Appendix VI

Terms of Engagement¹¹⁰

National. This term should be used to describe fuel cycle arrangements conducted exclusively under the domestic legal, regulatory, and commercial framework of a single state.

International. Any activity involving participation by entities (whether natural or legal persons or governments) from more than one state could be considered “international.” There are three possibilities, and combinations could occur among all three: (1) an arrangement conducted (owned and managed) by a fully international organization, such as the IAEA; (2) a wide spectrum of arrangements involving participation by differing entities (commercial, governmental, or other) that do not have a fully “international” character, such as URENCO or EURODIF; and (3) intergovernmental bodies that could own or manage arrangements between entities, such as the IUC. There are three subsets:

• Multinational. This term could be taken to mean an arrangement involving some form of participation by entities from several (not just two) states. It does not differ significantly from the term “international,” except that participation in a multinational arrangement might involve a narrower participation than a fully “international” or universal organization.
• Multilateral Agreement. A multilateral agreement is defined as a binding agreement between three or more parties concerning the terms of a specific circumstance. The agreement could be structured in terms of investment, management, regulatory oversight, or other matters.
• Regional. However various regions are defined, this term implies that participation in an arrangement would be limited to entities from a coherent geographical area.

ENGAGEMENT

Participation. Utilities in nuclear consumer states as well as nuclear fuel suppliers and take-back entities are key participants; they can participate in a range of activities, from providing a revenue source, to partial ownership interest, to concrete involvement in operation or facility management. The various rights, responsibilities, and activities of participating entities must be defined. Allowing participation by entities (whether governmental, private, or other) would be established based on set criteria.

Ownership/Investment. Any new fuel cycle arrangement will need a clear indication of what entities are legally entitled to an ownership interest or other form of financial investment in the arrangement. Given the sensitive nature of fuel cycle technologies, many states have legal restrictions on foreign ownership or even investment in such activities conducted within their jurisdiction. However, there are examples of international or multilateral entities that accept ownership or investment by governments or private entities and sometimes a mixture of both. Because an ownership interest also has implications for management, control, access, and supply issues, the basic instruments establishing a new fuel cycle arrangement should be explicit in who can own or invest in the arrangement, and what rights or obligations flow from such investments.

LEGAL RIGHTS

Choice of Law. For most purposes, the applicable law governing activities of a fuel cycle arrangement would be the law of the state in which a facility is located.

ENDNOTES

110. Adapted from a presentation by Carlton Stoiber to MLA Workshop, Center for Strategic and International Studies/Nuclear Threat Initiative, July 2011.