Monday, August 16, 2010

Guest Post: The Pre-Legislative Briefing Service (PLBS) – 'Building India one Bill at a time'

We are very pleased to publish the following guest post from Arghya Sengupta, member of the Pre-Legislative Briefing Service.

Prashant, Sanhita, Shivprasad and I started The Pre-Legislative Briefing Service (PLBS) with a view to proactively engage with the law-making process, by ensuring that parliamentary legislation is constitutionally sound, and in harmony with judicial precedent, international best practices and prevailing statutes. We felt that legislative drafting in India would be benefited by intensively researched academic analyses, which could draw attention both to relevant international precedents and practice in this regard as well as municipal laws and practices which needed to be accounted for before legislation was passed. Such analyses, we hoped, would mitigate the possibility of complex international legal imbroglios from emerging subsequently, as well as lengthy domestic litigation which would be both cumbersome and wasteful. “A stitch in time” is what we intended to provide to appropriate legislations.

I am happy to report that our first “stitch” on the Civil Liability for Nuclear Damage Bill, 2010, to which Shamnad drew the attention of the readers of this blog earlier, was extremely well received by the Parliamentary Standing Committee on Science and Technology, Environment and Forests and PLBS was invited to depose before the Committee on 2 August 2010.

Legislative Design in India

We at PLBS, envision our services will have fundamental implications on legislative design in India, and will encourage and assist drafting agencies and Ministries to bring clarity to statutes that affect the entire country. As things stand today, multiple drafting errors and inconsistencies lead to years of delay in implementation of an enactment, since the judiciary has to resolve legal and constitutional challenges before anything else. For instance, the ‘Separation of Powers’ issue that delayed the National Company Law Tribunal and the Competition Commission of India has resurfaced in the Civil Liability for Nuclear Damages Bill, and threatens to derail execution and implementation here too. Interventions at an appropriate stage, as envisaged by PLBS, will not only ensure a clean statute, but will also allow the judiciary to focus on its true role of interpretation of statute, rather than spending years in disentangling ‘bad’ law.

PLBS’s first report on the Civil Liability for Nuclear Damage Bill, 2010

On submitting our very first report, titled 'A Briefing Document on the Civil Liability for Nuclear Damage Bill, 2010: Questions of Constitutionality and Legislative Options Open to Parliament' to the Secretariat of the Department Related Parliamentary Standing Committee on Science and Technology, Environment & Forests, PLBS was invited by the Committee for a deposition. Three of us appeared before the Parliamentary Standing committee on 2 August 2010.

In our report and subsequent deposition, we cautioned that the Bill still has several constitutional and legislative challenges to overcome, before it is worthy of enactment. Most importantly, if the legislation itself were to be challenged before the Supreme Court, it may disastrously affect and delay access to the rights that the law seeks to provide. Such delay would also affect the nuclear power sector and perhaps even dash hopes of cheap, affordable nuclear power.

The PLBS report on the Nuclear Liability Bill inter alia addressed three key factors, discussed in detail below:

1. Institutional independence of bodies executing pivotal functions under the Bill
2. Consistency of clauses with basic principles of legal drafting
3. Constitutionality and international compliance of provisions on compensation and recourse

1. Institutional Independence

Clause 3 of the Bill vests the entire power to notify a ‘nuclear incident’ in the Atomic Energy Regulation Board (AERB), a body under the complete control of the Department of Atomic Energy (DAE). The DAE also runs all the nuclear power plants in the country. Therefore, the report highlighted the concern that the Government, in order to escape liability, may not be inclined to notify smaller nuclear incidents.

Similar concerns were raised about the independence of the Claims Commissioner and the Nuclear Damages Claims Commission (NDCC) set up under the Bill. Both bodies are to award compensation against nuclear plants owned by the Central Government. Both are also controlled by the Central Government. PLBS contextualised this in view of Supreme Court rulings which say that under the constitutional doctrine of ‘Separation of Powers’, any tribunal taking over the functions of a Court has to be vested with adequate judicial independence. Such independence is essential if only to preclude any interference from the Executive, especially when the Executive is party to the dispute before the Judiciary.

