ABSTRACT: Balancing the protection of the liable operator (economic interest) and the protection of victims (public interest) was a herculean task that the drafters of liability conventions had to put up with. Initially, it started in favour of the nuclear industry, i.e. preferring economic interest to public interest. Later on, it started shifting towards and in favour of public interest over economic interest. This shift-movement was common amongst the various liability regimes. But worrisomely, these liability regimes do not have a common mechanism which link them all together. As economic interests are being dropped in favour of public interest, it is expected that one international harmonized liability regime would be best alternative to the present ailing liability regime systems - with a lot of complications and complexities as would be seen in the body of this work.
1. INTRODUCTION AND THE RELEVANT TREATIES
The concept of special nuclear liability regime owes its origin to the Brookhaven Report of 1957. The report actually, for the first time in history, did assess the risks associated with civilian nuclear power and made a possibility-prediction on the probable consequences of any nuclear incident. This report was the starting point of what is today regarded as nuclear liability law; a special regime. Subsequently, Paris Convention on Third Party Liability in the Field of Nuclear Energy of 29 July 1960 (Paris Convention) supplemented by Brussels Supplementary Convention of 1963, revised by an Additional Protocol of 1964 and a Protocol of 1982 under the auspices of OECD, and Vienna Convention on Civil Liability for Nuclear Damage of 21 May 1963 (Vienna Convention) under IAEA, were drafted, though, with some inherent inadequacies which came to light after Chernobyl incident.
The Chernobyl accident was an eye-opener to the need for a viable and more effective international nuclear liability and compensation regime. Efforts have been made nationally, regionally and internationally as evident in the amendments and creation of newer nuclear liability regimes. Notwithstanding the above mentioned efforts, there are still big lacunae in the nuclear liability regime.
In this work, the author would not discuss the concept of liability in detail, insurance, contractual claims of the operator and jurisdiction. Rather, the author will focus on comparing different nuclear liability regimes on issues of coverage, limitation in time and amount, liability of the operator and relevance of national law; identifying their differences, their advantages and disadvantages to nuclear states, non nuclear states and transit states. To make the work easy to understand and concise, the author will use tabular diagrams where necessary to highlight the similarities and differences amongst the relevant Liability regimes.
Firstly, the author in chapter 2 will discuss and compare the Paris Convention 1960 (Brussels Supplementary 1963) and the Vienna Convention 1963, focusing geographical coverage, persons and things covered, financial and time limits, role of national laws, responsibility and liability of the operator, problem areas and effect of Joint Protocol.
In chapter 3, just like in chapter 2, the author will use similar comparison structure for the new Paris Convention and Vienna Convention, stating the improvements made and highlighting the problematic areas.
Chapter 4 would precisely concentrate on the interesting Convention on Supplementary Compensation on nuclear damage which is quite an innovative stride in nuclear liability regime. The author will unfold what is new about this convention and would identify the problem areas.
Finally, the author will make a summary of the work, highlighting the improvements made over the years and the problem areas that need to be addressed. The author would conclude the work with suggestions on the way forward.
2. COMPARATIVE COMPENSATION SYSTEM BETWEEN OLD VIENNA AND PARIS (BRUSSEL) CONVENTIONS
The Paris Convention 1960, Brussels Supplementary Convention 1963 and The Vienna Convention 1963 are first generation of nuclear liability agreements.
The term ‘coverage' in this sub-chapter includes issues like; territorial scope, relevant organisations, damages covered, coverage of non-contracting states (NCS) and coverage of exclusive economic zones (EEZ). To make this work concise and easy to understand, the differences and the similarities amongst the relevant liability regimes would be simplified in the table (Figure 1) below.
A critical look at figure 1 reveals the fact that PC and BSC enjoy same regional/geographical applicability and same OECD origin, while VC is a product of IAEA which has world-wide geographical scope. In essence, it would be said there are two distinct liability regimes, though duplicative in content, they are applicable to different geographical scope, and also, there are slight differences in damages covered, coverage of damage in NCS and coverage of nuclear incident on the high sea as shown in Figure 1.
