The logjam on the historic Indo-US nuclear deal was broken following a meeting of Prime Minister Narendra Modi and President of the United States of America, Barack Obama. While it is being termed as a historic deal breaking the logjam over crucial issues such as the tracking clause and the insurance pool were very significant.
While there appears to be clarity on the tracking clause, the removal of which by the US will be quoted by India to both France and Australia, there still is a lot of work that needs to be done on the liability issue.
In case of nuclear accident who is liable?
The companies in the US found it hard to digest that the Indian Parliament had passed a law which makes equipment manufacturers responsible for an accident. India had passed this law keeping in mind the horrific Bhopal tragedy.
This was one of the primary concerns that was raised by the US which had stalled the finalizing of the deal. Who will be liable in case of a nuclear accident was a concern that the US wanted India to address?
The solution to this is setting up of an insurance pool which would cover accidents. It is also stated that in case of an accident the risk would be transferred to the insurer.
The information regarding this aspect of the deal is not entirely clear. The claiming of a victory by both the leaders does indicate that they are ready to work in a positive direction, but the fact is that there are several concerns that remain.
On the issue of insurance pool there is no clarity as yet on who should contribute how much. Sections 7 and 8 of the Civil Liability for Nuclear Damage Act of 2010 read with Rule 3 of the CLND rules provide for the establishment of an insurance pool.
However this has been extended to operators alone and the question that remains to be answered if it will be extended to the suppliers also. This is bound to raise costs and it is yet to be seen how India will address this concern.
According to foreign secretary Sujata Singh, Indian state run insurance company GIC Re and three others would contribute 7.5 billion to the insurance pool. The remaining amount would be contributed by the government on a tapering basis, Sujata Singh also added.
This pool is said to be similar to the 26 other insurance pools that are present in other parts of the world. This is a complete risk management solution for operators and suppliers without causing financial burden is what is we have been made to understand.
The insurance claim explained
As per Section 17 b of the CLND, the suppliers of the plant can be held liable in case of an accident. Here the NPCIL can claim compensation if an accident occurs. Further Section 46 states that both suppliers and operators can be sued by the accident victims.
The US companies had been arguing that this is an unfair clause since as per the agreement it should be the operator and not the supplier who should be held liable.
While the government now states that the setting of the insurance pool can fix this problem, the government would need to set up the Nuclear Liability Fund for damages and claims above Rs 1500 crore.
Many experts feel that the government would have to do more on CLND to ensure that it is favourable to those they are doing business with.
Whether the NPCIL can be defined as both operators and supplier and the applicability of Section 46 only for criminal and not civil action are the lines in which the government is thinking.
This would ideally mean that the clauses need to be amended. The question is whether the government can act suo motu or will need to take it for approval in Parliament is yet to be seen.
The tracking clause
India should be extremely happy that the US President under his executive power waived off the tracking clause in the deal. The US said that it would not insist on the tracking clause. The US had earlier insisted on tracking the supplies and as per its rules it had said it was absolutely necessary.
As per the tracking clause the US could track supplies to ensure that it was not being used for any military purpose.
India had however argued that the US was being intrusive. It had also contended that the tracking clause infringes upon India and was not needed since the safeguards of the IAEA were in place. Indian officials had complained that the deal had not taken off as planned due to the tracking clause that was imposed by the US.
However the Indians argued that all the information which was made available to the IAEA can be shared with the international partners including the US. The data available with the IAEA can be made available to those with who India is conducting nuclear commerce. India also impressed upon the US that it had nothing to hide.
The more important aspect is that the data does not fall into wrong hands such as countries which work contrary to India's interests. Both India and the US say that all these aspects have been looked into by the legal team of both countries and prima facie it all looks fine.