Thursday, May 20, 2010

A re-look at the civil liability for nuclear damages bill

The Nuclear Liability Bill [No. 19 of 2010] is a major step towards operationalising the India-US civil nuclear deal. Its underlying aim is to limit the monetary compensation which the operator of a nuclear power plant would be required to pay in the case of nuclear disaster.

The text of the bill shows its drafting undertaken without due scrutiny. Its contents appear to have been drawn up without requisite home work or consultation with various stake holders.

The relevance of the bill has been challenged by the political parties on the ground that the proposed enactment should have been attempted only after first amending the Atomic Energy Act, 1962 (Act No. 33 of 1962). The latter does not offer any scope for entrusting nuclear power generation to any non-governmental entity. Under the existing law, the government alone is allowed to run a nuclear power generation plant [Section 3(f) of Act No 33 of 1962)].

However, the text of the statute is flawed and can be exploited skillfully to dodge payment of compensation to the victims or thwart their efforts to obtain monetary relief by dragging them through legal minefields. These require to be addressed. To illustrate, the bill enjoins an operator to cover his liability to pay compensation by taking out an insurance policy. However, care should have been taken to insure that such a liability to pay compensation under Clause 4 should not be contingent upon receipt by him of insurance proceeds under Clause 8.

The definition of nuclear damage includes costs of measures of reinstatement of impaired environment caused by a nuclear incident [Clause 2(f)(iv) and (v)]. Such a risk is manifest in the event of a nuclear radiation leak. However, the bill offers no clue as to the mechanism to claim damages for such a wide spread damage. It is also silent about the locus of the person or body authorised to seek claim in this situation. Such lack of clarity runs counter to the polluter pays principle enunciated by the Supreme Court of India in Indian Council for Enviro-Legal Action V Union of India [Clause 18].

The meaning of ‘operator’ in Clause 2(l) refers to a person. It is not known whether such a definition would afford its application to a company or corporate entity.

A trigger mechanism to set in motion the process of liability for nuclear damage is the issue of a notification by the Atomic Energy Regulatory Board (AERB), which carries out certain regulatory and safety functions under Section 27 of the Atomic Energy Act, 1962 (33 of 1962). Constituted on November 15, 1983 by the President of India, the Board consists of a full-time Chairman, an ex-officio Member, three part time Members and a Secretary. The notification is required to be issued by the AERB ‘within’ 15 days from the date of occurrence of a nuclear incident. The use of ‘within’ creates a doubt about the validity of a notification made after expiry of 15 days. Further, what happens if the full compliment of AERB is not functional due to any reason at the time of a nuclear incident? Would the decision by way of notification be valid? Moreover, authority to withhold such a notification is vested in the Board if in its opinion the threat and risk involved is ‘insignificant’. In a case of insignificant nuclear damage, it may be logical to infer that there may not be any notification or order. Can the ‘non-decision’ or, in other words, absence of a decision be challenged on the ground of erroneous application or non application of mind? The right to claim compensation shall stand forfeited if the claim is not made within ten years from the date of a nuclear incident [Clause 18]. Such clauses call for a review because the consequences or ill effects may quite often come to be visible many years or even generations later. The other objectionable clauses are 16(5) and 32(10) where no appeal or review may be feasible even when the decision of the Board is erroneous or flawed.

Clause 5 provides a shelter to an operator from payment of compensation, if a nuclear damage is caused by a nuclear incident directly due to certain acts, which include terrorism. This stipulation is also open to mischief. What happens, if an operator contests or evades his liability citing the incident to have been caused by a terrorist act? The likelihood of an operator indulging in foul play to get away from paying compensation cannot be ruled out.

By keeping the entitlement to compensation without claim for interest for delayed payment, the victims would be totally at the mercy of an operator [Clause 6(2)]. It may also induce the operators to take a complacent attitude.

The bill contains a number of clauses that are apparently ambiguous. For example, it pegs the maximum penalty liability for an operator at Rs. 500 crores. On the other hand, the government is authorised to either increase or decrease the amount of liability of any operator. What then is the sanctity of Rs. 500 crore limit?

The rationale for pegging the monetary limit at Rs. 500 crores has itself led to major criticism having regard to a like amount having been decided as total compensation to the victims of Bhopal gas tragedy of 1986. The critics point out that the extent of damage in a nuclear incident would be considerably higher. In any case, the cost of inflation over past two decades has rendered the value of Rs. 500 crores as ‘peanuts’. Putting a limit of Rs. 500 crores upon the liability of an operator would run contrary to the law laid down by the Supreme Court of India in MC Mehta and another V Union of India [(1987) 1 Supreme Court Reports 819]. The case had firmly established the notion of absolute liability.

The primary purpose of the bill is to provide for civil liability for nuclear damage caused in the nuclear plants owned by the government and operated by private operators. However, it also gives an indication about nuclear installations other than those owned by the Government [Clause 8(3)].

It is significant that the power of the Central Government to increase the liability of an operator beyond Rs 500 crores is based on the “risk involved” in a nuclear installation [Clause 6(2)]. Perhaps it would have been more appropriate to make it dependent upon the ‘damage’ involved.

By making the claim decided by a commissioner or a commission as final [under Clause 16(5) or 33(10) respectively] the scope for moving an appeal has not been allowed to exist. The Commissioner may not necessarily hold a law degree or prior experience in legal adjudication. It does not stand to logic how the adjudication by a claims commissioner on a serious right affecting the life, limbs or property of individuals or their future generations can be allowed to attain finality without even application of a legal mind.

The bill shows a lack of clarity with regard to the beneficiary entitled to receive the compensation. On one hand, Clause 14 lists four categories of persons who may submit an application for compensation. On the other, Clause 31(2) expects the person who has suffered the damage to himself come up with the application. This confusion needs to be cleared. Further, the damage in the case of a nuclear catastrophe may be quite devastating. What if the complete immediate family has been wiped out or rendered incapable by the evil consequences of a nuclear incident? Who would be allowed to stake a claim in such an event?

The proposed legislation covers the civil liability for nuclear damage in the sphere of nuclear power generation. However, it does not deal with the victims of nuclear damage caused by ships or submarine armed with and propelled by nuclear power. A mobile reactor fitted in a submarine would not fall within the definition of a nuclear installation [Clause 2(f) A]. It may be noted that extensive damage may be caused to civilian property in coastal areas or to the neighbouring ships by any mishap on a nuclear submarine.

The Government has assured due scrutiny of the bill by the Parliamentary Committee after the legislation is introduced in the House. However, such an assurance has failed to convince the Opposition because the recommendations of the Standing Committee have been often disregarded by the cabinet in the past. A review of the bill therefore, appears inescapable.

Article by:
Nilendra Kumar
Director, Amity Law School

Credits for the Article to Centre for Land Warfare Studies (CLAWS)