COUNTRY REPORT | INDIA’S NUCLEAR LEGAL FRAMEWORK
Future nuclear development in India NPPs in India often attract protests, as well as resistance from the local population and civil rights groups. The Supreme Court’s current role in balancing the general public’s concerns with the government’s vision to develop the nuclear energy sector in India appears to be a step in the right direction. The nuclear power sector has immense potential to serve global targets for decarbonised energy. The situation in India is consistent with this, as India aims to increase the share of nuclear in its energy mix to meet its already known and anticipated energy needs and strategic security goals.
It is, however, conceivable that disputes may arise at V This approach is partly a consequence of the 1984
chemical accident that occurred in Bhopal, the capital of the Indian state Madhya Pradesh. It was the worst industrial accident to date. The release of a toxic gas from a factory during the night caused, over several years, the death of 15,000 to 20,000 persons, and injured between 150,000 and 800,000 persons. An important legal battle to compensate the victims ensued, and in October 2022, the Indian Government was still considering pursuing further action before the Supreme Court. The 2010 Act is controversial because under the
international nuclear liability conventions, the operator is strictly and solely liable and the operator would have a right of recourse against a supplier “only if this is expressly provided by a contract in writing”.2 India’s provision has been met with criticism from the
nuclear industry, both domestic and international. The agreements already in place between India and foreign countries assumed that India would “create a civil nuclear liability regime based upon established international principles”, which is not considered to be the case by the foreign suppliers. The Indian government took some steps to address
Top: Kudankulam nuclear power plant is just one of India’s nuclear plants
Above: A law to provide civil liability for nuclear damage and prompt compensation followed the Bhopal disaster Photo credit: Paulose NK/
Shutterstock.com
these concerns, with no success, such as: the adoption of the Civil Liability for Nuclear Damage Rules (2011), FAQs on the Act, and the establishment of the Indian Nuclear Insurance Pool, which provides nuclear liability insurance policies for the nuclear operators and suppliers respectively. However, the Nuclear Supplier’s Insurance Policy (NSIP)
has also given rise to a number of concerns. Firstly, the NSIP will only be effective as long as the one provided to the operator of the NPP, for which the suppliers have taken insurance, remains in full force and effect. Secondly, the NSIP only addresses the operator’s right of recourse under Section 17(a) and Section 17(b) of the 2010 Act, and no other liability a supplier may incur for nuclear damage under any other laws, in India or abroad, is covered. In addition, at the time of writing, two public interest
litigation petitions are currently pending before the Supreme Court. These petitions challenge the validity of the Act.
Given India’s present advancement in the nuclear
energy sector and its increasing needs for energy, as well as its need to engage foreign suppliers and investors, it is important for the government, operators, and suppliers to find a way forward that will overcome these concerns.
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an increasing rate in India and around the world, with the increased focus on nuclear energy. Should any such dispute arise in relation to an international project in the nuclear energy sector in India, international arbitration is likely to be the preferred choice of dispute resolution due to the involvement of foreign players and the requirement of particular expertise in the field. Indeed, examples from around the world indicate that
there is a wide range of disputes in connection with the construction of NPPs and the commercial relationship between parties all through the supply chain that may end up as disputes in construction, investment, or commercial arbitration. In this regard, it is important for the concerned parties to focus on early risk management, which must be followed diligently throughout the life of the project or contract. Often, parties can avoid or at least mitigate such disputes by adopting a proactive and well-informed approach from the start. While India appears to be taking steps in the right
direction in this regard, it does not mean that projects in the nuclear sector can be dealt with in an easy manner. A great deal of care and planning by all relevant players is essential for projects and contracts in a sector regulated like no other. ■
About the authors Daniel Garton, Andrew McDougall KC, and Dipen Sabharwal KC are Partners, Ximena Vásquez-Maignan is a Counsel, and Manu Thadikkaran is an Associate of White & Case LLP. The authors wish to thank Shweta Sharma and Mohit Mahla, former trainees of White & Case LLP, and Subhiksh Vasudev, former trainee and presently an Associate of White & Case LLP, for their assistance with the preparation of this article.
Any views expressed in this publication are strictly those of the authors and should not be attributed in any way to White & Case LLP.
References 1 See G. Sundarrajan v. Union of India, (2013) 6 SCC 620, 93. See also The Civil Liability for Nuclear Damage Act, 2010, Section 4, accessed at:
https://indiacode.nic. in/bitstream/123456789/2084/1/201038.pdf.
2 Article 10 (a) of the CSC Annex, accessible at: www.
iaea.org/sites/default/files/infcirc567.pdf.
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