Progress in Nuclear Energy xxx (2017) 1e8 Contents lists available at ScienceDirect Progress in Nuclear Energy journal homepage: www.elsevier.com/locate/pnucene The Civil Liability for Nuclear Damage Act of India: An engineering perspective regarding Supplier's liability R.B. Grover Homi Bhabha National Institute, Mumbai, 400094, India a r t i c l e i n f o a b s t r a c t Article history: Received 23 January 2017 Received in revised form 11 April 2017 Accepted 12 April 2017 Available online xxx Civil liability for nuclear damage regime established in India follows global practice in this area and has a unique provision that enables an Operator to exercise a right of recourse against a Supplier. Rules promulgated under the Act provide ‘explanation’ about the Supplier which has been formulated based on practices in nuclear industry. The paper analyses the ‘explanation’ and concludes that India's legislation designates the plant system designer as the Supplier. Any examination of the Indian law without studying the ‘explanation’ leads to erroneous conclusions. To protect his interest against the Right of Recourse, the system designer can avail of the insurance policy that is meant for the suppliers. Vendors, other than the system designer, have no liability under the Right of Recourse. A harmonious analysis of debates and various documents indicates that the Section 46 of the Act is directed only towards the Operator. This paper examines the issue of Supplier's liability in the light of explanation about a supplier as included in the Rules. © 2017 Elsevier Ltd. All rights reserved. Keywords: Nuclear liability India's nuclear liability legislation Suppliers liability Role of system designer Indian nuclear insurance pool Defence in depth 1. Introduction 1.1. Nuclear power growth in India India is keen to accelerate the growth of nuclear installed capacity by setting up a mix of different reactor types. This includes Pressurized Heavy Water Reactors (PHWRs) and Fast Breeder Reactors based on indigenous design as well as light water reactors being set up in technical cooperation with other countries. Given the growing energy demand in India, nuclear energy must be an integral part of the energy mix and the Government of India has articulated its support for nuclear energy in several ways. Three different articulations made by the Government in the recent past follow. a Union budget presented every year in the Parliament reflects policies of the Government. In the budget speech presented on February 29, 2016 by the Finance Minister, paragraph 82 reads as follows, “In the power sector, we need to diversify the sources of power generation for long term stability. Government is E-mail address: rbgrover@hbni.ac.in. drawing up a comprehensive plan, spanning next 15e20 years, to augment the investment in nuclear power generation. Budgetary allocation up to ₹3000 crores1 per annum, together with public sector investments, will be leveraged to facilitate the required investment for this purpose” (Economic Times, 2016a). For every nuclear power plant set up in recent years, debt to equity ratio has been 70:30 and therefore, provision of ₹3000 crores by the government will translate to an investment of ₹10,000 crores. b In December 2015, India submitted to 21st Conference of Parties (CoP21) to the United Nations Framework Convention on Climate Change (UNFCCC) its “Intended Nationally Determined Contributions (INDC) for the Period 2021 to 2030”. Through this statement, India has committed “to achieve about 40 percent cumulative electric installed capacity from non-fossil fuel based energy resources by 2030 with the help of transfer of technology and low cost international finance from Green Climate Fund (GCF)” (INDC, 2015). The phrase “non-fossil fuel based energy” includes nuclear energy. 1 Crore is a word in Hindi and other Indian languages and means ten million. As per exchange rate on 05.04.2017, ₹10,000 crores ¼ ~ $ 1.54 billion. ₹ is a symbol for Indian rupee. http://dx.doi.org/10.1016/j.pnucene.2017.04.012 0149-1970/© 2017 Elsevier Ltd. All rights reserved. Please cite this article in press as: Grover, R.B., The Civil Liability for Nuclear Damage Act of India: An engineering perspective regarding Supplier's liability, Progress in Nuclear Energy (2017), http://dx.doi.org/10.1016/j.pnucene.2017.04.012 2 R.B. Grover / Progress in Nuclear Energy xxx (2017) 1e8 c Eighth BRICS summit was held at Goa and paragraph 54 of the Goa declaration issued on October 16, 2016 says, “We recognise that nuclear energy will play a significant role for some of the BRICS countries in meeting their 2015 Paris Climate Change Agreement commitments and for reducing global greenhouse gas emissions in the long term. In this regard, we underline the importance of predictability in accessing technology and finance for expansion of civil nuclear energy capacity which would contribute to the sustainable development of BRICS countries” (BRICS, 2016). Worldwide, nuclear industry has been subjected to intense public scrutiny in view of perceived risks and there is a sharp divide between “the public” and “the expert”. Even the categorisation as “the public” and “the expert” is objected to by those who are opposed to nuclear power. However, given the large and growing energy needs of India and other developing countries, nuclear energy is necessary to provide energy security; its benefits are many and its risks can be mitigated (Berger et al., 2017). Regulations to ensure safety of nuclear power plants and methodology to assess safety have been continuously evolving (Keller and Modarres, 2005) and regulators are moving towards Risk Informed Regulations (RIR) which have been evolved based on probabilistic risk assessment methods. All such developments provide basis for the evolution of liability legislations at the national level and treaties at the global level. This paper concentrates on the Indian scene and examines India's legislation on civil liability for nuclear damage. 