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Indo-US Nuclear Deal

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Posted by on Friday, October 22, 2010, 12:59
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Liability Law major impediment to Indo-US Nuclear deal. No change in the Act is possible, government tells U.S.

Indo-US Nuclear Deal
Indo-US Nuclear Deal

After initially trying to dilute the nuclear liability law at the draft stage to accommodate the concerns of American suppliers, the Manmohan Singh government has told the United States that the Act, as passed by Parliament, is final and that no changes in any of its provisions are possible.

In particular, the Indian side insists that any rules the government might frame to guide the Act’s implementation cannot override its provisions, including Section 17(b), which gives Indian operators a ‘right of recourse’ against nuclear suppliers in the event of an accident caused by defective equipment.
No voluntary surrender

Indian officials also insist that operators will not be able to “voluntarily surrender” their rights under 17 (b) in any commercial contract signed with foreign reactor suppliers, as allowed, for example, by the nuclear law of South Korea.

In the run-up to President Barack Obama‘s visit here in November, the U.S. side is looking for substantive changes in the nuclear liability law. American officials, including Under Secretary of State for Political Affairs William J. Burns, who is currently visiting Delhi, have told their counterparts here that the law is out of step with the international Convention on Supplementary Compensation for Nuclear Damage (CSC) — a compact India said it would sign in 2008.

“As far as we are concerned, our law is fully compatible with the CSC, and there is no question of us blinking,” a senior Indian official told The Hindu. “We said we would sign the CSC and our intention is still to do so. But nowhere does the CSC say it will supersede existing national legal remedies such as torts.”

Last month, a delegation from the Department of Atomic Energy met with officials at the International Atomic Energy Agency in Vienna — which serves as the ‘depository’ of the CSC — to convey India’s intention of acceding to the treaty.

The IAEA’s role is limited to accepting a country’s accession to the CSC. Indian officials say it cannot and will not scrutinise or pass judgment on the national liability law of the acceding state. But the IAEA’s Office of Legal Affairs apparently did tell the Indian side that lawyers from General Electric and other U.S. nuclear suppliers had told them that the Indian Act was “incompatible” with the CSC.

American companies such as GE and Westinghouse insist they will be unable to supply nuclear equipment to India unless they are fully insulated from all liability claims in the event of an accident. U.S. officials have also latched on to the criticism Indian companies have made of the new law, arguing that it is not just U.S. companies which fear being exposed to “unlimited liability” in the event of an accident.

Under one of the rules the government is proposing to introduce, however, this “alliance” between the Indian corporate sector and American nuclear vendors is likely to fracture.

Apart from the reactor itself, a typical nuclear power plant sources major and minor components from dozens of companies, and many of the latter fear being taken to court in the event of an accident. One option being examined is to define the “supplier” in 17(b) in such a way as to insulate these ‘nuts and bolts’ companies from liability. “But there is no way the reactor supplier can be taken out of the definition,” a senior Indian official told The Hindu.

Keywords: India-U.S. strategic ties, nuclear liability bill, IAEA, Manmohan Singh government, Obama visit

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