Nuclear energy disputes: What can India learn from global trends?


As one of the world’s most active regions for nuclear development, India is pinning a lot of hope on nuclear power. How can the supply chain mitigate project risks within India’s legal framework?


By Daniel Garton, Andrew McDougall KC, Dipen Sabharwal KC, Ximena Vásquez-Maignan, & Manu Thadikkaran


INDIA IS ONE OF THE top energy-consuming countries in the world and is expected to surpass the European Union by 2030. To meet its growing energy demand, India plans on growing its nuclear sector at pace over the next decade. The subcontinent currently has 22 reactors in operation with a total net capacity of around 6780 MW and is hoping to increase this almost threefold to a total capacity of 22,480 MW by 2031. It is not only considering expanding its large nuclear power plants (NPPs) fleet, but also developing small modular reactors (SMRs). With such ambitious plans, what learnings should India take from previous trends in nuclear energy?


Development of India’s nuclear energy sector In the 1960s, India made its first foray into the nuclear sector by building two small General Electric boiling water reactors. However, international collaboration quickly stopped when India carried out its first nuclear weapon test in May 1974 while refusing to sign the Treaty on the Non-Proliferation of Nuclear Weapons. Various international sanctions were imposed, which excluded India from nuclear trade. Over consequent decades, India relied mainly on Russia.


But since the 2005 the Civil Nuclear Cooperation Initiative between India and the USA, India has been reinstated in the international nuclear community. At present, India has signed Agreements on Co-operation and Peaceful uses of Nuclear Energy with 13 countries. As per India’s 2006 Integrated Energy Policy, the country


aims to achieve energy security for all of its citizens irrespective of their ability to pay for it. For this policy to be a reality, India needs to reduce its dependence on the import of fossil fuels. Yet, based on its current policies, India’s combined import bill for fossil fuels is projected to triple over the next two decades, with oil the largest component by far. In meeting its growing demand for energy, India’s policymakers are keen to adopt “safe, clean and convenient forms of energy” at the lowest cost and in a technically efficient, economically viable, and


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environmentally sustainable manner. Currently, the nation devotes nearly 3% of its GDP to energy investment, and an increasing share of this investment is going into clean energy. Looking beyond 2050, policymakers view nuclear energy as the most potent means to attaining long-term energy security and energy-independent status. Today, India is second in the world, after China, in


terms of the number of reactors being constructed. One of India’s primary goals for 2031 is to ensure the energy needed to sustain a growth rate of 8-9% becomes available. This opens opportunities for large-scale investment in the nuclear energy sector. Despite this momentum, steps towards increasing


India’s nuclear energy capacity will continue to meet delays arising from several factors. First, the civil liability for nuclear damage law has been a source of concern to foreign suppliers. Second, there are inherent challenges in developing and building NPPs on budget and on time. Third, several nuclear power projects have met with protests from the local population owing to the nature of nuclear energy. Fourth and finally, there may be delays due to Russia-related sanctions, as Russia is currently the only foreign partner active in the Indian nuclear sector. Taking these considerations into account, it is important


that all parties; whether local or foreign, are well-informed about the legal pitfalls they may face while working their way along the delicate path needed for the growth of nuclear energy in India.


Mitigating legal risks: learnings from India and abroad NPP projects have a long history of disputes. The Olkiluoto 3 power plant in Finland, being designed and constructed by the French-German supplier consortium of Areva- Siemens for the owner Teollisuuden Voima Oyj (TVO), was due to have been completed in 2009 but has still not achieved Takeover. This had led to ICC arbitrations running for a decade. More recently, EDF made a EUR1.5bn claim from Areva in 2021 for Flamanville 3’s operating losses.


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