PC 1960 & BSC 1963 VC 1963
ORGANISATION OECD-NEA IAEA
DAMAGE personal and property personal, property & any other loss allowed by the law of
COVERED (non-discrimination the competent court. (non discrimination principle)
TERRITORIAL contracting states
SCOPE (CS) & silent, but, covers incident in CS and NCS
NCS if national law permits
COVERAGE OF if national law of CS not covered
DAMAGE IN NCS allows it
EEZ/HIGH SEA no express coverageunder silent, but covered
PC, but covered under BSC.
Hence, it is quite clear that the first generation nuclear liability regimes have limited geographical coverage. The two conventions are actually independent of each other and are not connected by any treaty. This means that a party to PC would regard a party to VC as a NCS, therefore, would not provide compensation as stipulated under PC in event of an accident which happens in PC state but causes damage in VC state, unless otherwise provided by the national law of the PC state in whose territory the nuclear installation of the liable operator is situated. The same situation is applicable to CS of VC though not binding on CS.
A complicated situation like this was the order. The vacuum created by this discord was being managed until exposed by the Chernobyl incident. After Chernobyl, it became apparent and compelling to have a link between the two conventions to give the regime a wider scope of coverage since the two conventions are similar. Suggesting that, just as opined by Pelzer, it's unnecessary to have two almost identical liability systems. Hence, there was immediate need to join or harmonize the two regimes. This was exactly what Joint Protocol of 1988 did, although, many nuclear major states were yet to be party to any of these two regimes.
FINANCIAL AND TIME LIMIT
In a bid to encourage development of nuclear industry, PC + BSC and VC provided for limitation of the liability amount and time. This saves the liable operator from ruinous unlimited liability claims which, at this stage, could affect the growing-nuclear industry. Also, there was need to limit liability in time and amount to make the damages insurable.
Figure 2 below shows the limits of liability amounts and the time within which a claim must be made. It also shows the improvements made by BSC on PC, though, more explanation would be made hereafter.
PC BSC VC
Operator's liability is Same as PC for operator liability, but
15 million SDR (maximum) 120 million SDR per incident 5 million US Dollars (minimum)
AMOUNT 5 million SDR (minimum) and 300 million SDR after the no maximum amount
1982 Protocol(additional states funds)
Within 10 years from the date within 10 yrs from the date of
TIME of nuclear incident. Same as PC nuclear incident.
National law can permit longer National law of CS can permit
period provided the operator's longer period provided the
liability is secured. operator's liability is secured.
As already mentioned in the previous discussion above, at this time (before Chernobyl incident), there was no first-hand experience of how huge the effects of nuclear damages could be. So therefore, the drafters of the liability conventions provided for a minimum liability amount of 5 million SDR or USD depending on the convention in question as shown in figure 2. Interestingly, PC provides for maximum operator's liability amount of 15million SDR, it even went further to give CS discretion to increase or decrease this maximum amount provided it is not less than 5million SDR. It is remarkable that such maximum provision cannot be seen under VC.
However, the BSC was introduced to improve on the shortcomings of PC. The main aim of BSC was actually to increase the compensation amount for nuclear damages. This is evident in the provision of compensation amount of 300million SDR per incident. BSC also provides for three supplementary steps (tiers) to ensure appropriate compensation.
Unfortunately, the VC's 5million USD minimum compensation amount was not improved until the introduction of the new VC in 1997. This situation, according to Dr. Horbach, was an important weakness in comparison with the PC and BSC.
On the other hand, there is much similarity amongst PC, BSC and VC on limitation of time for bringing a claim which is pegged at 10 years from the date of occurrence of nuclear incident, albeit, criticisms that it's too short.
As fate would have it, the occurrence of Chernobyl accident and the lessons learnt have vindicated the positions of the critics. Chernobyl incident revealed how inefficient the limited time and amount was. This led to increment in limitation time and amount as would be seen later in this work.
