M P Ram Mohan*

http://link.springer.com/book/10.1007%2F978-81-322-2343-6

*Associate Professor, TERI University & President, Nuclear Law Association, India

Mohit Abraham*

Published by the American Academy of Arts and Sciences and is available for download  https://www.amacad.org/content/publications/publication.aspx?d=1499

Prologue

This paper provides an analysis of nuclear liability, with a focus on the countries of Southeast Asia. The unfortunate events at Fukushima Daiichi in 2011 have raised serious issues for the world community and, in particular, nuclear energy aspirants with regard to the scope and adequacy of nuclear liability coverage in the event of a nuclear accident. For the public in countries that are still discussing the efficacy of deploying nuclear power, we believe that the nuclear liability regime needs to be robust enough to fairly compensate all parties if and when a nuclear accident occurs. This paper tackles this complex issue by focusing on the most significant issues, including:

1. The tension among nuclear suppliers, nuclear operators, and the host and neighboring states in sharing the cost of liability.

2. The continual debate regarding the sufficiency and availability of funds to meet potential compensation demands in case of an accident. This uncertainty, we believe, constitutes a hurdle for public acceptance of nuclear energy, especially in developing countries; we believe that the insurance caps need to be raised significantly.

3. Altering the balance in this area of nuclear liability law jurisprudence by identifying the nuclear supplier as the responsible party in case of an accident. If liability laws comparable to the Indian Civil Liability for Nuclear Damages Act are adopted in the future by additional countries, particularly those in Southeast Asia, this could be a game changer in assessing the economic viability of nuclear energy. (The principle of excluding supplier liability in favor of channeling all liability to the operator of a nuclear power plant has been the operative standard in existing statutes and conventions.)

4. Reliance by a growing number of nuclear aspirants on foreign technology and expertise, including safety oversight. We believe that this will create new challenges regarding legal jurisdiction as to who is responsible for compensation and the extent of liability that could be imposed on these foreign entities and individuals.

5. Unavailability of a universal framework regarding the liability conventions across all states. The principles laid down by the Paris and Vienna Conventions form the bedrock of current international nuclear liability law. However, there is a lack of harmonization between these two agreements. (Many states, including legal officials from the United States, have asserted that the Convention on Supplementary Compensation for Nuclear Damage [creating a viable risk pool based on proportional assessments imposed on nuclear plant operators in states that have ratified the CSC] could serve as an umbrella agreement. According to the IAEA, “The OECD- sponsored Paris Convention and Brussels Convention are popular in Western Europe while the IAEA- sponsored Vienna Convention is popular in Eastern Europe and elsewhere around the world. Some countries have signed a Joint Protocol to link those two treaties. The Convention on Supplementary Compensation for Nuclear Damage (CSC) was designed to become a global regime and is open to countries without nuclear power plants”[1].

This paper addresses the following key questions:

1. What impact have the unfortunate events at Fukushima had on the views of regional policy-makers and stakeholders regarding changes to nuclear liability and nuclear compensatory standards?

2. What is the standard that policy-makers and scholars, planning the deployment of new nuclear energy, should use as a guidepost as they consider nuclear liability legislation in their respective states? Obvious questions that arise include whether the principles laid down by the Paris and Vienna Conventions should be used to establish regional or country- specific standards, and whether regional agreement on standards should be preferred over country-specific standards. The current U.S. policy is clear on these questions: The United States prefers adoption by new countries of the CSC rather than implementation of region-based standards.

3. Will the vendors in Russia, Japan, China, and the Republic of Korea, as substantive future nuclear suppliers, be influential in setting the trend(s) in the nuclear liability regime?

4. What can countries considering deployment of nuclear energy learn from the recent experiences in India? Statements made by Russian officials seem to indicate that if the Russian government were to accept India’s new liability law, there would be an increase in tender price for its new VVER plants in India, increasing the burden on Indian consumers. Does this set a precedent, or are alternatives, based on variants of India’s nuclear liability law, preferable?

5. Should specific incentives to encourage passively safe designs be considered when the technical aspects of establishing a robust and sustainable liability regime are considered?

6. What roles should international bodies such as the International Atomic Energy Agency, the World Nuclear Association, and others play in encouraging a uniform and strict liability regime?

7. Can other substantive non-nuclear models (such as the International Oil Pollution Compensation Fund) that contain provisions for risk-sharing among private and public entities be useful in assessing the size of the financial risk pool to pay for compensation in the event of an accident?

