Merits and demerits of Bill passed by Parliament

It is partial success for the conscious people who raised very justifiable objections against certain provisions of the Civil Liability for Nuclear Damage Bill, 2010 which was passed by both houses of Parliament after 18 amendments to crucial clauses. There are seven merits of the bill as passed by both the Houses and seven demerits. The environmental activists launched yet another struggle to stall the Bill by demanding the President to send it back for reconsideration.

I Merits

1.  ‘Intention’ dropped

First point of success is that the United Progressive Alliance dropped the contentious provision of “intent” as a precondition for holding suppliers liable for a nuclear accident caused by defective equipment.

2.  Power to notify beyond cap

Government has retained some power to notify higher amount of compensation beyond the cap of Rs. 1500 crore. This change made in Section 6(2) means if the loss is more than maximum compensation of Rs 1500 crore, the Government can notify higher amount in that particular case. Though it is unlikely that the Government would do it against any MNC resisting the strong lobby, it at least facilitates the state to extract more from the supplier. The people should be alert always and seek adequate compensation beyond the cap, in case of need.

3.  Facilitating Supplier’s Accountability:

If accident 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, “the operator shall have a right of recourse, i.e., can sue the supplier for recovery of any damages paid. There is no need for the supplier to agree to this in a contract or to have intentionally caused an accident, as earlier drafts proposed. This is a remarkable improvement after serious controversy about the wording of Section 17(b). Earlier requirement of ‘agreement’ has been removed. Defect makes supplier liable. This is well in tune with the general principles of product liability and strict liability in civil case. The law of torts imposed such liability independent of contract, since centuries. The attempt of the Union Government to go against this principle was effectively countered. This new provision makes suppliers accountable and it will be inevitable for them to be more careful to avoid the liability. As per earlier drafts, it would have been easy for them to escape liability by not agreeing or proving that they never had any ‘intention’.

The suppliers are now being even more definitively accountable – with or without the respective contracts having any provision towards that. It will only ensure that they’ll be much more alert as regards the quality of the equipments, material and services. They will have to be careful about even “some minor piece of equipment” is capable of triggering a catastrophe. As the nuclear power industry is a high risk industry with unique catastrophic potentials, the Bill makes the supplier to be more careful.

Earlier, 17(b) had the words ‘willful act and gross negligence’, which has to be proved to make the supplier liable. It is very difficult for the petitioner to prove supplier’s gross negligence and willful act as the reason for damage. Thus it very easy for suppliers to escape liability. This is antithesis of ‘strict liability’. By removal of these provisions, the strict liability has been extended from operators to suppliers also, though in a limited manner.  The industry lobby argued that, as a result, suppliers will now have to seek insurance for their supplied components in the country, which will naturally lead to an increase in the price of the same. This, in turn, would get reflected in the capital cost of nuclear power thereby putting it at further disadvantage vis-a-vis other sources of generation like coal that do not internalize the social cost of  their pollution, which nuclear does. This argument is irrational because the insurance is a mechanism of risk management, for which the industry has to include cost of insurance as part of their inevitable expenditure.

At least to the extent of operator of nuclear plant, this Bill made ‘strict’ liability as the principle. For the first time in independent India, such a liability framework for nuclear damages has been put in place. This provision eliminates the need to prove who is responsible for causing a nuclear incident, whether there is fault, negligence or intent, or whether there are any legal defenses that might be raised. Though this is the accepted principle evolved over a period of time, it was need to be codified.  According to Clause 6 (1) of the Bill, the operator has to be liable ‘strictly;’ to pay the damages, of course within the cap fixed as Rs. 1500 crore.  Earlier we have the Atomic Energy Act, 1962 and the Public Insurance Act, 1991 which are silent on the issue of nuclear damages.

4. Time Limit

The time limit for bringing actions for nuclear claims in case of personal injury has been increased from 10 to 20 years [Section 18(b)]. This provision also makes the suppliers and operators accountable as the effects of radiation could spread for twenty years and there is a possibility of claims coming up after 19 years also.

