Nuclear Power in India Progress, Opportunities and Challenges

Contents

•Law on strict and absolute liability

•Civil Liability for Nuclear Damage Bill

•Some Issues

 

Lawonstrictliability

•General principle of law –he who is at fault pays

•Exception -the theory of strict liability for hazardous activities which exists in England from 1866 -Rylands vs. Fletcher

•Certain activities in industrial society which though lawful are so fraught with possibility of harm to others, that the law has to treat them as allowable only on the term of insuring the public against injury irrespective of who was at fault

•Strict liability requires the defendant to pay damages for injury caused, even though he may not have been at any fault

IndianLawonabsoluteliability•In India the landmark Constitution Bench decision of the Supreme Court in M.C. Mehta v. Union of India AIR 1987 SC 1086 has gone much further than Rylands v. Fletcher (supra) in imposing strictliability by imposing absoluteliability. This case related to a concern working for private profit

•In Union of India (UOI) Vs. Prabhakaran Vijaya Kumar and Ors (2008) 9 SCC 527 the Supreme Court extended this principle to statutory authorities (like the railways), public corporations or local bodies which may be social utility undertakings not working for private profit, holding that this principle was not based on negligence on the part of the employer but is a sort of insurance

CivilLiabilityforNuclearDamageBill

•The UPA has majority in the Lok Sabha, but does not have majority in the Rajya Sabha. So in order to have this bill passed, the Government engaged opposition parties in discussions based on which certain amendments were made before the Bill could be approved by both Houses of Parliament.

•Applicability of the Bill -whole of India, the territorial waters of India and exclusive economic zone, ships and aircrafts registered in India, on any artificial installation/structure under the jurisdiction of India.

CivilLiabilityforNuclearDamageBill

•The term “operator” in relation to a nuclear installation, means the Central Government or any authority or corporation established by it or a Government company which has been granted a licence pursuant to the Atomic Energy Act, 1962 for the operation of that installation

•Government company, under the Companies Act, 1956, is a company in which Government owns not less than 51% shares

•Presently only Government is allowed to be an operater. However private participation by Indian players could be by way of SPVs in which the Government could own the majority. Presently foreign investment in atomic energy is restricted (present FDI Policy) and hence no foreign party can participate as stake holder in operation of nuclear plants.8CivilLiabilityforNuclearDamageBil

l•The Atomic Energy Regulatory Body is required to notify and widely publicize a nuclear incident within 15 days of occurrence

•The Bill defines “nuclear damage” as arising out of a nuclear incident•Nuclear incident is defined to mean any occurrences/s having the same origin which causes nuclear damage and, with respect to preventive measures, which creates a grave an imminent threat of damage

 

CivilLiabilityforNuclearDamageBill

•The operator is primarily liable. Consignors and persons responsible for transit of nuclear material are also liable if the damage arises in transit

.•Liability is excused if the damage occurs due to a natural disaster war etc. The operator shall also not be liable for nuclear damage caused to the nuclear installation itself, or property or means of transport on the same site

•Section 6 deals with cap on liability of the operator. The maximum amount of liability for a nuclear incident is 300 million Special Drawing Rights (which is approximately Rs. 2100 crores at present value). The maximum liability for the operator is capped at Rs. 1500 crores plus interest and costs

 

CivilLiabilityforNuclearDamageBill

•The reason for the cap is to enable the operators to get the required insurance protection –which is likely to require reinsurance

•After the operator pays compensation, it shall have a right of recourse where

–Such right is contained in a written contract

The incident has occurred as a consequence of a suppliers act, including supply of defective equipment or material

The incident has resulted from an act of omission or commissionintended to cause nuclear damage

•For any excess amount the Government will be liable

 

CivilLiabilityforNuclearDamageBill

•The Bill sets out the framework for establishment of Nuclear Damage Claims Commission and the manner in which compensation shall be awarded by the Claims Commissioner

•This is a welcome step and in light of the Bhopal experience it is important that an automated mechanism should be set up with minimum delay for payment to the aggrieved

•The right to claim compensation ceases after 10 years in case of damage to property and 20 years in case of injury to person. Subject to these, a claim shall be made within 3 years from date of knowledge of nuclear damage by the person suffering such damage. The application is to be disposed of within 3 months by an award and shall not take into account any personal insurance benefits

SomeIssues

•The USIBC has asked for channelling absolute and exclusive liability to nuclear power plant operators and establishing a sole remedy for compensation of claims stating that these principles are basic to international best practices as reflected in the International Atomic Energy Agency’s Convention on Supplementary Compensation (CSC)

•Will the law impede suppliers?