What are the loopholes in India’s nuclear liability legislation?

• India’s nuclear liability laws aim to attract more U.S. firms by easing accident-related fines on equipment suppliers.

• The international nuclear liability regime includes multiple treaties, strengthened after the 1986 Chernobyl nuclear accident.

• The Convention on Supplementary Compensation (CSC) was adopted in 1997 to establish a minimum national compensation amount.

• India enacted the Civil Liability for Nuclear Damage Act (CLNDA) in 2010 to provide a fast compensation mechanism for victims of a nuclear accident.

• The CLNDA provides for strict and no-fault liability on the operator of the nuclear plant, requiring them to cover liability through insurance or other financial security.

• If damage claims exceed ₹1,500 crore, the government is expected to step in, with a limited liability amount to the rupee equivalent of 300 million Special Drawing Rights (SDRs).

Supplier Liability in India’s CLNDA

• The international legal framework on civil nuclear liability is based on the principle of exclusive liability of the operator of a nuclear installation and no other person.

• India introduced the concept of supplier liability over and above that of the operator’s in its civil nuclear liability law, the CLNDA.

• The law recognizes that defective parts were partly responsible for historical incidents such as the Bhopal gas tragedy in 1984.

Supplier Liability Clause in Nuclear Deals in India

• Foreign and domestic nuclear equipment suppliers are hesitant to operate nuclear deals with India due to concerns about unlimited liability under the CLNDA.

• Suppliers are particularly concerned about Section 17(b) and Section 46, which contradict the Act’s purpose of channelling liability to the operator.

• Section 46 allows civil liability claims against the operator and suppliers through other civil laws, potentially exposing suppliers to unlimited liability.

• Existing nuclear projects in India, including the Jaitapur nuclear project, Kovvada nuclear project, and Russia’s Kudankulam nuclear project, have been stalled.

• The central government maintains that the Indian law is in line with the CSC, but legal experts argue that Section 17(a), (b), and (c) are distinct and separate.

• The Ministry of External Affairs claims that Parliament debates over the CLNDA have rejected amendments to include the supplier, thereby preventing the supplier from being liable under a “class-action suit”.