Should India Give US Nuclear Suppliers a Reprieve from the Indian Nuclear Liability Law?

In 2008 even before the India-US 123 agreement was finalised Washington had asked for and obtained a commitment from New Delhi that India would sign the Convention on Supplementary Compensation (CSC). India signed the CSC in October 2010 and during his November 2010 visit to India, President Obama received an assurance from the Indian government that it would ratify the CSC during 2011. Now during her just concluded visit Secretary of State Hilary Clinton once again asked India to ratify the treaty soon. Why is there such an insistence on the part of the United States that India ratify the CSC?

CSC is an international treaty that came about through US efforts in the late 1990s. It was opened for signature in September 1997 and even after fourteen years is yet to come into force. Currently there are 14 signatories to the CSC, of which only four, including the US, have ratified it. It must be mentioned here that of the 14 signatories, 13 signed the treaty between September 1997 and June 1998. After a long gap of more than 12 years India became the fourteenth signatory in 2010. Of these fourteen signatories only 6 countries, excluding the US, have any civil nuclear facilities. All these six countries have 123 agreements with the US (in all 48 countries around the world have 123 agreements with the US). Of the 13 signatories to the CSC, apart from the US, only six are members of one of the two international nuclear liability conventions – the Paris and Vienna conventions. Yet, the US has been insistent with only India that it sign and ratify the CSC.

Why is this so? In Tamil there is a popular saying that a Brahmin’s topknot does not move without a reason. Similarly, the US does not make a move without some deep reason. In the case of CSC this is not far to seek.

The CSC was designed to limit the liability facing US suppliers of nuclear technology with respect to their activities in foreign markets. This treaty would help American companies export nuclear safety technology to foreign nations. As the Presidential Letter of Transmittal of the treaty to the Senate for ratification put it:

“U.S. suppliers of nuclear technology now face potentially unlimited third-party civil liability arising from their activities in foreign markets because the United States is not currently party to any international nuclear civil liability convention. In addition to limiting commercial opportunities, lack of liability protection afforded by treaty obligations has limited the scope of participation by major U.S. companies in the provision of safety assistance to Soviet-designed nuclear power plants, increasing the risk of future accidents in these plants. Once widely applied, the Convention will create for suppliers of U.S. nuclear equipment and technology substantially the same legal environment in foreign markets that they now experience domestically under the Price-Anderson Act. It will level the playing field on which they meet foreign competitors and eliminate the liability concerns that have inhibited them from providing the fullest range of safety assistance.”

How does the CSC accomplish this? It does this through Articles 3.1 and 3.9 of the treaty. Art. 3.1 channels the liability exclusively to the operator of the facility and Art. 3.9 provides that any right to compensation for nuclear damage may be exercised only against the operator. Art. 3.9 further makes it clear that no person, other than the operator, can be legally liable for nuclear damage. As Mr. Markey, the US negotiator during the CSC negotiations, put it:

“No additional provisions are necessary to establish the exclusive legal liability of the operator for nuclear damage and to ensure that no legal actions may lie against any other person and, in particular, any person who has supplied any services, materials or equipment in connection with then planning, construction, modification, maintenance, repair or operation of a nuclear installation.”

It is true that under the convention there are provisions that provide the operator, under certain conditions, with a right of recourse. However, both the operator’s right of recourse and third party liability are subject to national laws. Thus, in the case of the United States, there would be no right of recourse because it is not allowed under the Price-Anderson Act. If India ratifies the CSC, both the right of the operator for recourse against the supplier and any third party action against the supplier would be nullified. In short, with India’s ratification of the CSC, US suppliers would be freed from the fear of either any right of recourse by the operator or third party action; and would, therefore, be free to enter into nuclear commerce with India. Unfortunately, the same would not be true for suppliers from other countries, none of whom are members of CSC. It is not surprising, therefore, that US negotiators are insistent on India ratifying the CSC. It is equally not surprising that with exception of one or two Indian analysts, none has pointed out these factors or brought them to the public attention. For one early analysis of this issue refer to an October 2010 IDSA brief “Should India sign the Convention on Supplementary Convention?”