5.  Speedy disposal of claims:

[Section 16 (1)] Claims for damages must be disposed off within three months of application. The Claims Commission has to do this job. It all depends on how these commissions are constituted and staffed. They have to act within the Act and cannot cross the limits fixed by this law.

6.  Judicial Review:

Section 35: Victims can approach High Courts and Supreme Court for review of compensation amounts. This is again general power of judicial review, which remain whether the law made a provision or not. Removing judicial review would be unconstitutional, and thus not acceptable.

7. Ensures some compensation

Additionally, under clause 7(a), the Bill enjoins upon the government to make good on losses over and above the limited liability of the operator, in the event of a nuclear incident. It also makes the government liable in the case of an accident at a nuclear installation owned by it. The Bill also calls for the setting up of a Nuclear Damages Claims Commission as a Regulatory authority.

In all we can say that the appointment of Claims Commissioner (clause 9), the constitution of a Nuclear Damage Claims Commission  (clause 19) to adjudicate and award compensation for nuclear damage within a period of three months, are useful provisions of the bill. No other provisions are there in the Bill to secure the interests of the victims of disaster and damage to environment.

II. Demerits

1. Victims are left to the General Tort law:

Through this Bill, the state played a clever game. The victim of accident, as in Bhopal tragedy, will not be entitled to sue either operator or supplier under this law.  Section 46 says the victims can file claims under torts.  This is a general principle of liability which is not codified any where. The tort law facilitates any victim of unjustifiable loss to make a claim for compensation. For this victim has to pay required court fee and run through all the delaying processes and procedures which can go up to the Supreme Court. A victim who already suffered loss cannot be expected to pay court fee, engage a lawyer and bear expenditure, and if the case goes up to higher levels of courts, he has to bear higher expenditure. For this there is no need for any provision like Section 46. This remedy is available anyway. The Union Government should have bothered about the difficulty of a common man to agitate for this remedy. Even if he wins the case and the court fix compensation amount, the amount paid earlier under this new law will be deducted. This tort remedy will be useful only when the amount of compensation is much higher than what was given under the Act, along with directing the operator to pay the petitioner the costs incurred. Realizing that a common victim cannot pursue this remedy individually, the Union Government has passed a law authorizing itself to represent in mass action for the compensation to lakhs of victims under the principle of parens patria (Government should act like a parent). Whereas, the Government, as per this Bill, made it clear that the individuals should fight separate litigation, which is totally unjustified.

2. Limited Liability emboldens operator to neglect safety

While many countries have unlimited liability and the tort law in general also insists on unlimited liability, it remains a key demerit of the Bill to cap the liability of the operator of the plant at a level of Rs.1, 500 crore.   Nuclear accident will have severe consequences than an oil spill, for which the USA forced BP to set aside an amount of USD 20 billion in an escrow fund to settle claims.  That amount is less than even the Bhopal settlement of $470 million, which The Government agreed as grossly inadequate.  When a nuclear industry invests on a reactor as high as Rs. 30 thousand crores, it is no match to fix liability at Rs. 1500 crore.  The principle of ‘Absolute Liability’ laid down by Supreme Court of India, speaks about higher amount of damages that match the capacity and investment size of the industry that was engaged in hazardous and inherently dangerous industrial activity. In the absence of any specific law, the liability remains strict as per this principle. This Nuclear Liability Bill if becomes law, it will have the effect of reducing the rigour of the judgment of Supreme Court, and help the disaster makers escape liability, leaving the burden on the state.   If they are supposed to pay just a trivial amount, the supplier or operator may not pay any attention for the safety as that happened in Bhopal. It might be cheaper for the operator to take the risk of paying the maximum liability (five per cent) than to spend 10 per cent extra for safety measures.

Mr. V. Gopala Krishna, founder member, ToxicsWatch Alliance while appealing to the President of India to send back the Civil Liability for Nuclear Damage Bill for reconsideration of Parliament, said: “clearly, with the passage of this Bill FICCI’s efforts on its own and on behalf of the multinational nuclear companies have succeeded despite India’s exemplary poor safety record with no database of radioactive radiation victims who appear to be deemed collateral damages for `development’ any cost based on nuclear power at any exorbitant cost.”

