International Treaties on Insurance and Liability related

to Nuclear Accidents

Michel VandersmissenAttorney-at-law, Brussels Bar

AEEC, 23 November 2009

General outline

1. Introduction

2. International Framework

3. US Framework

4. Case Studies:– Belgium– UK– Germany

Ratio Legis

• Why limit nuclear liability?– 1950’s: considered necessary to expand

nuclear industry– Original amount of Paris Convention was

merely 5-15 million SDR (€ 9-18 million)

General principles of nuclear liability

• Strict liability of the nuclear operator

• Exclusive liability of the nuclear operator

• Limitation of liability in amount and time

• Mandatory financial coverage of the operator’s liability

• Exclusive jurisdiction

International Framework

• Paris Convention and Brussels Supplementary Convention

• Vienna Convention

• Joint Protocol

Paris Convention and Brussels Supplementary Convention

Paris Convention on Third Party Liability in the Field of Nuclear Energy (PC)

• Signed under the auspices of OECD-NEA in 1960

• Entered into force in 1968• Signed by most West-European countries• Completed by additional protocols in

1964, 1982 and 2004

Paris Convention and Brussels Supplementary Convention

Fundamental principals of nuclear liability:

• Exclusive liability (art. 3)• Strict liability (art. 4)• Limitation of liability in amount (art. 7)• Limitation of liability in time (art. 8)• Financial security (art. 10)• Territory of contracting states (art. 2)

Paris Convention and Brussels Supplementary Convention

Brussels Convention supplementary to the Paris Convention (BSC)

• Signed in 1963• Entered into force in 1974• System of additional compensation:

• Three-tier system of supplementary compensation• Only on territory of contracting parties

Paris Convention and Brussels Supplementary Convention

• Three-tier system of supplementary compensation (art. 3, b)

1. 5 million SDR by operators

2. 5-175 million SDR by State

3. 175-300 million SDR by contracting parties

2004 Paris/Brussels Protocol

Protocols to amend the PC and BSC(signed 2004, not into force)

• New limits of liability:– € 700 million for operators– € 500 million for installation state– € 300 million for contracting parties

• Definition of “nuclear damage” broadened• Not yet into force, old limits still apply

Vienna Convention

Vienna Convention on Civil Liability in the Field of Nuclear Energy

• Signed under the auspices of the IAEA in 1963

• Entered into force in 1977• Wider geographic scope than Paris

Convention; signed by 33 countries of Central, Southern and Eastern Europe and Africa, South America and Asia

• Completed by additional Protocols of 1997

Vienna Convention

Principals are similar to Paris Convention:• Absolute and exclusive liability (art. II-IV)• Limitation of liability in amount (art. V)• Limitation of liability in time (art. VI)• Operator provides financial security (art. VII)• States ensure payment of claims (art. VII)• Only in territory of contracting states (art. XI)

Additional Protocols 1997

Protocol to amend the Vienna Convention– Possible limit of operator’s liability at 300 million SDR– Broadens definition of “nuclear damage”– Extends geographical scope– Extends the period for claims– Jurisdiction for coastal states– Entered into force in 2003, but with few members

Convention on Supplementary Compensation for Nuclear Damage (CSC)

– Additional amounts by state parties– Not yet ratified

Joint Protocol

Joint Protocol relating to the application of the Vienna Convention and the Paris Convention

• Signed under the auspices of both OECD/NEA and IAEA in 1988

• Entered into force in 1992• Brings the geographical scope of two conventions

together• Bridge between the two conventions• Broadens coverage of two conventions• Obviates possible conflicts of law in case of

international transport of nuclear material

US Framework

• USA is not party to any international liability convention

• Price Anderson Act (1957)– Renewed for 20 years in 2005– US$ 10 billion in cover– No fault needs to be proven– Individual operators are responsible for two

layers of insurance coverage

Price Anderson Act

• Two layers of insurance coverage:– First layer:

• Each nuclear site must purchase US$ 300 million liability cover

• provided by two private insurance pools• Average annual premium is $ 400,000• Financial liability >< legal liability in European

liability conventions

Price Anderson Act

– Second layer:• Jointly provided by all US reactor operators• Funded by retrospective payments if required of up

to $ 112 million/reactor/accident• Collected in annual instalments of $ 17.5 million

– Total provisions over $ 10 billion– Beyond this cover, Congress acts as insurer

of last resort

Case study: Belgium

Act of 22 July 1985 on Civil Liability in the Field

of Nuclear Energy (last modified by Act of 11 July 2000)

– Strict and exclusive liability (art. 5)– Liability is limited to € 297.5 million (art. 7 and 17)– Beyond this limit, Paris/Brussels system applies (art.

19)– Operator provides financial security (art. 8)– Direct right of action against insurer (art. 27)– Liability is limited to 10 years (art. 23.1)

Case Study: UK

Energy Act 1983

– Ratification of Paris/Brussels Conventions– Operators are liable for claims up to £ 140 million– Beyond this limit, Paris/Brussels system applies– Government plans legislation for 2010:

• Insurance towards € 700 million (2004 Paris/Brussels Protocol, when it enters into force)

• Insurance is to be provided by Government at commercial rates

Case study: Germany

Act of 2002 on the Peaceful Use of Atomic Energy and the Protection against its Hazards

– Ratification of Paris/Brussels Conventions– Unlimited operator liability– Maximum amount of coverage of € 2.5 billion– Not available in the insurance market;

complementing coverage scheme