But for the last minute protests of the Left and the Bharatiya Janata Party, the Manmohan Singh government would have diluted a crucial provision in the proposed civil nuclear liability Bill allowing for the recovery of damages from foreign suppliers in the event of an accident arising from negligence on their part. As it is, the Bill is structured in such a way that all liability for nuclear damages is legally channelled on to the operator of the concerned facility on a no-fault basis. The rationale for this channelling is to make it easier for victims to receive prompt compensation without litigation against the full range of corporate entities whose acts of omission or commission contributed to the accident. In reality, the channelling of liability on to the operator is inefficient from the economic point of view because it leads to the sub-optimal provision of safety measures by everyone else in the production chain of nuclear power. Faulty or poorly designed equipment produced by a supplier may contribute to a nuclear accident. But since the supplier is absolved of any liability in the event of a mishap, it has no incentive to do the best it can to ensure an accident does not occur.
The prevalence of legal channelling in international nuclear liability regimes can be explained by the fact that they were all designed with the supplier's priorities in mind. The Convention on Supplementary Compensation for Nuclear Damage (CSC), which India has told the United States it is willing to sign, allows the operator to hold its supplier accountable for an accident only if the latter had agreed to a ‘right of recourse' in a written contract. The Indian law proposes to go beyond the CSC by allowing the operator a right of recourse in the event that an accident is caused by gross negligence on the part of the supplier or by faulty or defective equipment. Although this was the consensual understanding in the Standing Committee of Parliament, hidden hands sought to negate the effort to hold suppliers liable by linking this expanded right of recourse, as defined by Clause 17(b), to the existence of a prior contract as envisaged by 17(a). Thanks to the Left and BJP, the government has had to back off. But in the light of persistent official efforts to protect suppliers from any liability for nuclear damage, Parliament must insist that the new law bar operators from signing contracts with foreign companies that negate or cast aside the rights that are now being given to them in statute. It is also necessary to subject the final text of the Bill to a close reading to ensure that the same hidden hands have not introduced ‘minor' changes that could end up having major implications.
Published - August 20, 2010 11:24 pm IST
