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India, US meet to break deadlock on n-liability

Indian government sources claimed the US appeared to be finally moving from its position on the nuclear liability law.

Written by Shubhajit Roy | New Delhi |
Updated: January 22, 2015 10:51:28 am
obama visit, Barack Obama, Narendra Modi, Obama India visit PM Narendra Modi with US President Barack Obama. (Source: Reuters photo)

Hoping to break the deadlock on the nuclear liability issue ahead of President Barack Obama’s visit to New Delhi, officials of India and United States met in London Wednesday to find a solution to the vexed problem stalling operationalisation of the civil nuclear deal between the two countries.

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Signalling the optimism on both sides as the Indo-US contact group sat down, Richard Verma, US Ambassador to India, expressed hope of progress on the deal. “We continue to be hopeful of implementing the civil nuclear agreement to fulfil the PM’s (Narendra Modi’s) goal of providing electricity to all Indians by 2020,” he said at an event in New Delhi.

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Indian government sources claimed the US appeared to be finally moving from its position on the nuclear liability law — from being advocates of amending the law to getting guarantees from the Indian side on tort law claims. The Indian side, the sources said, was proposing an insurance pool as an effective cushion for the suppliers’ liability.

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Sources said this has been the outcome of negotiations between Indian and American officials, businesses and experts in the last two meetings of the contact group.

New Delhi and Washington, the sources said, are discussing the “legal formulation” for an “assurance” from the Indian government so that compensation claims cannot be sought under the tort law — a law that offer remedies to those harmed by civil wrongs. Both sides have exchanged drafts on this issue and are working on an appropriate language, sources said.

Sources said that the US is “apprehensive” that section 46 of the The Civil Liability for Nuclear Damage Act, 2010, keeps open the possibility to seek damages under the tort law. This section states: “The provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being in force, and nothing contained herein shall exempt the operator from any proceeding which might, apart from this Act, be instituted against such operator.”

Indian officials have argued that section 46 talks of “operators” — in this case, Indian government-owned entities — and not “suppliers” which can be American firms like GE and Westinghouse.

“But they are worried that this may open the backdoor for lawyers to demand compensation under the tort law. So, they want an assurance. We have to give them that assurance. Now both sides are working on the language of the assurance,” a senior Indian official, privy to the discussions, said.

On the issue of “right to recourse” under section 17(b), India has proposed a nuclear insurance pool which will take care of the “supplier’s liability”. The General Insurance Corporation (GIC) has been tasked with setting up India’s nuclear insurance pool. It has reported to the government that it has managed to arrange coverage equivalent to $78 m out of the total liability limits for each operator (based on coverage from eight domestic insurers) but was attempting to obtain the remainder through international insurance pools.

“This insurance pool will have contributions from all stakeholders — from suppliers and operators — and will take care of the suppliers’ liability,” the official said.

Sources said that if there is an agreement, it will be one of the big takeaways which will be announced during the visit of the US President. This will pave the way for operationalising the civil nuclear deal. Implementation of the agreement inked in 2005 between George W Bush and Manmohan Singh has been stuck since 2010.

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