The Nuclear Liability Law Has Passed Its First Legal Test But There Will Be Others

Though the Kerala High Court has upheld the constitutionality of the controversial nuclear liability law, the arguments raised by the litigants in their petition and the grounds for its dismissal did not touch upon the law’s most contentious elements

The Kudankulam Nuclear Power Plant in Tamil Nadu, India. Credit: IAEA, CC-BY-SA

The Kudankulam Nuclear Power Plant in Tamil Nadu, India. Credit: IAEA, CC-BY-SA

Thorny issues pertaining to the Civil Liability for Nuclear Damage Act (CLND Act) were brought back into prominence recently when the High Court of Kerala pronounced upon the constitutional validity of the law in Thomas Mannully v. Union of India. The CLND Act, passed in 2010 with the twin purposes of imposing no-fault liability on nuclear operators and ensuring prompt compensation to victims of a nuclear incident, has consistently been in the eye of a storm. While upholding the validity of the CLND Act, the high court examined a number of its provisions that were cited as grounds for challenge. However, the court’s engagement with the impugned provisions of the Act seems cursory at best and disinterested at worst.

Thomas Mannully is not the first occasion where the constitutional validity of the CLND Act has been challenged. In 2011, Common Cause challenged the constitutionality of the Act as it “clearly violates the ‘polluter pays’ principle and the ‘absolute liability’ principle that have become recognised as part of the law of the land under Article 21 of the Constitution.” This matter is still pending before the Supreme Court and hence, it would be appropriate to say that the Kerala High Court’s verdict is the first pronouncement on the validity of the CLND Act. By virtue of this distinction itself, the High Court could have been more articulate in its reasoning and provided better justifications for its holding, even if the challenge it heard was on different grounds from those raised before the apex court.

The arguments against the liability law

One of the principal grounds for challenging the validity of the CLND Act in Thomas Mannully pertained to the independence of the Claims Commissioner and the Nuclear Damage Claims Commission.

The petitioners argued that the procedure for appointing these adjudicatory authorities under the CLND Act gives untrammelled powers to the Central government, thereby compromising judicial independence, a basic feature of the constitution. While the high court rightly dismissed the petitioners’ argument, it merely stated that “when a person is appointed as a Claims Commissioner he performs a statutory function and is expected to carry out the statutory duty in accordance with law and it cannot be stated that he might be acting to the dictates of the Central government.” This justification appears neither well-reasoned nor well-illustrated.

The court could have buttressed its decision by demonstrating that the CLND Act is not the only legislation establishing a specialised adjudicatory mechanism. For instance, Section 46 of the Information Technology Act, 2000 (IT Act) also requires the Central government to appoint an adjudicating officer not below the rank of a director to the Government of India or an equivalent officer of a state government for holding an inquiry in relation to offences that involve penalties or compensation under the IT Act. Clearly, the Central government routinely performs the function of appointing adjudicatory authorities to give effect to special mechanisms for dispute resolution, making the conferment of such power under the CLND Act constitutionally tenable. However, the Kerala high court failed to sufficiently expound upon these questions, while arriving at its conclusion.

The petitioners also questioned the validity of Section 35, arguing that the bar on the jurisdiction of civil courts takes away the valid right to approach them. This argument should be viewed in light of the Supreme Court’s judgment in L. Chandra Kumar v. Union of India (1997), where it has clarified that an adjudicatory authority has to strictly apply principles of judicial objectivity and independence only in instances where such authority substitutes the judiciary as an alternative institutional mechanism for judicial review. However, the framework for adjudication under the CLND Act is not of such nature. The petitioners’ concerns can be dispelled on a reading of the text of Section 35 itself, which excludes civil courts from entertaining a suit in respect of any matter which the Claims Commissioner or the Nuclear Damage Claims Commission is empowered to adjudicate under this Act. Thus, civil courts continue to exercise jurisdiction over private claims under tort law that do not fall within the purview of the CLND Act. Section 46 of the CLND Act further clarifies this proposition by expressly leaving room for claims under other laws. However, to a legal scholar’s utter disappointment, the Kerala High Court’s reasoning in Thomas Mannully falls short of making these connections while dismissing the petitioners’ claim regarding Section 35.

However, one seemingly genuine concern raised by the petitioners was the apparent lack of autonomy of the Atomic Energy Regulatory Board (AERB). As per the AERB website, its functioning comes under the direct supervision of the Atomic Energy Commission (AEC), which is part of the Department of Atomic Energy (DAE), Government of India. A majority of members of the AERB are also former DAE officials. This might be problematic in view of the fact that all nuclear operators that the AERB currently regulates under the CLND Act are government-owned entities that report to the DAE. Consequently, the independence of the AERB, as the sole enforcement agency in the field of atomic energy in India, might be contentious. Such a concern is not misplaced, particularly in light of a recent review of India’s regulatory framework for safety of nuclear power plants, where the International Atomic Energy Agency (IAEA) raised a similar concern with regard to the independence of the regulator, and provided recommendations for maintaining its independence from the government. A new law has been introduced to replace the AERB with a relatively more autonomous Nuclear Safety Regulatory Authority but it is not certain when the new NSRA will finally come ito being and how independent it will be.

