstitutional‟ clauses and that it was being pushed through the parliament due to US pressure. This bill deals with the liability or the immunity for suppliers of nuclear power plant equipments to India. While the western countries wanted immunity to suppliers and the opposition and the civil society wanted liability. The need for this bill was to avoid situations that arose at the time of the disastrous Bhopal Gas Tragedy, 1984. The principles of product liability, strict liability and absolute liability emerged when the UCC was on trial for the Bhopal Gas Tragedy. To avoid such situations in the future the parliament enacted and codified the principle of absolute liability in the Public Liability Insurance Act 1991. In contrast the Civil Liability for Nuclear Damages Bill, 2010 exempts the suppliers from any such liability and the government takes the responsibility of compensating the victims from the public exchequer, just to attract foreign nuclear equipment suppliers. The bill effectually caps the maximum amount of compensation at the time of nuclear accident to 1500 crore (US$334.5 million) as operators liability. This is not in sync with the accepted legal jurisprudence.

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ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

As no international nuclear liability conventions set such a cap on the total liability, but they only set a base. Many countries like Sweden and South Korea set a floor of 300 SDRs, and not total liability. Agreeing on such a cap is not in the interest of the country. It also deals with the setup that will be created, to make the compensation process prompt and efficient for its victims.

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ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

RESEARCH QUESTIONS
1. What is the extent of liability of the operators and suppliers? 2. What were the debatable clauses of the bill? 3. The process and setup of compensating the victims at times of nuclear disaster?

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ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

INTRODUCTION

The history of this bill goes to the 123 Agreement signed between USA and Republic of India is known as the U.S. – India Civil Nuclear Cooperation or Indo - US nuclear deal. The joint statement between George W Bush and Manmohan Singh was the framework for this agreement which was signed on July 18, 2005. This agreement separates India‘s civil and military facilities and places all its nuclear facilities under International Atomic Energy Agency. India was granted an exemption by the Nuclear Suppliers Group. The deal also places India under permanent safeguards to those nuclear facilities that have been identified by India. This lead to many inspections in the proposed sites and certain sites were selected for this matter. India also signed a an agreement with France. On October 1, 2008 the US Senate also approved the civilian nuclear agreement and allowing India to purchase nuclear fuel and technology from the US. Passing this bill is one of the last steps needed to be taken to activate the Indo-US civilian nuclear agreement as the United States nuclear reactor manufacturers will require the liability bill to get insurance in their home land.

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ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

LIABILITY

The liability of the operator of the nuclear installation shall be strict, and based on the principle of no-fault liability. The operator shall be liable in the following cases.  When Nuclear Damage is caused by a Nuclear Incident occurring in a Nuclear Installation during the temporary storage of material-in-transit in such installation, this person responsible for the material-in-transit is deemed to be an operator. The consignor shall be deemed to be an operator if the Nuclear Damage is caused during the transportation of the material-in-transit. If there is a written agreement between consignor and the consignee, the consignor being the one transporting the nuclear material, the person liable for any damage under the agreement shall deemed to be the operator.

 

Exceptions: 1. An operator shall not be liable for a nuclear incident where Nuclear Damage has been caused A natural disaster of exceptional character  An act of armed conflict, hostility, civil war, insurrection and terrorism. 2. An operator shall not be liable for any nuclear damage caused to The nuclear installation itself and any other installation including a nuclear installation under construction, on the site where it is located.  To any property on that site which was in connection with the installation.  The means of transport in which the particular nuclear material was being transported.

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ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

3. If any kind of nuclear damage is suffered by any person on account of his own negligence or from his acts, the operator shall not be liable. Monetary Liability of the Operator-

The maximum amount of liability in each nuclear incident shall be the rupee equivalent of three million Special Drawing Rights or such higher amount as the Central Government may specify by notification: (a) In respect of nuclear reactors having thermal power equal to or above ten MW, rupees one thousand five hundred crore; (b) In respect of spent fuel reprocessing plants, rupees three hundred crore; (c) In respect of the research reactors having thermal power below ten MW, fuel cycle facilities other than spent fuel reprocessing plants and transportation of nuclear materials rupees one hundred crore. Provided that the Central Government revises the amount. This amount of 300 SDRs (Rs. 2122.40 crore or $ 455 million) is grossly inadequate as the amount of $ 470 million as awarded in the Bhopal Gas Tragedy case was felt inadequate then how can an amount of $ 455 million be adequate that to for damage caused by a nuclear accident which will have its effect not only on the present generation but also on the generations to come. No international nuclear liability convention sets a cap on the total liability, but sets a base. Countries like Sweden and Japan have base liability of 300 million SDRs and not total liability. Whereas Indian bill seeks to cap the total liability at 300 million SDRs, showing disregard to human lives. But many objections were raised against this clause and now it has been amended and the Act gives the government the power to decide a higher amount over the cap of 300 million SDRs.