1.2. Enactment of a legislation on civil liability for nuclear damage In view of envisaged nuclear power growth, and possible spread of radioactivity over large areas in case of an incident, howsoever rare, it was considered necessary to have a legislation on civil liability for nuclear damage. To understand this issue, the Department of Atomic Energy (DAE) awarded a study-project “A critical and comprehensive study of the nature and extent of state responsibility arising out of nuclear incidents/accidents within national boundaries and beyond” to V. B. Coutinho and S. Rajagopal in 1999 with the objective of going into various aspects of civil liability arising out of any nuclear damage (Parliament of India, 2010). The study recommended enactment of a legal framework based on generally accepted principles that is providing prompt compensation to victims of an incident based on a no-fault liability regime, clarity about court of jurisdiction, and ensuring that there is no discrimination based on citizenship in disbursing compensation. This study was followed by deliberations within the Government. While deliberations were going on, the Government of India launched an initiative to open international civil nuclear cooperation with the objective to source uranium from international markets, and have access to manufacturers of nuclear equipment abroad to accelerate the growth of nuclear installed capacity in the country (Grover, 2017 in this issue). This initiative demanded India to be a party to one of the international conventions on the subject. This led to expediting the ongoing work and eventually ‘The Civil Liability for Nuclear Damage Act, 2010’ (DAE, 2010), hereinafter the CLND Act or the Act, was passed by the Parliament and notified. The Act along with the Rules (DAE, 2011) made thereunder constitute India's domestic legislation and forms the basis for ratification by India of the Convention on Supplementary Compensation for Nuclear Damage (CSC) which was opened for signatures at Vienna on September 29, 1997 at the 41st General Conference of the International Atomic Energy Agency (IAEA, 1998). It also provides an assurance to the Indian public that in the case of an incident, howsoever unlikely, there is a mechanism for providing prompt compensation to the victims. 2. Key features of the Indian legislation This section describes the key features which are in line with the international liability regime. There is one unique feature and that is described in the next section. Preamble or the long title of the Act sets the tone. It talks about broad principles such as no-fault liability regime, channelling liability to the operator, appointment of Claims Commissioner, and establishment of Nuclear Damage Claims Commission. Section 4(1) states that “The operator of the nuclear installation shall be liable for nuclear damage caused by a nuclear incident …” Further, Section 4(4) states that “The liability of the operator of the nuclear installation shall be strict and shall be based on the principle of no-fault liability.” Section 8(1) states that “The operator shall, before he begins operation of his nuclear installation, take out insurance policy or such other financial security or combination of both, covering his liability …” All these provisions along with the long title of the Act make it clear that the liability is strict, and channelled to the Operator through a no-fault liability regime. Section 6 limits liability in amount and Section 18 limits the time during which claims have to be made. Section 5 provides for exclusions for liability for operator by imposing liability on the Government in case of events like grave natural disaster and armed conflict. A nuclear incident has to be notified (Section 3(1)) by the regulator that is the Atomic Energy Regulatory Board (AERB) and whosoever suffers nuclear damage shall be entitled to claim compensation in accordance with the provisions of the Act (Section 13(1)). The Act also provides for a single court of jurisdiction (Section 9(2) and Section 19), which is either Claims Commissioner or a Nuclear Damage Claims Commission. This provision implies that Indian law provides for a dedicated court, and this will speed up settlement of claims by victims. A comparison of the Indian legislation with international principles has been presented by other authors (Ram Mohan, 2014; Sutaria, 2014) and is not included in this paper. 3. A unique feature in the Indian legislation 3.1. The unique feature One feature in the Indian legislation is unique and has been a topic of debate. The Bhopal Gas Tragedy2 resulted in a huge loss and made India aware about the need of a sound public policy to compensate the victims of a severe accident. The verdict of the trial court for the case of State of Madhya Pradesh v. Warren Anderson and Ors instituted in 1994 was delivered on June 7, 2010. In India, bills are discussed in detail in Standing Committees and the first hearing of the Standing Committee to discuss Civil Liability for Nuclear Damage Bill was held on June 8, 2010. The verdict was extensively reported in the media, and the Bhopal Gas Tragedy is likely to have weighed heavily on all who participated in the discussions of the Standing Committee resulting in the unique feature in the Bill related to a right of recourse against the supplier by the operator although Union Carbide was the Operator. The unique feature is the right of recourse provided in the Section 17 of the Act and Rule 24 which elaborates Section 17. Section 17 reads as follows. 2 There is an extensive write-up on Bhopal gas Tragedy in Wikipedia. As in early April 2017, the write-up had 106 references. Please cite this article in press as: Grover, R.B., The Civil Liability for Nuclear Damage Act of India: An engineering perspective regarding Supplier's liability, Progress in Nuclear Energy (2017), http://dx.doi.org/10.1016/j.pnucene.2017.04.012 R.B. Grover / Progress in Nuclear Energy xxx (2017) 1e8 “17. The operator of a nuclear installation, after paying the compensation for nuclear damage in accordance with section 6, shall have a right of recourse where d b a. such right is expressly provided for in a contract in writing; b. the nuclear incident has resulted as a consequence of an act of supplier or his employee, which includes supply of equipment or material with patent or latent defects or sub-standard services; c. the nuclear incident has resulted from the act of commission or omission of an individual done with the intent to cause nuclear damage.” This section uses the words “Operator” as well as “Supplier”. The word “Operator” is defined in the Act, while the word “Supplier” is not defined; it is used only once in section 17 and nowhere else. It is explained in the Rule 24 as follows. c ““Supplier” shall include a person who e (i) manufactures and supplies, either directly or through an agent, a system, equipment or component or builds a structure on the basis of functional specification, or (ii) provides