India’s Nuclear Liability Regime

Recent delays in foreign-assisted nuclear power projects such as the Jaitapur Nuclear Project and Kovvada Project have reignited debate over India’s nuclear liability law, particularly provisions under the Civil Liability for Nuclear Damage Act (CLNDA), 2010, which impose supplier liability. This remains a major hurdle in operationalizing civil nuclear agreements with countries like France and the U.S.

India’s Civil Nuclear Framework and International Liability Norms

• Chernobyl (1986) prompted global consensus on civil nuclear liability laws.
• Convention on Supplementary Compensation for Nuclear Damage (CSC) adopted in 1997 by IAEA to ensure uniformity and minimum compensation standards.
• CSC includes an “escape clause” for additional compensation from public funds if national funds fall short.

• Objective and Scope
  • Ensures prompt compensation to victims of nuclear accidents.
  • Establishes no-fault liability for the nuclear operator.
• Compensation Framework
  • Operator’s liability capped at ?1,500 crore.
  • Government liability capped at 300 million Special Drawing Rights (SDRs) (~?2,100–2,300 crore).
  • Compensation must be covered through insurance or other financial security.

• Deviation from Global Norms
  • CSC allows supplier liability only if:
    • It’s contractually agreed.
    • There is intent to cause damage.
• India’s Expansion (CLNDA Section 17(b))
  • Allows right of recourse if damage arises due to:
    • Supply of defective equipment/material.
    • Patent or latent defects.
    • Sub-standard services by supplier or their employee.

• Problematic Clause: Does not prevent civil suits under tort or other laws.
• Legal Ambiguity: Suppliers may face unlimited civil liability, which goes beyond the cap defined under CLNDA.

• Private Supplier Hesitancy: Fears of unlimited liability deter foreign and domestic private firms.
• Insurance Dilemma: Lack of clarity on insurance cover requirements.
• Delay in Key Projects:
  • Jaitapur Nuclear Power Plant (France).
  • Kovvada Nuclear Project (USA).
• Only Functional Foreign Reactor: Kudankulam with Russian support—predates CLNDA.

• CLNDA is in line with CSC.
• Section 17(b) provides optional, not mandatory, recourse.
• Legal experts argue Section 17(a), (b), and (c) are independent and supplier liability persists even without a contractual clause.

• Clarify and Limit Supplier Liability
  • Notify clear definitions for “nuclear damage.”
  • Amend or reinterpret Section 46 to insulate suppliers from indefinite civil exposure.
• Strengthen Nuclear Insurance Pool
  • Fully operationalize the India Nuclear Insurance Pool (INIP) to cover operator and supplier risks.
• Balance Victim Compensation and Investment Climate
  • Maintain operator accountability while providing legal certainty to suppliers.
• Build Strategic Communication with Partner Nations
  • Use diplomatic forums to assure adherence to CSC while addressing domestic political concerns.