The “Breakthrough” on Nuclear Agreement between Modi and Obama: A Reality Check

Sukla Sen | SACW

The (Illusory?)”Breakthrough”

“At the start of a three-day U.S. presidential visit rich with pageantry and symbolism, President Obama and Indian Prime Minister Narendra Modi said Sunday [Jan. 25 2015] that the two countries have made progress toward resolving a long-standing impasse on civilian nuclear cooperation.

“Obama said that the United States and India have reached a “breakthrough understanding” that would make it easier for U.S. firms and others abroad to invest in Indian nuclear power plants. Indian law holds suppliers, designers and builders of plants liable in case of an accident, making companies reluctant to invest in the plants. The two countries have also long failed to agree on how to track nuclear material.”[1]

In India, the ruling dispensation tom-tommed it as a major “breakthrough” or achievement.[2]

It was, however, only after a lapse of two weeks, the Indian Ministry of External Affairs, after much prodding, on Feb. 8, eventually released the details of the “breakthrough”: Frequently Asked Questions and Answers [FAQ] on Civil Liability for Nuclear Damage Act 2010 and related issues’[3] While a section of the media has clearly welcomed it[4]; this time, at least one sceptic voice has found space right at the very beginning[5].

Here, it may not be quite out of place to mention in passing that at the time of the announcement, on Jan. 25 last, the specifics of the “breakthrough”, as it now transpires[6], were yet to be fully worked out. So it won’t be too unfair to infer that the announcement involved an element of deliberate deception.

The Issue

As The Washington Post report, cited above, makes out, prior to Obama visit, there were essentially two friction points: one, supplier’s liability; two, the US right to keep tracking all nuclear materials delivered by any US-based entity.

As regards the second requirement, the US President, on Jan. 25, made a concession by waiving off, under his executive authority, the originally envisaged requirement under the 123 agreement [of the U.S. Atomic Energy Act] and the Hyde Act of 2008 of (intrusive) “tracking”.[7] A US spokesperson clarified: “The United States is satisfied that the information we will receive . . . including through information exchanges and a consultative mechanism, will provide enough information to meet the requirements under the 123 agreement, as well as allow for the necessary certifications to Congress as required by the Hyde Act.”1 However, doubts have been raised whether the US President has the powers to grant such waiver.[8] One would also wonder whether a waiver granted under executive authority of the US President can be scrapped as easily, again under executive authority, by the present President or a successor of his. Not only that, subsequently, questions have been raised as regards the very extent of “concession” made by the US.[9]

The Relevant Sections of CLNDA

Be that as it may, the “supplier’s liability” issue essentially refers to two specific sections of the Civil Liability for Nuclear Damage Act, 2010 (CLNDA) (8): viz. sec. 17(b) and sec. 46.

Section 17 provides:

The operator of the nuclear installation, after paying the compensation for nuclear damage in accordance with section 6, shall have a right of 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 supplier or his employee, which includes supply of equipment or material with 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.

Section 46 provides:

The provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being in force, and nothing contained herein shall exempt the operator from any proceeding which might, apart from this Act, be instituted against such operator.

And, a note on its right margin reads: Act to be in addition to any other law.

The FAQ on Sec. 17

Now let us come to (a selected few of) the clarifications provided on Feb. 8.

As regards the operator’s “right of recourse” leading to “suppliers’ liability” as provided under the Sec. 17, and 17(b) in particular, of the CLNDA, which in the global context is unique to India, a two-pronged approach has been adopted to nullify this provision.

In response to the Question 14 of the FAQ, it is provided: “The India Nuclear Insurance Pool is a risk transfer mechanism formed by GIC Re and 4 other PSUs who will together contribute a capacity of Rs 750 crores out of a total of Rs 1500 crores. The balance capacity will be contributed by the Government on a tapering basis. The pool will cover the risks of the liability of the nuclear operator under Section 6(2) of the CLND Act and of the suppliers under Section 17 of the Act. The Pool envisages three types of policies, including a special suppliers’ contingency policy for suppliers other than turn key suppliers.”

