DiaNuke.org: Why is the Prime Minister circumventing the Nuclear Liability Act?

Sukla Sen: We must, to be fair, note the fact that two cabinet Ministers – Salman Khurshid and V Narayanasamy – and the DAE have already denied the report. They’ve categorically assured that there will be no dilution of the Act. At the same time we must also take note that the issue of supplier’s liability was referred to the Attorney General for his legal opinion and he has opined that the operator, i.e. the NPCIL, is free to not to exercise its “right to recourse” conferred by the Act as regard the erring supplier. No one has reportedly denied that. That, by all means, gives a clear indication of the government’s original intention. We must also note that the subject legal opinion of the AG appears to be quite perverse. The NPCIL being a state body dealing with public money cannot just let an erring supplier off the hook at its whims and fancy at a great cost to the Indian tax paying citizens.

The government, and apparently the Prime Minister in particular, appears to be trying its best to meet the demands of the reactor suppliers to clinch the deals for supply of nuclear reactors. There is a lot of resistance from suppliers from all the three countries viz. Russia, France and the USA. The former Chairman of the DAE, Anil Kakodkar, did publicly comment that the Indian government had made commitments to reward the countries with contracts for supply of nuclear reactors who had helped to breach India its isolation in the global nuclear marketwhich was in place since 1974 triggered by the first nuclear explosion in Pokhran and subsequently further strengthened in the wake of the second set of explosions at the same site in 1998. And the US took the lead role. So the Prime Minister appears to be too keen to do his best to honour his commitments to these countries regardless of other considerations of national interest or even public opinion. Perhaps the fact that his chances of being reelected as the Prime Minister for a third term are rather slim, even in case of a Congress-led government, also has a bearing on his personal choices.

DiaNuke.org: The government has already severely limited suppliers’ liability by introducing liability period under the Liability Rules and indexing the liability to the value of component. Why are in the international corporates still bent on a total waiver?

Sukla Sen: First of all it is quite natural on the part of the suppliers not to share any risk if they can afford to. That makes perfect business sense. But beyond that, in the present case, the risk could be too huge – Rs. 1,500 crore being the cap. And I also guess that no other country in the world has similar legal provisions ensuring supplier’s liability in case of an accident. I also understand that in the construction industry it is the standard practice to “indemnify” the supplier from any “consequential damage”. That means, in case of any equipment breakdown the supplier will be obliged only to repair/replace the damaged/faulty equipment (during the guarantee/warranty period); and not compensate for any other loss caused by the damage, including those to any “third party” or loss of businesses caused by the downtime resulting from the damage. That probably explains the severity of resistance.

DiaNuke.org: What are the prospects of challenging the Rules that contradict the spirit of the Act?

Sukla Sen: I’d guess that is the prerogative of the Indian parliament. Maybe it’s also possible to challenge it in the court.

DiaNuke.org: India has signed the CSC. Is it mandatory to harmonise the domestic legislation with it?

Sukla Sen: To me it’s plain common sense that if a government signs an international treaty/agreement and undertakes to comply with certain obligations accordingly, it should also ensure that the domestic laws by which it is bound are also in alignment with such obligations. But it is not always possible for a government to make laws as it wishes to. So in the event of any conflict between the provisions of the international treaty/agreement and domestic laws which one will prevail is a technical/legal issue which I’ll not be in a position to comment on. Still my hunch is that in case of India where the parliament does not have to authorise the government for signing an international agreement whereas the laws are legislated by it, the domestic laws should prevail in case of any conflict as the parliament is the supreme authority.

DiaNuke.org: Should the PM’s step be challenged in the court? Or as many are saying, the operator does have an option not to use its right to recourse and what remains is primarily a political battle against using this option?

Sukla Sen: In view of the denials already issued we’ll have to watch the developments carefully. But as I’ve already said above, to my mind, the advice rendered by the AG is legally untenable.