IMMUNITIES IN THE NAME OF LIABILITY: A CRITIQUE ON

INDIAN NUCLEAR LAW

By Madabhushi Sridhar
BACKGROUND
The Civil Liability for Nuclear Damage Act, 2010 raises some crucial questions for India.
Will the Act strengthen the nuclear power industry in India by facilitating the flow of
technology and machinery from Western countries? Or will it take away the expected
benefit, because of liability provisions stipulated therein, which are considered as
impediments for entry of suppliers? The Government of India did yield to pressures from
various quarters and has strengthened the provisions of liability compared to the earlier
draft, albeit only slightly! Supplying defective machinery, itself, with or without contract,
with or without negligence, makes the supplier liable under general principles of liability.

LEGAL PRINCIPLES
Absolute Liability
Rylands vs. Fletcher (1968) LR 3 HK 330, the celebrated UK case decided in 1868, laid
down a cardinal rule, A person who, for his own purpose, brings on his land and collects
and keeps there, anything likely to do mischief if it escapes, must keep it in at his peril,
and if he does not do so, is prima facie answerable for all the damage which is the natural
consequence of its escape. In other words, the duty is not merely the general negative
duty to refrain from active injury, but a positive duty to guard and protect ones
neighbours, lest they suffer harm by reason of dangerous things artificially brought on
ones land and the duty is absolute because it is independent of any negligence on the
part of the defendant or his servants. This rule is referred to as the rule of strict liability
or absolute liability. It is also referred to as no fault liability, where the wrong doer
will be liable with or without proof of fault by the claimant. However, it does recognise
some exceptions also.
In the Indian context, the Supreme Court laid down the principle of absolute liability in
Shriram Gas Leak case [M.C. Mehta vs. Union of India (1987) 1 SCC 395, AIR 1987 SC
965] thus: Where an enterprise is engaged in a hazardous or inherently dangerous
activity and harm results to any one on account of an accident or in the operation of such
hazardous or inherently dangerous activity resulting for example, escape of toxic gas, the
enterprise is strictly and absolutely liable to compensate all those who are affected by the
accident and such liability is not subject to any of the exceptions which operate vis--vis
the tortuous principle of strict liability under the rule in Rylands v Fletcher.
Furthermore, the Parliament has codified the principle of absolute liability by enacting
the Public Liability Insurance Act 1991. Section 3 of the said Act says that in any claim
the claimant shall not be required to plead and establish that the death, injury or damage

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in respect of which the claim has been made was due to any wrongful act, neglect or
default of any persons.
Producers Liability
After strict liability, the concept of strict Product Liability was developed in Donogue
vs. Stevenson 1932 AC 562, another well-known case. It is a kind of product related strict
liability, which exempts non-interfering middle agencies such as links between maker
and seller. The House of Lords held that a manufacturer of products, which he sells in
such a form as to show that he intends them to reach the consumer in the form in which
they left him, owes a duty to the consumer to take reasonable care. There is no
contractual duty in this situation as there was no contract at all. But a tortuous duty is
presumed by courts of law, breach of which makes the manufacturer liable. From this
emerged the Consumer Rights and Product liability rule. Applying this principle if a
nuclear reactor is defective, and that causes an accident, more than an operator it is the
maker or supplier who should take up the responsibility of defective product i.e. the
reactor.
ROLE OF THE EXECUTIVE
While judiciary has come up with very imaginative and quite useful rule of absolute
liability to help innocent victims of profit-aimed corporations, the executive is doing
otherwise. The Public Liability Insurance Act 1991 in section 2 defined accident as an
accident involving a fortuitous, sudden or unintentional occurrence while handling any
hazardous substance resulting in continuous, intermittent or repeated exposure to death of
or injury to any person or damage to any property but does not include an accident by
reason of war or radio activity. Two questions arise. First, why should not the State,
whose sole responsibility is welfare of the people, give relief to the victims of war?
And why should it exempt it from the definition of accident which will deny the victims
from claiming the damages under the mechanism provided by the Public Liability
Insurance Act 1991? Second, even if it is assumed that the war is beyond control of State,
why should it claim exemption from accidents of radio activity?
It is difficult to understand why the Government is insisting on proof of intention in
civil claim of damages. It is well within the logic and law to seek strict proof of intention
and guilty mind of nuclear machinery supplier to cause nuclear damage of particular
people in India to make the operator or supplier of nuclear reactor to undergo life
imprisonment or suffer death penalty. But why the operator of a defective nuclear reactor,
now Indian State or a government company be solely liable and US or French or other
foreign nuclear reactor suppliers be totally exempt from liability in civil law for payment
of damages? The Act [section 2 (l)] defined operator as the Central Government or any
authority or corporation established by it or a Government company who has been
granted a licence pursuant to the Atomic Energy Act, 1962 for the operation of that
installation.