So, an insurance pool of Rs. 1,500.00 crore will be created by the GIC, the apex public sector undertaking in the general (other than life) insurance sector in combination with 4 other PSUs and backed up by the Union Government to provide (three types of) risk covers to (i) the operator, (ii) the (turn key) supplier and (iii) suppliers other than the turnkey supplier. It is quite clear that there will be no reinsurance by global insurance companies as is the normal practice in case of insurances involving very large amounts in order to distribute the risks. So, any compensation to be paid will come exclusively out of the Indian taxpayers’ money. That is quite extraordinary. Not only that, as the price of a reactor will be “negotiated”, the turn key supplier will, in all probability, be allowed to jack up its price to factor in the cost of insurance, if at all any. (One has got to specifically keep in mind the sanctimonious sermon immediately following the quote cited above: “Operators and suppliers instead of seeing each other as litigating adversaries will see each other as partners managing a risk together.” The actual implications in this case may very well turn out to be quite ominous.) Thus the turnkey supplier will be provided full risk cover, either overtly or covertly, just free. It goes without saying that this move completely defeats the very purpose and intent of the Sec. 17(b) of the CLNDA without touching the Act itself and thereby enabling the government to make this utterly ridiculous claim: “There is no proposal to amend the Act or the Rules”[10] (in response to the Question 3).

Apart from the very relevant issue that who is ultimately made to pay in case of an accident on account of a proven fault on the part of the (turn key) supplier, arguably, even more important is the fact that the provision for supplier’s liability would have had made the supplier considerably more circumspect as regards the quality of the supply than otherwise. Given the potentially catastrophic nature of a nuclear power plant, that is of immense importance. With free full risk cover for the turn key supplier that aspect stands completely dispensed with.

Just another minor point. The reference, in the quote above, to “the risks of the liability of the nuclear operator under Section 6(2)” which tends to suggest that hence the operator has to take an insurance is rather misleading. The Rule 3(5) rather explicitly provides: “The provisions of this rule [i.e. the Rule 3 which lays down the specifics of the Sec. 8(1) of the CLNDA as regards the “insurance policy or such other financial security or combination of both, covering his liability under sub-section (2) of section 6″] shall not apply to a nuclear installation owned by the Central Government.” So, the NPCIL does not really need to take any insurance cover, which is now being arranged as one of the three types of insurance referred to above – in a way to rationalise the other two, as per the Rules relating to the CLNDA.

Be that as it may, if the first prong of the two-pronged approach is to nullify the Sec. 17(b) of the CLNDA in order to provide the turn key supplier a full insurance cover for free at the cost of the Indian taxpayers, then the second prong is constituted of a disingenuous attempt to read down the said Sec. 17(b).

In response to Question 9 of the FAQ, it is provided: “Section 17 states that the operator shall have a right of recourse. While it provides a substantive right to the operator, it is not a mandatory but [merely] an enabling provision. In other words it [only] permits but does not require an operator to include in the contract or exercise a right of recourse.” And, then immediately follows: “However, even though there is no mandatory legal requirement under the CLND Act to provide for a right of recourse in a contract, there may be policy reasons for having a risk sharing mechanism including a right of recourse. As a matter of policy, NPCIL, which is a public sector undertaking, would insist that the nuclear supply contracts contain provisions that provide for a right of recourse consistent with Rule 24 of CLND Rules of 2011.”

Before coming to the central issue – as laid out in the first quote in the preceding para, let us make it clear that if the “right of recourse” is merely an enabling provision, and not a mandatory one, then incorporating this provision in the contract, in line with the Sec. 17(a) of the CLNDA, would apparently hardly serve any purpose. Not only that, the deception, embedded in the second quote, is even deeper. It actually talks of “a right of recourse consistent with Rule 24 of CLND Rules of 2011.” The sting here, as the saying goes, is in the tail – i.e. the Rule 24.

