India, US seeking common ground on civil nuclear issue

The issue which has been a matter of contention due to India's nuclear liability law is expected to dominate the discussions that Burns will have with Foreign Secretary Ranjan Mathai and with other officials.

Sources pointed out that despite strong reservations on this issue, after the Indian Government issued the Gazette notification last month, the Obama Administration has decided to not to come out with its view.

India and the US appear to have agreed to avoid finger-pointing in public on the contentious nuclear liability issue and are internally working to find out a common ground.

The consequence of the new approach is that the US government has officially held off any public comment on the Implementation Rules, preferring to work with India through quiet diplomacy.

In fact, there is no consensus both inside the US Government and the American corporate sector on how to respond to this nuclear issue, said a nuclear expert who is intimately knowledgeable about the situation and regularly interacts with government officials in the US and India, involved in negotiating on this subject, as well as with US nuclear industry and legal community.

"The US and India are trying to find a common ground to keep the hopes of civil nuclear commerce between the two countries alive," said the expert who requested anonymity given the sensitive nature of the ongoing negotiations.

It is learnt that the American corporate sector recently submitted to the State Department its viewpoint on India's Gazette notification.

India's nuclear liability law did figure when Prime Minister Manmohan Singh had met President Barack Obama on the sidelines of the ASEAN and East Asia Summits in Bali last month, where he "explained to him (Obama) that we have a law in place. Rules have been formulated..."

"Therefore, we have gone some way to respond to the concerns of American companies and within the four corners of the law of the land we are willing to address any specific grievances," Singh had said after meeting Obama.

Officials of the Obama Administration and the industry representations have had several meetings in recent past on this issue, informed sources said.

"There are two schools of opinions which cut across government officials, lawyers, policy makers, etc. – the purist and the pragmatist," the expert said, adding that the "purists" will accept nothing short of India changing the NLL and the Implementation Rules to be consistent with the five principles of the Compensation for Nuclear Damage (CSC).

These five principles are (1) channeling all legal liability for nuclear damage exclusively to the operator; (2) imposing liability on the operator without the need to demonstrate fault, negligence or intent; (3) granting exclusive jurisdiction to the courts of the country where a nuclear incident occurs; (4) permitting liability to be limited in amount and in time; and (5) compensating damage without any discrimination based upon nationality, domicile or residence.

Notably, CSC is not presently in force.

On the other hand, the "pragmatists" recognise that the Indian government does not have the political ability to change the NLL and thus the effort should be to build on the existing NLL with various legal and technical defences to achieve a practical (if not the perfect) solution.

"Some in this camp also believe CSC and NLL should be addressed separately - meaning that CSC is a matter that needs to be handled at the official level (since it is based on a government-to-government understanding), whereas the NLL must be addressed by nuclear suppliers just as it is in countries engaged in nuclear commerce with the US that are not members of any international nuclear regime today," the expert said.

The "pragmatists" seem to be gaining the ground lately because the earlier approach based on the "purists" point of view only poisoned the relationship between the two countries and in fact eroded much of the goodwill generated after the US and India signed the "path breaking" 123 Agreement, the expert noted.

Both nations have agreed to enter into a dialogue about how the arrangements (implementation of the NLL) can be structured to ensure participation by US nuclear industry in the Indian civil nuclear expansion.

Meanwhile, the US still expects India to ratify the CSC as promised by India in an official note that it will its nuclear law will be compliant with the Convention on Supplementary Compensation for Nuclear Damage (CSC).

The US expectation is that the ratification process may also impact the Implementation Rules, and perhaps the NLL, in a favourable way, the expert said.