India's Nuclear Liability Law: Balancing Safety and Investment

India's Civil Nuclear Liability Framework

India's approach to civil nuclear liability is shaped by the Civil Liability for Nuclear Damage Act, 2010 (CLNDA). This law aims to ensure prompt compensation for victims of nuclear accidents while fostering international cooperation in nuclear power development.

Understanding 'No-Fault Liability'

The principle of 'no-fault liability' holds nuclear facility operators legally accountable for damages resulting from nuclear accidents, regardless of fault or negligence. This approach allows victims to receive timely compensation without needing to prove operator carelessness, streamlining the compensation process.

The Right to Recourse

The 'right to recourse' empowers operators, such as NPCIL, to seek restitution from suppliers or contractors under specific conditions, like equipment defects or pre-agreed liabilities. Notably, Section 17(b) of the CLNDA permits this, diverging from many international conventions that do not allow such recourse.

Key Provisions of the CLNDA, 2010

• Operators bear exclusive liability for nuclear damage based on the no-fault principle.
• The liability of operators is capped at ₹1,500 crore, with potential for increase.
• The Central Government covers liabilities exceeding the cap.
• Operators can exercise the right to recourse in cases of faulty supply or intentional damage.
• Victims may pursue additional compensation under other legal frameworks, as per Section 46.

The Controversy of Supplier Liability

Clause 17(b) allows suppliers to be held liable for defective parts or equipment, contrasting with international norms where only operators are typically held accountable. This provision raises concerns among suppliers about unpredictable financial and legal risks in India.

Challenges Posed by Section 46

Section 46 enables victims to claim further compensation under different laws, such as tort law, potentially exposing suppliers to unlimited liability. This conflicts with the global principle of centralizing liability with the operator.

Impacts on Foreign Investment

• U.S. and French companies have hesitated or withdrawn from reactor projects due to liability concerns.
• Projects like the Kudankulam reactors, involving Russian firms, continue as they accept India's terms.
• India's ambitions for large-scale nuclear expansion have been hampered.

The Government's Response

In response, India established the Indian Nuclear Insurance Pool in 2015 to provide insurance to suppliers. Additionally, India joined the Convention on Supplementary Compensation for Nuclear Damage (CSC) in 2016, although fundamental provisions of the CLNDA remain intact.

Proposals for Addressing Ambiguities

• Consider narrowing or eliminating Section 46 to reduce conflicting legal claims.
• Amend Clause 17(b) to align with international practices.
• Offer government-backed guarantees or legal amendments to reassure suppliers.
• Enhance transparency in operator-supplier contracts to clearly define recourse limits.

India's nuclear liability law ensures compensation through operator no-fault liability but raises concerns among foreign suppliers because of the right to recourse and Section 46. Harmonizing Indian law with global standards while safeguarding victim rights could enhance foreign collaboration and investment in India's nuclear sector.