Stephen M. Goldberg
former Senior Consultant to the American Academy’s Global Nuclear Future Initiative

Robert Rosner
Senior Advisor to the American Academy’s Global Nuclear Future Initiative;
William E. Wrather Distinguished Service Professor in the Departments of Astronomy and Astrophysics and Physics, University of Chicago

[1] “Initiative for Global Liability,” World Nuclear News, August 30, 2013, http://www.world-nuclear-news.org/NP_Initiative_for_global_liability_3008131.html.

*Mohit Abraham is Partner at PXV Law Partners and Advocate-on-Record of the Supreme Court of India. He is on the Governing Board of the Nuclear Law Association of India and also chairs its working group on nuclear liability

Let me first touch upon the subject of RISK ASSESSMENT which is one of the prominent among the frequently asked questions on “nuclear”, both during Public Engagement and also in expert gatherings like today of you associated with the Legal Framework issues.

Risk assessment requires estimation of the two components, one – the magnitude of the potential harmful consequence of an accident happening and second – the probability of that the accident might happen. In statistical terms the level of risk is stated as the product of the probability that an accident or harmful event might occur multiplied by the potential consequence of that event.  All manmade technologies continue their efforts to reduce both, the potential harmful consequences of likely incidents as well as the likelihood of their occurrence.

In nuclear technology, Enrico Fermi who made beginning of nuclear reactor concept at the famous Chicago Pile way back in 1942 had given due consideration to what needs to be done in case any harmful event happens during the experiment. He had thought of a SCRAM feature to promptly shut down the reaction in case it is required. Ever since that day, the scientists and technologists associated with nuclear facilities pay highest attention to safety of nuclear power plants by making improvements in new designs and back fitting improvements in older plants, so that risk from it can be minimised.

Well, in spite of high order of attention paid to safety, there have been three serious accidents in some old design nuclear power plants – at Three Mile Island in U S, at Chernobyl in what was earlier USSR and in recent times at Fukushima in Japan. Two of these, at Chernobyl and that at Fukushima, resulted in very large consequences of releasing radioactivity to the environment. Among these certain number of fatalities or risk to health of surrounding population happened only at Chernobyl where certain 60 to 70 fatalities are reported by different international agencies, some of these happened while fighting fire during the accident. ( Background information from WNA web site – The accident destroyed the Chernobyl 4 reactor, killing 30 operators and firemen within three months and several further deaths later. One person was killed immediately and a second died in hospital soon after as a result of injuries received. Another person is reported to have died at the time from a coronary thrombosis. Acute radiation syndrome (ARS) was originally diagnosed in 237 people on-site and involved with the clean-up and it was later confirmed in 134 cases. Of these, 28 people died as a result of ARS within a few weeks of the accident. Nineteen more subsequently died between 1987 and 2004 but their deaths cannot necessarily be attributed to radiation exposure. Nobody off-site suffered from acute radiation effects although a large proportion of childhood thyroid cancers diagnosed since the accident is likely to be due to intake of radioactive iodine fallout. Furthermore, large areas of Belarus, Ukraine, Russia and beyond were contaminated in varying degrees).

Even these fatalities are far below when compared to those which continue to happen with any other man made technology. For example, transport sector continues to make advances in terms of safety for all modes of transport but the human fatalities associated to accidents stand in no comparison with the low numbers achieved in nuclear industry since its first commercial deployment.

Nuclear industry is able to achieve such remarkably low fatality number in extremely severe accidents like those at Chernobyl and Fukushima, essentially because the progression and effects of nuclear incident even at its worst generally provide you sufficient time to act and move personnel to safe space. This was demonstrated at Fukushima. Emergency plans for such events are proactively developed for all plants and are rehearsed at regular intervals to determine readiness of State to handle the unlikely condition requiring evacuation.

The safety criterion is now further tightened by designers of new plants. The design objective of new plants is that even in a credible severe accident scenario ‘practically eliminate any requirement of long term displacement of people’. I must add here that the safety performance at 20 operating units in India recording a combined operational length of over 370 years is a testimony to the care taken in all areas of design, construction and operation.

If the safety performance of nuclear facilities are comparatively far better than other man made technologies and the fatalities from nuclear are so low, then why concern of public about nuclear power is disproportionately high! I will like to come to this subject a bit later, but before that let me dwell on other general related risks with regard to power availability today.

In our existing shortage of electricity, shortage of coal, our main major source of fuel for power in India, is a primary cause. Limitations on other sources of power in oil/gas/ hydro are also bottlenecks to our growth path. These are aptly covered in various forecasts and analyses, like ‘The Integrated Policy of Energy 2006’ Planning Commission report. The continued shortages of coal from national resources and constraints from import are becoming increasingly evident. This limitation risks our growth.