RELEVANCE OF NATIONAL LAW AND POLICY
The importance of national law towards effective application of compensation for nuclear damages under the various liability regimes cannot be over emphasized, especially, where the liability regimes, have in many occasions shift responsibility and discretion to contracting states.
As already partly seen in the previous discussions, national law is relevant in providing or determining;
when a damage suffered in NCS can be covered under the PC
damage which amounts to “any loss” under the VC
increase or decrease of maximum liability amount under PC
longer operator's liability-time exceeding 10yrs
the nature, form and extent of compensation
equitable distribution of the compensation
reciprocity agreement between a CS and a NCS
liability of carrier
coverage of damage to the means of transport
whether a grave disaster amounts to ‘severe' force majeure for purposes of exoneration of the operator from liability.
insurance amount, type and terms etc.
Therefore, in consideration of the power (discretion) and relevance of national law of a CS under the various Liability regimes as mentioned above, it is the opinion of the present author that this discretion, though commendable to some extent, did lead to different applications, provisions and interpretations. Most importantly, it opened the door of disharmony even amongst contracting states of a particular liability regime.
RESPONSIBILITY AND LIABILITY
Both PC and VC established strict liability of the operator of the nuclear installation, authorizing victims to sue and claim compensation from the operator at the court of all contracting states, although, the operator's liability is limited. The conventions also channeled liability exclusively and legally to the operator, meaning that the operator is solely liable and no person other than the operator is to be held liable for nuclear damage. This could be said to be an action in good direction as it gives easier and speedier access to compensation claims.
Additionally, Article VII VC and Article 10 PC mandate the operator to maintain insurance or other financial security covering his liability to the extent of the amount, type and terms required by installation state.
Coming to nuclear transport accident and the consequent damages; if the nuclear material is sent from operator of nuclear installation in one CS to an operator in another CS, the sending operator is liable until receiving operator takes charge of the material unless there is a written contract shifting liability to the receiving operator. The operator is also liable, under PC, for the damage to means of transport. This situation is not applicable under the VC unless the law of the installation state provides for it.
But if the material is sent from CS to NCS, the sending operator is liable until the material is unloaded in the NCS. Also, if material is sent from a NCS to a CS, the receiving operator is liable upon written consent.
Furthermore, it is interesting to note that Article 7(e) PC allows transit contracting states to increase the maximum amount of liability of foreign operator provided that such increment do not exceed the maximum amount of liability of operator of nuclear installation in that transit state.
Notwithstanding the plethora of occasions of liability of the operator stated above, such liability is limited or exonerated in the following cases;
Limitation of liability to incidents occurring in the territory of CS of PC.
If national law of CS makes the carrier liable
In severe cases of force majeure
Limitation in amount
Limitation in time
3.COMPARATIVE COMPENSATION SYSTEM BETWEEN NEW VIENNA AND PARIS CONVENTIONS.
The 1986 Chernobyl accident is a remarkable time in the history of civil nuclear industry. The incident exposed the high-weakness-level of the first generation liability regimes. It gave a clearer picture of how destructive and fatal a major nuclear accident could be. The effects of Chernobyl accident was trans-border in character and nature, as damages on human lives, human health, property and the environment were suffered in countries miles away from Ukraine. This necessitated urgent actions to be taken in the area of nuclear liability regimes. This was evident in the accelerated rate of time within which Joint Protocol (JP) was created to link the two liability regimes.
However, JP on itself could not solve all the liability problems exposed by Chernobyl incident as it only joined the two regimes which at this time (1988) had only 24 state-signatories all together. Therefore, there was immediate need to update the liability regimes to reflect the lessons learnt from Chernobyl incident. This led to the creation of the 1997 VC (new VC or NVC) and the 2004 PC-BSC (new PC or NPC & new BSC).
Firstly, starting with the NVC, it was believed that by establishing Vienna Convention Protocol 1997 (NVC) new member states would be attracted, thereby, extending geographical scope of the convention to cover victims of the new states. The areas of improvements made by NVC are highlighted in figure 3 below;
VC 1963 NVC 1997
Covers areas covered under VC 1963 and also
DAMAGE Personal, property & any other loss allowed environmental damages, economic loss and cost
COVERED by the law of the competent court. of preventive measures taken to minimize
Damage or any loss suffered.
