International Civil Nuclear Liability Regime and India: A Comparative Assessment

ISSSP Reflections No. 28, July 13, 2015

Author: Summaiya Khan

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Image Copyright: DNA

Image Copyright: DNA

The successful negotiation of the Indo-US civil nuclear cooperation agreement in 2008 had resulted in a lot of hopes of investment flowing into India’s civil nuclear power sector. However, those expectations have not seen the light of day partly due to the differences over the Indian nuclear liability regime. In light of the above background, the current article analyses the evolution of the international nuclear liability regimes and posits them against the Indian liability regime as enshrined in the Civil Liability for Nuclear Damage Act, (CLNDA), 2010.

Evolution of the International Nuclear Liability regimes

During the 1950s there was a progress towards generation of nuclear energy for peaceful purpose. Clean energy was accorded top most priority. However, a peaceful nuclear programme would be confronted with the problem of dual use of nuclear material and the issue of nuclear accident with a nuclear reactor leading to fatality and injury of a high magnitude.

The Brookhaven report which was published by the Atomic Energy Commission of the USA in March 1957 addressed similar issues of a nuclear accident or catastrophe. It provided probable estimates of damage that is caused by a nuclear accident like fatalities, injuries and so on. This report propelled the establishment of an international nuclear regime in order to compensate the losses and damages.

International Nuclear Liability laws can be grouped broadly in to the OECD (Organization for Economic Cooperation And Development) Paris Convention, 1960 and the IAEA’s Vienna convention, 1963. The Vienna convention comprising mostly of Eastern European nations where as, western European countries are a party to the Paris Convention.

Both the conventions evolved through various stages and were amended in order to suit the current liability needs. Though these liabilities regimes have differing provisions, they hold a few principles in common like (a) principle of operator’s liability, (b) nuclear damage, (c) provision for compensation and so on. Also, there are similarities in definitions of radioactive products, nuclear installations.

The Paris Convention has very limited scope that is, it is only limited to territory of the contracting party according to Article 2 of the convention, except if mentioned in the legislation of the state of the contracting party. The convention allows very limited time of ten years for the victim of nuclear damage to claim compensation. The Liability amount in the Paris convention is limited, to five to fifteen million Special Drawing Rights (SDR). SDR refers to the asset or the account of the International monetary fund which is used by member countries. Paris Convention allows for carriage of material through maritime international laws which allows innocent passage in time of distress which is not so in the case of the Vienna Convention. The Paris convention also does not explain the word damage in article 1 of list of definitions.

The 1986 Chernobyl accident led to release of radioactive material into the atmosphere and its spread regardless of geographical boundaries. The incident impacted surrounding countries like Belarus, Ukraine and the United Kingdom. Former Soviet Union was not a party to any of the international Civil Nuclear Liability Conventions and had not notified its neighbouring states about the mishap. Therefore, it could not benefit from the compensation arrangements of the liability regimes. The Chernobyl accident stood a testimony to the fact that a nuclear accident does not recognise geographical boundaries and would affect non-contracting states as well.

Post the Chernobyl incident, there was need felt for a regime that was viable to bring about a balance between the two regimes that is the Paris convention (1960) and the Vienna convention (1963). As not all the countries were a party to either of the conventions. It was essential to amend these laws in order to increase the liability compensation, the scope of damage and unite the nations under an umbrella of a single liability regime. As a result there was a Joint Protocol signed in 1988. The 1988 Joint protocol provided a link between the two conventions so that the parties to both the conventions have a benefit of compensation. The joint Protocol after it came in to force in 1992 and enabled those members who were a party to it benefit from both the conventions. Consequently the Vienna convention was amended in 1997 and Parris convention in 2004.

Convention on Supplementary Compensation

The Convention on Supplementary Compensation (CSC) was adopted in the year 1997 at a diplomatic conference at Vienna with a view to provide a worldwide liability regime and to supplement as the name suggests the fund for liability. Any state not a party to either the Paris Convention, 1960 or the Vienna Convention, 1963 can accede to this convention. Ratification or acceptance to this convention is on the condition that a state is party to either the Vienna or Paris convention(s) or the state’s national law must comply with the provisions of the convention.

The CSC adheres with both the provision of the Paris and the Vienna convention with an aim to increase the amount of compensation. It requires the state to make available 300 million SDRs or above by making available requisite public funds. The CSC provides for equitable distribution of the available fund. It prescribes a formula for the contribution of public funds by the contracting parties is the amount which shall be the product of the installed nuclear capacity of that Contracting Party multiplied by 300 SDRs per unit of installed capacity.

The amount determined by applying the ratio between the United Nations rate of assessment for that Contracting Party as assessed for the year preceding the year in which the nuclear incident occurs, and the total of such rates for all Contracting Parties to 10% of the sum of the amounts calculated for all Contracting Parties in conclusion the CSC is an amalgam of the Paris and the Vienna convention that extends the scope of damage it provides for a well-organized distribution of funds with prior notice to the contracting parties of a nuclear incident. The operator is required to furnish a list of nuclear reactors with the depository that holds the operator liable and provide a fund of insurance to supplement the compensation amount that is to be borne by the operator. All these conventions hold the operator severally and jointly liable.

The Indian Civil Nuclear Liability law

The Civil Liability for Nuclear Damage Act, (CLNDA) 2010 provides for compensation arrangements in case of any events of accidents, it also provides for a claims commission which decides the amount of compensation.