While talking of coal, we should also not remain oblivious to the global warming cry resonating at the international level. Carbon dioxide or coal use is being questioned. Norms are being negotiated at international forums putting pressure on gradual reduction of coal use for power production. For example  in U.S because of the new emission standards, the forecasts are that 90 percent of the power plants expected to shut down by 2020 will actually be shut down by 2016. Those new standards include coal-fired power plants likely having to install flue gas desulfurization equipment, or “scrubbers,” which cost hundreds of millions of dollars each, depending on the size of the plant. (Coal plant operators are planning to retire 175 coal-fired generators, or 8.5 percent of the total coal-fired capacity in the United States, according to an analysis by the Energy Information Administration (EIA)).

The U S Environmental Protection Agency  has further proposed new regulations aiming to curb carbon emissions from future coal-fired power plants and is in the process of proposing similar regulations governing existing coal power plants.

The Operators in U S have an economic alternative of natural gas at low prices resulting from the shale gas boom for new plants. In fact plans to reduce coal use are being evolved world over by various countries.

For a highly populated country like India deploying all sources of energy are vital for our growth. Nuclear power reduces the risk of the greenhouse gas producing options. The limitation on coal due to its shortage and international commitments to reduce its use in coming years is putting at risk the availability of power from this major contributor of electricity. In this background Nuclear Power is one of the important options for a developing economy like ours. The three stage programme of the Department of Atomic Energy promises to the country bountiful of power for a few centuries through use of available thorium. DAE is making steady progress in this goal. The first stage programme which is well matured and a commercial success has been achieved through Indian R&D efforts and the support provided by Indian industry for supply of high quality nuclear grade equipment. The first stage uses uranium as fuel. The spent fuel is reprocessed to separate out Plutonium which is another nuclear fuel formed during use of uranium in the reactors. Reprocessing technology, which is also operational as a result of development done with in the country, separates out the plutonium and unused uranium  which are put to reuse.  In the process of reprocessing the radioactive waste products which are small in quantity are also separated for convenient storage. I will come back to the waste handling a bit later. The Plutonium and the unused uranium thus recovered from spent fuel of first stage reactors can be put to use again as fuel in reactors. In India this combination becomes fuel for the second stage reactors called Fast Breeder Reactors, so called because they have potential to deliver a bit more plutonium than they consume. We have been operating a Fast Breeder Test Reactor for the last over 28 years at Kalapakam in Tamil Nadu. This experience has been extended to construct a 500 MWe Fast Breeder Reactor based Power Plant unit at Kalapakam. The commissioning of this unit by end of this year puts us on to a growth trajectory in coming decades.  Thorium, not a fuel itself, will be subsequently converted to Uranium 233 fuel in these fast reactors. Uranium 233 in combination with thorium will be used later during third stage of Indian nuclear power programme in sustaining the nuclear power capacity achieved further for a few centuries. Certain primary experience on science and engineering related to thorium has been already obtained by its limited use in the present plants. Its large scale use which will be in third stage of the programme will need commercial level deployment of the technologies for use of thorium. These include the challenges in fuel reprocessing and remote handling. The Advanced Heavy Water Reactor designed by BARC is a proactive step in demonstrating these technologies ahead of their large scale deployment later in third stage programme of the Department of Atomic Energy.

The Nuclear Power Programme of India will in the coming decades contribute to reduce the existing and oncoming risk of energy shortages. Nuclear Power is environmental friendly non green house gas producing option and a safe means for providing energy security to the country.

Public Engagement

The application of nuclear technology was visible to public first time as an instrument of war and it was only later that it came to be known for other services, like as a source of energy to produce electricity. It is the first impression of ‘Nuclear’ as a destructive means that has carried forward itself and embedded itself deep in public psyche in general. Although nuclear power reactors do have a good safety record, the distrust and fear associated with radiation make most people sensitive to the word nuclear. Not surprisingly therefore, most people perceive that any small nuclear/radiation-related incident will lead to a situation like Hiroshima or Nagasaki. The fear has not disappeared even after having an accumulated experience of about 15500 years of operation in about 430 nuclear power plants with over 370,000 MWe of total capacity around the world.  About 70 more reactors are under construction. In addition around 180 nuclear reactors power some 150 ships and submarines around the world. In spite of this large scale experience, the equilibrium of public acceptance of nuclear power achieved through public engagement gets often disturbed by any nuclear accident or a one sided news commentary in media.

