September 22, 2013

People’s Democracy

(Weekly Organ of the Communist Party of
India (Marxist)


No. 38

September 22,





the Parliament and Nuclear Suppliers’ Liability


Prabir Purkayastha


Vahanvati has done it again. Not satisfied with blotting
his copybook with
“opinions” that facilitated Raja’s 2G scam or
participating in a meeting on how
to lie to the Supreme Court on the coalgate scam, he is
now trying to change an
Act of Parliament through his “interpretation”. In doing
so, he is doing
immense disservice to the post that he occupies, the
Attorney General’s post.


is not a government pleader appointed to fight a
government case. He is
supposed to give his legal opinion to the government on
what the law is
supposed to be, not what the government wants. He is the
highest law officer in
the country and supposed to advise the government on how
to protect the rights
of the people in the country. Instead, once again, he has
soiled his high
office with an opinion on nuclear suppliers liability,
which is expressly
designed to protect foreign suppliers; even if they supply
faulty and
substandard equipment. This, in a country that has seen
Bhopal Gas Disaster,
the largest industrial accident ever, with enormous loss
of lives.


clause that Vahanvati has opined on is the much debated
Clause 17 of “The Civil
Liability for Nuclear Damage Act.” This clause was opposed
by nuclear
suppliers, particularly the US suppliers, who had argued
that only the owners
of nuclear plants should have liability and they should be
exempted from all
liabilities whatsoever – even if the accident resulting in
damage is squarely
to their account. This means that they would carry no risk
even if they supply
sub-standard or faulty equipments. After Fukushima
and the magnitude of this nuclear disaster, to argue that
all suppliers should
be let off scot free in case of faulty design or
faulty/substandard equipment,
is to dice with with peoples’ lives.




the beginning, the Manmohan Singh government tried to help
the American nuclear
lobby by diluting suppliers’ liability. One was a cap on
the plant operator’s
liability – of 300 million SDR’s (at that time about Rs
1500 crore), which then
also became a cap on the suppliers’ liability. The right
to recourse – the
right of the operator to recover the damages that he might
have incurred in
case of an accident – was hedged initially in various
ways. Finally, the
Standing Committee and subsequently the parliament passed
the Act that laid
down the following:


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 –

Such right is expressly provided for in a contract in

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 defect

The Nuclear Incident has resulted from the act of
commission or omission of an
individual done with the intent to cause Nuclear damage


attempts had been made during the Standing Committee
deliberations to link 17
a) above with 17 b). An “and” was introduced at one stage
to make the 17 b)
contingent on its being a part of the contract. If this
had been accepted, the
right to recourse of the operator under 17 b) could have
been exercised only if
it was there in the contract. The parliament rejected all
such measures and
laid down unambiguously that the suppliers of liability
for defective supplies
would exist independent of the contract provisions.


Vahanvati is now seeking to do – from newspaper reports –
is to link 17 a) and
17 b) and arguing that without suppliers liability being
expressly being
provided in the contract, the supplier would have no
liability; that 17 b)
could be exercised only if it is included in the contract.
This flies in the
face of all interpretations of acts, and is a complete
unique Vahanvati spin.
Worse, he seems also to be implying that it is possible
for a public sector
undertaking – the Nuclear Power Corporation Ltd (NPCL) –
to defy the provisions
laid down in  an
Act of parliament and enter
into a contract with private parties that are explicitly
in contradiction to
such an Act. To give such blatantly wrong interpretation
of law even after the
Court  has
exposed his complicity in
various other illegal acts of the government 
– in 2G and coalgate cases – needs indeed a very


is Manmohan Singh government so hell bent on acting
illegally that would
probably end up being challenged in a court of law any
way? Has it not suffered
enough ignominy in the 2G and the coalgate cases of
violating various lawful
provisions to satisfy the venality of local and global


issue here is Manmohan Singh’s desire to bring the Nuclear
Deal that he has
signed with the US
to fruition, even if it costs the country dear. 
The Indian government had secretly promised to buy
10,000 MW of
equipment in lieu of US
support to lifting sanctions on India
for nuclear fuel and dual use technology. Shivshankar
Menon’s letter with this
offer is on public record.


