May 07, 2010
The present controversy in India over nuclear liability needs to draw some comparison and conclusions from the aviation liability that is an 81-year-old worldwide system. The limiting of liability has been done keeping in mind a balance between operator’s liability and promoting investment in nuclear power. The same principle has been followed in aviation since 1929 with the Warsaw Convention and its subsequent amendments and protocols leading to the new refined Montreal Convention, 1999, which has over time raised the strict liability limits. In aviation, the payment of liability has been put fully on the airline (the operator) and the upper limit has been fixed not as per incident but as per individual (passenger) death or injury in an accident. It is currently SDR 100,000 or about Rs 60 lakh, raised over time from around $6,300 in 1929.
On nuclear liability, there are three main international instruments. They are the Paris Convention on third party liability in the field of nuclear energy of 1960, the Vienna Convention on third party liability in the field of nuclear energy of 1963 and the Protocol of 1997. The main convention for our analysis is the Vienna Convention as amended in 1997 and adopted by 80 nations. The main features of this Convention and the 1997
Protocol are that operators of nuclear power plants are liable for damage caused by them regardless of fault. Second, the potential cross-boundary consequences of a nuclear accident require an international nuclear liability regime. National laws, therefore, would be subservient to international convention. Liability is limited both by international convention and national legislation. So, liability falls exclusively on operators of the nuclear installation and is absolute. Jurisdiction of courts is limited to the country of accident.
The 1997 Protocol puts a lower limit on operators’ liability in each nuclear incident of not less than SDR 300 million (approx $400 million or Rs 2,000 crore). Member states may put a higher minimum cap. The Indian Civil Liability for Nuclear Damage Bill 2009 fixes maximum liability for a nuclear incident at Rs 500 crore for the operator and the government beyond it, but up to SDR 300 million (about Rs 2,000 crore). In the Indian case, the only possible operator under the Atomic Energy Act, 1962 is the Nuclear Power Corporation, a public sector corporation.
Comparing nuclear liability to aviation liability, it becomes clear that aviation liability provisions are much better for victims. First, the concept of absolute individual (passenger) liability is missing in nuclear conventions and our Bill. It has been replaced by incident, which means that in the unfortunate case of a nuclear disaster there would be no minimum liability of the operator mandated for payment against each death. This is unlike aviation protocols where individual compensation is currently SDR 100,000 (Rs 60 lakh), which sets a benchmark for cases of injury. Of course, in aviation the limit of number of persons is restricted to number of passengers and also third parties on the ground. In cases of nuclear incidents, the number of affected persons will depend upon the intensity of the accident and the spread of radioactivity (the case of Chernobyl where radiation got spread by wind is still vivid in our minds).
Under the Indian Bill, a claims commissioner will be appointed and will determine the amount of the claim. But the operator’s total liability will not exceed Rs 500 crore and the government’s will not exceed SDR 300 million, irrespective of the number of deaths and injuries. In aviation, there is no upper limit on total liability and airlines are expected to have adequate insurance cover. The Indian Bill (2009) also provides that the central government may, by notification, increase or decrease liability of the operator but not to less than Rs 100 crore. The implication of this provision, especially regarding decreasing the liability, is unclear.
In order to meet states’ liability, International Atomic Energy Agency adopted a Convention on Supplementary Compensation (CSC) in 1997 to meet compensation beyond SDR 300 million. An international fund is to be created using contributions from contracting parties collectively on the basis of installed capacity and UN rate of assessment. For CSC to gain force, at least 5 nuclear installation states, with a combined capacity of 400 GWth, need to ratify. So far, 4 states with a combined capacity of 350 GWth have ratified it. To bring CSC into force, one among France, Japan, Russia or Korea needs to ratify. A combination of India, China and the UK would also suffice. With this, the operator’s liability will shift beyond SDR 300 million to the CSC fund and the states and taxpayers will be exempt from this liability. In the US, under the Price-Anderson Act, an insurance facility has been created with operators’ contribution (which also insures the equipment suppliers). Therefore, the US is not interested in CSC.
In conclusion, while a nuclear accident is likely to wreak greater damage than an aircraft accident, the liability regime is more restricted. No minimum amount of compensation per death has been prescribed, either in the international context or in the domestic Bill. Unless this is changed, the plight of the Bhopal Gas tragedy victims will continue to haunt us.