build to print or detailed design specifications to a vendor for manufacturing a system, equipment or component or building a structure and is responsible to the operator for design and quality assurance; or d (iii) provides quality assurance or design services.” This explanation about the word “supplier” has remained under-examined in the literature on India's nuclear liability legislation and despite debate on nuclear liability in the media, has remained under-reported. Sutaria (2014), Ram Mohan (2014) and Ameye (2015) have analysed Section 17 and the Rule 24, but have not included implications of the explanation in their analyses. Ignoring the explanation has resulted in Heffron et al. (2016) calling section 17 vague and ambiguous, and opining that a victim will have to resort to a multitude of court cases. This paper examines this issue in detail and presents basis for designating individuals as suppliers or vendors based on engineering practices followed by nuclear industry. Complete text of Rule 24 is given in Annex 1. The second explanation is also important as it clarifies that an Operator cannot claim more than what it has paid to the victims. This clearly limits the liability of a Supplier to the same value as that of the Operator. 3.2. Some observation regarding channelling to the operator Legal channelling to the Operator provides a one stop solution to the victims of an incident, but continues to be debated among legal experts. It has been examined in detail by Ameye (2009, 2015) and one can make certain observations, some contrarian, about channelling. a It is the Operator who has the control over the activity at the time at which the incident occurs and therefore, must be liable for damages. Citing Harvard Report, Ameye writes that a welldesigned system may become dangerous if badly run. Postdelivery, suppliers lose control over their products, and are not even aware of the health of equipment and components supplied by them. This aspect has acquired further importance now when life of plants is being extended way beyond what was initially envisaged and new plants are being designed to have a life of 60 or beyond. Plants having long life will see replacement e 3 of equipment and components as well as incorporation of altogether new features. Channelling of liability solely to the Operator prevents pyramiding of insurance. Addition of supplier insurance will add to costs that will be passed to the consumer in the form of higher tariff of electricity generated. Contrarian viewpoint is that insurance companies will perform risk assessment studies using principles of probabilistic risk assessment and quantify the contribution of every major equipment to core melt probability. Such studies will form the basis of determining the premium for the policy to be issued to the vendor of a given equipment. Overall the premium will get adjusted and tariff for the consumer might not be affected. The way nuclear industry is evolving, design knowledge is becoming proprietary information of vendors. As the design knowledge becomes more hermetic, it will be hard to sustain channelling of liability to operator for risks, he is not aware of or even worse, for risks he cannot perceive (Ameye, 2009). Practice by vendors withholding key safety information challenges the presumption that the Operator has control over the activity and this amounts to challenging the very basis of channelling liability to the Operator. Design integrity of a nuclear installation has to be maintained throughout the lifetime of the plant and one important element to do so is setting up a design authority as a part of the operating organisation (IAEA, 2003). The design authority is expected to have requisite knowledge of “the overall basis for safety of its nuclear facilities throughout the full lifecycle of those facilities” (AERB, 2015). In the opinion of the author, the mandatory provision by regulators about having a competent design authority favours channelling to the Operator and challenges the tendency of vendors to maintain design knowledge hermetic. This provision needs to be implemented strictly and the system designer should share design information with the design authority set up by the operating organisation. This is discussed in detail in the next section. The US law provides for economic channelling thereby holding suppliers responsible. This is achieved by providing “umbrella insurances covering the liability of operators, suppliers and designers” (Ameye, 2015). Consequence to the US joining CSC, the additional fund that the US must contribute to meet its obligations under the CSC, will be contributed by the nuclear suppliers as provided in the US Energy Independence and Security Act, 2007. The US law differs from laws in other countries, and the CSC, through its Section 3, grandfathers the provision in the US law. The word ‘supplier’ has been used by many authors, and appears in some legal documents, but is not defined anywhere. Indian legislation explains the word ‘supplier under Rule 24. Prior to examining the explanation about a supplier in the Indian legislation and its implication on the right of recourse, it is necessary to examine certain basic principles of reactor design, construction and operation. 4. Basic principles of nuclear power reactor design, construction and operation 4.1. Fundamental safety functions A nuclear power reactor consists of several Structures, Systems and Equipment. It is designed to deliver power to the grid. Underperformance of a system or equipment can lead to reduced delivery of power and may or may not be significant with respect to safety. Safety relates to three functions (IAEA, 1999) that protect Please cite this article in press as: Grover, R.B., The Civil Liability for Nuclear Damage Act of India: An engineering perspective regarding Supplier's liability, Progress in Nuclear Energy (2017), http://dx.doi.org/10.1016/j.pnucene.2017.04.012 4 R.B. Grover / Progress in Nuclear Energy xxx (2017) 1e8 against any release of radioactive material in the public domain:  controlling reactor power;  cooling the fuel; and  confining radioactive materials within the appropriate physical barriers. 