Prologue

This paper provides an analysis of nuclear liability, with a focus on the countries of Southeast Asia. The unfortunate events at Fukushima Daiichi in 2011 have raised serious issues for the world community and, in particular, nuclear energy aspirants with regard to the scope and adequacy of nuclear liability coverage in the event of a nuclear accident. For the public in countries that are still discussing the efficacy of deploying nuclear power, we believe that the nuclear liability regime needs to be robust enough to fairly compensate all parties if and when a nuclear accident occurs. This paper tackles this complex issue by focusing on the most significant issues, including:

1. The tension among nuclear suppliers, nuclear operators, and the host and neighboring states in sharing the cost of liability.
2. The continual debate regarding the sufficiency and availability of funds to meet potential compensation demands in case of an accident. This uncertainty, we believe, constitutes a hurdle for public acceptance of nuclear energy, especially in developing countries; we believe that the insurance caps need to be raised significantly.
3. Altering the balance in this area of nuclear liability law jurisprudence by identifying the nuclear supplier as the responsible party in case of an accident. If liability laws comparable to the Indian Civil Liability for Nuclear Damages Act are adopted in the future by additional countries, particularly those in Southeast Asia, this could be a game changer in assessing the economic viability of nuclear energy. (The principle of excluding supplier liability in favor of channeling all liability to the operator of a nuclear power plant has been the operative standard in existing statutes and conventions.)
4. Reliance by a growing number of nuclear aspirants on foreign technology and expertise, including safety oversight. We believe that this will create new challenges regarding legal jurisdiction as to who is responsible for compensation and the extent of liability that could be imposed on these foreign entities and individuals.
5. Unavailability of a universal framework regarding the liability conventions across all states. The principles laid down by the Paris and Vienna Conventions form the bedrock of current international nuclear liability law. However, there is a lack of harmonization between these two agreements. (Many states, including legal officials from the United States, have asserted that the Convention on Supplementary Compensation for Nuclear Damage [creating a viable risk pool based on proportional assessments imposed on nuclear plant operators in states that have ratified the CSC] could serve as an umbrella agreement. According to the IAEA, “The OECD-sponsored Paris Convention and Brussels Convention are popular in Western Europe while the IAEA-sponsored Vienna Convention is popular in Eastern Europe and elsewhere around the world. Some countries have signed a Joint Protocol to link those two treaties. The Convention on Supplementary Compensation for Nuclear Damage (CSC) was designed to become a global regime and is open to countries without nuclear power plants.”¹

This paper addresses the following key questions:

1. What impact have the unfortunate events at Fukushima had on the views of regional policy-makers and stakeholders regarding changes to nuclear liability and nuclear compensatory standards?
2. What is the standard that policy-makers and scholars, planning the deployment of new nuclear energy, should use as a guidepost as they consider nuclear liability legislation in their respective states? Obvious questions that arise include whether the principles laid down by the Paris and Vienna Conventions should be used to establish regional or country-specific standards, and whether regional agreement on standards should be preferred over country-specific standards. The current U.S. policy is clear on these questions: The United States prefers adoption by new countries of the CSC rather than implementation of region-based standards.
3. Will the vendors in Russia, Japan, China, and the Republic of Korea, as substantive future nuclear suppliers, be influential in setting the trend(s) in the nuclear liability regime?
4. What can countries considering deployment of nuclear energy learn from the recent experiences in India? Statements made by Russian officials seem to indicate that if the Russian government were to accept India’s new liability law, there would be an increase in tender price for its new VVER plants in India, increasing the burden on Indian consumers. Does this set a precedent, or are alternatives, based on variants of India’s nuclear liability law, preferable?
5. Should specific incentives to encourage passively safe designs be considered when the technical aspects of establishing a robust and sustainable liability regime are considered?
6. What roles should international bodies such as the International Atomic Energy Agency, the World Nuclear Association, and others play in encouraging a uniform and strict liability regime?
7. Can other substantive non-nuclear models (such as the International Oil Pollution Compensation Fund) that contain provisions for risk-sharing among private and public entities be useful in assessing the size of the financial risk pool to pay for compensation in the event of an accident?

Stephen M. Goldberg
former Senior Consultant to the American Academy’s
Global Nuclear Future Initiative

Robert Rosner
Senior Advisor to the American Academy’s
Global Nuclear Future Initiative;
William E. Wrather Distinguished Service Professor
in the Departments of Astronomy and Astrophysics
and Physics, University of Chicago

ENDNOTES

¹ “Initiative for Global Liability,” World Nuclear News, August 30, 2013,
http://www.world-nuclear-news.org/NP_Initiative_for_global_liability_3008131.html.