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Done deal: Why nuclear agreement with Japan is good for India

Rangila

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India will be able to access a new generation of nuclear reactors, over 1000 MW and hi-tech safety features, with the finalizing of the Indo-Japanese nuclear agreement. Sources say Westinghouse is readying to offer a deal under which India would buy six of its state-of-the-art AP1000 reactors by March next year.

Though a US-based firm, Westinghouse is a wholly-owned subsidiary of the Japanese firm Toshiba.

Prime Ministers Narendra Modi and Shinzo Abe announced on Saturday that negotiations for a bilateral civil nuclear agreement had been successfully concluded. A lot of technical details as well ratification by the Japanese Diet still have to be done, but the diplomatic work is over.

Japanese companies are world leaders in nuclear technology, say Indian sources. Whether a reactor is French or Korean, key components like reactor vessels are the monopoly of Japanese firms like JSW. Only Russian reactors are not dependent on Japanese parts, but their reactors are limited to 1000 MW and have outdated safety technology. Indian officials noted there were actually no “American reactors”, only Japanese. Westinghouse is a Toshiba subsidiary and even the GE reactor core is built by Hitachi.

In other areas, said officials, like nuclear fuel fabrication and breeder technology the Japanese are the best or at the least very close to being so. “Having the Japanese on your side, makes nuclear arrangements with other countries much easier,” said a senior Indian official.

The negotiations went on to the last minute, say Indian and Japanese sources. Even as Abe arrived in India on Friday the two sides were still talking. “The last parts were agreed on Friday night, but we received confirmation from Tokyo only on Saturday morning,” said one of the negotiating team. Joint secretary (Disarmament) Amandeep Singh and his Japanese counterpart Takeshi Osuga led the respective teams, though difficult issues were sent up to foreign secretary S Jaishankar and Japanese deputy oreign minister Shinsuke Sugiyama.

India and Japan have struggled with civil nuclear talks since New Delhi struck a similar deal with Washington. Because of the Hiroshima-Nagasaki legacy, Tokyo had asked for further commitments from New Delhi on issues like nuclear testing and disarmament. India, however, insisted it could not go beyond what it had agreed to with the US. “All the countries we have since signed civil nuclear agreements would have asked for similar concessions,” said an Indian official.

The diplomatic compromise was to explore areas of nuclear cooperation which were not covered in detail in the Indo-US agreement, said Japanese sources. “This way the substantive part of the detail remained true to the template of the Indo-US agreement,” said an Indian official. One of these grey areas that the two found common ground was nuclear safety, a Japanese concern since their own Fukushima disaster. “That was something prominent with the Japanese public and plus for India as well,” the official added.

It is known that earlier rounds of negotiations were successful in everything except three areas. Two of them were resolved in talks between April and October. The last pending issue revolved around termination – the circumstances under which Japan could cancel the agreement – and how this would affect bilateral work in the ultra-sensitive field of reprocessing technology. Reprocessing allows a country to separate potentially weapons-grade plutonium from nuclear waste.

Reportedly there are some tricky areas where India and Japan have reached a gentleman’s agreement to not write down specific clauses, but allow the other side to revert to its own internal procedures.

“This was not an easy deal for Japan,” said an Indian source. But Prime Minister Abe realized that their mutual hopes for a bilateral strategic relationship could not move forward beyond a point unless the nuclear speed bump was removed.
 
agreement-counterpart-signing-hyderabad-moment-during-indian_d062b0f8-a0e6-11e5-87cb-5268f82dcaeb.jpg



India will be able to access a new generation of nuclear reactors, over 1000 MW and hi-tech safety features, with the finalizing of the Indo-Japanese nuclear agreement. Sources say Westinghouse is readying to offer a deal under which India would buy six of its state-of-the-art AP1000 reactors by March next year.

Though a US-based firm, Westinghouse is a wholly-owned subsidiary of the Japanese firm Toshiba.

Prime Ministers Narendra Modi and Shinzo Abe announced on Saturday that negotiations for a bilateral civil nuclear agreement had been successfully concluded. A lot of technical details as well ratification by the Japanese Diet still have to be done, but the diplomatic work is over.

Japanese companies are world leaders in nuclear technology, say Indian sources. Whether a reactor is French or Korean, key components like reactor vessels are the monopoly of Japanese firms like JSW. Only Russian reactors are not dependent on Japanese parts, but their reactors are limited to 1000 MW and have outdated safety technology. Indian officials noted there were actually no “American reactors”, only Japanese. Westinghouse is a Toshiba subsidiary and even the GE reactor core is built by Hitachi.

In other areas, said officials, like nuclear fuel fabrication and breeder technology the Japanese are the best or at the least very close to being so. “Having the Japanese on your side, makes nuclear arrangements with other countries much easier,” said a senior Indian official.