4.2. Defence in depth Since the early days of nuclear power, the principle of ‘Defence in Depth’ or DiD has been the primary means of preventing accidents in a nuclear power plant and mitigating the consequences of accidents if they do occur (Keller and Modarres, 2005). DiD has been continuously evolving. It is “centred on several levels of protection including successive barriers preventing the release of radioactive material to the environment. The concept includes protection of the barriers by averting damage to the plant and to the barriers themselves. It includes further measures to protect the public and the environment from harm in case these barriers are not fully effective.” Special attention is focussed on safety functions by making use of “redundancy and diversity of design and the physical separation of parallel components, where appropriate, to reduce the likelihood of the loss of a vital safety function” (IAEA, 1999). In practice, this is achieved by providing three trains each of 100% capacity, or four trains each of 50% capacity with appropriate precautions regarding physical separation and diversity. Further, “initiation and operation of the engineered safety features are highly reliable. This reliability is achieved by: the appropriate use of fail-safe design; by protection against common cause failures; and by independence between safety systems and plant process systems. The design of these systems ensures that failure of a single component would not cause loss of the function served by a safety system (the single failure criterion). Where a system is relied upon to perform both safety and process functions, special consideration is given to ensuring that the safety function is not affected by expected or inadvertent process control demands” (IAEA, 1999). “Safety components and systems are chosen that are qualified for the environmental conditions that would prevail if they were required to function. The effects of ageing on normal and abnormal functioning are considered in design and qualification.” (IAEA, 1999) Guidance provided by the IAEA has been incorporated in domestic regulatory guides by regulators (For example, AERB, 2005) and after Fukushima has further evolved (AERB, 2015; OECD, 2016). “This concept is applied to all safety related activities, whether organisational, behavioural or design related, and whether in full power, low power or various shutdown states. This is to ensure that all safety related activities are subjected to independent levels of provisions in a hierarchical manner, so that if a failure were to occur in a level, it would be detected and compensated for or corrected by appropriate measures by the subsequent level” (AERB, 2015). There are five levels as follows (OECD, 2016). 1 Normal operation: To prevent deviations from normal operation, and to prevent failures of structures, systems and components important to safety. 2 Operational occurrences: To detect and intercept deviations from normal operation, to prevent anticipated operational occurrences from escalating to accident conditions and to return the plant to a state of normal operation. 3 Design basis accidents: To minimise the consequences of accidents and prevent escalation to beyond design basis accidents. 4 Beyond design basis accidents: To ensure that radioactive releases caused by beyond design basis accidents, including severe accidents, are kept as low as practicable. 5 Mitigation of radiological consequences: To mitigate the radiological consequences of potential releases of radioactive materials that may result from accident conditions. Levels 1, 2 and 3 are incorporated to prevent and mitigate anticipated events and design basis accidents. Level 4 addresses beyond design basis accidents which might result from extreme external events, multiple failures, and/or human errors. Essentially any radioactive release in public domain from a nuclear facility will be the result of failure of multiple systems and not an isolated equipment. Further, a variety of design principles are used to promote and implement DiD and these include “redundancy, diversity, segregation, physical separation, train/channel independence, singlepoint failure protection and, as far as practical, independence between levels” (OECD, 2016). 4.3. Design authority Nuclear power plants consist of several systems and equipment and have a long operating life. During the long operating life, changes can arise due to a variety of reasons including physical ageing, obsolescence of hardware and software, improvements made in the plant based on feedback from operating experience, to address regulatory changes, or to upgrade the plant in view of new knowledge. However, integrity of design of a nuclear installation must be maintained throughout its operating life. A report by the International Safety Advisory Group, INSAG-19, provides details (IAEA, 2003) and advocates formalising this process by setting up a design authority within the operating organisation. This recognises the peculiarities of nuclear industry which can be summed up as (i) regulatory authority holding the operator responsible for the design and safe operation, (ii) channelling of liability to the operator, (iii) each nuclear power plant being a unique combination of nuclear island, balance of plant and site dependent features, and (iv) nuclear island designer, steam cycle designer and balance of plant designer coming together only for a specific plant. This results in operating organisation as the only entity having knowledge of the overall design and implication of any change that is made during the lifetime of the plant. The guideline about setting up a design authority has been adopted by AERB as well (AERB, 2015). Specific provision included in the AERB document is as follows, “The prime responsibility for safety rests with the organisation responsible for operating the nuclear power plant that gives rise to radiation risks. The responsible organisation should set up a formal process to maintain the integrity of design of the plant. A formally designated entity i.e. design authority within the responsible organisation shall take responsibility for this process.” It continues, “The formally designated entity (design authority) that has overall responsibility for the design process shall be responsible for approving design changes and for ensuring that the requisite knowledge is maintained throughout the plant life.” The structure of nuclear industry in India is unique. For setting up PHWRs in India, Nuclear Power Corporation of India Limited (NPCIL) is the system designer (or integrator), the constructor as well as the operator. Combination of roles in a single entity is helpful in ensuing that design basis knowledge is available to the operator, which is a factor contributing towards safe