In 2008, the U.S. and India reached an agreement on civilian nuclear cooperation that was hailed in many quarters – in the U.S. and India, and by other international nuclear suppliers and vendors – as an opportunity to facilitate a rapid expansion of India’s civilian nuclear program. India foresaw expanding its civilian nuclear program from 4.8 GW capacity at present to 30 GW by 2030. To fully engage with international nuclear suppliers, however, India needed to harmonize certain national laws, in particular those addressing civil nuclear liability, with international expectations.

Internationally, the fundamental nuclear liability principles include:

  • Strict liability, relieving victims of the need to prove fault or negligence
  • Exclusive liability, ensuring that the operator is the only entity liable to compensate damage (even if caused by a supplier or vendor)
  • Financial protection covering operator’s liability, ensuring that funds are available to indemnify victims
  • Limitation of operator liability in time and in amount, enabling the operator to set a cost-effective mechanism for covering of the liability amount
  • A single court for victims’ claims, ensuring consistent treatment in the recognition and execution of judgments

The Indian nuclear liability law, enacted in 2010, contains elements that address each of the above principles. Significantly, however, India's nuclear liability law also contains a provision authorizing the operator to seek recourse against suppliers and vendors under certain circumstances (and after the operator pays victims). Section 17(b) grants the operator the right to seek recourse from suppliers and vendors if the accident was the result of a patent or latent defect in equipment or substandard services. This makes India’s approach different from nearly all other jurisdictions. Since the sole operator in India is the Nuclear Power Corporation of India Limited (NCPIL), a government-owned entity, most observers view a blanket waiver of this right infeasible, politically if not legally. As a result, international nuclear suppliers have hesitated to fully engage in India’s nuclear program, facing the risk of significant liability different from other jurisdictions or the prospect of major price increases to offset the increased risk. 

India’s nuclear liability law appears to be here to stay. At a recent Nuclear Law Association meeting in New Delhi, India, a number of participants raised questions regarding the effects of India’s nuclear liability law on expansion of civilian nuclear energy in India and on public acceptance of nuclear power. Some hailed India’s nuclear liability law as a paradigm shift in civilian nuclear liability, ensuring the suppliers and vendors will now have a stake in safe operation of plants. They viewed the Indian law as a model that should be adopted by other nations developing civilian nuclear power programs. Others sounded a note of realism, recognizing the obstacles to international nuclear engagement posed by the nuclear liability law, but acknowledging that it is unlikely to be changed in light of political changes expected in April of this year. This leaves just a few options: substantially less international participation in India’s nuclear program, significantly higher payments to foreign vendors to offset increased risk, or, most likely, a compromise solution. One possible solution envisions development of a new insurance product to cover suppliers and vendors, while another would establish a process for certifying the absence of defects or acceptable service. Neither option is a panacea and both would still increase supplier risk and therefore the costs of a project. But, a first step on both sides could be all it takes to create new momentum for India’s civilian nuclear program.