The negotiations went on to the last minute, say Indian and Japanese sources. Even as Abe arrived in India on Friday the two sides were still talking. “The last parts were agreed on Friday night, but we received confirmation from Tokyo only on Saturday morning,” said one of the negotiating team. Joint secretary (Disarmament) Amandeep Singh and his Japanese counterpart Takeshi Osuga led the respective teams, though difficult issues were sent up to foreign secretary S Jaishankar and Japanese deputy oreign minister Shinsuke Sugiyama.

India and Japan have struggled with civil nuclear talks since New Delhi struck a similar deal with Washington. Because of the Hiroshima-Nagasaki legacy, Tokyo had asked for further commitments from New Delhi on issues like nuclear testing and disarmament. India, however, insisted it could not go beyond what it had agreed to with the US. “All the countries we have since signed civil nuclear agreements would have asked for similar concessions,” said an Indian official.

The diplomatic compromise was to explore areas of nuclear cooperation which were not covered in detail in the Indo-US agreement, said Japanese sources. “This way the substantive part of the detail remained true to the template of the Indo-US agreement,” said an Indian official. One of these grey areas that the two found common ground was nuclear safety, a Japanese concern since their own Fukushima disaster. “That was something prominent with the Japanese public and plus for India as well,” the official added.

It is known that earlier rounds of negotiations were successful in everything except three areas. Two of them were resolved in talks between April and October. The last pending issue revolved around termination – the circumstances under which Japan could cancel the agreement – and how this would affect bilateral work in the ultra-sensitive field of reprocessing technology. Reprocessing allows a country to separate potentially weapons-grade plutonium from nuclear waste.

Reportedly there are some tricky areas where India and Japan have reached a gentleman’s agreement to not write down specific clauses, but allow the other side to revert to its own internal procedures.

“This was not an easy deal for Japan,” said an Indian source. But Prime Minister Abe realized that their mutual hopes for a bilateral strategic relationship could not move forward beyond a point unless the nuclear speed bump was removed.

Congratulations to US-Japan-India
 
This is only a civil deal brother.

The key turning point was the dilution of Nuclear liability law passed by UPA by the Modi/BJP which allowed India to close the nuclear deals with many countries.

Under the current law the supplying country or supplier would not be held responsible. Meaning if there were to be another union carbide like incidence, Indian tax payers would foot the bill and fend for themselves.

No change in nuclear liability law: MEA - The Hindu
 
The key turning point was the dilution of Nuclear liability law passed by UPA by the Modi/BJP which allowed India to close the nuclear deals with many countries.

Under the current law the supplying country or supplier would not be held responsible. Meaning if there were to be another union carbide like incidence, Indian tax payers would foot the bill and fend for themselves.

No change in nuclear liability law: MEA - The Hindu
How can this be compared with union carbide ? They are just nuclear suppliers.
 
This nuke deal with Japan is said to be our 2nd most important nuke deal after 123 deal with USA. So its indeed a good news
 
How can this be compared with union carbide ? They are just nuclear suppliers.

Ideally when a product fails, the user/customer conducts the root cause analysis (RCA) and identifies which part caused the problem. The supplier responsible for providing the non compliant part should be held responsible. But with the dilution of the liability clause, if there were to be an accident and then the supplier would not be held responsible. The cost would be born by the government of India. Also, there would not be any criminal damages towards the supplier.

Look at the below case where BP and it's sub-contractors were held responsible. If there were to be a nuclear disaster in India, Indians and India would not be able to sue Westinghouses or AREVAs of the world as BJP has diluted the nuclear liability clause and gave a commitment that suppliers would not be sued or held responsible, should there be a disaster.


A senior BP executive has told a US court that the oil giant was not solely responsible for the 2010 Gulf of Mexico oil spill.
Rig operator Transocean and contractor Halliburton must also bear portions of the blame for the explosion and resulting spill, Lamar McKay said.
The trial, in New Orleans, will determine liability for the spill.
BP could face a huge fine, despite agreeing in 2012 to pay $4.5bn (£2.9bn) to settle criminal charges.


BP: Gulf of Mexico oil spill 'shared responsibility' - BBC News

BP Is Found Grossly Negligent in Deepwater Horizon Disaster - WSJ
 
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Under the current law the supplying country or supplier would not be held responsible. Meaning if there were to be another union carbide like incidence, Indian tax payers would foot the bill and fend for themselves.
Small twist, the Indian govt and the suplier will make the compensation pool of 15 billion

India: Civil Nuclear Liability Law In India
Last Updated: 8 May 2015
Article by Ran Chakrabarti
IndusLaw

1. Introduction


Back in January this year, India and the United States reached an understanding, in public at least, on the commercial liability of suppliers for nuclear accidents in India. The general understanding appears to be that operators of nuclear facilities in India will continue to remain primarily liable for a nuclear incident and that any residual liability of suppliers for damage arising from a nuclear accident will be mitigated by an insurance pool, funded by Indian insurers and the Government of India.1

But how do these public statements square with India's civil nuclear liability laws and to what extent are suppliers insulated from legal action in the event of a nuclear disaster? Let's look at the detail.