operation. The recommendation of INSAG (IAEA, 2003) regarding setting up a design authority within the operating organisation is built into the structure of NPCIL. As NPCIL sets up light water reactors in technical collaboration with vendors in other countries, it must ensure that a competent design authority for light water reactors is established Please cite this article in press as: Grover, R.B., The Civil Liability for Nuclear Damage Act of India: An engineering perspective regarding Supplier's liability, Progress in Nuclear Energy (2017), http://dx.doi.org/10.1016/j.pnucene.2017.04.012 R.B. Grover / Progress in Nuclear Energy xxx (2017) 1e8 within NPCIL and contracts signed with foreign vendors should appropriately address this aspect. Attention should be given by the design authority to understand the design basis of all systems including those that are called upon to function only during serious incidents. This might call for addressing issues related to intellectual property rights during contracts upfront. Considering the success of the model adopted by NPCIL, BHAVINI, the company tasked with setting up fast reactors, is evolving on similar lines. Entities engaged in operating fuel cycle facilities are also following the same approach. 5 rating. Its safety function comes into play following a station blackout when heat is transferred to secondary side by thermosyphon. The important feature determining thermosyphon is the elevation at which the steam generator is placed relative to the reactor core. Adequacy of thermosyphon to remove decay heat, being a safety function, is always investigated in detail (Vijayan et al., 1993). Main responsibility of performance for the safety function of the steam generator lies with the system designer since it is the system designer who determines the elevation of the steam generator relative to the reactor core and the overall flow path. One can extend similar arguments to all safety systems and equipment. 4.4. Duration of license by AERB AERB issues licenses under the Atomic Energy (Radiation Protection) Rules, 2004, which says, “Every licence issued under rule 3 shall, unless otherwise specified, be valid for a period of five years from the date of issue of such licence.” The period of licence has been kept short so as to give the regulator an authority to periodically examine the plant and ask the operator to keep the plant in a safe condition in accordance with the current safety criteria. The provision of having a design authority as a part of the operating organisation is a step towards ensuring that the plant design meets the current safety criteria. Rule 24, sub-Rule (2) provides for duration of Right of Recourse as the longer of two possible time periods: product liability period as included in the contract or the period of initial licence issued by the Atomic Energy Regulatory Board. As per the practice prevailing in the industry, general conditions of contract for supply of equipment specify five years as the period of warranty for latent defects and one year for patent defects. 5. The Supplier: an explanation 5.1. Construction of PHWRs in India In India, PHWRs are being designed, constructed and operated by the NPCIL. Vendors only supply systems and equipment as per detailed design specifications or ‘build to print’ drawings provided to them by NPCIL. Vendors have no control on how the specifications and/or drawings of individual equipment are evolved, the systems are designed, and the systems are integrated in the final plant configuration. One can take the example of a pump in a shutdown cooling system, which is a safety system. The system designer decides the flow rate and the pressure to be developed by the pump. Flow rate is calculated to remove decay heat generated after reactor shut down and the pump vendor has no role in the calculations. The vendor supplies the pump as per specifications provided to him. Any inadequacy in the specified flow rate or the pressure is the responsibility of the system designer. One can argue that shaft seizure can result in the failure of the pump and for that the pump vendor must be held responsible. This argument overlooks the basic design philosophy that no single failure can cause a nuclear accident and in case, system designer has overlooked this vital aspect, then fault is with the plant system designer, and not with the pump vendor. Take another example, say a steam generator which transfers heat from the primary fluid to the secondary fluid. The system designer decides the number of steam generators to be deployed in a reactor, its boundary conditions like inlet and outlet temperature, elevation at which it is to be placed in the plant, its controls and may ask the vendor to design its internals. Manufacturing done by a vendor is subject to quality assurance at the apex level by engineers belonging to NPCIL. Steam generator performs both process function and safety function. Under normal operation, it performs process function and any inadequacy in its design influences plant 5.2. Construction of reactors in technical cooperation with vendors from other countries One additional aspect needs attention. For nuclear power plants to be set up in technical cooperation with other countries, designer of the nuclear island will be someone else, say a company X. The Indian company setting up the plant as an Operator will be influencing design by asking the designer to meet regulatory criteria applicable in India. However, company X will accept or refuse to implement suggested changes based on its analysis. Since it would take decision after due analysis, the responsibility for the overall system design remains with company X. 5.3. Linking the explanation in rule 24 with practices in nuclear industry One can now link this discussion to the explanation given in the Rule 24 about the Supplier. The explanation has three parts: (i) a Supplier could be a person who provides system, equipment and structures against ‘functional specifications’, or (ii) a person who has provided ‘build to print’ drawings or detailed design specifications, or (iii) a person who has provided ‘design or quality assurance services’. It is to be noted that providing flow rate and pressure to be delivered by a shutdown cooling pump doesn't amount to providing functional specifications. Functional specifications for a shutdown cooling pump would involve the operator listing all conditions under which the pump will have to provide cooling water and the heat load to