Our experience is that a continuous engagement to educate the people about the beneficial aspects of nuclear radiation and to remove their misgivings about it is very necessary. Department of Atomic Energy and its various units are well engaged in this regard. These efforts have been significantly intensified in the last few years. The role of Atomic Energy and its contributions in delivering benefits which are of general public interest like in agriculture, clean potable water, health, security, education, power etc. are widely communicated in these public engagements. Regarding fear of radiation, a regular campaign on educating particularly our neighbours at plants about the existence of the God given natural background radiation which is on an average 2400 micro Seiverts in a year, its variations from place to place or even when you move indoor from outdoor, make use of materials like granite in your homes has seen wide appreciation. Coupled to this the radiations received in certain routine medical checkups like x-rays, or sophisticated tests like CAT scan etc has been a subject of interest in general public. We have seen that through such education now there is a growing appreciation that persons living even in immediate vicinity of a nuclear Power plant receive practically nil radiations when compared to that from the natural background and its local variations.

Nuclear power stations in particular, are actively involved in carrying out regular public awareness programmes for people living in the vicinity of these facilities. People are invited and taken on guided tours of the nuclear power stations, made conversant with the basics of radiation protection, safety practices, and the do’s and don’ts during a nuclear emergency. The station authorities also make visits to the surrounding villages and population centers to create awareness of the same. The NPCIL web page has an open invitation to people to know more about nuclear power through visit to power station or answering their questions. Just to give you a glimpse last year over 63,000 visitors in 1234 groups visited nuclear power plants. During the year, over 10 lakh persons were reached through exhibitions and lectures/ presentations organised in schools/ colleges/ forums.  Over 8.3 lakh printed materials were distributed. Rural outreach was enhanced during the year and more than a lakh villagers reached out through various initiatives.  Fatehpur in Haryana is a new site where NPCIL is initiating construction of two units of 700 MWe. A large scale programme has been going on at around this site. The major programmes  were Exhibition on wheels (mobile van), Farmers Integration Programme around Haryana site in association with a local university & Indian Council of Agricultural Research, Street Plays for rural outreach and educational programmes Edu-Sat (educational programme on TV) in collaboration with Educational Multimedia Research Centre, Newspaper in Education (NIE) programme in collaboration with a national daily (the Times of India) and Media Students Adaptation Programme (M-SAP). Earlier a visit was organised for group of farmers from neighbouring villages to Narora Atomic Power Station near Bulandshahar in Uttar Pradesh. The farmers from Haryana could interact with local population near NARORA plant to familiarise themselves with their impressions. During the event of foundation laying of the Gorakhpur Haryana Anu Vidyut Pariyojana, last month by honourable Prime Minister, about 24,000 villagers were imparted awareness about nuclear power and the project.

Interaction with public indicates that they have two major concerns- personal safety and waste management. Safety is given highest priority during all activities of fuel cycle from mining activities of uranium to its use in reactors and later during reprocessing of spent fuel.  The regulatory limits for radiation exposure for protection of workers, public and environment are set at conservative low levels. These as set by the AERB and are in line with international norms specified by ICRP(International Commission on Radiological Protection).

In addition to safety a genuine concern of public is regarding radioactive waste management. I will like to briefly dwell on the status in this regard. The nuclear fission process produces many types of radioactive isotopes which decay with time. Some of the isotopes take rather very long time to decay or have long half-lives. Generally radioactive isotopes decay to sufficiently safe levels only after ten half-lives, which presents a problem when dealing with certain waste products contained in spent nuclear fuel. Spent fuel quantity from a 1000 MWe unit as at Kudan kulam is about 25 tonnes in a year. As I referred earlier, spent nuclear fuel discharged from the reactor contains materials like plutonium and unused uranium suitable for recycling and hence could be reused to produce electricity. For example the spent fuel from reactors at Kudankulam will have left over about 96% uranium and 1% plutonium and this 97% fraction is recyclable again as fuel material. The remaining 3% is the radioactive waste including a very small fraction of these isotopes called minor actinides which have a very long half-life. It is generally this long life and high level waste which is of concern.  While DAE has in operation a facility for embedding this 3% waste in vitrified form in glass matrix for its safe storage, R&D work on further separation of these long lived minor actinides during fuel reprocessing has now been completed. It shall be now further possible to partition the waste to separate these minor actinides. These can be “transmuted” or burnt and could practically get eliminated by inducing fission in Fast Breeder Reactors or other reactors of second and third stage of the programme. I must as well add here that Thorium based fuels of third stage will produce negligible minor actinides.

The vitrified high level volumes currently stored in Vitrified Waste Storage Facility are very small in the country. The partitioning of waste and burning it will further bring down high level waste. The remaining waste will have a half life of about 30 years, and would decay in 300 years.