The Rules were notified notified in November 2011, about a year after the CLNDA being notified, in December 2010. While framing the Rules, a conscious attempt was made to water down the provisions of the CLNDA which had been the end product of a process of detailed, and heated, debates in the parliament aided by high-pitched campaigns[11] by and consultations, via the parliamentary standing committee entrusted with the task of examining the issue, with various sections of the civil society including “experts” and activists engaged with the issue of nuclear power. Thus while the CLNDA bears the imprint of this vigorous tussle, the framing of the Rules was just a unilateral executive act, intended to significantly undermine the Act passed by the parliament in order to mollify the potential suppliers of nuclear power plants – from the US, in particular, but also from France and Russia. Consequently, the Rule 24 effectively nullified the Sec. 17(a) of the CLNDA by laying down unreasonably restrictive limits on time, for lodging the claim, and also on the amount, which can be claimed.[12] However, for whatever reasons, the Rule 24 makes no mention whatever of the Sec. 17(b) of the CLNDA. So it stood, even after framing and notification of the said Rules, untouched and unscathed. And, any sensible reading of the Sec. 17, quoted in full above, would make it clear that both the 17(a) and 17(b) would operate simultaneously and independently of each other, not as “either-or”. So, while the brave declaration that “(a)s a matter of policy, NPCIL, which is a public sector undertaking, would insist that the nuclear supply contracts contain provisions that provide for a right of recourse consistent with Rule 24 of CLND Rules of 2011” is nothing but just hot air, meant to deceive the uninformed, it is supplemented with the move to read down the 17(b) itself.

There is of course nothing novel or original about the argument put forward now that the “right of recourse” as provided under Sec. 17 is not meant to be mandatorily exercised, it is up to the operator to opt or not to opt to pursue this course. Even the UPA II had tried this line.[13] Had obtained the opinion of the then Attorney General to this effect. But had to abandon this line in the face of vociferous opposition. Just to recount, in the view of this writer expressed at that time, 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.” At that time, the BJP also had vociferously opposed the contemplated move, its leader in the Rajya Sabha, Arun Jaitley, now the Finance Minister in the Modi Cabinet, had, in a signed article13A, argued: “If a public sector company willfully enters into an agreement with a foreign vendor and abdicates its’ right to recourse which section 17(b) otherwise provides for its’ benefit, it would not only be violating the provisions of the Civil Liability for Nuclear Damages Act but also section 13(1)(d) of the Prevention of Corruption Act wherein a wrongful loss would be caused to the revenue of a Public Sector company.” Now, obviously, the boot is on the other foot. But that does not make the, already tried and abandoned, argument any more convincing just because the new regime has opted to adopt and issue it. And the clarifications issued, under the FAQ, by the Ministry of External Affairs (MEA), Govt. of India do not, repeat not, have the force of a law.

One only wonders that having made the provision for free full insurance cover, exclusively out of Indian taxpayers’ money, what was the need for such laughable acrobatics.

The “Clarifications” regarding Sec. 46

Now let us look at the implications of the Sec. 46 of the CLNDA and the clarifications issued related to this.

In response to Question 11, the FAQ provides: “Concerns over the broad scope of Section 46 have been raised by suppliers, both domestic and foreign. Section 46 of the CLND Act provides that “the provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being in force, and nothing contained herein shall exempt the operator from any proceeding which might, apart from this act, be instituted against such operator”. The language in section 46 of CLND Act 2010 is similar to such language in several other legislations such as Telecom Regulatory Authority Act, Electricity Act, Securities and Exchange Board of India (SEBI) Act, Insurance Commission Act. Such language is provided routinely to underline that other relevant laws continue to be operable in their respective domains.”

And, in response to Question 12: “The CLND Act channels all legal liability for nuclear damage exclusively to the operator and Section 46 does not provide a basis for bringing claims for compensation for nuclear damage under other Acts. That this section applies exclusively to the operator and does not extend to the supplier is confirmed by the Parliamentary debates at the time of the adoption of this Act. It may be noted that the CLND Bill was adopted by a vote. During the course of the vote on various clauses of the Bill, in the Rajya Sabha two amendments were moved for clause 46 that finally became Section 46 of the CLND Act that inter-alia sought to include suppliers in this provision. Both those amendments were negatived. A provision that was expressly excluded from the statute cannot be read into the statute by interpretation. It is well-settled principle of law that every statute is to be interpreted in accordance with the intention of the legislature or maker of the Statute (M/s. Turtuf Safety Glass Industries V Commissioner of Sales Tax U.P., 2007 (9) SCALE 610, and State of Kerala & Anr V P.V. Neelakandan Nair & Ors, 2005 (5) SCALE 424).”