The author is chairman of the International Foundation for Aviation and Development and former representative to ICAO
The present controversy in India over nuclear liability needs to draw some comparison and conclusions from the aviation liability that is an 81-year-old worldwide system. The limiting of liability has been done keeping in mind a balance between operator’s liability and promoting investment in nuclear power. The same principle has been followed in aviation since 1929 with the Warsaw Convention and its subsequent amendments and protocols leading to the new refined Montreal Convention, 1999, which has over time raised the strict liability limits. In aviation, the payment of liability has been put fully on the airline (the operator) and the upper limit has been fixed not as per incident but as per individual (passenger) death or injury in an accident. It is currently SDR 100,000 or about Rs 60 lakh, raised over time from around $6,300 in 1929.
On nuclear liability, there are three main international instruments. They are the Paris Convention on third party liability in the field of nuclear energy of 1960, the Vienna Convention on third party liability in the field of nuclear energy of 1963 and the Protocol of 1997. The main convention for our analysis is the Vienna Convention as amended in 1997 and adopted by 80 nations. The main features of this Convention and the 1997
Protocol are that operators of nuclear power plants are liable for damage caused by them regardless of fault. Second, the potential cross-boundary consequences of a nuclear accident require an international nuclear liability regime. National laws, therefore, would be subservient to international convention. Liability is limited both by international convention and national legislation. So, liability falls exclusively on operators of the nuclear installation and is absolute. Jurisdiction of courts is limited to the country of accident.
The 1997 Protocol puts a lower limit on operators’ liability in each nuclear incident of not less than SDR 300 million (approx $400 million or Rs 2,000 crore). Member states may put a higher minimum cap. The Indian Civil Liability for Nuclear Damage Bill 2009 fixes maximum liability for a nuclear incident at Rs 500 crore for the operator and the government beyond it, but up to SDR 300 million (about Rs 2,000 crore). In the Indian case, the only possible operator under the Atomic Energy Act, 1962 is the Nuclear Power Corporation, a public sector corporation.
Comparing nuclear liability to aviation liability, it becomes clear that aviation liability provisions are much better for victims. First, the concept of absolute individual (passenger) liability is missing in nuclear conventions and our Bill. It has been replaced by incident, which means that in the unfortunate case of a nuclear disaster there would be no minimum liability of the operator mandated for payment against each death. This is unlike aviation protocols where individual compensation is currently SDR 100,000 (Rs 60 lakh), which sets a benchmark for cases of injury. Of course, in aviation the limit of number of persons is restricted to number of passengers and also third parties on the ground. In cases of nuclear incidents, the number of affected persons will depend upon the intensity of the accident and the spread of radioactivity (the case of Chernobyl where radiation got spread by wind is still vivid in our minds).
Under the Indian Bill, a claims commissioner will be appointed and will determine the amount of the claim. But the operator’s total liability will not exceed Rs 500 crore and the government’s will not exceed SDR 300 million, irrespective of the number of deaths and injuries. In aviation, there is no upper limit on total liability and airlines are expected to have adequate insurance cover. The Indian Bill (2009) also provides that the central government may, by notification, increase or decrease liability of the operator but not to less than Rs 100 crore. The implication of this provision, especially regarding decreasing the liability, is unclear.
In order to meet states’ liability, International Atomic Energy Agency adopted a Convention on Supplementary Compensation (CSC) in 1997 to meet compensation beyond SDR 300 million. An international fund is to be created using contributions from contracting parties collectively on the basis of installed capacity and UN rate of assessment. For CSC to gain force, at least 5 nuclear installation states, with a combined capacity of 400 GWth, need to ratify. So far, 4 states with a combined capacity of 350 GWth have ratified it. To bring CSC into force, one among France, Japan, Russia or Korea needs to ratify. A combination of India, China and the UK would also suffice. With this, the operator’s liability will shift beyond SDR 300 million to the CSC fund and the states and taxpayers will be exempt from this liability. In the US, under the Price-Anderson Act, an insurance facility has been created with operators’ contribution (which also insures the equipment suppliers). Therefore, the US is not interested in CSC.
In conclusion, while a nuclear accident is likely to wreak greater damage than an aircraft accident, the liability regime is more restricted. No minimum amount of compensation per death has been prescribed, either in the international context or in the domestic Bill. Unless this is changed, the plight of the Bhopal Gas tragedy victims will continue to haunt us.
The author is chairman of the International Foundation for Aviation and Development and former representative to ICAO
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