Note: CS law can extend damages recoverable.
TERRITORIAL SCOPE Silent, but, covers incident in CS and NCS Incident anywhere, but national law of CS can exclude NCS with nuclear installation but without reciprocal benefits.
COVERAGE OF Not covered
DAMAGE IN NCS
It is worthy to note that notwithstanding the enthusiasm shown by drafters of this NVC and the improvements made, it could be argued that the NVC has failed to match the expectations as many states, especially nuclear states (NS), are yet to be signatory to this convention.
Secondly, on the other hand, the 2004 Protocols to amend PC and BSC (NPC & new BSC, though not yet in force, have made commendable improvements as well just like NVC. Figure 4 below shows that recoverable damages and geographical coverage of NPC and new BSC are almost identical with the NVC, except that NPC does not give CS express discretion to extend economic loss recoverable by its local legislation.
In conclusion, the present writer opines that, though the improvements made by these new conventions are welcome developments, it has in effect created and broadens the problems which JP intended to solve. The present situation is more complex and complicated because it is evidently possible that states belong to the old conventions without belonging to the new conventions or JP. It is evident, also, that states belong new convention without belonging to old convention, or be a party to old and new conventions without being party to JP, or even be a party to 2, 3, or 4 of these conventions, etc. The present situation really calls for concern and attention.
PC 1960 & BSC 1963 2004
NPC New BSC
DAMAGE personal and property personal, property, economic loss, same as NPC
COVERED (non-discrimination cost of preventive measures, loss of
principle) income & environmental damages
TERRITORIAL contracting states CS, VC+NVC states, JP states, NNS CS only
SCOPE (CS) & and NS with reciprocity law that
NCS if national law permits resembles PC principles
COVERAGE OF if national law of CS NNS covered
DAMAGE IN NCS allows it not covered
NS not covered unless it has law
with reciprocal benefits
EEZ/HIGH SEA no express coverage under covered EEZ of CS
PC, but covered under BSC.
3.2 FINANCIAL AND TIME LIMIT
After Chernobyl incident, there was gradual shift of favor, in the new liability laws, towards the victims. The need to up the limitation amount and time became imminent, most especially, under the Vienna Convention which has not been revised for many years.
In the NVC, as shown in figure 5, the operator's minimum liability amount was increased to 300million SDR, though it is allowed for an operator to provide minimum amount of 150million SDR if the installation state accepts to provide the balance to make it up to the minimum amount of 300million SDR. It was also allowed for CS to fix a minimum liability amount of 5million SDR to lower-risk activities. Additionally, CSs are now free to impose unlimited liability.
Furthermore, the time limit for bringing claims for personal injury and death was increased to 30 years from the date of nuclear incident. This is a welcome development but the present author would prefer 50 years time limit with CS guarantee, because an exposure to excess ionizing radiation can have stochastic effects on human beings which might take more than 30years to show on the victims. It is worthy to note also that under the NVC, priority is given to personal injury or death brought within 10yrs in the event of insufficient fund for compensation. Such similar provision is lacking in the new PC and BSC.
VC 1963 NVC 1997
5 million US Dollars (minimum) 300 million SDR (minimum)
AMOUNT no maximum amount CS can fix 5million SDR in lower nuclear risk activities
within 10 yrs from the date of within 30 yrs from the date of nuclear incident, but for
TIME nuclear incident. personal injury and death only. 10 yrs for other damages.
National law of CS can permit
longer period provided the
operator's liability is secured.
On the other hand, under the NPC and new BSC as shown in figure 6 below, the operator's minimum liability amount (1st tier) is increased to 700million Euro. While low risk installation and transport minimum liability amounts are 70million Euro and 80million Euro respectively. The CS of NPC is required to pay for nuclear damage if the operator's insurance or financial security is insufficient or unavailable. In addition to it, under the new BSC, the installation state (2nd tier) will provide 500million Euro and also public funds of 300million Euro would be made available by contracting states (3rd tier) to pay for nuclear damage if the operator's financial security is insufficient. Furthermore, the time limit is increased to 30yrs for loss of life and personal injury claims under the NPC and new BSC.
