No Transparency in Nuclear Deal

A week after Prime Minister Narendra Modi and United States (US) President Barack Obama announced they had reached a “breakthrough understanding” on the question of liability for American nuclear suppliers in the event of an accident in India, there is still no clarity on the nature of the deal that has been struck. Other than saying “the deal is done”, the Indian foreign secretary (since replaced) provided no details. Another official spoke of an insurance pool to be established by the public sector General Insurance Corporation with assistance from the Government of India, which would indemnify operators and suppliers against damage claims following a nuclear incident. But how this pool will operate and how the attendant risk premia will be calculated and apportioned is not known.

American objections to the Civil Liability for Nuclear Damage Act (CLNDA), 2010, have centred on two provisions that open the possibility for US vendors to be held liable for accident claims. The overall scheme of the CLNDA is to hold the operator of a nuclear plant strictly liable for an accident regardless of whose fault the accident is. This liability is capped at Rs 1,500 crore. Section 17(b) of the Act gives the operator the right to recover whatever he pays out as no-fault liability from his supplier, if the accident for which strict liability was channelled to him had resulted from an act of the supplier or his employees, including the “supply of equipment or material with patent of latent defects or sub-standard services”. Obviously, exercising this “right of recourse” would require the operator proving his charge in a court of law.