No longer liable
New Delhi has finally released the fine print of its much-hyped nuclear deal with Washington. Both sides resolved their long-standing impasse by finalising the terms and conditions for operationalising the 2008 civil nuclear cooperation agreement, after the intervention of President Barack Obama and Prime Minister Narendra Modi. The bone of contention between both Washington and New Delhi were the contents of section 46 of the Indian civil nuclear liability law, which made US-based suppliers vulnerable to tort claims in civil courts. This section empowered ordinary citizens to file tort claims (claim for damages) against suppliers in a civil liability suit. It was a clause, many in the American nuclear industry believed-would open up companies to potentially unlimited liability. Sunday’s announcement clarifies the ambiguity surrounding this contentious clause by stating that in the event of a nuclear accident, the victims cannot sue the suppliers for damages. Previously, under the 2010 Indian nuclear liability law, equipment suppliers were to be held responsible for paying damages in case of an accident. To find a way around the contentious liability clause, New Delhi has offered to set up an insurance pool to compensate companies that have won the right to construct reactors. The plan laid out by state run General Insurance Company of India (GIC Re) and other public sector undertakings proposes that insurance would be bought by foreign companies contracted to build nuclear reactors in India. These foreign companies, however, would then recoup the cost of the premium paid to GIC Re by charging a higher amount to its consumers in India. While the government has tried to soft sell the 1500 crore-worth insurance pool as an ingenious workaround, it would seem that the cost of this would ultimately be borne by the average Indian consumer through higher energy costs. Although New Delhi is claiming victory on the nuclear deal, it’s safe to say that this is a pyrrhic victory at best.