PC /BSC NPC / NEW BSC
Operator's minimum liability is 5million SDR. Operator's minimum liability is 700million Euro
AMOUNT Installation state- 175million SDR (BSC) Installation state- 500million Euro. (new BSC)
CSs public funds- 125million SDR (BSC) CSs public fund - 300million Euro. (new BSC)
Within 10 years from the date within 30 years from the date of nuclear incident for
TIME of nuclear incident. loss of life or personal injury only.
National law can permit longer 10 years for other damages period provided the operator's liability is secured.
3.3 RELEVANCE OF NATIONAL LAW AND POLICY
Once again, the national laws of contracting state, even non contracting states, are invested with major-playing roles under the new liability conventions. For instance, a reciprocity law of a non contracting nuclear state is a prerequisite for nuclear damages suffered in such state to be covered under the new conventions except new BSC. Other areas where national law and policy could be relevant are as follows;
CS of NVC may fix a minimum liability amount of 5million SDR to lower nuclear risk activities.
CS specifies the type and terms of insurance or financial security the operator should maintain.
CS of NVC may provide additional compensation.
CS is free to impose unlimited liability under the new conventions.
These roles, amongst others which relate to areas of jurisdiction which the present work do not cover, are meant to give flexibility in the conventions and to allow CSs to make laws and policies which reflect their national values and interests.
3.4 RESPONSIBILITY AND LIABILITY
The situation of the operator's liability under the new conventions remains virtually same as the old conventions, except in the areas you would see hereafter. The liability amount and time within which a claim can be brought are increased under the new conventions as already stated in the sub-chapter 3.2 of this work. This increment exposes the operator financially, as he would pay higher premium for insurance or make available higher financial security.
Interestingly, responsibility is now expressly bestowed on contracting states to, depending on the convention they belong, make available additional compensation or to provide certain minimum amount of public funds to compensate victims if the operator's financial security is insufficient.
Also, except for new BSC, the operator's liability is now extended to cover nuclear incident and damages in non contracting state. Though, CS may choose to limit this in event of non contracting nuclear state without nuclear liability reciprocity law. The damages to be covered were also extended under all the new conventions to cover economic loss, cost of preventive measures, reinstatement measures and environmental damages.
Notwithstanding the extension, the operator's liability is still limited in time and amount. Also, the operator is exonerated from liability for nuclear damaged caused directly by hostilities, armed conflict, civil war and insurrection.
GEOGRAPHICAL SCOPE AND APPLICABILITY
The 1997 Convention on Supplementary Compensation has been said, by many scholars, to be the long awaited and desired liability regime that would cure all the complications and complexities found in the functioning and in the inter-relations of all the liability conventions. The present author shares this view with some reservations which would be discussed later.
CSC in scope is global, in the sense that it opens the door to all states; nuclear states and non nuclear states, legal channeling regime and economic channeling regime. So, PC states, VC states and Annex states can be members of CSC. This gives states that neither belongs to PC nor VC an opportunity to be part of liability regime without being members of the two previously mentioned regimes. Another interesting innovation of CSC is the introduction of the ‘Grandfather Clause' under Article 2 of the CSC-Annex. This clause recognizes United States' national law, which provides for economic channeling of liability as a satisfactory requirement of the conditions under the CSC Annex. In essence, CSC, according to McRae, does guarantee global availability of meaningful compensation in the event of a nuclear incident, subject to state membership.
However, although CSC is meant to be a global regime, its scope for purposes of coverage is limited to territory of contracting states, meaning that it is applicable to contracting parties. The scope is also limited to nuclear incident in civil nuclear installations because CSC covers only civil liability.