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The Significance of the Word and

Let us take a look at how immunity to foreign nuclear reactor suppliers is being extended.
Section 17: Prior to Changes
The draft Bill (prior to changes) made the operator of a nuclear facility wholly liable for
any damage stemming from an accident. Clause 17 allows the operator to exercise a right
of recourse under three circumstances, where (a) such right is expressly provided for in
a contract in writing; (b) where the accident results from the gross or willful negligence
of the supplier or his employees; or (c) where an individual intentionally causes the
accident. This means that the supplier will not be liable unless there is a contract, willful
act, gross negligence done with an intention to cause nuclear damage. The impossibilities
are like this: supplier will not agree to the terms of liability, the mental element of
willful act, nature of gross negligent or intention cannot be proved. There is no way
with this, becoming law, one can make supplier to pay the sufficient amount of
compensation. It may be argued that when we are making operator and government liable
for compensation fully, why should any body bother about supplier liability? The
problem is capacity, and principle of justice. Supplier who makes a particular design or
supplies a particular technology will generally be capable of paying. This accountability
infuses in supplier more alertness, due diligence and to invest more in research to make
safer technology.
Insisting on intention to cause nuclear damage, as a condition to make supplier liable
under civil law is nothing but offering immunity from payment of any compensation.
This will also amount to dishonestly providing the supplier a great facility of contracting
out of liability, which is absolutely unjustified. It is difficult to prove culpability for
negligence. Previous draft imposed strong liability, which is diluted by Parliamentary
Standing Committee (PSC). The PSC recommended expanding scope of section 17(b) to
include the nuclear incident resulted as a consequence of latent or patent defect,
supply of sub-standard material, defective equipment or services. But this is made
subject to a written contract between operator and supplier expressly providing for these
eventualities. The PSC recommended that section 17(a) may end with and, the report
also suggested an addition of sentence that the operator must secure his interest through
appropriate provisions in the contract with the supplier. The problem of adding and
after section 17(a) is well explained in a note by the PSC, titled Deletion of the word
and' recommended by the Standing Committee between clause 17 (a) and 17(b) of the
Civil Liability for Nuclear Damages Bill 2010. The note states that if the foreign
suppliers are not agreeing to provide for right of recourse in the contract, they do not
want to be held liable for any nuclear damage, even if they have supplied defective
equipment.
Interestingly the PSC referred to significance of intention and still made this
recommendation. It noted that mens rea, which is only amplifying the intent in clause
17(b), as argued by the Secretary (Legislative Department) is generally used in criminal
and taxation laws, but in compensation cases the use of this doctrine is grossly inadequate

