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An Overview of CLND Act 2010
An Overview of CLND Act 2010
K.L. Ramakumar
Email: [email protected]
Presentation sequence:
Brief Introduction to Nuclear energy
International civil nuclear cooperation
Need for a separate legislation
Similar international instruments
Taking stock of main points in CLND Act
Salient Points
There has been quite an exhaustive amount of opinions expressed on the provisions
of CLNDA.
Strident criticism to defensive arguments
Almost all of them missed out on the most significant aspect of the Act
namely its progressive nature.
The Act is here to stay and the Rules have been promulgated.
This presentation steers clear of the maze of criticism or defensive arguments
Focus is on taking stock of main elements of CLNDA
The Civil Liability for Nuclear Damage Act of 2010 (CLND Act)
The Rules for implementing the CLND Act
Ministry of External Affairs website: Frequently Asked Questions
and Answers on Civil Liability for Nuclear Damage Act 2010 and
related issues, February 08, 2015
IAEA, The Convention on Supplementary Compensation for
Nuclear Damage (CSC) 1997
Parameter CSC CLNDA
Installations covered Art. II.2; Annex, Arts 1(b); 1.2 Chapter 1, Sections 1 and 2
Geographical scope Art. V Chapter 1, Sections 1 and 2
Non-discrimination Art. III.2 Inference
Nuclear damage Art. I(f) Chapter 1, Sections 1 and 2
Incident in an installation Annex, Arts 3.1(a); 3.4; 3.7(a) and (b); 7.1; 7.3; 7.4 Chapter 2; Section 4
Incident during transport Annex, Arts 3.1(b) and (c); 3.2; 3.7(c); 7.2; 7.3; 7.4 Chapter 2, Section 4
Exclusive liability Annex, Arts 3.8; 3.9; 3.10 Chapter 2, Section 4
Causes of exoneration Annex, Arts 3.3; 3.5; 3.6 Chapter 2, Section 5
Right of recourse Art. IX; Annex, Arts 8.3; 10 Chapter 4, Section 17
Liability limits Annex, Arts 4; 6; 8.1 Chapter 2; Section 6
Insurance cover Annex, Art. 5 Chapter 2; Section 8
Public funds Art. III; Annex, Arts 4; 5; 8.1 Chapter 2, Section 7
Enforcement of rights of Art. X.2 Chapter 4, Sections 13-16
compensation
Nature, form and extent of Annex, Art. 11 Chapter 4, Sections 13-16
compensation
Time limits Annex, Art. 9 Chapter 4, Section 18
Jurisdiction Art. XIII.1–4 Chapter 3, Section 9 and
Chapter 5, Section 19
Applicable law Arts I.1(e); XIV; Annex, Art. 11 Chapter 1, Section 1
Recognition and Art. XIII.5–7 Chapter 5, Section 36
enforcement of judgements
Main features of CLNDA in the context of CSC Expectations
CSC Expectations Provisions in CLNDA
Exclusive jurisdiction The Nuclear Claims Commissioner. Constitutional right to
approach the High Courts and the Supreme Court exists in
parallel.
Absolute (strict) liability No-fault liability. Section 4(4)
Chanelling of liability Liability channelled to the Operator (Section 4(1)) with
Operator’s right of recourse (Section 17) and
Citizens’ right under tort law(Section 46)
Limited liability in time Section 18: For damage to property, the time limit is 10 years.
For personal injury to any person, the time limit is 20 years
Other remedies for Section 46: Provides, that the provisions in the Act shall be, in
victims addition to, and not in derogation of, any other law, for the time
being in force, and nothing contained herein shall exempt the
operators from any proceedings which might, apart from this Act,
be instituted against such operators
Issue CSC CLNDA
Operator’s National law may provide Section 17: The Operator of the nuclear
right of that the operator shall installation after paying the compensation for
recourse have a right of recourse nuclear damage in accordance with Section 6,
against the only: shall have a right to recourse where: –
supplier (1) if this is expressly (a) Such right is expressly provided for in a
provided for by a contract contract in writing;
in writing; or (b) The nuclear incident has resulted as a
(2) if the nuclear incident consequence of an act of suppliers or his
results from an act or employees, which includes supply of
omission done with intent equipment or material or patent or latent
to cause damage, against defects or sub-standard services;
the individual who has (c) The nuclear incident has resulted from the
acted or omitted to act act of commission or omission of an individual
with such intent. done with the intent to cause nuclear
damage.
