The Indian government’s attempts to spare US nuclear suppliers of civil liability in case of nuclear damage is yet another instance of blatant disregard for Parliament’s supremacy. While enacting The Civil Liability for Nuclear Damage Act, 2010, Parliament had inserted a revolutionary clause in Section 17 of this Act to hold suppliers also liable.
The section states that nuclear installation operators “shall have the right of recourse where (a) such right is expressly provided for in a contract in 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 or sub-standard services”. With US nuclear suppliers strongly lobbying against Section 17(b) of the Act, the Department of Atomic Energy sought Attorney-General GE Vahanvati’s opinion on the matter.
India’s desperation to appease US interests appears to be linked to Prime Minister Manmohan Singh’s impending visit to Washington later this month. Five years after Indo-US ties reached the zenith with the signing of the civil nuclear agreement under former US President George W Bush, much of the euphoria has dissipated.
The Nuclear Power Corporation of India Limited (NPCIL) and US nuclear supplier Westinghouse are reportedly on the verge of signing an agreement to set up a nuclear plant in Gujarat. It is the contents of this agreement that the US wants to water down so as to forestall the plant operator, NPCIL, from pursuing its right to recourse.
The Attorney-General has held that NPCIL could choose to not incorporate the right to recourse in the agreement signed with the supplier. The A-G also endorsed the Ministry of External Affairs (MEA) view that though the right to recourse against the supplier was available to the operator, it was not a mandatory right and it could be foregone by the operator.
The A-G and the MEA’s views would apply to right to recourse being foregone when it is not specified in the contract (Section 17(a) of the Act). But Section 17(b) is clear: that the right to recourse shall apply to the operator-supplier relationship irrespective of the contract.
For over two years now, US lawmakers and diplomats, unhappy with the liability law, have claimed that it was not in line with international nuclear liability principles reflected in the Convention on Supplementary Compensation for Nuclear Damage.
They were obviously taking aim at Section 17(b) but unlike the US, France has accepted India’s civil nuclear liability legislation. Other countries like Germany, Russia, and South Korea also prescribe liabilities for suppliers.
Ironically, it was the legal imperative of US nuclear suppliers to secure insurance coverage that forced India to quickly enact the civil nuclear liability legislation. Already, Section 17 has been significantly weakened through the rules (Rule 24(1)) enacted for the Act. This restricts compensation collected from suppliers to the extent of the operator’s liability (Rs1,500 crore) or the contract price, whichever is less.
It appears that the Bhopal gas tragedy, where US company Union Carbide’s Indian subsidiary was guilty of gross negligence that killed thousands and affected several more besides contaminating the soil and water, has been forgotten by the Indian government in its tearing hurry to appease US businesses.