and misplaced. This amendment linking clause 17 (a) and 17 (b) by and will make it
worse than what was there in the original Bill. The PSC recommended its removal and
the Union Cabinet accepted it. However, mere deletion of word and after clause 17(a)
will not be enough. Each of three sub-clauses should be separated by or for more
clarity. If three sub clauses of Clause 17 are not separated by or it can be interpreted
that all three clauses have to be proved for claiming damages from supplier. Even if it is
separated by or, there are difficulties. The operator will get compensation only when
there is a specific contract, which is doubted. Further, nuclear incident must have been
proved to be result of willful act or gross negligence of supplier. Third option also asks
for an impossible task, i.e. nuclear incident resulted from the act or omission done with
intent to cause nuclear damage. If third option is there second is not necessary. If this
provision is made into law, it is impossible for any court to impose any liability on
supplier.
It is claimed that this has been done to strengthen the right of recourse against the foreign
suppliers. It is already known that the US administration and the American nuclear
industry lobby objected to sub-clause 17 (b). Even while the PSC was considering the
Bill, the Government tried to delete clause 17(b) altogether, which would mean removal
of even diluted liability. Facing uproar over this and in the aftermath of Bhopal judgment
of lighter punishment to accused in India, the Department of Atomic Energy backed out
and the Government announced that clause 17(b) will not be removed.
Section 17: After the Changes
Responding to stiff resistance and to secure the necessary numerical strength to pass the
Bill, the draft of section 17 was further changed, as:
17. The Operator of the Nuclear Installation after paying the compensation for nuclear damage in
accordance with Section 6, shall have a right to recourse where
(a) Such right is expressly provided for in a contract in writing;
(b) The Nuclear Incident has resulted as a consequence of an act of suppliers or his employees,
which includes supply of equipment or material or patent or latent defects or sub standard
services;
(c) The Nuclear Incident has resulted from the act of commission or omission of an individual
done with the intent to cause Nuclear damage.

However, by not incorporating or between three sub-clauses the Act carried forward the
confusion as to interpretation, i.e., whether all three clauses need to be fulfilled or any
one of them would be enough to impose liability on supplier. The and is removed but
or is not added. Liability of supplier continues to be uncertain, even after the
amendment.
Limiting Operators Liability: Debatable
Another improvised recommendation of PSC is to enhance the operators liability cap
from Rs. 500 crore to Rs. 1500 crore. Total liability for each nuclear incident remains
capped at 300 million SDRs (Rs. 2122.40 crore or $ 455 million) as per clause 6(1). This

amount is less than even the Bhopal settlement of $ 470 million, which has been
acknowledged as grossly inadequate by the Government itself. The moot question is how
can any body fix the quantum of damage of nuclear radioactivity or other accident in
advance? And why should anybody fix such quantum. This amounts to limiting liability
and extending immunity beyond, which is not in tune with accepted liability
jurisprudence.
The Act contains such terms as armed conflict, hostilities, civil war, insurrection or an act
of terrorism that have wide meanings, and effect of exempting suppliers and operators
from liability. But these terms have not been defined. Therefore there is a need for
inserting meanings of these terms from other laws, in section 2 of this Bill. Such
vagueness in connotations can make the operators negligent in observing security
procedures and can create situations of disputes between the operator and the central
government. From Chernobyl and other nuclear accidents it is clear that such an accident
may induce radioactive contaminations in surface, ground water bodies, and other water
resources. The efficiency of Department of Atomic Energy gets routinely revealed in
issues ranging from radioactive steel, ship breaking industry, Mayapuri scrap market,
Kaiga incident, the obsolete ship Blue Lady etc. The Bill does not make any provision for
such efforts. The Bill refers to payment of compensation due to health impacts of
radiological emergencies or radiation, but there is no clause dealing with taking health
care in case of radiation.
None of the international nuclear liability conventions set any cap on total liability, but
only set a floor. Countries like South Korea and Sweden have set operators liability at
300 million SDRs, not total liability. The operators liability in the US is $ 11.9 billion.
Countries like Japan, Russia and Germany do not have any cap on total liability. In
contrast, the Indian Bill seeks to cap total liability to 300 million SDRs, displaying scant
regard for the lives and security of its people. India also can impose a certain amount of
liability saying less than the same is not acceptable. It is indeed not wise to say by way of
law that even if our people suffer damage, we will not accept more compensation than
this. Agreeing to Rs 1500 crore cap on nuclear disaster from large nuclear power plants,
Rs 300 crore cap for institutions involved in reprocessing fuel and Rs 100 crore cap for
small research reactors, is unacceptable!
The PSC failed to understand more reasonable and just objections raised against the Bill,
especially regarding the provisions protecting the operator and suppliers from facing
litigation and the ambiguities regarding nuclear accidents in defence installations and the
jurisdiction of the Atomic Energy Regulatory Board (AERB). It has also made an
objectionable suggestion to create a liability fund to reduce government liability by
levying additional charges on electricity. Why users of electricity should subsidize the
liability of the foreign supplier of nuclear reactors?
Finally, the provision was amended and now the Act gives back the power to the
Government to notify specific higher amount over the cap of 300 Million Dollars. The
legislative cap is removed and executive is given authority to fix additional