Legal Fame work

While the advances in science and technology continues to make this necessary technology of nuclear safer and acceptable to public, a robust Legal Fame work   has its own  contribution to sustain public confidence in the elements of public safety.

Atomic Energy Act 1962 and rules framed there under provide the main legislative and regulatory framework pertaining to atomic energy in the country. The Act was enacted to provide for the development, control and use of atomic energy for the welfare of the people of India and for other peaceful purposes and for matters connected therewith. The Act also provides Central Government with the powers to frame rules and issue notifications to implement the provisions of the Act. In addition to the provisions of the Atomic Energy Act, the provisions of several other legislations related to environment, land use, etc have also to be met for locating and operating Nuclear Power Plants (NPPs).

Among the important Rules Framed under the Atomic Energy Act, Atomic Energy (Radiation Protection) Rules 2004, give requirement of consent for carrying out any activities for nuclear fuel cycle facilities and use of radiation for the purpose of industry, research, medicine, etc.  Similarly Atomic Energy (Safe Disposal of Radioactive Wastes) Rules, 1987, establish the requirements for the disposal of radioactive waste in the country.  Atomic Energy (Working of the Mines, Minerals and Handling of Prescribed Substances) Rules, 1984, regulate the activities pertaining to mining, milling, processing and/or handling of prescribed substance.

The Atomic Energy Regulatory Board, the regulator, ensures that the above rules are observed and use of ionising radiation and nuclear energy in India does not cause unacceptable impact on workers, members of the public and to the environment. One of the mandates of the AERB is to formulate safety requirements for nuclear and radiation facilities. For NPPs, AERB has issued Safety Codes for Regulation, Siting, Design, Operation, Radiation Protection and Quality Assurance and also several safety guides and manuals under these Codes. Safety codes establish objectives and set minimum requirements that have to be fulfilled to provide adequate assurance for safety in nuclear and radiation facilities. Safety Guides provide guidelines and indicate methods for implementing specific requirements of the codes.

All of you, the experts gathered here are all well informed about the existing legal framework and activities under consideration by Government to further strengthen it. There is a general admiration of the expertise available in the legal and judicial fraternity of the country. Some land mark arguments and judgments in honourable courts in many matters of public interest including those raised regarding nuclear facilities demonstrate this. I would like to conclude here quoting a few lines from a judgment delivered by the Supreme Court of India last year; and I quote:

1^st March, 2014

Third NLA Annual Meet

Nuclear Energy & Indian Society: Public Engagement, Risk Assessment and Legal Frameworks

Dr. Ram Mohan- President of the Nuclear Law Association,

Mrs. Els Reynaers Kini- General Secretary,

distinguished panellists,

ladies and gentlemen,

I am delighted to be here this morning at the Third Annual Meeting of the Nuclear Law Association devoted to “Nuclear Energy and Indian Society: Public Engagement, Risk Assessment and Legal Frameworks”.  The programme is very relevant and I compliment you in drawing up such an excellent list of participants.

2.       To begin with, let us try to see the nuclear energy issue in the broader perspective of India’s energy policy.  As you know, the Integrated Energy Policy (IEP) was the first comprehensive document linking energy policy with sustainable development; covering all sources of energy, their use and supply, access and availability, affordability and pricing; environmental concerns; and energy security.  This document was first released in August 2006 as a draft and formally approved by the Cabinet in end-2008.  Some aspects, pertaining to figures and projections may be refined in coming years but broadly speaking, the analytical basis of the IPE retains its validity.

3.       With a population of 1.2 billion, the tenth largest economy in terms of GDP, and the third largest in PPP terms, India today is the fourth largest primary energy consumer, after China, U.S. and Russia.  Yet, in per capita terms, India’s consumption is 585 kilogram of oil equivalent (KGOE); the global average is 1800, China stands at 1700 while the US leaders with 7000+.  Incidentally, I may add that Japan comes in at approximately 4000 KGOE which only goes to show that there is considerable elasticity even at the level of highly developed economies.

4.       Though our economy has grown annually at an average rate of 7 per cent since 2000, approximately 35 per cent of the national population is still considered to be below poverty level.  Nearly a quarter of the population lacks access to electricity and energy poverty has been identified as a hindrance to economic development.  In India’s current energy mix, nuclear energy accounts for approximately 1 per cent; in terms of power generation, with an installed capacity of 4.8 GW, it accounts for slightly over 2 per cent of the total installed capacity, estimated at 225 GW covering thermal, hydel and renewables.