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ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

Extent of Liability of the Supplier

The liability has now also been extended to the Supplier through section 17 of the Civil Liability for Nuclear Damages, 2010. Section 17 of the act has been amended as there was no consensus over it in the Parliament. Earlier, 17(b) had the words ‗wilful act and gross negligence‘, but the meaning of these words was taken to be ambiguous and not clear. Now this clause of the bill has been amended and now it reads ‗the nuclear incident has resulted as a consequence of an act of supplier or his employee, which includes supply of equipment or material with patent or latent defects or substandard services.‘ Due to this ‗strict‘ and ‗no-fault‘ liability has now been extended even to the suppliers and this does not conform to the standard international practice, wherein only the operator is liable and not the supplier. Due to this change in the bill, now even the suppliers will have to seek protection from insurance companies. And also insure their components that will be supplied in the country. This would lead to the rise in the price of power generation. Clause 17(b) is really unjust to small suppliers who contribute to the three stage nuclear programme. They are seriously not in a position to get insurance cover for the potential liability that may be several times their net worth. Certain small suppliers like the Kaybouvet Satara say that ―they are anxiously watching tender documents that will be issued by NPCIL in the coming months to see how these reflect clause 17(b) before they make a quotation.‖ But the word ‗Intention‘ to cause damage, as a requisite to make supplier liable for nuclear damage and offers ‗immunity‘ from payment of compensation. This will give an undue advantage to the supplier to evade liability, which is absolutely unjustified. Moreover it is very difficult to prove culpability in the case of negligence. This concept of mens rea or intent is generally used in criminal and taxation law cases, but to use this principle in compensation cases is disgustingly unjustified. There is very little clarity in section 17. The clauses (a) (b) and (c) of section 17 was, in the original bill separated by ‗and‘ which was not reasonable, but after the amendment the word ‗and‘ has now been deleted. But mere

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deletion does provide clarity in the section. It is suggested that the clauses should be separated by the word ‗or‘ to provide more clarity and objectivity to the bill.

Economic Considerations of the Bill

Financially speaking it is expected to boost the Indian Economy and bring in $ 150 billion in the next decade for nuclear power plants. It is India‘s objective to increase the production of nuclear power generation from present capacity of 4000 MWe to 20,000 MWe in the next decade. U.S. nuclear vendors cannot sell reactors to Indian until and unless India caps third party liabilities or establishes a reliable liability pool so that the U.S. firms are protected from being sued in case of accidents.

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ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

DEBATABLE SECTIONS OF THE BILL

The bill certainly has some debatable Sections which were fiercely contested in the Parliament. These certain Sections indirectly free the operator of the nuclear reactor from any financial and legal liability.

Section 61 It reads as follows, “the maximum amount of liability in respect of each nuclear incident shall be the rupee equivalent of three hundred million Special Drawing Rights or such higher amount as the Central Government may specify by notification: Provided that the Central Government may take additional measures, where necessary, if the compensation to be awarded under this Act exceeds the amount specified under this sub-section. The liability of an operator for each nuclear incident shall be – (a) In respect of nuclear reactors having thermal power equal to or above ten MW, rupees one thousand five hundred crore; (b) In respect of spent fuel reprocessing plants, rupees three hundred crore; (c) In respect of the research reactors having thermal power below ten MW, fuel cycle facilities other than spent fuel reprocessing plants and transportation of nuclear materials rupees one hundred crore. Provided that the Central Government may, review the amount of operator‟s liability from time to time and specify, by notification, higher amount under this sub-section: Provided further that the amount of liability shall not include any interest or cost of proceedings.”

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Section 6, Civil Liability for Nuclear Damages, 2010

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ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

According to the bill the liability of the operator of the nuclear reactors has been set at the rupee equivalent of 300 Special Drawing Rights (SDRs) which is equal to $458 million (Rs 2,087 crore). This amount is considered insufficient in contrast to the damage caused by the Nuclear Incident. A similar kind of law in U.S. has set the financial liability for such kind of Nuclear Incidents to $ 10.5 billion.

