India’s Civil Liability for Nuclear Damage Act (CLNDA)

Brief Context

Context India is considering easing nuclear liability laws, specifically to reduce accident-related fines on equipment suppliers, in order to attract U.S. and other foreign firms for civil nuclear projects. What is Civil Nuclear Liability?

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Syllabus: GS2/Governance

Context

• India is considering easing nuclear liability laws, specifically to reduce accident-related fines on equipment suppliers, in order to attract U.S. and other foreign firms for civil nuclear projects.

What is Civil Nuclear Liability?

• Civil nuclear liability laws ensure compensation to victims in case of nuclear accidents and define who is liable for such compensation.
• Liability is generally assigned to the operator of the nuclear installation, often a public entity, to streamline legal processes and ensure availability of compensation.

India’s Nuclear Infrastructure

• India operates 22 nuclear reactors, all run by Nuclear Power Corporation of India Limited (NPCIL), with plans for more.
• Despite signing civil nuclear agreements with the U.S., France, and Japan, only Russia is currently executing projects (Kudankulam), largely due to concerns around India’s liability regime.
  • Jaitapur Nuclear Plant (with France) has been pending since 2009, the liability concerns remain unresolved.
  • Kovvada Project (Andhra Pradesh): Yet to proceed.
  • Only Russia (Kudankulam) is implementing nuclear projects due to pre-CLNDA agreements.

International Legal Framework

• After the 1986 Chernobyl disaster, the global nuclear liability regime evolved.
• The international legal framework on civil nuclear liability is based on the central principle of exclusive liability of the operator of a nuclear installation and no other person. 
• The Convention on Supplementary Compensation (CSC) was adopted in 1997.
  • It sets minimum compensation levels and allows supplementary public funds from member states if needed.
• Even though India was a signatory to the CSC, Parliament ratified the convention only in 2016. 
  • To keep in line with the international convention, India enacted the Civil Liability for Nuclear Damage Act (CLNDA) in 2010, to put in place a speedy compensation.
• Reasons for not making Supplier Liable: In the initial phase of nuclear energy development, foreign governments and the nuclear industry agreed that:
  • Excessive liability claims on suppliers would make their participation financially unviable.
  • Such risks could hinder the expansion of nuclear energy.
  • Hence, liability was channeled exclusively to plant operators, with only a few exceptions.
• The CSC permits operator’s rightof recourse against suppliers only under two conditions:
  • If it is expressly agreed in the contract.
  • If the nuclear incident results from an intentional act or omission by the supplier.

Key Provisions of CLNDA, 2010

• India went beyond CSC conditions by introducing supplier liability in the Civil Liability for Nuclear Damage Act (CLNDA).
• Reason for Deviation:
  • Inspired by past tragedies like the Bhopal Gas Disaster (1984), where defective equipment played a role.
  • Legislators aimed to ensure accountability beyond just the operator.
• Operator Liability: Imposes strict and no-fault liability on the operator.
  • As per the Act, operator means the Central Government or any authority or corporation who has been granted a licence pursuant to the Atomic Energy Act, 1962 for the operation of that installation.
  • Operator must pay ₹1,500 crore in damages, insured or secured via financial means.
  • If claims exceed this, the government will cover up to 300 million Special Drawing Rights (SDRs) (₹2,100–₹2,300 crore).
• Supplier Liability (Section 17): It is unique to India and introduces liability for suppliers under:
  • 17(a): If contractually agreed.
  • 17(b): If an incident results from defective equipment or services (even if not intentional).
  • 17(c): If caused intentionally by the supplier.
  • This goes beyond CSC, which allows recourse only if contractually agreed or intentional wrongdoing is proven.
• Legal Ambiguity (Section 46): It states that other legal proceedings (civil/criminal) are not barred by the Act, which opens door to civil suits outside CLNDA.
  • Raises fear among suppliers of being sued under tort law, potentially leading to unlimited liability, despite the capped liability for operators.
  • Tort law is considered to be a form of restorative justice since it seeks to remedy losses or injury by providing monetary compensation.

Government’s Position

• The central government has maintained that the Indian law is in consonance with the CSC till now. 
• About Section 17(b), it said that the provision “permits” but “does not require” an operator to include in the contract or exercise the right to recourse.
• Section 46: The provision has no mention of ‘supplier’, and so is ‘operator specific’.
  • 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.

Conclusion

• India’s unique inclusion of supplier liability under CLNDA diverges from global norms.
• It has become a major barrier to operationalising civil nuclear deals.
• While the government maintains that the law permits flexibility, the legal text allows supplier liability even in absence of explicit contractual provisions.
• Unless clarified or amended, foreign participation in India’s nuclear sector may remain minimal, affecting energy security and bilateral nuclear cooperation.

Source: TH