Eager to establish its credibility as an American ally, the Indian government largely copied an annex of the convention into a draft law. However, it could not negate the historical context: an estimated 15,000 people have died in Bhopal as a result of poisoning by methyl isocyanate, a chemical that escaped from a plant run by a subsidiary of the American company Union Carbide in 1984. The accident clearly resulted from corporate negligence, and there is considerable anger in India that top executives — including the C.E.O. of Union Carbide at the time of the Bhopal disaster, Warren Anderson, who lives openly in the United States despite having been declared an “absconder” by Indian courts —have never been brought to book.
The effect of the Indian government’s proposal for the nuclear liability law was to override the “absolute liability” principle laid down by the Indian Supreme Court after the Bhopal disaster. Under this principle, both the operator and supplier would have been jointly liable, with no cap on their liability. Instead, the government wanted to indemnify the supplier and transfer responsibility for an accident onto the public-sector Nuclear Power Corporation. This would have led to a situation where Indian victims and taxpayers were entirely liable for an accident, with no way of holding the supplier to account.
The final Indian law does cap the Nuclear Power Corporation’s liability at about $250 million. However, even though the government went to farcical lengths to prevent this, the law also contains a small clause that allows the public-sector company a “right of recourse,” which it can use to reclaim some of this money from the supplier if the accident was caused by a design defect.
Taken at face value, this clause does not seem significant and it is not clear why Westinghouse and G.E. are unwilling to sell reactors to India. After all, the maximum exposure is only $250 million — a tiny fraction of the multibillion price tags for each reactor. However, suppliers are probably worried about the consequences of opening the door to supplier liability by even an inch.
For instance, a future government may simply ignore the liability cap and demand that the supplier pay up a much larger figure in the event of an accident. This is precisely what the Obama administration did to BP, forcing it to pay compensation well in excess of the liability cap of $75 million for the Deepwater Horizon disaster.
Furthermore, the Indian law sets a precedent. Other countries may decide to follow suit, and this could undermine an international liability system that has been carefully crafted by Western governments to protect their companies.
the human factor wasn't as different as some people think.
