Legal dispute over accident liability hits hopes of global nuclear deal

Date: 28/02/02

By Maria Kielmas

A WESTERN European legal wrangle has dealt a sharp blow to the nuclear industry's hopes of benefiting from concerns over security of energy supply.

The conflict is an overlap between the 1960 Paris Convention on third-party liability for nuclear damage and a 2001 EU regulation on jurisdiction in foreign judgements in civil and commercial matters.

The Paris Convention - established by the Nuclear Energy Agency (NEA) - covers the 15 Union member states plus Norway, Turkey and Slovenia and limits the liability of nuclear operators following an accident.

Negotiations have been under way for the past five years to increase this liability to a minimum of €700 million.

The agreement clashed last year with the European Commission's working paper on environmental liability. Its paper appeared to recognise international conventions related to oil pollution, but omitted any mention of nuclear ones.

If passed into EU law this would have made European operators subject to unlimited claims.

After much lobbying by the nuclear industry, the proposed environmental liability directive unveiled in January acknowledged international nuclear conventions. However, operating companies say they are still worried how the European Parliament might amend it.

According to Julia Schwartz, a lawyer at the NEA's legal affairs department, the Paris Convention signatories completed their renegotiations and agreed on a finalised text only to crash into another of the EU's brick walls. This time it was the 2001 regulation on jurisdiction for foreign judgements in civil and commercial matters, which limits members states' competence in negotiating international agreements.

The Paris states agreed to a single jurisdiction in the event of an accident; the claims are adjudicated in the country where the accident occurs.

But the EU wants to go further by also having claims adjudicated in those countries where the damage occurs.

A court will respect limits of liability in one jurisdiction but this is far from certain if the case is extended into others, says Schwartz.

Renegotiation of the Convention complicates matters further.

'The [EC] regulation says that existing agreements are exempt but what they do not respect is amendments to existing agreements,' she says.

The Brussels-based nuclear energy trade association, Foratom, has warned about the potential for double jeopardy, but the impasse continues.

It also pits the non-EU Paris states against the EU - and non-nuclear member states, such as Austria and Ireland, against the rest.

The European wrangle also stalls efforts to reach a world-wide agreement on nuclear liability.

The refusal by the former Soviet Union in 1986 to pay compensation to foreign victims of the Chernobyl disaster prompted a review of existing liability conventions and a push to recognise international liability.

The oldest scheme is the US 1957 Price-Andersen Act, which limits liability for private insurance and government indemnity to 9.4 billion for accidents related to power plants and nuclear fuels' shipments.

The 1963 Vienna Convention, established by the International Atomic Energy Agency (IAEA) and covering countries outside the US and Paris states, increased a nuclear operator's liability limit in 1997 to €420 million.

The 1982 Brussels Convention, established by the NEA, allows its signatories to set higher liability limits, though still much less than those in the US. But the common thread in all of these conventions is that they specify a single jurisdiction for claims.

In 1997 the US proposed a Convention on Supplementary Compensation (CSC) which would link the three conventions and form the basis of a single international framework.

But the Paris Convention states did not want to become part of a US-sponsored agreement, prompting accusations from both sides of the Atlantic that the US and Europe were involved in a protectionist contest aimed at keeping out the other's nuclear industries.

Omer Brown, a specialist nuclear lawyer and partner in Washington DC law firm Harman, Wilmott and Brown, believes the wrangling has hindered any hope of a true international agreement.

'It's going backwards,' he says. 'Europe is trying to find a regional not an international solution.'

Article is part of a survey on energy.