things have happened subsequent to the signing of India US
nuclear deal. The
Bhopal Judgement that gave a slap on the wrist of those
responsible for the
Union Carbide Disaster, causing a huge outrage and
bringing back memories of
this horrific disaster. And the Fukushima
accident brought out the risks of nuclear energy,
particularly if the designs
and operations are faulty.


the Bhopal Judgement, the discussions on what should be
the liability of the
suppliers became a serious matter of debate in the
country. It was the
consensus among the people that those who supply thousands
of crores worth of
equipment, need to also accept some financial liability if
their equipment is
proven to be the cause of an accident. It is this
consensus that the parliament
reflected when it incorporated suppliers liability in the
Liability Act.


nuclear suppliers have resisted such liability right from
the beginning. In the
laws have been passed which puts the entire liability of
the accident only on
the operators – the Price Anderson Nuclear Industries
Indemnity Act. It was
specifically designed to shield the nuclear equipment
suppliers from liability.
They have also used this as a model for all countries and
even for
international treaties on nuclear liability.


of nuclear energy have argued that no other industry gets
this protection. In
effect, this is an implicit subsidy to the nuclear
industry, which then needs
to  take no
insurance for supplying
defective equipment causing an accident. As nuclear
accidents can have enormous
consequences, this protects the nuclear equipment
manufacturers from loss of
business in case of an accident. If Bhopal-like accident
had taken place in
another country, Union Carbide’s liabilities could have
bankrupted it, as has
happened to a number of asbestos companies. It is this
hidden subsidy – in most
cases by the tax payers – that appears to make nuclear
energy commercially more
attractive than it really is.


brings out this quite clearly, though here we are
discussing the operator’s
liability. The accident in Fukushima
comparable to Chernobyl.
It is still continuing to 
highly radioactive material into the atmosphere,
groundwater and the sea. There
have been core melt-downs in three of the reactors and
their containment
vessels have also cracked. The entire area inside the
plant is highly
radioactive making any maintenance and stabilisation  work hazardous. 


is estimated that due to the large amount of radioactivity
discharged, the loss
to the people in FukushimaPrefecture is
more than $
100 billion US dollars.


time required to dismantle the plant will be more than 20
years and to replace
the radioactive soil there probably 40-50 years. Right
now, the Japanese
government is building an ice-wall – at a cost of about
half a billion dollars
– to reduce the radio active water from leaking out into
the ground water and
the sea.


question is who is going to foot  all the
bill? The insurance of Tepco, the owner of the Fukushima
plant, will barely cover $1
billion. Most of the $100 billion of the cost – of paying
compensation to those
affected, dismantling the plant, and rehabilitating the
area – is going to be
borne by the Japanese government, read the Japanese




the suppliers are given total immunity from any damage
that their faulty
equipment may cost, why should they then take care of the
safety of the plant?
What prevents them from cutting corners and taking risk at
the cost of the


is why the Clause 17 of the Nuclear Liability Act puts
some liability on the
supplier. If the operator has to pay out money, again with
an upper limit of
only Rs 1,500 crore, then he can sue the supplier for at
least this amount.
Contrast this to the cost of an accident of Fukushima
scale costing more than 300 times
this amount. A reactor costs much more than Rs 1,500
crore, forget the cost of
a possible accident. The US suppliers’ unwillingness to
even take an insurance
cover for a fraction of their contract value – something
all suppliers in all
other industries routinely do – shows the lack of
confidence they have in their
own equipment and supplies.


Manmohan Singh government is risking a possible Fukushima
when it seeks to placate the US
and remove suppliers’ liabilities. Possibly, he gave
assurances to the US
the US
suppliers will have no liability for their supplies. In
trying to save his face
for such assurances, he is playing with the lives of
Indian people.


government and its companies must understand that it may
take comfort now from
the words of Vahanvati and Manmohan Singh. But as they are
likely to find out,
the law of the land cannot be overturned by dubious
interpretations and
executive actions. India
is still not a banana republic, even if its government is
behaving like one.
The will of the people and the rule of law will finally
prevail, all
governmental efforts notwithstanding.