3. Burden on Tax payer:

As per the approved Bill, now only ‘government’ or ‘Government Company’ can be benefited by liability cap, but the ‘Government Company’ is defined (Section 1 (3A) as one ‘where the Central Government has ‘less than 51 per cent’ ownership’. This provides golden offer to private companies to claim state subsidy if they caused loss beyond the cap. The liability burden of private company wherein the shares of government are less than 51 per cent can also be shifted to tax payers. This is a clandestine way of diverting the state resources to private sector in the name of facilitating the FDI or globalizing the nuclear power trade. This is highly objectionable provision which will not be in national interest. It is against the directive principles of the Constitution.  Why tax payer should be taxed further for the injury caused by private operator because of the defective machinery supplier by other foreign company.

4. No strict liability for environment loss

Nuclear accidents certainly happen. Chernobyl is just an example. Dr. Maitreyan, MP (Rajyasabha) in his speech on 30th August in the Parliament quoted Dr. Robert Peter Gale book “Final Warning — The Legacy of Chernobyl” saying nuclear accidents happen, “In sum, accidents happen. This is why the nuclear industry continues to insist upon laws limiting its liability for damages arising out of nuclear accidents”. At the conclusion of the Chapter, Dr. Gale says: “As for Chernobyl, it may be that the greatest contributions made at Hospital Number 6 were not the lives saved but the lives lost. For the failure to save lives demonstrated how deadly nuclear power can be and how helpless the world is when radiation rages wild. In the end, we all live near Chernobyl.” In such case the Bill without imposing strict liability on behalf of victims and environment loss, cannot do any benefit for the nation. The Bill meticulously takes care of interests of operators. Because of the struggle and serious opposition, the Union stepped down and provided for liability of supplier towards the operator alone.  With this background the cap on the liability amount, acts as danger for victims and facility for the other stake holders.

5. No mention of MNC Liability

The whole issue of liability of principal company or MNC or a supplier from foreign country, which supplied machinery, technology and training to the staff like Union Carbide in Bhopal did to Union Carbide India Limited, is left untouched by the new legislation. In fact that would have been a real contribution for developing liability jurisprudence for nuclear damage.

Either under this Bill or Company Law Bill, 2009, there is no provision for making the multinational company liable for the damage. Operator gets right of recourse in a limited way but victims of mass damage or disaster caused by reactor cannot pursue any legal action against the supplier. If the operator, for any reason chooses not to seek enforce right of recourse, this law cannot do any thing. The corporate structure as envisaged by Company Bill 2009 does not provide for any liability towards victims on supplier for any kind of damage.

Mr. V. Gopala Krishna suggested Union Cabinet to set up a committee (of nuclear scientists, engineers, agricultural scientists and Public health experts), to study the effects of nuclear damage on India before rushing through the Bill. Then alone the people can understand the seriousness of the damage and requirements of liability. Without any such study, making liability laws with caps and limitations will do serious harm to the interests of the people and environment.  While Bhopal Gas Leakage victims are let down by the political class of country by their inactions or improper actions, the future victims of nuclear accidents are going to be led down by this Law which, instead of codifying the strict liability, generously declared limitations on the liability clause.

6. Exemption for ‘terrorism’

Under clause 5, Liability is exempted if the damage is caused to the nuclear installation by the act of terrorism. All those who suggested changes in the bill wanted the word ‘terrorism’ to be deleted. Thought the installations are protected by defence, the danger of terrorist attack cannot be ruled out.  It is quite possible for operator to raise the defense of ‘terrorism’ to escape from liability.

7. No Severe Criminal Liability

Though the Bill is called Civil Liability Bill, clause 46 suggests that existing criminal law can be used against the operator.  While bringing a new law, the Government should have created specific criminal liability of supplier, keeping in view the controversy of lesser punishment to criminals of Bhopal led to serious debate on this issue and Government is agitating in Supreme Court through a curative petition to increase the punishment after 25 years.

______________________________________________________________

The author is . .

Prof. Madabhushi Sridhar,

Coordinator, NALSAR Center for Media Law Studies and Public Police

_____________________________________________________________

More Articles from the same author. . .