responsibility. Further, an overall power is given to executive to review amount of

liability of operator from time to time and specify by notification.
The changed version is extracted below:
6. (1) The maximum amount of liability in respect of each nuclear incident shall be the rupee
equivalent of three hundred Million Special Drawing Rights or such higher amount as the Central
government may specify by notification:
Provided that the Central government might take Additional measures, where necessary, if the
compensation to be awarded under this Act exceeds the amount specified under this sub section,
(2) The Liability of the operator in each nuclear incident shall be
(a) In respect of nuclear reactors having thermal power equal to or above 10 MW, rupees one
thousand five hundred crores;
(b) In respect of spent fuel reprocessing plants rupees, three hundred crores;
(c) In respect of research reactors having thermal power below 10 MW, Fuel cycle facilities other
than spent fuel reprocessing plants and transportation of Nuclear Materials, rupees one hundred
crores;
Provided that the Central Government may review the amount of Operators liability from time to
time, and specify, by notification, a higher amount in this sub section; Provided further that the
amount of liability shall not include any interest or cost of proceedings.

It is pertinent to note that section 35 is amended to enable Supreme Court and High
Courts to entertain the cases under Constitution while excluding other civil courts. In
response to severe criticism to 10 year limitation clause, section 18 was redrafted to
expand the limitation period to 20 years in case of personal injury while retaining 10
years limitation in case of damage to property.
Impediment to Foreign Suppliers
Now let us take a look at the other side of this debate. The nuclear law of India is seen as
harsh by the supplying countries. For instance, American firms feel that India imposed
harsh liability measures on both suppliers and operators of any new nuclear plants,
affecting hundreds of billions in nuclear trade deals. They are of the view that the Indian
law goes beyond international rules that limit liability of operators of the plants. The US
India Business Council comprising hundreds of US firms issued a protest saying that the
sole remedy for compensation from accidents should be with Indian operators. Nuclear
Power Corporation of India Ltd (NPCIL) is worried that the law will cut off the supply of
Western components for the 30-40 GWe of new nuclear generation capacity which the
country wants to build in the next two decades. If that happens, they claim, India's
ambitious plans to build new reactors will quickly come to an end.
To facilitate the Indo-US nuclear trade, the US firms expect that India should pledge to
indemnify foreign suppliers through government-to-government agreements or NPCIL
should assume the liability as the supplier, since NPCIL is the only operator of nuclear
plants as of now. America and other countries are worried about the liability clauses.
India expects that the base-load power from nuclear reactors would stabilize its shaky
electric grid. According to NPCIL, India has drawn up an ambitious plan to reach a
nuclear power capacity of 63,000 MW in 2032 by setting up of 16 indigenous pressurized
Heavy Water Reactors (PHWR) each, including ten based on reprocessed uranium.