Further, in response to Question 13, it is argued, in the same tortuous manner as above, that the Sec. 46 does not enable the victims of a nuclear accident to sue the supplier in a foreign court. It, however, keeps the issue somewhat open whether a victim is outright prohibited from approaching a foreign court.

Now, these are only clarifications, or interpretations – regardless of whether considered silly or profound, issued by the executive having no legislative backup or judicial authority whatever and thereby, as already pointed out above, do not have the force of law.

These are at best a set of legal arguments[14], out of a number of possible ones, and not binding on anyone. These just cannot stop the potential litigants from litigating, nor the judicial authorities while passing judgement will be in any way bound by these clarifications.

Very similar would be the case with any “legal memorandum” issued by the Attorney General.[15]


So, in sum, while the Sec. 17(b) of the CLNDA is all set to be completely subverted through the provision of free full insurance coverage to the turnkey suppliers out of exclusively Indian taxpayers’ money, though the backup move to read down this provision of the Act does not appear to amount much; the issues as regards the Sec. 46 appear to remain pretty much unresolved.

And, the proof of the pudding will surely be in the eating.[16]

In that context, a proverbial straw in the wind is provided by a more recent news report, datelined Feb. 13 2015.[17] It says: “It’s still really early,” Danny Roderick, chief executive of Toshiba unit Westinghouse [one of the two US-based suppliers identified for supply of nuclear reactors/plants], told reporters [on Feb. 12 2015, i.e. four days after the issue of subject MEA clarifications] after an industry event in New York. “You have to realize these are documents that are going to take months and months to review [emphasis added].”

So, while the Government of India, in its insane drive to import nuclear reactors – which cannot be justified in terms of cost considerations and, far more importantly, carries the stupendous risk of catastrophic accidents (that is precisely why there is so much fuss about the liability clause) apart from being routinely hazardous – from abroad, and the US in particular, to boost India’s nuclear power programme – a perpetual laggard[18], at a time when globally nuclear power is very much on a declining curve[19] – with China, Russia, India, S. Korea and the US leading the rather smallish pack, of just 14 countries, planning to build new reactors, has tried too hard to treacherously subvert an Act passed by the Indian parliament to appease and lure the potential suppliers; a significant hurdle – even if not insurmountable, apparently, continues to remain in place, nonetheless.

Feb. 16 2015

The author is an anti-nuclear peace activist and a founder member of the Coalition for Nuclear Disarmament and Peace (CNDP), India.

Notes and References:

1. See: Obama, India’s Modi claim breakthrough on nuclear issues by Katie Zezima, Jan. 25 2015, at

2. Ref., for example: “Indian Foreign Secretary Sujatha Singh later confirmed that agreement has been reached. “We have broken the logjam of the past few years. We have reached an agreement. The deal is done,” Singh said after extended discussions between Obama and Modi lasting more than three hours.” See: India and US announce nuclear ’breakthrough’ after Modi-Obama talks, Jan. 26 2015, at Also see: Obama, Modi achieve breakthrough in civil nuclear over one-on-one talks, Jan. 25 2015, at, Modi, Obama announce nuclear breakthrough after talks, Jan. 25 2015, at, Modi, Obama walk the talk on nuke deal by Suhasini Haidar, Jan. 25 2015, at Of course, contrarian views started appearing after a brief while: Nuclear deal no cause for celebration by Suvrat Raju and M V Ramana, Jan. 31 2015, at, Liability risks in India-US nuke deal transferred to taxpayers by Brahma Chellaney, Feb. 3 2015, at, Nuclear power plants at what cost? by Yogi Aggarwal, Feb. 3 2015, at, The nuclear ‘breakthrough’ is mostly hype by SA Aiyar, Feb. 8 2015, at