2. Legal drafting Concerns

The definitions of ‘nuclear damage’, and 'nuclear incident' in Clause 2 of the Bill were circular and prone to confusion. A harmoniously drafted definition was recommended which avoided circularity and ensured clarity in interpretation. Clause 5, relating to exemptions for operators was found to be inconsistent with international treaties and Supreme Court jurisprudence, since it excluded the operator’s liability in accidents due to natural disasters of exceptional nature. Apart from international treaties which do not contain this exemption, the Supreme Court has clearly stated in multiple precedents that operators of hazardous incidents have to incur ‘absolute liability’ without any exceptions whatsoever. Thus it was recommended that this clause be deleted.

Clause 46 of the Bill, inter alia suggests that liability caps on operators do not prohibit State Pollution Control Boards from claiming unlimited damages from the plant operators under special purpose environmental legislations such as the Air Act, Water Act and the Environmental Protection Act. If this is true, then the entire aim of this legislation is vitiated since operators would have to pay expensive additional insurance premiums, in turn hiking the cost of electricity generated by these nuclear plants. The interface between the Bill and other legislations on the one hand, and general tort law on the other, was a key issue flagged by the PLBS submission. Keeping in mind the special nature of the legislation, it was recommended that the legislation override other legislations and general principles in the specific instance of a nuclear accident and claims for compensation be brought entirely under its legislative umbrella.

3. Constitutionality and international compliance of provisions on compensation and recourse

PLBS found that liability caps, as mentioned in Clause 6 of the Bill, the subject of much media and popular debate (see here and here), were neither unprecedented nor unconstitutional. However, while such caps may apply with regard to the operator of a nuclear establishment, it does not translate into a cap on the entire liability for the incident. In other words, even though one party need not pay, another party like the government would need to pay for the damage caused. This feeds off the Supreme Court's interpretation of Article 21 of the Constitution, according to which a victim deserves full compensation for damage suffered due to industrial pollution. Thus the underlying principle which needs to be adhered to is that victims must not remain uncompensated.

In this regard, provisions for recourse, in Clause 17 of the Bill are equally relevant. To ensure ease of access of compensation for victims, this Bill, as well as comparative legislations in other countries, channel liability, irrespective of fault on to the operator. Thus the victim can proceed against the operator of a nuclear plant in case of nuclear damage, irrespective of who or what caused it. In certain situations however, the damage may be caused by the negligence of the supplier of the nuclear fuel, materials or equipment. The key issue in such cases is whether the operator should continue to be exclusively liable or whether he should have recourse to the supplier who should bear liability. Though public policy would demand that those at fault be made liable, equally, foisting liability on the supplier in case of fault would lead to pyramiding insurance costs since both operators and suppliers would have to take out insurance for the loss thereby raising the cost of nuclear energy. Highlighting these factors forms a key part of the Report which recommended suitably nuanced positions which are both theoretically sound and practically efficacious.

More generally, with regard to the inter-relation between the Bill and international law, PLBS also expressed concerns about the extent to which the Bill was compliant with the Annex to the Convention on Supplementary Compensation for Nuclear Damage. The Statement of Objects and Reasons of the Bill in paragraph 7 states as follows: “It is, therefore, considered necessary to enact a legislation which provides for nuclear liability that might arise due to a nuclear incident and also on the necessity of joining an appropriate international liability regime”. As part of Article II of the CSC, the Convention may be signed by any nation whose national laws either implement the Paris Convention or Vienna Convention, or comply with the provisions of the Annex to the CSC. As India is not signatory to either of the mentioned conventions, it is key that the present Bill comply with the Annex if India seeks to sign the CSC in the future. PLBS noted that the Bill departs from the Annex in three key ways. First, the liability caps mentioned in clause 6 of the Bill are in parts much lower than the liability caps prescribed in Article 4 of the Annex. Secondly, the right of recourse as contained in the Bill is much wider than the right of recourse contained in Article 10 of the Annex thus making the scope for supplier liability wider. And finally, while Article 3 (3) of the
Annex clearly states that the operator shall be absolutely liable for any nuclear damage, the Bill contains no corresponding provision.

The response to the initial reports has been extremely encouraging for us at PLBS. Legislative interventions, such as the ones PLBS seeks, have for long been seen as outside the domain of mainstream lawyering in India. We started out with a desire to change this perception and use our legal education, skills and analytical ability to further the collective good, in the manner we best could. If our first experience is anything to go by, exciting law-making times lie ahead!
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