An asset-turned-liability

The latest controversy  to  hit India’s ruling UPA government is the Civil Liability for  Nuclear  Damage Bill, popularly known as the Nuclear Liability Bill. The  bill, as  the name suggests, deals with liabilities in case of a  nuclear disaster  in India. The government has come in for stinging  criticism from many  quarters as opposition accuse it of bowing to  American pressure and  conceding the sovereignty of the nation to  capitalistic powers in the  form of U.S. nuclear suppliers.

India and Pakistan are the only nuclear   capable countries who do not have such a law in effect. All that is  set  to change as India ushers in the new Nuclear Liability Bill. So  far, so  good. Where the government has hit the road block is in certain   features of and other proposed amendments to the bill which are   perceived to be a result of U.S. pressure on the government.

A nuclear plant is  supplied to a  country by nuclear suppliers. They design and build the  nuclear  reactors until it is fully functional. When the reactor is  handed over  to a country, a nuclear operator is hired to operate the  plant. The  operator deals with the day-to-day running of the plant.  According to  the international and the proposed Indian law, in case of a  nuclear  accident, victims are entitled to compensation from the  operator of the  plant. This law has been made so that, wherever the  fault leading to  the accident may lie, the victims get speedy  compensation as any  confusion regarding the source of the aid is  removed. The operator can  then seek to get compensation from the  supplier in a court of law.

The most controversial aspect of the   Nuclear Liability Bill has been the proposed amendment to Article 17 (b). This section deals with the compensation a nuclear operator can get   from the nuclear suppliers. Nuclear supplier companies based in the  U.S.  has conveyed their objection to Article 17 (b) to the UPA  government.  They fear that this part of the bill would expose them to  criminal and  tort proceedings. American nuclear companies have  historically been  reluctant to operate in countries which could take  them to court over  accidents and disasters. If the article is scrapped  or amended in favour  of nuclear suppliers, the opposition argues, the  suppliers would have  almost no incentive to concentrate on the safety  of the plants they  provide and thus would lead to nuclear disasters.  The Article 17(b) is a  vital part of the Bill. It is the part which  ensures speedy and fair  compensation to the victims of a disaster and  facilitates a fair  remuneration to the operator from the supplier. If  the government scraps  or drastically amends the bill as has been  suggested, the whole  procedure of bringing the wrong-doers to justice  is thrown out of the  window.

The major nuclear accidents across the  world - Chernobyl, Three Mile Island, Crystal River, Brookhaven etc -  have all  been caused by flaws in the design of the nuclear plants and  drawbacks  in the safety measures provided. The design of a nuclear  power plant is  done exclusively by the nuclear plant supplier. Thus any  fault in the  design can be squarely laid at the door of the supplier.  It is  interesting to note that the operator may have no idea about the  flaws  in the design. The safety measures too are primarily installed by  the  nuclear supplier. If the Article 17 (b) is amended in favour of  the  supplier, then they will have almost no incentive to provide  effective  and fool-proof safety mechanisms and to construct designs  that are not  prone to accidents of any kind. The government should  desist from any  attempt to tamper with the article. Rather it should  ensure that the  article covers every contingency and strengthen it to  ensure that no  guilty part goes unpunished.

The Article 17 (b) is not the only problem with the Nuclear Liability Bill. The government should take a look at the USA’s equivalent of the Bill and realise how much value   the American government places on an American life.

The Clause 6 of the  Indian Bill states that the maximum financial liability in case of a  nuclear accident is  300 million Special Drawing Rights (SDR), which translates  to $458 million or  Rs. 2087 crores. The compensation set by the  American constitution for  an accident in the U.S. is $10.5 billion or  Rs. 50000 crores. The Indian government should effectively tell the  world that lives are not cheaper in India. If the U.S. government has set  such high compensation amounts when accidents affect American citizens, why not so in India. The government should assess this situation and  increase the amount set  as compensation. What is more, the only operator  that would be running  the plants in India is the NPCIL, the government  run agency. So, when a  nuclear disaster happens, the Indian public would  effectively be  paying the compensation to themselves out of their own  pockets!

The maximum amount that can be  reclaimed by  the operator from the supplier is now set as Rs. 500  crore, which is  significantly less than the Rs. 2087 crore NPCIL would  have to pay.  Obviously, the supplier would rather pay the compensation  to the  operator rather than investing much more money into developing a   faultless design and safety system. A potential tort feasor will   optimise their behaviour on the basis of artificially low damages they   would have to pay.

India plans to accede to the Convention on Supplementary Compensation (CSC). The CSC is basically a forum or a group of nations that have a common consensus on the issue of Nuclear Liability. The financial details that have been set in the Indian Bill is in accordance to the CSC. However, the CSC is not exactly the  premier organisation in these matters. Only a mere thirteen countries  have  joined the CSC of which only four have ratified it. The Vienna Convention on Civil Nuclear Liability is a much better option. It has only a floor regarding the amount associated with operator recourse in stark contrast with the cap CSC has put in place. It also allows countries to operate independent liability regimes. Moreover, the CSC will only enter in to force if a major nuclear power joins it, a remote possibility. Only if every country in the world were to join the CSC, would the aforementioned amount of 300 million SDR be raised. At the current level, only 50 million SDRs can be raised.

Another drawback to  the proposed Bill  is that it restricts the time period allowed for  claims of compensation  to 10 years. Ten years is too short a time frame  to assess the  physical impacts a nuclear leak has on a population. The  time frame  should be lengthened to at least 30 years so that the nature  of the  impact can be fully and effectively assessed. The Bill should  also make  provisions to include health and environmental experts to  assess the  impacts, a feature that has been left out of the current  bill.

The current international law regarding   liability of nuclear suppliers is largely lenient to the suppliers.   These laws were drafted in the days when the nuclear power industry was a fledgling one and was in the process of evolving in to a major industry. However, today the nuclear industry flourishes like a green bay tree and so does not deserve any leniency. International institutions should deal with mishaps on the part of suppliers in the same manner as it would deal with disasters in any other industry.  

The current Civil  Liability for  Nuclear Damage Bill is almost half baked and is not  exactly fit to  be passed by the Indian Legislature. The Bill requires  some serious  amendments to ensure that the welfare of prospective  victims is always  the foremost priority of the government. India is one  of the largest  emerging markets of nuclear energy. India should use this  power to  negotiate with foreign and Indian suppliers to ensure that the  Bill  does not let these companies get away with negligence. An ordinary  citizen can only hope that the government has learned crucial lessons  from the Bhopal disaster of 1984 and the horrendous mismanagement of the   investigation and prosecution.