U.S. wants IAEA to vet Indian liability law

Adding a new element to the ongoing Indo-U.S. nuclear saga, Secretary of State Hillary Clinton on Tuesday “encouraged” New Delhi to “engage” with the International Atomic Energy Agency to ensure that the Indian nuclear liability law “fully conforms” with the international Convention on Supplementary Compensation (CSC) for Nuclear Damage.

Indian officials told The Hindu that any suggestion that Indian law would have to be adjusted on the basis of the IAEA's opinions was not acceptable. The Agency was only the depository of the CSC — essentially a clearing house for countries filing their ratification of the treaty — and can have no role in vetting a sovereign law.

New Delhi considers the liability law to be in conformity with the CSC and is committed to ratifying the Convention before the year is out.

The U.S., on the other hand, thinks Section 17(b) of the Indian law, which expands the scope of the operator's right to compensation from nuclear suppliers in case of an accident due to faulty equipment, violates the CSC. U.S. companies have also opposed Section 46 of the Indian law, which implicitly allows accident victims to file tort claims.

Indian officials maintain the CSC cannot proscribe the operation of ordinary tort law in India and that the only forum which can pronounce the Indian law incompatible with the CSC is the Indian Supreme Court and not the IAEA.

Despite this tough public message, Ms. Clinton acknowledged the fact that the Fukushima nuclear disaster in Japan had reduced India's room for manoeuvre on the liability front, senior Indian officials who were familiar with the delegation-level talks told The Hindu.

However, with U.S. firms wary of entering India because of the tough liability law, Ms. Clinton said she expected the nuclear deal to be “enforceable and actionable in all regards.”

Speaking to newspersons at the end of the second strategic dialogue, External Affairs Minister S.M. Krishna and Ms. Clinton also expressed divergent views on the manner in which India should join the four export control regimes — the Nuclear Suppliers Group (NSG), the Missile Technology Control Regime (MTCR), the Australia Group and the Wassenaar Arrangement.

Mr. Krishna twice made the point of India gaining membership to these bodies in “tandem,” while Ms. Clinton felt the process should be “phased.” Curiously, the Joint Statement, which usually reflects a consensus on phraseology, uses the word “phased.”

This wordplay is significant as India's priority is membership of the NSG and the MTCR, while the U.S. would prefer India acceding first to the Australia Group and the Wassenaar Arrangement.

Asked about the tightening of NSG guidelines, Ms. Clinton stuck to an earlier State Department formulation that these did not “detract” from the clean waiver India had secured from the cartel in 2008.