The body blow, however, came from a US newspaper. See: Is the India nuclear agreement really the ‘breakthrough’ Obama promised? by Annie Gowen and Steven Mufson, Feb. 4 2015, at

And, the activists in India also raised their dissenting voices: Citizens Speak Up against Modi Government’s Brazen Move to Tamper with the Nuclear Liability Act, posted on Jan. 30 2015, at, Nuclear liability bill by Prabir Purkayastha, January 29 2015, at and The ‘breakthrough’ in Indo-US nuclear deal will bleed Indians every which way by Nityanand Jayaraman, Jan 29, 2015, at

3. See: Frequently Asked Questions and Answers on Civil Liability for Nuclear Damage Act 2010 and related issues, Feb. 8 2015, at

4. See: India clears air on nuclear liability, expects nuclear commerce to start soon by Indrani Bagchi, Feb. 8 2015, at Also: Liability law won’t be eased for nuclear deal: Government by Dipanjan Roy Chaudhury, Feb. 9 2015, at . For a more neutral reporting: Centre clarifies on Indo-US nuclear deal, says Indian victims cannot sue foreign suppliers for N-accident, PTI, Feb. 08 2015, at

5. See: MEA clarification on nuclear deal draws flak by Suhasini Haidar, Feb. 9 2015, at This has now been followed up with another significant critical view: Profitability without accountability by M V Ramana and Suvrat Raju, February 16 2015, at

6. “However, on Friday [i.e. Feb. 6], U.S. Assistant Secretary of State Nisha Biswal, in an answer to a question from The Hindu, said the two sides were still “trading papers” on the [subject] issue. The Ministry has also not clarified on the “tracking” requirements of the U.S. on nuclear material in India in its press release.” (See:

7. “The US and India have been in a deadlock for six years, with Washington insisting on tracking any nuclear material it supplied to India. The US president used his executive powers to waive away the measure [emphasis added] and agree that from now on, inspections of India’s use of fissile materials by the IAEA will suffice.” See: US, India reach ‘breakthrough understanding’ on stalled civil nuke deal, Jan. 26 2015, at

8. “U.S. nonproliferation experts also questioned whether Obama has the authority to waive a requirement to track nuclear materials [emphasis added] that is part of the 2006 legislation that eased other restrictions on exporting to India. “It would appear that the U.S. side has caved [emphasis added] on a requirement set by Congress in the ‘Hyde Act’ of 2008 for implementation of any nuclear cooperation between the two countries that there must be an extensive ‘end-use monitoring’ program to help ensure that no U.S.-origin nuclear material or technology is diverted for military purposes,” Daryl G. Kimball, executive director of a nongovernmental group called Arms Control Association, wrote in an e-mail to National Security Council officials asking for clarification.” See:

9. “But, now it turns out that the United States has not lowered its requirement of monitoring the use of nuclear material supplied to India [emphasis added]. They will not do it directly, but through the IAEA monitoring team, which will have two US members, while inspecting the reactors.” See: US to monitor Indian nuclear facilities through IAEA by Iftikhar Gilani, Feb. 6 2015, at And the report goes on to claim: “Further, India will share the data during the annual consultation by a India-US contact group that helped in achieving a “breakthrough” in the civilian nuclear deal during Obama’s visit.”

Yet another report posits: “Obama officials said that the two sides came up with a tracking system specific to India that will rely heavily on a series of information exchanges, as well as some information that would come from the International Atomic Energy Agency, which monitors some of India’s nuclear plants.” See:

10. See: THE CIVIL LIABILITY FOR NUCLEAR DAMAGE ACT, 2010 at,2010.%20(38%20OF2010).pdf and the Civil Liability for Nuclear Damage Rules, 2011 at

11. See, for example: Nuclear Liability Cap Bill to Congress-led Standing Committee, posted on May 13 2010, at, CNDP Representation on ’Civil Liability for Nuclear Damage Bill 2010’ to Parliamentary Standing Committee on Science & Technology, posted on June 19 2010, at, Fwd: Supplementary Submission on ’Civil Liability for Nuclear Damage Bill 2010’ to Parliamentary Standing Committee on Science & Technology, Environment & Forests, posted on June 28 2010, at!msg/greenyouth/u5uk4SqJjuQ/Xqsqbmo_2SMJ, India: The Civil Liability for Nuclear Damage Bill 2010 – Some Tentative Observations by Sukla Sen, March 31 2010, at and The great nuclear folly by Praful Bidwai, March 21 2010, at .

