THE union cabinet has approved a legislation on civil nuclear liability which is being introduced in the parliament. Such a bill is being brought to meet the demand of the United States that a law be enacted to protect the US suppliers of nuclear equipment from liability to pay compensation in the case of a nuclear accident. The US has linked the completion of the Indo-US nuclear agreement to India’s capping of nuclear liability and that is why the hasty move to introduce this in parliament. The UPA government had, already before the ratification of the 123 agreement, given a written commitment that India will buy 10,000 MW of nuclear reactors from US companies. The nuclear liability regime demanded by the United States is to put a cap on the liability of nuclear operators and also remove all liabilities of the equipment suppliers.




The proposed bill has sought to limit all liability arising out of a nuclear accident to only 300 million SDRs (about $450 million) and the liability of the operator only to Rs 300 crore. The difference between $450 million and Rs 300 crore (about $67 million) is the government’s liability. Given that a serious accident can cause damage in billions, the small cap of $450 million proposed shows the scant regard for the Indian people. The Bhopal Settlement of $470 million reached between the government of India and Union Carbide and accepted by the Supreme Court, has been shown to be a gross under estimation. Even today, lakhs of gas victims are suffering and have received only meagre compensation. It is completely unconscionable of the UPA government to suggest that all nuclear accidents, which have the potential of being much larger than Bhopal, be capped at a figure that has already been shown to be a gross underestimate.  Since the government wants to allow private operators in the nuclear power sector, this low level for compensation is meant to serve their interests too. Apart from this, the minuscule liability of Rs 300 crore for the actual operator is tantamount to encouraging the operator to play with plant safety.

The Indian legal regime is quite clear: for hazardous industries, the plant owners have strict liability. Neither does the law accept any limits to liability – the party concerned must not only pay full compensation but also the cost of any environmental damage that any accident may cause. The Oleum leak from Sriram Food and Fertility settled the liability regime in India and any legislation seeking to cap liability will be completely retrogressive.

Contrary to the claims being made, the Vienna Convention — the basis of the proposed nuclear liability bill — does not cap nuclear liability but only puts a minimum floor. It also allows countries to operate their liability regimes. For example, Germany, Japan and Finland all have unlimited liability, the same as current Indian law. The US has a liability cap of $ 10.2 billion. Not only is the Indian government proposing to cap liability of nuclear plants, but is also proposing a cap of only $450 million, way below what can happen in any serious nuclear accident. It appears that in order to promote private nuclear power and foreign suppliers, UPA government is willing to sacrifice its own people.

The suppliers’ liability is also being considerably weakened in the proposed bill. Instead of the normal contract law, where recourse of the operator to claim damages is inherent, the bill limits this recourse only if it is explicitly mentioned in the contract. Otherwise, the nuclear operator cannot claim compensation from the supplier of equipment even if it is shown to be faulty. It is evident that contracts for buying US nuclear reactors will explicitly exclude any liability on the part of the supplier and therefore by the law to be adopted they will go scot free even if an accident occurs due to a defect in the equipment supplied by a US company.

The BJP and the Left parties have already indicated opposition to the Civil Liability for Nuclear Damage Bill that is key to operationalise the landmark Indo-US nuclear deal.

The Bill pegs the maximum amount of liability in case of each nuclear accident at Rs 300 crore to be paid by the operator of the nuclear plant.

However, the draft bill also has provisions that would enable the government to either increase or decrease the amount of liability of any operator.

The Bill was approved by the Union Cabinet on November 20th 2009.

According to the provisions in the draft legislation, the operator would not be liable for any nuclear damage if the incident was caused by “grave national disaster of exceptional character”, armed conflict or act of terrorism and suffered by person on account of his own negligence.

The Bill also provides for establishment of Nuclear Damage Claims Commission which will have one or more claims commissioners for a specified area.

The claims commissioner shall have all powers of a civil court for the purpose of taking evidence on oath, enforcing attendance of witnesses, compelling the discovery and production of documents and other material objects.

Environment activists have described as a violation of fundamental rights the proposed attempt to cap the level of compensation to victims of a nuclear accident.

“Under Article 21 of the Constitution, there is no warrant or justification for capping nuclear liability,” noted jurist Soli Sorabjee said in his opinion to Greenpeace.

“Any such move (to limit compensation) will be in defiance of the Supreme Court judgements and will be contrary to the interest of people of India and their fundamental rights under Article 21 of the Constitution,” he said.

Issues relating to the remaining steps of the nuclear deal — reprocessing pact and civil liability legislation — are expected to be key points in Prime Minister Manmohan Singh’s agenda when he meets US President Barack Obama on the sidelines of the Nuclear Security Summit next month.




After award of compensation, the operator has the right to appeal in three cases, one of which is when he argues that the incident resulted from “wilful act or gross negligence” of a supplier of material, equipment or services.

The right to claim compensation has a limit of 10 years from the date of incident. The exception is of stolen, lost, jettisoned or abandoned nuclear material, where the period is increased to 20 years.

The government is expected to argue that the legislation is necessary as the Atomic Energy Act that governs the nuclear power sector is silent on compensation.

Several insurance companies also do not cover injuries caused due to radiation.