2. The Act

India's Civil Liability for Nuclear Damage Act, 2010 (the "Act") essentially created a mechanism for compensating victims from damage caused by a nuclear accident, allocating liability and specifying procedures for compensation.

It was the last piece of the jigsaw to operationalize the 2008 Indo-US Civilian Nuclear Agreement (the "2008 Agreement") since US operators required the Act to be in place in order to be insurable in the US.

However, many commentators have argued that the Act has hindered the operationalization of the 2008 Agreement because of open-ended rights of recourse against suppliers and unknown liabilities. As a result, suppliers are unable to insure against risks that are uncertain and therefore, are unable to enter into the Indian market.

3. Liability

The Act is clear about the allocation of responsibility for nuclear damage. The operator is strictly liable (which is in line with the general principle internationally) for nuclear damage arising out of a nuclear incident2 except in the case of a force majeure event, in which case the central government takes the risk.3

The liability of the operator is essentially capped at Rs. 15 billion (USD 238 million)4 and the overall liability of the central government in relation to any particular nuclear incident is capped at an equivalent of 300 million Special Drawing Rights5 (an IMF basket of currencies) which is equal to approximately USD 415 million as of April 2015.

Does nuclear liability include economic loss? Notably, although the definition of "nuclear damage" contemplates economic loss, it appears to be contingent upon a notification from the central government for its application. Would the central government make such a notification following a nuclear accident, essentially increasing its overall liabilities?

In summary, the operator is strictly liable for an amount up to USD 238 million and the central government is liable for amounts exceeding this and falling below USD 415 million. The government's recent announcement to set up a Rs. 15 billion insurance pool (USD 238 million) to be funded by Indian insurers and the government is intended to mitigate the liability of the operator.

It should be noted that since the operator in India (the Nuclear Power Corporation of India Limited ("NPCIL")) is state owned, the entire liability of the operator is essentially a public liability and footed by the Indian taxpayer in any event.

But what happens to liabilities that exceed USD 415 million (as they no doubt would, if we consider the clean up costs in the recent Fukushima nuclear disaster in Japan and the Deepwater Horizon oil spill in the Gulf of Mexico)? Under the provisions of the Convention for Supplementary Compensation for Nuclear Damage (the "CSCND"), contracting states are essentially obliged to fund such liabilities.

Article III of the CSCND sets out that compensation above 300 million Special Drawing Rights shall come from the public funds of contracting states calculated in accordance with a formula specified in Article IV of the CSCND.6 However, while India has signed the CSCND in October 2010, it is yet to ratify it and until that occurs, there are question marks over its enforceability.

4. Suppliers

What about the liability of suppliers? Section 17 of the Act essentially provides that an operator, after paying compensation, shall have the right of recourse against a supplier where such a right exists under contract and if the nuclear incident occurred as a result of the act of a supplier (or his employee), including the supply of equipment or material with patent or latent defects, or the provision of services which are sub-standard.

On paper, it seems logical to infer that the NPCIL would insist on such a liability clause in any contract with any supplier in connection with the design, engineering, procurement and construction of a nuclear installation. Generally, liabilities are capped at the value of the contract, or a percentage of the contract value, but they often include indemnities whereby a contractor holds harmless an employer against third party claims for death or damage to property arising from negligence. These indemnities are often uncapped.

Consider the scenario in the context of an Indian nuclear accident. The operator will be held accountable through the principle of strict liability under the Act (up to the maximum amount of USD 238 million). On paying out that liability, in the event that the accident was caused by a latent or patent defect, designed or constructed by the supplier (or the negligent performance of associated services), then it would flow that the supplier would be contractually obliged to indemnify the operator for his loss.

But could it be the case that a supplier could negotiate with the operator to exclude its liability under the supply or construction contract? Although it would be highly unusual for an operator to accept such a bad bargain, the Civil Liability for Nuclear Damage Rules, 2011 (the "Rules") would prevent this.

Rule 24 of the Rules states that a contract between an operator and a supplier referred to in Section 17 of the Act shall include a provision for the right of recourse against the supplier for not less than the extent of the operator's liability under the Act, or the value of the contract, which ever is less.

Put otherwise, any contract between an operator and a supplier must contain a liability clause, though it seems that the liability of the supplier would, in such circumstances, be capped at USD 238 million.

5. Claims in tort

The final bone of contention between suppliers, the government and civil society is the ability of a victim (or a group of victims) of a nuclear accident to make a claim against a supplier in tort.