Section 72 The Central Government shall be liable for nuclear damages in respect of a nuclear incident, -(a) Where the liability exceeds the amount of liability of an operator specified under sub-section (2) of section 6, to the extent such liability exceeds such liability of the operator; (b) Occurring in a nuclear installation owned by it; and (c) Occurring on account of causes specified in Sections (i) and (ii) of sub-section (1) of section 5: Provided that the Central Government may, by notification, assume full liability for a nuclear installation not operated by it if it is of the opinion that it is necessary in public interests. For the purpose of the meeting part of its liability under Section (a) or Section (c) of subsection (1), the Central Government may establish a fund to be called the Nuclear Liability Fund by charging such amount of levy from the operators. In such manner, as may be prescribed. This Section mentions about the financial liability that the culpable groups would share. It also states that the operator of the nuclear reactor is liable up to the amount of Rs 500 crore and the remainder would be paid by the Indian Government. In India‘s case Nuclear Power Corporation of India Ltd. (NPCIL) is the operator which itself is a government undertaking.

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Section 7, Civil Liability for Nuclear Damages, 2010

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The operator can reimburse the amount paid from the manufacturer and supplier if it is mentioned in the contract. The maximum amount for which the foreign companies will be liable is Rs 500 crore. Ultimately, the amount will be shelled out of the pockets of the Indian taxpayer even if they are not at fault and will pay for the mistakes of others.

Section 173 The operator of the nuclear installation, after paying the compensation for nuclear damage in accordance with section 6, shall have a right of recourse where --(a) Such right is expressly provided for in a contract of writing; (b) The nuclear incident has resulted as a consequence of an act of supplier or his employee, which includes supply of equipment or material with patent or latent defects of sub-standard services; (c) The nuclear incident has resulted from the act of commission or omission of an individual done with the intent to cause nuclear damage. This Section deals with the legal binding relationship of the culpable groups in case of a nuclear accident. It gives special rights to the operator (NPCIL) to sue the manufacturer and the suppliers. The victims have no right to sue for compensation. Practically, no one is considered legally liable as the recourse would only yield a meagre amount of Rs 500 crore at maximum. Section 184 The right to claim compensation for nuclear damage shall extinguish, if such claim is not made within a period of – (a) Ten years, in the case of damage to property;

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Section 17, Civil Liability for Nuclear Damages, 2010 Section 18, Civil Liability for Nuclear Damages, 2010

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(b) Twenty years, in the case of personal injury to any person, from the date of occurrence of the incident notified under sub-section (1) of section 3: Provided that where a nuclear damage is caused by a nuclear incident involving nuclear material which, prior to such nuclear incident, had been stolen, lost, jettisoned or abandoned, the said period of ten years shall be computed from the date of such nuclear incident, but, in no case, it shall exceed a period of twenty years from the date of such theft, loss, jettison or abandonment. This Section of the Civil Liability for Nuclear Damages limits the time available to make a claim within 10 years. This time which is given is very less compared to the long term damage that may be caused due to the radiations emitted by the nuclear reactor.

Section 355 Save as otherwise provided in section 46, no civil court except the Supreme Court and a High Court(exercising jurisdiction under articles 226 and 227 of the constitution) shall have jurisdiction to entertain any suit or proceedings in respect of any matter which the Claims Commissioner or the Commission, as the case may be, is empowered to adjudicate under this Act and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act. This Section extends the legal binding that the culpable groups may have to face. No civil court has the authority to take up the trial; it is only the Nuclear Damage Claims Commissioner who has the authority to take up the trial against the operator in case of a nuclear incident. The country will be divided into different zones, each having a claims commissioner. In the U.S. counterpart—the Price Anderson Act, the lawsuits and the criminal proceedings goes under the U.S. courts.