be removed. Similarly specifying functional specification for a gasket for use in a flanged joint would involve the Operator specifying pipe size, fluid, flow rate, temperature, pressure, type of flange and all forces and bending moments coming on a flanged joint. Further, a system designer will hire services of vendors for providing design services, but the final design check has to be done by the system designer himself. Similarly, an operator (or in some cases the system designer) might engage vendors for providing quality assurance services at intermediate stages of equipment manufacture and plant construction, but at the final stage or at the apex level, quality assurance has to be supervised by him directly. The explanation about the word supplier as included in Rule 24 has a clear linkage with practices followed by nuclear industry and leads one to conclude that Supplier is a person who designs and integrates the complete reactor system. Vendors supplying individual equipment and systems, or providing intermediate quality control services, or performing design calculations for individual equipment or systems are not suppliers. This is further explained in the next section with respect to the structure of nuclear industry in India. It is pertinent to add here that the supply chain for a nuclear facility can be divided into several tiers. Different countries/regions follow different nomenclature for various tiers. In the UK (HM Government, 2012), it is classified in 6 tiers with the technology vendor as the first tier, system integrators as the second tier, and Please cite this article in press as: Grover, R.B., The Civil Liability for Nuclear Damage Act of India: An engineering perspective regarding Supplier's liability, Progress in Nuclear Energy (2017), http://dx.doi.org/10.1016/j.pnucene.2017.04.012 6 R.B. Grover / Progress in Nuclear Energy xxx (2017) 1e8 equipment and component manufacturers, fabricators, raw material suppliers etc. comprising the remaining tiers. Analysis of major accidents also brings out the importance of the system designers along with Operators. So far there have been three major accidents in nuclear power plants and all three have been analysed in detail. The first is the accident at Three Mile Island, which was initiated by an equipment failure, but inappropriate operator action turned the failure into a serious accident. This in turn was the result of inadequate training and deficiencies in the design of the control room (Kemeny, 1979). The accident at Chernobyl was caused by a combination of several factors: “specific physical characteristics of the reactor; specific design features of the reactor control elements; and the fact that the reactor was brought to a state not specified by procedures or investigated by an independent safety body. Most importantly, the physical characteristics of the reactor made possible its unstable behaviour” (IAEA, 1992). The most recent accident has been at Fukushima and was the result of a total outage of electricity at the plant. As per the report of the investigation commission appointed by the National Diet of Japan (Diet, 2012), it was a manmade disaster. The Operator was aware of the risk of a total outage of electricity in case of a tsunami larger than that assumed at the initial design stage. He was also aware that such a tsunami could occur, but didn't take any remedial action. 6. Right of recourse With this explanation, one can discuss the Right of Recourse as included in the Indian legislation. Three points need to be considered. First is that there is a difference between events that can lead to a situation which has to be categorised as a nuclear incident as per the Act, and events leading to unavailability of the plant for operation or operation at reduced power. Latent or patent defects in equipment referred to in Section 17 (b) of the Act may hamper plant operation, but about any effect on safety from radiation in public domain, one has to look at it along with the basic principles of nuclear power reactor design, construction and operation. Though patent or latent defects are included in Section 17 (b), safety from radiation in public domain can be jeopardised only if the design of the complete system has not been done following the principles of DiD, and steps to maintain integrity of design throughout operating lifetime of the installation have not been taken. Second is the fact that post-delivery, vendors generally do not play any role in operation and maintenance of the products supplied by them and have no control over any changes made by the Operator in the plant which might influence their products or services. Incidents in any plant can be caused by several reasons including poor maintenance practices, operating under conditions not permitted by design specifications, or human error by the Operator. Vendors are liable only as per product liability they have taken up under the contract. The Act itself includes patent and latent defects under Section 17 b. This argument is in harmony with the basic precept followed by the nuclear industry that the primary responsibility of nuclear safety lies with the Operator. The third issue pertains to differentiating between a Supplier and vendors. As stated in the previous section, Supplier is a person who designs and integrates the complete reactor system and is responsible for the quality assurance at the apex level. Going by the explanation of the Supplier, in the considered opinion of the author, for PHWRs being set up in India as at present where NPCIL is the system designer, NPCIL is the Supplier. It is clearly stated by Ministry of External Affairs (MEA, 2015), which in response to question 10 in the document giving frequently asked questions and answers, says that “… in some cases the operator (NPCIL) itself may be a Supplier as it provides build to print or detailed design specifications to a vendor.” This is also incorporated by the NPCIL in its General Conditions of Contract as given in Annex 2 (NPCIL, 2017). Extending this logic, for the Prototype Fast Breeder Reactor being set up at Kalpakkam, Bharatiya Nabhikiya Vidyut Nigam Limited (BHAVINI) is the Supplier and for reprocessing facilities, Bhabha Atomic Research Centre is the Supplier. One can now extend this logic to a nuclear power plant which is set up by an Operator in India in technical cooperation with a vendor, whether Indian or Foreign, where the vendor designs the complete nuclear power plant. The vendor could be X or Y or Z. Any such vendor will design the complete plant and develop build to print drawings or detailed design specifications for equipment, components and systems. Such a vendor will source equipment and components from individual sub-vendors. In the light of discussion above, the lead vendor that is X or Y or Z will be the Supplier for the Right of Recourse. Sub-vendors will have no liability under the Right of Recourse. To protect his interest, the system designer that is X, Y, or Z can avail of the insurance policy meant for Suppliers. 