There are two very important and significant differences in the texts of CSC and CLNDA
1. The chapeau is different. This difference has profound significance in our interpretation of
paragraph 17 as a whole including the sub-clauses.
The chapeau of CSC merely says the Operator shall have right of recourse only if the two sub-
clauses are included in the national legislation. It is silent on the circumstances or the time
when the Operator shall have this right of recourse.
The chapeau of CLNDA is very clear. The Operator shall have the recourse only after he paid
the compensation. That means he has fulfilled his liability obligations flowing out of legal
chanelling (“exclusive, absolute and strict”). The CLNDA is very particular about this clause of
legal chanelling to the Operator.
What the Operator would or should do after fulfilling his legal obligations should not be
viewed as deviation from the provisions of CSC.
The moment the process of paying the compensation is complete, in my opinion legal
chanelling does not hold and is not applicable until (God forbid) a future incident. The
subsequent actions of the Operator should not be linked to legal chanelling.
2. Addition of 17(b) text.
Section 17(B) text:
The situations identified in Section 17(b) relate to actions and matters such as product liability
stipulations/conditions. These are ordinarily part of a contract between the operator and the supplier.
Thus, this provision is to be read along with/in the context of the relevant clause in the contract between
the operator and supplier on product liability. It is open for the operator and the supplier to agree on the
terms of their contract relying on the applicable law. The parties to a contract generally elaborate and
specify the extent of their obligations pursuant to warranty and indemnity clauses that are normally part
of such contracts.
Let us read again 17(a): Such right is expressly provided for in a contract in writing. Merely mentioning the
phrase “Right of recourse” in the contract is not sufficient and is ludicrous for argument also. It should
clearly elaborate how this right of recourse, under what circumstances is exercised to complete the
process. Now read 17(b) along with the above explanation. It becomes clear as to why this enabling
provision is required.
Rule 24 (Definition of Supplier)
1. Limitation of the Amount of Liability
Rule 24 sub-rule 1 provides that an operator’s liability will be restricted to the extent of the
operator’s liability (that is, the liability cannot exceed that which the operator itself incurs)
or the value of the contract with the supplier, whichever is less.
2. Limitation of the Time Period for Liability
Rule 24 sub-rule 2 provides that a right of recourse, as provided for in section 17 of the
CLNDA, will be available to an operator only for the duration of the initial license issued
under India’s Atomic Energy (Radiation Protection) Rules, 2004 (about five years), or the
product liability period negotiated between the supplier and operator, whichever is longer.
Supplier shall include a person who:
(i) Manufactures and supplies either directly or through an agent, a system, equipment or
component or builds a structure in the basis of functional specification, or
(ii) Provides build to print or detailed design specifications to a vendor for manufacturing a
system, equipment or component or building a structure and is responsible to the
operator for design and quality assurance, or
(iii)Provides quality assurance or design services
Let us understand the term “supplier” in the Indian context from the definition as given in Rule
24
Any person/entity who designs the complete plant, develops build to print drawings or detailed
design specifications for equipment, components and systems required for a nuclear power
plant becomes supplier.
Indigenous PHWRs :
NPCIL designs, constructs and operates. Vendors only supply systems and equipment as per
detailed design specifications or ‘build to print’ drawings provided to them by NPCIL.
Manufacturing done by a vendor is subject to quality assurance by engineers belonging to NPCIL.
Hence NPCIL is the supplier as well as operator
Setting up of nuclear power plant by an operator in technical cooperation with vendors whether
Indian or Foreign:
Any vendor who will design the complete plant and develop build to print drawings or detailed
design specifications for equipment, components and systems after meeting the regulatory
criterial applicable in India will become supplier.
