Context :
India is reportedly considering easing its nuclear liability laws to attract foreign suppliers, especially from the U.S., as concerns over unlimited liability have delayed key projects like Jaitapur and Kovvada.
Provisions of the Civil Liability for Nuclear Damage Act (CLNDA), 2010:
- Strict and No-Fault Liability: Operator is liable for damages irrespective of fault.
- Insurance Mandate: Operators must cover liability via insurance or financial security.
- Right of Recourse (Section 17):
- 17(a): Contractual provision allows operator to recover from supplier.
- 17(b): Operator can recover if damage is due to defective equipment or material supplied.
- 17(c): Allows recovery if the act was intentional by the supplier.
- Liability Cap:
- Operator: ₹1,500 crore
- Government: ~₹2,100–2,300 crore (300 million SDRs)
Supplier Liability – The Core Issue:
- Global Norm (CSC): Operator-only liability; suppliers excluded to prevent legal uncertainty and promote nuclear commerce.
- India’s Deviation:
- Section 17(b): Introduces statutory supplier liability for defects—unprecedented globally.
- Section 46: Does not bar other civil/criminal proceedings against suppliers, risking unlimited liability under tort law.
Why Foreign Suppliers Are Wary:
Ambiguity in Law:
- No clear cap on supplier liability (unlike operator).
- Even if contracts exclude liability, Section 17(b) allows legal action based on statute.
Insurance Challenges:
- Lack of clarity on how much insurance is sufficient for suppliers.
- No international precedent or actuarial model for supplier-side insurance.
Fear of Civil & Criminal Prosecution:
- Section 46 allows litigation under tort/criminal law, leading to possible class-action suits or multiple proceedings.
Existing Stalled Projects:
- Jaitapur (EDF, France): MoUs signed since 2009; no progress due to liability concerns.
- Kovvada (Westinghouse, U.S.): Still in pre-clearance stages.
- Contrast: Russia’s Kudankulam reactors progress uninterrupted (deal predates CLNDA).
Government’s Position:
- CLNDA aligns with CSC.
- Section 17(b) is permissive, not mandatory—operators may choose not to invoke it.
- Suppliers argue this doesn’t reduce their risk—law allows courts to bypass contract terms based on statutory reading.
UPSC Relevance:
GS2: International Relations
Civil nuclear cooperation with U.S., France, Japan hindered by legal uncertainties.
GS2: Governance & Policy
Law vs. Policy contradiction—Parliament allowed recourse, but diplomacy seeks to dilute it.
GS3: Internal Security/Energy Security
Nuclear power is crucial to India’s low-carbon energy mix; legal clarity is essential for energy infrastructure.
UPSC Mains Question (GS2/GS3):
Q. India’s civil nuclear liability framework, while progressive in intent, has created a deterrent for foreign investment in nuclear energy. Critically examine the ambiguities in the Civil Liability for Nuclear Damage Act, 2010 and suggest a balanced way forward.