7. Reference to other laws in section 46 is directed towards the operator Views have been expressed about the applicability of Section 46 to suppliers (Sutaria, 2014; Ram Mohan, 2014; Ameye, 2015). The report of the Standing Committee (Parliament of India, 2010) has two notes of dissent and one is from Mr. Saman Pathak, CPI(M) MP from Rajya Sabha. This note of dissent has three different parts and one part pertains to proposing an amendment to Section 46 as follows. Proposed Amendment: Clause 46: The provisions of this Act shall be in addition to and not in derogation of any other law for the time being in force. Nothing contained herein shall exempt the Operator and/or the Supplier of any material, design or services, from any proceeding which may, apart from this Act, be instituted against such person, either in any Indian or any external court.” The amendment essentially proposes to add the words, “and/or the supplier of any material, design or services.” Similar amendments were moved in Rajya Sabha and were not accepted (Balachandran, 2015). The Section 46 of the Act now reads as follows. “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.” Further, because of debate in the Standing Committee, clause 35 was amended and the words “Save as otherwise …. the Constitution)” were substituted in place of the words “No civil court” at the beginning of the clause 35. The Section 35 of the Act now reads as follows. “Save as otherwise provided in Section 46, no Civil Court (except the Supreme Court and a High Court exercising jurisdiction under articles 226 and 227 of the Constitution) shall have jurisdiction to entertain any suit or proceedings in respect of any matter which the Claims Commissioner or the Commission, as the case may be, is empowered to adjudicate under this Act and no injunction shall be Please cite this article in press as: Grover, R.B., The Civil Liability for Nuclear Damage Act of India: An engineering perspective regarding Supplier's liability, Progress in Nuclear Energy (2017), http://dx.doi.org/10.1016/j.pnucene.2017.04.012 R.B. Grover / Progress in Nuclear Energy xxx (2017) 1e8 granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.” A harmonious reading of the debate in the Standing Committee on clause 46, amendments moved and rejected in the Rajya Sabha and linkage between Section 35 and Section 46 brings one to the conclusion that Section 46 is directed only towards the Operator, and provision of remedy under Articles 226 and 227 of the constitution is available to the victims against the Operator. It is erroneous to assume that Section 46 provides a basis for a right of recourse to the Operator against the Supplier, or victims can or have to (as stated by Heffron et al., 2016) file claims against suppliers under Section 46. Right of Recourse against the Supplier under Article 17 is available only for compensation that has been paid by the Operator under Section 6 of the Act within caps provided therein. The language as included in Section 46 is similar to what is included in other Indian legislations such as Electricity Act, 2003 (Section 175), Securities and Exchange Board of India Act (1992) (Section 32), Insurance Regulatory and Development Authority Act, 1999 (Section 28) Act, and implies continued applicability of other laws in their respective domains. 8. Steps taken after the notification of the Act Section 3(1) of Act provides for AERB to notify the occurrence of an incident and the AERB has already issued a safety directive titled “Criteria and Assessment Procedure for Notification of Nuclear Incident under the Civil Liability for Nuclear Damage Act, 2010” on December 9, 2013 (AERB, 2013). This directive gives the composition of an ‘Event Review Committee’ and criteria in detail to determine whether an event qualifies as incident under the Act. Section 7 (2) of the Act gives an option to the Central Government to set up a Nuclear Liability Fund by charging a levy from the Operator and this option has been exercised by the Government of India (DAE, 2015) . At the current rate of electricity generation by NPCIL and the minimum rate of prescribed levy, it will amount to the Government collecting about 2000 million every year. Section 8 (1) of the Act gives two options to the Operator; one of them is taking an insurance thereby subrogating ‘Right of Recourse’ to the insurer. Indian Nuclear Insurance Pool (INIP) was launched on June 12, 2015 to provide policies as follows to Operators and Suppliers (Business Standard, 2015).  Nuclear Operators Liability (CLND Act, 2010) Insurance Policy, and  Nuclear Suppliers' Special Contingency (against Right of Recourse) Insurance Policy. There is only one nuclear insurance pool in India and will be providing insurance to both the operator and the supplier. NPCIL has since received the insurance policy covering all nuclear power plants operated by it and the total premium is around 1000 million for a risk cover of 15,000 million (Economic Times, 2016b). 9. Concluding remarks India has ratified CSC and is in talks with the US companies for setting up of reactors. As per the US Government sources, key concerns of US companies about India's liability legislation have been addressed. (Biswal, 2016). While Westinghouse is having a dialogue with NPCIL for setting up reactors (Indian Express, 2016), GE is still not satisfied and is seeking clarity (Economics Times, 2016c). The position taken by the US companies has been 7 criticised by some legal experts as the US law also has differences with the global practice (Ameye, 2015). The US law provides for economic channelling and not legal channelling to the operator and Ameye calls US-India discord as “oxymoronic”. INIP has issued insurance policy to an operator that is NPCIL. Suppliers policy has also been launched and is available for subscription. Rules formulated under the Act were tabled in the Parliament. As per the procedure in India, rules must be tabled for a period of