5.       The IEP estimates that India’s primary energy supply will need to increase by 4 to 5 times and electricity generation capacity by 6 to 7 times – in order to deliver a sustained growth rate of 9 per cent up to 2035.  What does this imply in terms of figures?  It means that in the most optimistic scenario, nuclear power generation could go up to 80 GW, out of a total of 1,200 GW, i.e., less than 7 per cent.  Incidentally, the IEP projection is based on the assumption that by 2011 our nuclear generating capacity would have been 11 GW, twice of what it is today!  In other words, nuclear power will continue to account for only a small fraction of India’s energy mix.

6.       However, energy security is also a key element of the IEP and defined as follows:

“We are energy secure when we can supply lifeline energy to all our citizens irrespective of their ability to pay for it as well as meet their effective demand for safe and convenient energy to satisfy their various needs at competitive prices, at all times and with a prescribed confidence level considering shocks and disruptions that can be reasonably expected.”

Further, even with this growth rate, India’s per capita electricity consumption currently at approximately 600 KWH will only rise to approximately 2,600 KWH which incidentally is China’s today per-capita consumption whereas the OECD average today is more than 8000 KWH per capita.  Given that the fuel mix for power generation in 2035 would remain fairly similar to what it is today, with fossil fuels being the dominant resource – it implies, in turn, a growing import dependency.  Therefore, even though nuclear energy will remain a small part of the overall energy mix, it is a critical part in addressing our energy challenges, mitigating carbon emissions and enhancing energy security in terms of reducing dependence on foreign energy sources.

7.       The nuclear issue often attracts more than its due share of controversy which brings me to the second part of my talk.  In order to understand the challenges that India’s nuclear energy programme has faced, we need to have a historical perspective.  Broadly, I would divide India’s nuclear story into four phases – phase 1 (1947 to 1974), phase 2 (1974-1998), phase 3 (1998-2008), and phase 4 (post-2008).  During the first phase, the Atomic Energy Commission was set up in 1948, the Department of Atomic Energy established in 1954, the Atomic Energy Act passed in 1962, the first research reactors – Apsara , Cirus and Purnima set up and the Tarapur power station went online.  It was the period of ‘Atoms for Peace’ when international cooperation was actively promoted.  Indian nuclear science benefited from this open environment even though we had decided to stay out of the NPT in 1968.  Phase 2 marked by the 1974 PNE changed things dramatically.  Proliferation was seen as a threat, Nuclear Suppliers Group was set up and India was isolated from global nuclear industry and technology.  Indian nuclear scientists embraced ‘self-reliance’, leading to inevitable delays.  The second nuclear power plant in Rajasthan was delayed by eight years (from 1973 to 1981), the Fast Breeder Test Reactor by nine years (from 1976 to 1985) and the Kalpakkam and Narora Power Plants also faced similar delays.  During the 1990s, there were other developments – further tightening of export controls on dual use technologies, the indefinite extension of the NPT, Pakistan’s nuclear weaponisation and missile proliferation in our neighbourhood.  This was the period when India sought to safeguard its ‘nuclear option’ and the programme, including the civilian side, attracted secrecy.  The third phase began with our nuclear tests in mid-1998 when India declared itself a nuclear weapon state.  Initially, the international reaction was strong in terms of UN Security Council sanctions.  However, with sustained diplomatic efforts and changes in the international environment, we were able to come out of the isolation.  The US-India civil nuclear cooperation agreement of 2008, also called the 123 Agreement, marks the beginning of phase 4.  Since then, a number of bilateral cooperation agreements have been signed, including with France and Russia.  India has also adopted its Nuclear Liability Act, though this is a subject on which the suppliers’ community has posed some questions.

8.       This short account would perhaps indicate both why the Indian nuclear programme remained shrouded in secrecy and the nuclear power programme often suffered delays and cost overruns.  It is only in the fourth phase post 2008 that the situation started changing after we began to move in the direction of separating the civilian part of the nuclear sector from the weapons and security-related side with more facilities being brought under IAEA safeguards.  Understandably, the weapons programme will always remain classified whereas the civilian programme will attract growing scrutiny and accountability in order to enjoy public support.  This is the major change that has taken place but it is still work-in-progress.

9.       It is in this context that your meeting today assumes significance.  As I mentioned, present nuclear power capacity is 4.8 GW, consisting of 20 reactors all of which are primarily indigenous PHWRs except for the two initial LWRs at Tarapur.  Seven more reactors, including a prototype fast breeder reactor, are expected to more than double the capacity by 2017.  The Twelfth Five Year Plan foresees a major expansion in the nuclear power generation with more than 10 indigenous PHWR reactors and as many as 10 LWR reactors with international collaborations with France, Russia and US.  This would be a major transition because it would also involve the technology demonstration marking the second stage of India’s nuclear programme.  The nuclear civilian cooperation agreements signed in recent years have enabled us to improve generation at the existing nuclear plants thanks largely to enhanced fuel supply.  It is expected that by the end of stage 2, India would have an installed capacity of nearly 30 GW, ready to undertake the transition to stage 3, which is the thorium generated U-233 cycle, self-sustaining in view of our extensive thorium reserves.