Diluting Supplier Liability: A Mistake

Former Atomic Energy Regulatory Board Chairman, A. Gopalakrishnan, has pointed out
that Prime Minister should not have made a written commitment to dilute the supplier
liability. He alleged that the commitment was made without a proper techno-economic
impact assessment and that this would prove fatal to indigenous reactor technology.
Through the nuclear deal, the U.S. had roped India into its strategic tactics to protect the
economic interests of its nuclear industry. As rightly apprehended, the Civil Liability for
Nuclear Damage Bill, 2010, with several cosmetic changes, is meant to pave the way for
India to sign International Atomic Energy Agency (IAEA)'s Convention on
Supplementary Compensation (CSC) for Nuclear Damage, 1997. It is time to question,
whether the proposed Liability Bill and the pre-existing IAEA's compensation Treaty are
in the supreme interest of present and future generation of Indians? If India decides to
join the CSC, will it not be an exercise in surrendering its sovereignty?
It is Indias great failure that it could not make anybody liable for the Bhopal disaster
caused by Union Carbide Corporation (UCC) of USA. Impossibility of imposing liability
on manufacturer and supplier is a major problem that all developing nations face as a
consequence of globalization and opening up of the economies. Interestingly, the UCC is
also in the business of nuclear power while its current owner the Dow Chemicals
Company (since February 6, 2001) is offering a range of nuclear grade resins that are
designed and manufactured to meet the requirements of the nuclear power industry in
developing countries. As part of its `policy perspectives' for Accelerate Development of
Alternatives and Renewable Energy, Dow calls for "An increased reliance on safe
nuclear power and technologies for effectively managing nuclear waste". Radioactive
waste is not a single "thing" that can be isolated and dealt with. We have already had
troubles with the Dow Chemicals, which refused to own up its responsibility for
cleaning-up the Bhopal factory premises, though it occupies it. What will be the liability
position in case of a serious nuclear accident? India should send a legal message to
suppliers that they are welcome to our nuclear market, but subject to liability. for any
nuclear disaster caused by their defective supplies.
About the Author:
Dr. Madabhushi Sridhar is a Professor of Law at National Academy of Legal
Studies and Research (NALSAR) University of Law at Hyderabad. He is designated
as Intellectual Property Rights Chair-Professor of Ministry of Human Resource
Development- at NALSAR for one term, besides leading the NALSAR Center for
Media Law and Policy.

Abstract
This article examines the crucial questions raised by the Civil Liability for Nuclear
Damage Act, 2010 regarding liability or immunity for suppliers of nuclear power plant
equipments to India. While the west wanted immunity the opposition and civil society in
India insisted on liability, because of disastrous experience from defective UCC

pesticide plant in Bhopal killing thousands of people. Principles of product liability, strict
liability and absolute liability were developed in courts of law, where the producers and
operators of industrial machinery would be liable without any exception. The Parliament
has codified this principle of absolute liability by enacting the Public Liability Insurance
Act 1991. In contrast, the Civil Liability for Nuclear Damage Act, 2010 offers
immunity to suppliers or producers while the Government takes up responsibility of
compensating the victims from public exchequer in their anxiety to invite foreign nuclear
equipment suppliers. To convince resisting opposition and to get the Bill passed the UPA
Coalition Government of India made some changes in law which still left some doubts
and uncertainties. Another controversial provision of the Act was limiting the liability up
to 300 million USD, which critics say is much less than what Indian victims got for
Bhopal disaster. This is not in tune with accepted liability jurisprudence. None of the
international nuclear liability conventions prescribed any cap on total liability, but only
set a floor. Countries like South Korea and Sweden have set operators liability at 300
million SDRs, not total liability. The operators liability in the US is $ 11.9 billion.
Agreeing for a cap on nuclear disaster from large nuclear power plants is not in the
interest of nation. But the nuclear supplying nations are considering this Indian
legislation as diluting immunity and impeding the transfer of nuclear power technology.