Capping nuclear liability is a non-starter

The government proposes to introduce a Civil Nuclear Liability Bill to appease foreign investors. Any legislation that attempts to dilute the Polluter Pays and Precautionary Principle and imposes a cap on liability will be in blatant defiance of Supreme Court judgments and is likely to be struck down.

One of the vital guarantees in our Constitution is the protection of the Right to Life enshrined in Article 21. Our Supreme Court by creative interpretation ruled that the expression ‘life’ does not connote merely physical existence but embraces the right to live with “human dignity and all that goes along with it, namely, the bare necessaries of life such as adequate nutrition, clothing and shelter over the head.” Thereafter it further expanded the concept of the right to live with human dignity to encompass within its ambit, the protection and preservation of environment, ecological balance free from pollution of air and water.

Our Constitution evinces great concern for environment. Article 48-A of the Directive Principle mandates that the state shall endeavour to protect and improve the environment. One of the fundamental duties prescribed in Article 51-A is, inter alia, to protect and improve the natural environment.

Despite these constitutional provisions, pollution continues unabated. The river Ganges was brazenly polluted by the discharge of effluents by some tanneries in Kanpur who, despite notices issued by the Supreme Court to take steps for the primary treatment of industrial effluent, had utterly failed to do so. Hence the court was constrained to issue directions for the closure of the tanneries. The court was conscious that closure of tanneries may bring unemployment and loss of revenue, but it significantly ruled that “life, health and ecology have greater importance to the people.”

In its landmark judgment in the Oleum Gas Leak case, the Supreme Court laid down certain important principles. A five-judge bench unanimously ruled that “an enterprise which is engaged in a hazardous or inherently dangerous industry which poses a potential threat to the health and safety of the persons working in the factory and residing in the surrounding areas owes an absolute and non-delegable duty to the community to ensure that no harm results to anyone on account of hazardous or inherently dangerous nature of the activity which it has undertaken.” The court further held that “it should be no answer to the enterprise to say that it had taken all reasonable care and that the harm occurred without any negligence on its part.”

At first blush, this may appear unduly harsh. However the rationale for this rule as explained by the court is that “such hazardous or inherently dangerous activity for private profit can be tolerated only on condition that the enterprise engaged in such activity indemnifies all those who suffer on account of the carrying on of such activity regardless of whether it is carried on carefully or not.” Therefore in a case of escape of toxic gas, “the enterprise is strictly and absolutely liable to compensate all those who are affected by the accident and such liability is not subject to any of the exceptions.”

In 1996 in the case of Indian Council for Enviro-Legal Action Justice Jeevan Reddy speaking for the court pointed out that the rule of absolute liability is premised on the very nature of the activity carried on and “it is the enterprise carrying on the hazardous or inherently dangerous activity alone has the resource to discover and guard against hazards or dangers.” The court further introduced the Polluter Pays Principle, which according to it requires that the financial costs of preventing or remedying damage caused by pollution should lie with the undertakings that cause the pollution. Under this principle, it is not the role of government to meet the costs involved in either prevention of such damage, or in carrying out remedial action, because the effect of this would be to shift the financial burden of the pollution incident to the taxpayer. The responsibility for repairing the damage is that of the offending industry. It is noteworthy that the Polluter Pays Principle has been incorporated into the European Community Treaty as part of the new articles on environment that were introduced by the Single European Act of 1986.

In its subsequent judgment in Vellore Citizens Forum, Justice Kuldip Singh speaking for the court held that “the Precautionary Principle and the Polluter Pays Principle are essential features of Sustainable Development.” This is a milestone judgment in our environmental jurisprudence. The court reaffirmed the Polluter Pays Principle laid down in its previous judgments to mean that “the absolute liability for harm to the environment extends not only to compensate the victims of pollution but also the cost of restoring the environmental degradation. Remediation of the damaged environment is part of the process of Sustainable Development and as such the polluter is liable to pay the cost to the individual sufferers as well as the cost of reversing the damaged ecology.” The seminal significance of this judgment lies in the court’s holding that the Precautionary Principle and the Polluter Pays Principle are part of the environmental law of the country and the court’s pointed reference to Articles 21, 47, 48-A, and 51-A (g) of the Constitution in this connection.

The thrust of these Supreme Court judgments is for compensating and protecting the victims of accidents as part of their fundamental right to life under Article 21 of the Constitution. Under our Constitution, Supreme Court judgments constitute the law of the land and are binding on all courts, authorities and persons.

It is claimed that foreign companies are reluctant to invest in India as they do not want to run the risk of having to compensate without a cap for a nuclear accident on account of imposition of absolute liability. It is understood that the government to appease the foreign investors proposes to introduce a Civil Nuclear Liability Bill whereby inter alia the compensation payable in case of a nuclear accident is capped at $450 million.

In effect, this means that in case the actual damage and the cost of remedying environmental degradation exceeds the proposed ridiculously low cap of $450 million or any other sum, the government would have to bear the remaining burden. This would be directly contrary to the Supreme Court’s ruling that it is not the role of the government to meet the costs involved. The effect of a cap in reality would be to shift the financial burden of the consequences of the accident to the taxpayer. According to the Polluter Pays Principle that has been embedded in our jurisprudence, the liability and responsibility for compensating the victims of accident and remedying the environmental damage caused is that of the offending industry alone. No part of the liability can be limited nor passed on to the government.

There can be two views about the advantages or disadvantages of foreign investment in India in the nuclear energy sector. But there can be only one view: health well-being and protection of our people are paramount and must override dollar considerations. Foreign multinationals are not solicitors of the fundamental rights of our people. The Bhopal Gas case is a burning reminder.

Any legislation that attempts to dilute the Polluter Pays and Precautionary Principle and imposes a cap on liability is likely to be struck down as it would be in blatant defiance of the Supreme Court judgments. Moreover, it would be against the interests and the cherished fundamental right to life of the people of India whose protection should be the primary concern of any civilised democratic government.

Soli J. Sorabjee

(The author is a former Attorney General for India.)