Section 46 of the Act states that its provisions are in addition to, and not in derogation of any other law for the time being in force, and nothing contained in the Act shall exempt the operator from any proceedings, which might, apart from the Act, be instituted against the operator.

On the face of it, this seems to suggest that claims in tort against the operator may be permissible, notwithstanding that the intention of the Act is to channel all claims for nuclear damage against the operator. As discussed above, it begs the question as to whether a claim in tort for economic loss by a victim against the operator would be admissible outside of the scope of the Act?

But the concern for suppliers is that the Act does not go far enough to insulate them from claims in tort before the Indian courts. The response by the proponents of the nuclear deal is that Section 46 of the Act relates to claims against the operator and therefore necessarily excludes the ability of an action in tort against a supplier.

It's difficult to predict how a court would construe this provision. On the one hand, the Act clearly allocates liability for nuclear damage to the operator, yet, on the other hand, gives the operator the right of recourse against a supplier in certain circumstances. The Act does not expressly preclude an action against a supplier in tort, in circumstances of negligence causing death, personal injury or damage to property.

The view taken by India's Ministry of External Affairs seems to be that the Act prevents claims in tort against a supplier before an Indian court. Amendments moved during the passage of the bill through parliament, included the proposed addition of a supplier to this provision, which was rejected. Although it's a well-settled principle of law that every statute is to be interpreted in accordance with the intention of the legislature, the constitutionality of Section 46 has not been tested.7

But could victims of a nuclear incident in India move foreign courts in relation to claims for damages against a foreign supplier? Again, the view taken by India's Ministry of External Affairs seems to suggest that they can't, though it remains to be seen how a court in a foreign jurisdiction would treat a claim by victims for damages resulting from the negligence of a foreign supplier. Would a foreign court throw out such a claim on the basis that the Act is the sole remedy for victims and declare that it does not have the jurisdiction to accept such a claim?

In this context, it should be noted that Article XIII of the CSCND states that jurisdiction over actions concerning nuclear damage arising from a nuclear incident shall lie only with the courts of the contracting party within which the nuclear incident occurs. Therefore, it is likely that a foreign court will rule that an action in tort by an Indian victim in the courts of the jurisdiction of the supplier will probably be inadmissible on the basis of Article XIII of the CSCND.

6. Conclusions

India's insatiable demand for growth means that it has to look at alternative ways of producing vast quantities of energy that its economy will require during the course of this century.

However, the consequences of a nuclear accident cannot be simply swept under the carpet. As the recent Fukushima nuclear disaster in Japan has made clear, the costs are potentially enormous. Indeed, India is no stranger to industrial disasters on a large scale. The legacy of the Bhopal disaster in 1984, resulting in more than 15,000 deaths and complex legal battles for compensation that followed are still fresh in memory.

Ultimately, ensuring a framework to promote nuclear energy production on the one hand and broader public policy goals on the other is a very difficult balance to get right. It remains to be seen whether the Act and the Rules set out a balanced framework, encouraging suppliers to dip their toes into the Indian nuclear energy market, yet protecting the legitimate interests and concerns of the public in the event of a nuclear accident.

Footnotes

1 Nuclear Insurance Pool Dilutes Risk for Indian, US Suppliers -The New Indian Express

2 See Section 4 of the Act

3 See Section 5 of the Act

4 See Section 6(2) of the Act

5 See Section 6(1) of the Act

6 Convention on Supplementary Compensation for Nuclear Damage | International Atomic Energy Agency

7 Frequently Asked Questions and Answers on Civil Liability for Nuclear Damage Act 2010 and related issues
 
I know the answer, but let me see how many of you do:

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@knight11 Small twist, the Indian govt and the suplier will make the compensation pool of 15 billion

15 Billion Rs is what?
Peanuts.

@dadeechi thrust on this is legitimate.

Is not it?

 
In summary, the operator is strictly liable for an amount up to USD 238 million and the central government is liable for amounts exceeding this and falling below USD 415 million. The government's recent announcement to set up a Rs. 15 billion insurance pool (USD 238 million) to be funded by Indian insurers and the government is intended to mitigate the liability of the operator.

I know the details but do you sincerely think this would be sufficient compensation for a nuclear accident?

The Bhopal disaster and its aftermath: a review

Why are Bhopal survivors still fighting for compensation? - BBC News

State, Centre delaying compensation for Bhopal Gas tragedy : PTI feed, News - India Today
 
Exactly. He is confusing many things.
No. I find his explanation quite justified.
There has to be a clause attached for the supplier also, so that the supplier can be liable to be held responsible in case there is a fault with whatever he is supplying. I have just scratched the surface though, don't know the details. Neither am I getting time these days.
 
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