12. See: CNDP Statement on Circumvention of Supplier’s Liability under the Civil Liability for Nuclear Damage Act, 2010, Nov. 18 2011, at And, for a more detailed discussion, Disingenuous Diplomacy to Push Forward BJP’s Nuclear Policy by Sukla sen, posted on July 3 2014 – its end portion, in particular, at

13. See: The Attorney General’s interpretation of nuclear liability law is legally untenable: Sukla Sen, Sept. 21 2013, at

13A. See: Diluting nuclear supplier’s liability by Arun Jaitley, Sept. 22 2013, at

Also: “According to reports, the Centre [ruled by the UPA II], had sought the AG’s (Attorney General) opinion on legality of a MEA (ministry of External Affairs) proposal before the Cabinet Committee on Security, which read, “Authorize Nuclear Power Corporation of India Ltd not to exercise operators’ right to recourse under Section 17 of the Civil Liability for Nuclear Damages Act, 2010.” The MES in its note is reported to have stated that “We consider the section 17 of CLNDA is a kind of enabling provision; it gives a specific right to operator but does not place any mandatory obligation or requirement to exercise the right of recourse against supplier. In the absence of a mandatory obligatory, the operator could choose not to exercise that right. It is a statutory right and not a fundamental right under the Constitution.”” at .

14. In this context, it would not be totally out of place to draw attention to how the very intent and purpose of the Indian parliament in enacting a specific law – The Muslim Women (Protection of Rights on Divorce) Act 1986 – to nullify the effects of the Supreme Court judgment in the famous Shah Bano case was subsequently largely nixed by the Supreme Court in the Daniel Latifi case through “interpretation”. (See: and, for example.)

15. Despite the very obvious partisan polemical tone of the article, Kapil Sibal, a senior Supreme Court lawyer and Congress leader, has, in it, quite rightly argued: “The attorney general’s opinion, in the form of a legal memorandum, cannot amend the statute; it must be consistent with the statute.” (See: Fact and fission, Feb, 15 2015, at

16. S A Aiyar has thus rather aptly commented: “Finally, it’s worth reiterating that it’s not enough to convince Obama, Hollande, Abe or Putin. Even if these political leaders are satisfied, that will mean nothing unless corporations like General Electric, Toshiba, and Areva are willing to take the financial risk of supplying India.” (See: The nuclear ‘breakthrough’ is mostly hype, Feb. 8 2015, at It is, in a way, an echo of: “Analysts say the real test will be whether the two U.S.-Japanese companies sign commercial contracts with the Nuclear Power Corporation of India.” (See:

Also noteworthy: “Ultimately it’s up to the companies to go forward [emphasis added], but the two governments [i.e. the US and India] came to an understanding,” Richard Verma told the press. See:

17. Westinghouse to work on India nuclear plan before liability resolved – CEO at Of course, it indicates some softening of the stand on the part of the vendor, but the final outcome remains still pretty much uncertain. And, there, apparently, is no word as yet from the GE-Hitachi – the other US-based identified supplier, beyond that it looks forward “to reviewing the governmental agreement.” (See: While the Rosatom of Russia has eventually appeared to have reconciled itself to the CLNDA, having failed to extract any special concession on the liability aspect even after much tussle (see: Modi-Putin Talks: Russia to Supply 12 (or 10?) Nuclear Reactors over the Next 20 Years (despite Appalling Performance in Koodankulam, Dec. 12 2014, at, and, also, ), the liability issue still remains to be sorted out between India and France/Areva (see: The Yet Unresolved Nuclear Liability Row between France and India, Feb. 5 2015, at

18. See: The Limited Future of Nuclear Power in India by M. V. Ramana, July 2013, at

19. See: The rise and fall of nuclear power, in 6 charts, updated by Brad Plumer on January 30 2015, at

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