thirty sitting days, and MPs may move a motion to amend or annul the rules till the last date of the subsequent session. No such motion was moved in case of CLND Rules. The Committee on Subordinate Legislation (CSL) did raise queries and response to all queries has been provided by the Government. In the subsequent Action Taken Report, with regard to explanation about the ‘Supplier’, the CSL has noted that “whether the term ‘supplier’ is to be defined in the Act itself is a matter of drafting and policy on which DAE may take appropriate decision in consultation with the Legislative Department” (Lok Sabha Secretariat, 2014). A harmonious analysis of debates and various documents indicates that the Section 46 of the Act is directed only towards the Operator and the remedy under articles 226 and 227 of the constitution available to the victims is also against the operator. Rule 24 provides explanation about a supplier and when one looks at the explanation along with practices in the nuclear industry, one concludes that it is the plant system designer, who is the Supplier. The ‘explanation’ has been formulated based on an analysis of engineering practices followed by the nuclear industry. Any examination of the Indian law without studying the ‘explanation’ will lead to erroneous conclusions. To protect his interest against the Right of Recourse, the system designer can avail of the insurance policy that is meant for the suppliers. Sub-vendors have no liability under the Right of Recourse. Annex 1 Rule 24: Right of Recourse (1) A contract referred to in clause (a) of section 17 of the Act shall include a provision for right of recourse for not less than the extent of the operator's liability under sub-section (2) of section 6 of the Act or the value of the contract itself, whichever is less. (2) The provision for right of recourse referred to in sub-rule (1) shall be for the duration of initial license issued under the Atomic Energy (Radiation protection) Rules, 2004 or the product liability period, whichever is longer. Explanation 1: For the purposes of this Rule, the expressions: (a) “product liability period” means the period for which the supplier has undertaken liability for patent or latent defects or sub-standard services under a contract; (b) “Supplier” shall include a person who e (i) manufactures and supplies, either directly or through an agent, a system, equipment or component or builds a structure on the basis of functional specification, or (ii) provides build to print or detailed design specifications to a vendor for manufacturing a system, equipment or component or building a structure and is responsible to the operator for design and quality assurance; or (iii) provides quality assurance or design services. Explanation 2: For the removal of doubts it is clarified that an operator's claim under the rule shall in no case exceed the Please cite this article in press as: Grover, R.B., The Civil Liability for Nuclear Damage Act of India: An engineering perspective regarding Supplier's liability, Progress in Nuclear Energy (2017), http://dx.doi.org/10.1016/j.pnucene.2017.04.012 8 R.B. Grover / Progress in Nuclear Energy xxx (2017) 1e8 actual amount of compensation paid by him up of the date of filing such claim. Annex 2 Extracts from the General Conditions of Contract The term “supplier” and the duration and extent of supplier's liability are explained in Rule 24 of the Civil Liability for Nuclear Damage (CLND) Rules, 2011. For any questions relating to supplier's liability under section 17 of the Civil Liability for Nuclear Damage (CLND) Act, 2010, Government of India's clarifications dated February 08, 2015 may be referred to. These have been posted at the websites of the Ministry of External Affairs and the Department of Atomic Energy under the title “Frequently Asked Questions and Answers on Civil Liability for Nuclear Damage Act, 2010 and Related Issues.” In regard to contracts with manufacturers of or vendors for supply of systems, equipment, components, or building of structures, or provision of services to nuclear installations which are operating or are under construction or those to be installed in future for which NPCIL is the system designer and technology owner, being responsible for safety design of such installations, NPCIL shall assume the role of supplier in accordance with the explanation of the term “supplier” given in Rule 24 of the CLND Rules, 2011 and in the context of section 17(a) and (b) of the CLND Act, 2010. Other suppliers can avail of the Nuclear Suppliers' Special Contingency (Against Right of Recourse) Insurance Policy provided by the India Nuclear Insurance Pool to cover any liability exposure under section 17(a) and (b) of the CLND Act, 2010. NPCIL maintains the operator's statutory insurance under the CLND Act, 2010 by subscribing to the Nuclear Operator's Liability Policy offered by the India Nuclear Insurance Pool, thereby subrogating to the India Nuclear Insurance Pool the operator's “right of recourse” against suppliers under section 17 (a) & (b) of the CLND Act, 2010. References AERB, 2005. Safety Systems for Pressurised Heavy Water Reactors. Guide No. AERB/ NPP-PHWR/SG/D-10. AERB, 2013. Criteria and Assessment Procedure for Notification of Nuclear Incident under the Civil Liability for Nuclear Damage Act, 2010. Accessed at. http://www. aerb.gov.in/AERBPortal/get/ZGlyZWN0aXZlMjAxM2UucGRm. on 7 June 2015. AERB, 2015. Design of Light Water Based Nuclear Power Plants (AERB Code No. AERB/NPP-LWR/SC/D). Ameye, E., 2009. Channelling of nuclear third party liability towards the operator: is it sustainable in a developing nuclear world or is there a need for liability of nuclear architects and engineers? Proceedings of Nuclear. Inter Jura, October 5e9. 339e379 (Toronto). Ameye, E.M., 2015. United States and India: two nuclear states with legislation that truly holds responsible parties liable in case of a nuclear accident. J. Risk Res. 18 (8), 1070e1082. Balachandran, G., 2015. Some issues in respect of Indian's nuclear liability law e I. IDSA Issue Brief. February 10, 2015, Accessed on 8th June 2015 at. http://www. idsa.in/issuebrief/issuesinIndiansnuclearliabilitylaw_gbalachandran_100215. 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Please cite this article in press as: Grover, R.B., The Civil Liability for Nuclear Damage Act of India: An engineering perspective regarding Supplier's liability, Progress in Nuclear Energy (2017), http://dx.doi.org/10.1016/j.pnucene.2017.04.012