10.     Naturally, this is a highly ambitious programme and bound to be questioned, both with regard to technical and economic feasibility.  It explores new technologies because no other country has the same stakes in working on the thorium cycle as we have.  At the same time, post-Fukushima anti-nuclear sentiment has grown, including in India, although there are some reports that the Japanese government is now softening its opposition to nuclear power.  Therefore, while transparency and accountability on the part of the nuclear establishment is essential in order to develop public support and confidence, it is equally important that we refrain from falling into either the ‘anti-nuclear trap’ or the traditional criticisms of the last 30 years when even the civilian aspect of the programme was classified.  Today, while there is a strong case to be made out for nuclear power both in terms of energy security and mitigating carbon emissions, concerns over safety aspects as well as cost effectiveness will have to be satisfactorily addressed.  Therefore, public engagement and risk assessment become important.  Our citizens must have confidence in the regulatory processes.  AERB has already been strengthened and further strengthening of regulatory mechanisms is foreseen under the Nuclear Safety Regulatory Authority Act.

11.     A word about the liability issues and then I will close.  I think we all understand how nuclear liability laws have evolved and why liability was channelled exclusively to the operator.  In the 50s, only the US had a nuclear industry and the US private sector needed this protection in order to establish itself at a global level.  Today, the situation is different and there is a growing feeling that this exclusive channelling is no longer helpful.  The Indian law, in this regard may not be consistent with existing practice but it is certainly much more in consonance with the spirit of the times.  The idea of some measure of supplier liability is an idea that can no longer be bypassed.  However, what we need to ensure is that it does not become ‘infinite’ or ‘open ended’.  What is, therefore, needed is a genuine effort to address the concerns of the suppliers’ community so that their liability is not ambiguous and open ended but can be quantified in a manner that does not raise costs to prohibitive levels.  Such an approach would actually advance international nuclear liability law.

12.     I am glad that the Nuclear Law Association of India is seeking to examine this issue in its different dimensions and I hope that your deliberations will help in providing greater clarity to these issues.

Thank you.

By, Vaibhav Saxena*

India’s nuclear power expansion programme banks heavily on imported technologies which have developed at high cost and risk over a long period. Not unreasonably therefore, the nuclear technology developers would expect compensation for transfer of their technologies. When the technology is transferred in whatever form (sale, JVs, localiastion or full ownership transfer) the technology provider will want to ensure that its competitive advantage, as the developer of the technology is protected. If current trends in the nuclear industry are any indication, host countries the world over are placing an increasing priority on both localisation and technology transfer.

Intellectual property (IP) has an international dimension, and technology providers want to make sure that the host country acknowledges and enforces the technology provider’s IP rights. They genuinely want to have confidence that the other party to the transaction will honour and respect their IP rights including the licences granted in respect of the technology. A patent is granted only to the inventor or the owner of the invention and the principle behind patent protection is that in return for disclosing his invention, the inventor is given limited exclusivity for it and thus provided an exclusive right to make, use and sell the invention within the jurisdiction of that patent.  Nuclear capabilities and activities have created a shrinking world necessitating wide-ranging international co-operation. As a backward step though the World Trade Organisation (WTO) – Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement gives freedom to each country to frame its patent and other IP related laws and confirms that the patent laws are ‘territorial’. Patent laws are therefore, national in scope and eventually IP rights may need to be enforced through the national courts.

According to sub-section (1) of section 20 of the Atomic Energy Act, 1962, no patents shall be granted for inventions which in the opinion of the Central Government are useful for or relate to the production, control, use or disposal of atomic energy or the prospecting, mining, extraction, production, physical and chemical treatment, fabrication, enrichment, canning or use of any prescribed substance or radioactive substance or the ensuring of safety in atomic energy operations. As a corollary to this, section 4 of the Patents Act, 1970 provides that “No patent shall be granted in respect of an invention relating to atomic energy falling within sub-section (1) of section 20 of the Atomic Energy Act, 1962”.