Sub-Vendors only supply systems and equipment as per detailed design specifications or ‘build
to print’ drawings provided to them. They cannot be called suppliers.
Two features of Rule 24 (revisited)
Nuclear Liability Fund setup by the Government (as per Section 7 (2) of
CLNDA) 2015
Charging a levy from the Operator (NPCIL) ≈ Rs. 2 billion/year
Further progress in matters related to CLNDA Post-notification of
the CLNDA (Contd.)
Launching of Indian Nuclear Insurance Pool (INIP) in 2015
Option for the Operator to take out insurance thereby subrogating ‘Right of Recourse’
to the insurer. (as per Section 8(1) of CLNDA)
Nuclear Operators Liability (CLND Act, 2010) Insurance Policy, and
Nuclear Suppliers' Special Contingency (against Right of Recourse) Insurance Policy
NPCIL has since received the insurance policy covering all nuclear power plants operated
by it and the total premium is around Rs. 1 billion for a risk cover of Rs. 15 billion
MEA website : “Frequently Asked Questions and Answers on Civil Liability for Nuclear
Damage Act, 2010 and Related Issues” for clarifications on Section 17 of CLNDA
Modified General Terms of Contract issued by NPCIL to include clarifications on operator,
supplier and the information on different insurance policies for operator and supplier.
To be attached with every tender form
Granted, any incident, by nature may occur accidentally and nuclear incidence is no
exception and enough legal remedies need to be in place for compensating the
innocent victims.
Alfred Tennyson’s famous poem Morte d’ Arthur where King Arthur, just before his
death says to his companion Sir Bedivere
“The old order changeth yielding place to the new,
And God fulfils Himself in many ways,
Lest one good custom should corrupt the world.”
The plain meaning of the beautiful utterance is that change is the order of the universe
and, in order that it may not stagnate and rot, the replacement of the old order by the
new is essential.
So provisions of CLNDA are the new order replacing the old. I would not say it is
replacing the old but is augmenting with certain value addition.
Salient Points
US and Indian Law are better-suited legislations in the wake of Three Mile Island,
Chernobyl and Fukushima.
Even though US law and Indian law differ, both in the US and India, suppliers and
designers of defective reactors can be held liable in case of a nuclear accident.
• In the US, this is achieved through economic channelling – with umbrella insurances
covering the liability of operators, suppliers and designers
• Indian law provides for a right of recourse by the operator against the operator
against suppliers and designers where a nuclear accident is due to supply or design
deficiencies.
These laws are undoubtedly superior to protect victims in case of a nuclear accident.
Whilst allowing a one-stop-shop for victims, who can limit their legal actions to suing
the operator, they allow the operator to take appropriate steps (umbrella insurance in
case of the US or the right of recourse in case of India)
Salient Points(Contd.)
A critical analysis of the text of Rule 24 and the definition of Supplier therein, gives
clarity to the term supplier and avoids bunching of multitude of vendors sub-vendors
and other providers in the category of suppliers facilitating ease of identifying supplier
for liability insurance purpose.
A harmonious analysis of debates and various documents indicates that the Section 46
of the Act is directed only towards the Operator.
Compliance mandates acceptance of all the provisions from the international reference.
Inclusion of additional provisions to strengthen the objectives is desirable and does
not amount to deviation or noncompliance.
CLNDA also stipulates that Operator’s liability is strict and exclusive. He shall pay the
compensation for the nuclear damage. Section 17 is clear about this. The moment this
process of paying the compensation is complete, in my opinion, legal chanelling does
not hold and is not applicable until a future incident. One cannot invoke legal chanelling
for subsequent actions of the operator.
To End with, another quote
“An Act to provide for civil liability for nuclear damage and prompt compensation to the
victims of a nuclear incident through a no-fault liability regime, channelling liability to
the operator, appointment of Claims commissioner, establishment of Nuclear Damage
claims Commission and for matters connected therewith or incidental thereto.”