Page 37 - The Insurance Times September 2022

full force and effect for the entire term of NSIP for a supplier to be able to make are unclear over how much insurance
a claim under the NSIP. Further, NSIP is issued as only a right of recourse policy, cover does supplier have to take. There
offering to hold the supplier harmless should the operator exercise its rights is still a lot of ambiguity in this. The legal
against the supplier under Section 17(a) and/or Section 17(b) of the CLND Act. framework for foreign direct
And, thus, NSIP would not indemnify a supplier against any liability under Other investment ("FDI") in India does not
Laws or any other laws of any other country (or under Section 17(c) of the CLND permit foreign investment in atomic
Act). energy.

Nuclear Power Plants in India 2021- Under Construction How much cover is good

Power Plant Location Operator Type Total Capacity enough?
(MW) One of the key themes for global
Madras Tamil Nadu BHAVINI PFBR 500 nuclear industry captains and Indian
(Kalpakkam) insurance companies is- How much
cover is good enough for nuclear
Kakrapar Unit 4 Gujarat NPCIL IPHWR-700 700
business. Does a Rs 15-billion insurance
Gorakhpur Haryana NPCIL IPHWR-700 1,400
cover serve the expanding nuclear
Rajasthan Rajasthan NPCIL IPHWR-700 1,400
business in India? Even though the
Unit 7 & 8
target of 63 GWe of nuclear power by
Kudankulam Tamil Nadu NPCIL VVER-1000 2,000 2032 set by its National Energy Policy
Unit 3 & 4 looks far too ambitious to achieve, the
scaled-down 22 GWe would also need
Total 6,000
more insurance cover. It also makes
private companies reluctant to invest
Liability under Indian & other laws
in the Indian nuclear projects, giving
In 2010, the Civil Liability for Nuclear Damage Act, 2010 (CLND Act, 2010) was
state-run ventures like those from
enacted. The Civil Liability for Nuclear Damage Rules, 2011 (CLND Rules, 2011)
Russia and France an advantage over
were notified in 2011 and were made part of subordinate legislation under the
them.
CLND Act. Assignment of liability under the Nuclear Liability Act has been a hotly
debated issue in relation to the US-India agreement and the promotion of nuclear
The Indian reinsurance company, GIC-
commerce in India few years ago. Section 17(b) and section 46 of the Nuclear
Re, with the four state-run insurance
Liability Act have been the primary bones of contention. Section 6 of the act
companies, is in a difficult position to
limits the liability of an operator of a nuclear power plant and section 17 of the
try to convince the foreign companies
act provides the operator a right of recourse to suppliers after paying
that the sum is adequate for now. The
compensation under section 6. Sections 17(a) and 17(c) are comparable to article
Indian government had set up the Rs
X of the Vienna Convention and article 10 of Annex to the Convention on
15-billion India Nuclear Insurance Pool
Supplementary Compensation for Nuclear Damage. Section 17(b), which is unique
on June 12, 2015, to provide cover
to the Nuclear Liability Act, makes available a right of recourse if the nuclear
corporate liability against any accident
incident was a result of an act of a supplier (or its employee) or supply of defective
at nuclear plants. The cover comes
equipment or sub-standard services if the contract does not provide so.
under India's Civil Liability for Nuclear
Damage Act of 2010 (CLND Act). The
Another cause for concern arises from section 46, which states that the provisions pool was created as India stepped out
of the Nuclear Liability Act are in addition to, and not in derogation of, any other
to solicit more investment in its power
applicable law. Therefore, the Nuclear Liability Act does not exempt the operator
sector by nuclear power developers.
from any proceeding under a law such as the law of tort. This means that an
operator could be made liable under tort law for claims in excess of the limits The sum agreed to essentially caps the
specified in the act. CLND Act has complicated efforts to spur the country's use liability of the insurers, even as project
of atomic power as international equipment makers fear it would leave them developer companies are told that
liable for any accidents. Since its enactment in 2010, the country has taken steps their liability is unlimited. The Indian
to convince foreign suppliers that its law adheres to international standard. In government claims, not incorrectly,
2014, the US too had raised similar concerns about Clause 46 in particular. Things that the risks are quite unlikely, so

The Insurance Times, September 2022 37