Potential grounds for challenge

While the petitioners, on their part, challenged the constitutional validity of as many as 15 sections of the CLND Act, some of its most controversial provisions were not brought to the fore. Despite the reassuring pronouncement of the Kerala high court, it would be specious to say that all is well with the CLND Act. Curiously, certain contestable provisions of the Act, as well as the Civil Liability for Nuclear Damage Rules, 2011 (CLND Rules), which could have been potential grounds for challenge, did not attract the petitioners’ attention.

Fast-Breeder Nuclear Reactor under construction at Kalpakkam Nuclear Complex, Tamil Nadu. Credit/ Copyright: IAEA Imagebank/Petr Pavlicek

Fast-Breeder Nuclear Reactor under construction at Kalpakkam Nuclear Complex, Tamil Nadu. Credit/ Copyright: IAEA Imagebank/Petr Pavlicek

The operator’s right of recourse against suppliers, provided under Section 17 of the CLND Act, has always been a simmering issue. Section 17 provides for the right of recourse against suppliers under three specific circumstances, viz., where such a right is expressly provided for in a contract in writing; where the nuclear incident is the consequence of an act of the supplier or his employee, which includes supply of equipment with patent or latent defects or sub-standard services; and when the nuclear incident has resulted from the commission or omission of an individual with the intent of causing nuclear damage. It is evident from its language that Section 17 neither puts a cap on the amount that an operator can recover from a supplier nor sets a limitation period during which such a right of recourse subsists. Significantly, Section 17 of the CLND Act mirrors Article 10 of the Annex of the CSC and is a way to ensure that entities whose responsibility for an act of pollution or contamination can be legally established are compelled to contribute, at least indirectly, towards compensating the victims of a nuclear incident.

It is on the operator’s right of recourse that Rule 24 of the CLND Rules imposes two significant limitations – first, that the right would extend to the amount of the operator’s own liability under Section 6(2) or to the value of the contract, whichever is less; and second, that the operator’s right would be limited in time to the duration of initial license issued under the Atomic Energy (Radiation Protection) Rules, 2004 (the rules provide a duration of a maximum of five years) or the product liability period (the period for which the supplier has undertaken liability for patent or latent defects or sub-standard services under a contract), whichever is longer.

Clearly, Rule 24 makes the right of recourse contingent on provisions of the contract between the operator and supplier. This is dubitable because the particulars of the contract may be more or less burdensome than the extent of damage actually incurred, and the employment of such a parameter to determine liability would be against the interests of both the operator and the supplier. Rule 24 stands exposed to a probable challenge under Article 14 for invoking such conditions for the exercise of the right of recourse that bear no reasonable nexus with the purpose sought to be achieved by the CLND Act. In effect, Rule 24 is an example of delegated legislation that imposes a limitation on the amount which can be claimed, and the time within which such claim can be made against the suppliers, when none is envisaged by the provisions of the parent CLND Act.

Furthermore, while Section 46 of the CLND Act would have dispelled the petitioners’ argument against Section 35, it raises certain concerns of its own. As the provision currently stands, it fails to exclude claims that can be directly brought by victims against suppliers. In principle, this runs contrary to the legal channeling of liability to the operator, which the CLND Act is designed to give effect to for expeditious disposal of victims’ claims. This is also problematic from the point of view of operationalising nuclear agreements, for suppliers might be wary of the presence of such a provision in the nuclear liability law. The ‘FAQs’ released by the Ministry of External Affairs during US President Barack Obama’s visit to India in January aimed to reassure suppliers that victims would not be able to invoke Section 46 against them; what matters in the event of an accident, however, is not the executive’s interpretation of statute but the judiciary’s conclusions.

Need for balance

The underground tunnel being built to connect the Fast-Breeder Nuclear Reactor to the sea, at the Kalpakkam Nuclear Complex. Credit/ Copyright: IAEA Imagebank/Petr Pavlicek

The underground tunnel being built to connect the Fast-Breeder Nuclear Reactor to the sea, at the Kalpakkam Nuclear Complex. Credit/ Copyright: IAEA Imagebank/Petr Pavlicek

For now, it would be merely speculative to say that a more scathing and well-considered attack on the CLND Act by the petitioners would have possibly led to a different outcome in the Kerala high court. What is certain is that the CLND Act, in its current form, is in need of suitable amendments, given that potential challenges could rise. If India plans to go ahead with its ambitious plans for building more nuclear power plants, it is essential that the only liability legislation in force not contain ambiguities that will ensure it remains embroiled in the quagmire of litigation. Even as the government seeks to reassure nuclear suppliers about a predictable legal environment, the Act has to be mindful of not selling short the rights of victims of nuclear accidents at the altar of giving effect to nuclear agreements. Admittedly, this is a delicate balance to strike. Fine tuning the CLND Act would help achieve this balance if it is to remain beyond the reach of any challenge to its constitutional validity in the future.

Ritwika Sharma and Yashaswini Mittal are Research Fellows at the Vidhi Centre for Legal Policy, New Delhi. In January 2015, Vidhi released a Report titled “Operationalising India’s Nuclear Agreements: Issues and Solutions on Nuclear Liability”, which critically analysed several provisions of the CLND Act. The Report is available here.