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Section 35, Civil Liability for Nuclear Damages, 2010

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ANALYSIS OF THE CIVIL LIABILITY FOR NUCLEAR DAMAGES BILL, 2010

CLAIMS PROCEDURE

Chapters III, IV and V of the Civil Liability for Nuclear Damages, 2010 discuss about the compensation claim procedure for the victims of a nuclear incident. Among these Clauses, Clause 35 was the most debatable as it bars the injured victims from filing suit against the operator. It is only through this setup of the Claims Commission and the Nuclear Damage Claims Commission that the victim can claim compensation. The victim has to prove and fulfil the requisites of it being a nuclear incident. Chapter III and Chapter V deal exclusively deal with compensation claim setup. Chapter IV of the bill discusses the Claims and Awards in case of a nuclear incident. This section of the research will deal with the procedure by which compensation can be claimed by the victims --1. Once a nuclear incident has occurred and has been reported and notified under sub-section (1) of section 3, the Claims Commissioner of the concerned zone and having the jurisdiction over the area, shall cause widespread publicity regarding the nuclear incident in the manner as he deems fit, for inviting applications of claims from the operator, by the victims of the nuclear incident. 2. The next question that comes is that, who is competent to file a claim? The application for claim may be made before the Claims Commissioner, in respect of the nuclear damage by— (a) a person who has sustained injury; (b) the owner of the property to which damage has been caused; (c) the legal representatives of the deceased; (d) Any agent duly authorized by such person or owner or legal representatives.

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3. (a) The application filed before the Claims Commissioner shall be in a prescribed form, containing all the particulars and accompanied with the prescribed documents. (b) Subject to the provisions of section 18, every application under sub-section (1) shall be made within a period of three years from the date of knowledge that, a particular nuclear damage has been caused. 4. (a) On receipt of such application under sub-section (1) of section 15, the Claims Commissioner shall give a notice to the operator and also offer an opportunity of being heard to the parties. It is the duty of the Claims Commissioner to set out such an application within a period of three months from the date of such receipt and make an appropriate award of compensation. (b) While making an award of compensation, the Claims Commissioner shall not take into consideration any gain, reimbursement or amount received by the applicant in pursuance of the contract of insurance taken by him or for members of his family or otherwise. (c) If an operator in any case tries to dispose off his property and evade the liability of payment of the amount of the award, the Claims Commissioner has the power to issue a temporary injunction to restrain such act through the provision of rules 1 to 4 of Order XXXIX of the First Schedule of the Civil Procedure Code, 1908. (d) The Claims Commissioner shall arrange to deliver the copies of the award to the parties within a period of fifteen days from the date of award. (e) Every award made under sub-section (1) shall be final. 5. The operator after paying the amount of compensation which had arisen out of a nuclear damage, in accordance with section 6, shall have the right to recourse -(a) Such right is provided in the contract in writing; (b) The nuclear incident was caused by the fault on the part of the supplier or his employee; this may include supply of material or equipment with hidden defects of sub-standards.

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(c) The nuclear incident was caused by the act of commission or omission of an individual done with the intent to cause nuclear damage. 6. The right to claim shall extinguish after the end of the stipulated time period— (a) In case of damage to property the time available to claim is ten years; (b) If a person has received any personal injury, from the date of occurrence of the incident as notified under sub-section (1) of section 3, then the time available with him is twenty years; Provided that where a nuclear damage is caused by a nuclear incident involving nuclear material which, prior to such nuclear incident, had been stolen, lost, jettisoned or abandoned, the said period of ten years shall be computed from the date of such nuclear incident, but, in no case, it shall exceed a period of twenty years from the date of such theft, loss, jettison or abandonment.

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CONCLUSION

After researching on the topic so elaborately, it is very clear that the bill is not settled and not just. It has many debatable clauses which still have no consensus over it. The liability of the operator is clearly defined but, the total liability that has been capped is unjust for the people who suffer the damage. Moreover the total liability is capped whereas in other countries only a floor is set. But after due consideration to the opposition, the bill has been amended and a proviso was added stating that the Central Government can increase the amount of compensation as it deems fit but has not stated any amount. The bill also deals with a claims procedure which seems unjust to the people as they only have the right to file a complaint and thereafter it becomes the responsibility of the compensation machinery. Thus, the bill had many unjust issues which were later on amended but few still persist. Now the efficacy of the bill can only be seen when it undergoes its real test.

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BIBLIOGRAPHY/ TABLE OF AUTHORITY

Research Papers Referred  Sridhar, Madabhushi, Immunities in the Name of ‗Liability‘: A Critique on Indian Nuclear Law (January 24, 2011)

Websites Referred  http://ssrn.com/abstract=1746854  http://www.prsindia.org

Statutes Referred  Civil Liability for Nuclear Damages Bill, 2010

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