However, two of the sections of the bill that is sections 6 and 17 (B) have been a bone of contention by the suppliers. These sections give the operator the right to recourse making the suppliers liable for material that is defective or latent. This provision of the Act has stalled the various deals and transfer of reactors, including from Russia (Kudankulam 3 and 4) and France. The international community perceives these sections as a contradiction to the provisions of CSC. This was done so that the Indian victims of a nuclear disaster also have equal right of compensation like that of the victims in foreign courts.

However, most of the provisions of the CLNDA 2010 are in compliance with the international conventions for compensation by placing the onus of compensation on the operator. The liability rests on the principle of no fault or strict liability like that of the CSC.

Insurance Pool

Insurance is another similarity between both the Indian and the international liability regimes. The CLNDA directs the operator to take insurance before operating the nuclear reactor. Likewise the Convention on Supplementary Compensation for Nuclear Damage (CSC) also provides for insurance mechanism for compensation where each operator must deposit an amount of three hundred million (SDR) special drawing rights which shall be awarded irrespective of nationality or domicile. The amount of compensation in according to CSC the rate of compensation rate is calculated according to the assessment rate of the UN whereas, according to CLNDA the claims commission decides on the amount of compensation.

In accordance to this provision of the CLNDA, an insurance pool has been setup by the General Insurance Corporation (GIC) with the an insurance firm of UK Marsh contributing to the India Nuclear pool.

It is to be noted that the CLNDA in India makes it easy for the victim of a nuclear accident to claim compensation as the law is based on the civil procedure or tort law. A claims commission is appointed to award compensation for a nuclear incident that takes place in the scope or geographical boundary of India to awarding of compensation for a nuclear incident that takes place in the scope or geographical boundary of India to awarding of compensation is similar as per the international liability regime.

It is to be noted that the international liability law is well evolved through decades of amendments and revisions. The Indian liability act is of a recent development subjected to different reading and interpretation. It is also necessary to give the operator his due and right to recourse which is not the case in the international regime as it holds only the operator liable even if the fault does not lie with the operator.

Table 1: Comparison between Indian and International Civil Nuclear Liability Regimes

Paris Convention 1960 Vienna Convention 1963 Revised Paris Convention 2004 Revised Vienna Convention 1997 CSC 1997 CLNDA India 2010
Definition of Nuclear Damage Loss of life, and personal injury and property damage; and damage during transport of nuclear substance to and from nuclear installations. Loss of life, and personal injury and property damage. In addition to damages to persons and to property, other damages including the cost of preventive measures, the cost of measure to reinstate an impaired environment and the economic losses resulted from such an impaired environment were taken into account. Loss of life, and personal injury and property damage. In addition to damages to persons and to property, other damages including the cost of preventive measures, the cost of measure to reinstate an impaired environment and the economic losses resulted from such an impaired environment were taken into account. In addition to damages to persons and to property, other damages including the cost of preventive measures, the cost of measure to reinstate an impaired environment and the economic losses resulted from such an impaired environment were taken into account.
Paris Convention 1960 Vienna Convention 1963 Revised Paris Convention 2004 Revised Vienna Convention 1997 CSC 1997 CLNDA India 2010
Geographical Scope Covers the territory of the contracting parties alone Confined to the contracting party’sterritory More restricted geographical application, and does not cover damage caused on the high seas or other areas beyond national jurisdiction. Extends to all the states including the damages in the non-contracting states. Territory of contracting party; in or above Maritime area beyond the territorial sea of a contracting state; in or above the exclusive economic zone of a Contracting Party or on the continental shelf of a Contracting Party It extends to the whole of India; Territory of India; in or above Maritime area beyond the territorial sea of India; in or above the exclusive economic zone of India or on the continental shelf
Paris Convention 1960 Vienna Convention 1963 Revised Paris Convention 2004 Revised Vienna Convention 1997 CSC 1997 CLNDA India 2010
Liability limit in time 10 years 10 years, but cannot exceed more than 20 years from the date of theft, loss, jettison or abandonment 10 years; exceptional case 20 years Limit extended to 30 years, but only “with respect to loss of life and personal injury.” The CSC Convention provides for a t10 years limitation period, or 20 years from the date of the theft, loss, jettison or abandonment. 10 years for loss of property;20 years for personal injury
Liability limit in amount 5 Million SDR min- 15 Million SDR max. (US$ 7.02-21.06 million) Not less than US$ 5 million (no upper limit fixed) € 700 million minimum(US$ 780 million) 300 Million SDR(US$ 421 million) 300 Million SDR(US$421 million) 300 Million SDR(US$ 421 million)
Paris Convention 1960 Vienna Convention 1963 Revised Paris Convention 2004 Revised Vienna Convention 1997 CSC 1997 CLNDA India 2010
Exceptions Caused by a nuclear incident directly due to an act of armed conflict, hostilities, civil war, insurrection or a grave natural disaster of an exceptional character. Act of armed conflict, hostilities, civil war or insurrection, and, subject to the law of the Installation State, damage caused by a grave natural disaster of an exceptional character. Caused by a nuclear incident directly due to an act of armed conflict, hostilities, civil war, insurrection or a grave natural disaster of an exceptional character. A grave natural disaster of an exceptional character” has been removed from the exceptions

 

A grave natural disaster of an exceptional character; or an act of armed conflict, hostility, civil war, insurrection or terrorism.

About the Author

Ms. Summaiya Khan is pursuing M.A in Political Science from St. Joseph’s College, Bangalore. This article was written during her Summer Internship at the International Strategic and Security Studies Programme, NIAS, Bangalore. She can be contacted at <sumhani.pals@gmail.com>


 

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