As a consequence,  inventions useful for or relating to the production, control, use or disposal of atomic energy or the prospecting, mining, extraction, production, physical and chemical treatment, fabrication, enrichment, canning or use of any prescribed substance or radioactive substance or the ensuring of safety in atomic energy operations can not be patented in India and in the absence of patent protection their inventors have to protect their rights through a confidentiality clause in the contract or a separate confidentiality agreement so that in case of breach, the supplier can have a right of recompense. Such remedy however, will be enforceable against the buyer and not against the government or the regulatory authority to whom information of proprietary nature is communicated by the buyer in compliance with the legal and regulatory requirements as in the absence of the privity of contract the government and regulatory authorities can not be held liable for the breach of confidentiality. Obviously intellectual property rights are available in rem while contracts normally bind the parties concerned. Yet it can be argued that the buyer may still be liable if it failed to inform the government or the regulatory authority of the proprietary nature of third party intellectual property related information submitted to them in compliance with the applicable local laws.

Though carefully drafted confidentiality agreements have a significant role in protecting intellectual property, such an agreement can, at best secure compensation for breach of contract between two parties and can hardly be a substitute for clearly delineated express laws which have binding force and are enforceable through deterrent penal provisions that can introduce order in the IP regime. Therefore, true international cooperation for protection of IP is absolutely essential which can only prosper in an atmosphere of mutual trust and equality by digging at currently prevalent fragmentary ‘territorial’ approach reflected in the WTO-TRIPS international IPR regime and the out-fashioned national laws like sub-section (1) of section 20 of the Atomic Energy Act, 1962 and Section 4 of the Patents Act, 1970. This is of great relevance in the context of highly-specialised technological endeavours such as the nuclear sector and deserves treatment of a forewarning that the host government might find it difficult to attract project participants and to achieve the desired levels of localisation and technology transfer to the extent to which the host country shows lack of respect for IP rights. New approaches to IP protection are therefore, the need of the hour.

India wants to boost its nuclear power-generation by more than ten times over the next two decades to cut dependence on imported fossil fuels, but there’s one problem: global companies don’t want to sell India the equipment it needs to run nuclear power-plants under existing rules.

Foreign equipment-makers are worried about an Indian law, passed in 2010, which would make them liable to pay compensation in the event of an accident, says Dipankar Bandyopadhyay, a Mumbai-based partner at Indian law firm Verus, and one of the few lawyers in the country who specialize in India’s nuclear liability law.

Mr. Bandyopadhyay says that in most other countries, if there is a nuclear accident, the damages are borne only by the company which runs the nuclear plant, not companies which supplied equipment to the plant.

Still, given the large size of India’s market for nuclear power, some equipment-makers are negotiating with the government to find ways to do business in India, he says.

Mr. Bandyopadhyay recently sat down with The Wall Street Journal to explain India’s nuclear law scenario. Edited excerpts:

The Wall Street Journal: Why are foreign nuclear power equipment-suppliers wary of India’s nuclear law?

Dipankar Bandyopadhyay: India’s nuclear liability law was created to deal with the specific question of compensation for victims of a nuclear accident.

Under both international and Indian law, the operator of a nuclear installation is liable for a nuclear accident in that facility, regardless of whether the operator is at fault or not. In other words, victims do not need to prove that the operator was negligent in running the facility.

In addition, in India the law empowers the operator to claim compensation from the supplier of nuclear equipment, if the accident happens due to defective equipment or sub-standard service.

Indian rules require that every contract between the supplier and the operator must have a provision for compensation to the operator from the supplier.

The plant operator can’t claim more compensation from the equipment-maker than the cost of the equipment. Also, equipment-makers would be liable for no more than five to six years after the sale of equipment.

WSJ: Are companies trying to work around the existing law to sell equipment to India?

Mr. Bandyopadhyay: International suppliers ‎are eager to take advantage of the opportunity India presents and that is why they are actively talking to the Indian government to seek a waiver on the compensation they would have to provide. Alternatively, they have asked for the compensation to be limited and subject to an applicable timeline of, say, five to six years and not for the entire lifespan of the facility.

The government has a firm position on this matter, but it also wants to end the impasse and get business going in light of its ambitious nuclear power program.

One recent example of progress is the signing of a preliminary agreement between Westinghouse Electric Company and the Nuclear Power Corporation of India. (Under this, Westinghouse will explore the possibility of selling equipment to Nuclear Power Corp for its proposed plant in Gujarat). The preliminary pact will keep the momentum going towards the signing of a future supply contract.

WSJ: What protection does India’s nuclear law provide to the man on the street?

Mr. Bandyopadhyay: In the case of a nuclear accident, a victim or his heir will receive compensation for loss of life, personal injury, loss of property, and any other associated economic losses.

As I said before, he will not need to prove negligence. He will get compensation from the operator.

Follow India Real Time on Twitter @WSJIndia and Saurabh Chaturvedi @journosaurabh.

Photo courtesy: Associated Press