Finally, notwithstanding the merits of CSC, it is the view of present author that though the CSC is global in scope, much of its global character is yet to be seen as not too many states, especially nuclear states, have signed the CSC. The present author believes that CSC lacks the compelling tool which would have made it more effective, acceptable and applicable to all states. CSC would be better off, if it were to be a compulsory liability regime which all states, especially nuclear active states, must be party to. By this, all states would be covered and damages suffered anywhere would be compensated.
The coverable damages under the CSC are personal injury, property damage, environmental damage, cost of preventive measures and economic loss. But the definition of these damages is to be determined by the law of the competent court. The preventive measure is recoverable only if it's taken in response to a grave or imminent threat of a possible release of radiation that could cause other types of nuclear damage or actual release of ionizing radiation. The damages to be recoverable must result from civil nuclear activities. The claims for these damages are equitably recoverable by the victims in line with the non-discrimination principle, though it's permissible to exclude damages in non-member states.
Article III(1)(a)(i) of CSC mandates states to ensure availability of minimum liability amount of 300million SDR (1st Tier) under their individual national laws. An additional amount of 300million SDR of International fund, which member states contribute, is also made available to supplement the compensation under the state's national law (2nd Tier). Furthermore, one-half of the International funds would be reserved exclusively for trans-boundary damages, i.e. damages outside the installation state of the liable operator (3rd Tier). This provision would be of great interest to the neighboring states and transit states.
So, in essence, a total compensation amount of 600million SDR is made available for payment of damages. However, 150million SDR of this 600million SDR is exclusively reserved to cover trans-boundary damages.
Article IV (1)(a) CSC established contribution formula for states contribution to international fund. 90% of the contribution comes from nuclear active states on the basis of their installed nuclear capacity. 10% of the contribution comes from all member states including nuclear states on the basis of their UN rates of assessment. But, the contribution are made on-the-need basis. This contribution formula is really a fair provision but however, could be counter-productive, in the sense that nuclear active states (e.g. France) might see this contribution provision as a threat to their economic interest and therefore, would be reluctant to join CSC.
RESPONSIBILITY AND LIABILITY
Article III(1)(a) CSC bestowed responsibility on installation state to ensure availability of 300million SDR. This responsibility is mandatory in character. This means that states choose how to raise the amount. The amount could be raised through the operator's insurance policy, or insurance pool, or regional agreement, or public funds.
However, the responsibility of the state does not exonerate the operator, because the concept of channeling of liability to one operator is still upheld in the CSC. This means that the operator still remain liable though limited in amount and time.
The present author believes that the emphasis on state's responsibility for ensuring availability of minimum liability amount under the CSC is not unconnected with its harmonizing mission. Because by shifting the onus from legally liable operator to the states, gives opportunity to states like US who could not join the PC and VC to join the CSC. So, in essence, what CSC did was to establish a bridge between US and the PC and VC without affecting the integrity of the available compensation.
It is indisputably acceptable, that progress has been made over the years in the field of nuclear liability regimes, by way of better compensation and wider coverage of damages and geographical scope as demonstrated above in the main chapters. The questions that still pop up are; ‘How good enough are the present regimes?', ‘can the present regimes withstand the test of another major nuclear accident?', and ‘how do we make CSC more acceptable? These are the problem questions that the present author believes would be solved only when there is a ‘mandatory-harmonization' of all the liability conventions and treaties into one international unified nuclear liability regime which ensures that damages suffered anywhere, whether the state is nuclear state, non nuclear state or transit state, is coverable and recoverable, and that compensation is equitably paid to victims of all nations. The mandatory harmonization option should be explored, because without it, issues like national interest, sovereignty and economic interests would always be a clog in the wheel of achieving a one unified global liability regime.
These suggestions may not be possible in the near future, but they are desirable if we must have an effective and efficient international nuclear liability and compensation system.
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The Protocol of 12 February 2004 amending Paris Convention
The Protocol of 1997 amending the 1963 Vienna Convention. (Vienna Convention Protocol)
Vienna Convention on Civil Liability for Nuclear Damage of 21 May 1963.
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