The Eu Tentative to Harmonise Nuclear Liability

THE EU TENTATIVE TO HARMONISE NUCLEAR LIABILITY

AMONG THE EU MEMBER STATES

Marc Beyens[1]

ABSTRACT

The present contribution aims at providing you with an overview of initiatives that were taken by the European Commission to foster reflection on the harmonization of nuclear liability regimes among the EU Member States.

The Brussels Nuclear Law Association, the Brussels chapter of the International Nuclear Law Association, has been a partner of the European Commission for a number of these exercises, and notably co-organised a workshop in 2010 on the Prospects of a Civil Nuclear Liability Regime in the framework of the European Union as well as a follow-up workshop in January of this year entitled “Taking nuclear third party liability into the future/Fair compensation for citizens and level playing field for operators”.

The purpose of the intervention is to present the main conclusions of the different initiatives of the European Commission. Needless to say that this presentation engages the author and does not reflect any official position by the European Commission.

The “Legal Study for the accession of Euratom to the Paris Convention on third party liability in the field of nuclear energy” produced by the law firm Gomez-Acebo & Pombo for DG Energy and Transport

At a time when the so-called “nuclear renaissance” was discussed widely, the European Commission advanced in its “Nuclear Illustrative Programme 2007” that the discussion on the nuclear sector in the EU should, inter alia, notably focus on “developing a harmonized liability scheme and mechanisms to ensure the availability of funds in the event of damage caused by a nuclear accident.” It is in the implementation of this programme that the Commission launched an “Impact Assessment on the Paris Convention on Nuclear Liability” in December 2007 with a consultation of stakeholders.

The outcome of the impact assessment formed the basis of a legal study performed by the law firm Gomez-Acebo & Pombo for DG Energy and Transport. When published, the study contained a disclaimer according to which the study represented the law firm’s views on the possible accession of the Euratom Community to the Paris Convention, which have not been adopted or in any way approved by the Commission and should not be relied upon as a statement of the Commission’s or DG Energy and Transport’s views.

The legal study starts from the observation that nuclear third party liability rules are currently not harmonized in the EU, but form some kind of patchwork, with some states party to the 1960 Paris Convention, others to the Paris and 1963 Brussels Supplementary Convention, still others to the 1963 Vienna Convention or to the 1997 Amended Vienna Convention, one to the Convention on Supplementary Compensation and five to no convention at all. Moreover, not all Member States which are party to a convention have ratified the 1988 Joint Protocol relating to the application of the Vienna Convention and the Paris Convention. In some regimes the liability of operators is unlimited, whereas others have capped liability. The operator’s insurances differ both as regards their coverage and payable fees. The obligation to compensate victims of a nuclear accident differs both as regards the damages covered and the payable amounts.

The legal study investigates whether the Community has the power to act in order to harmonise the situation and, if so, which action would best fit the general objective of legal coherence.

With respect to the question whether the Community has the power to act, the study distinguishes three different angles, namely :

(1)Nuclear insurances, for which article 98 of the Euratom Treaty provides the basis for harmonizing nuclear insurances throughout the EU with a qualified majority in the Council on a proposal by the Commission

(2)Jurisdictional arrangements related to third party liability issues, which are exclusive EC Community powers, although in 2004 the EU agreed in various Council decisions that the Paris Convention EU Member States sign and ratify the 2004 Paris Protocol including its jurisdictional rules which deviate from Council Regulation (EC) 44/2001, and

(3)All other issues that may arise under nuclear third party liability, for which the legal study sees shared powers to act for the Community and the Member States pursuant to Articles 2 and 203 of the Euratom Treaty (requiring unanimity in the Council).

In a second part of the study, an analysis is made as to which action would best fit the general objective of legal coherence in the medium run. The study distinguishes 5 policy options :

(1)Non-action (option A);

(2)All 27 Member States are/become parties to the Paris Convention (option B);

(3)22 Member States are/become parties to the Paris Convention with an opt-out for the 5 non-convention states (option C);

(4)Euratom accession to the Paris Convention (option D); and

(5)A Euratom Directive (option E).

Analyzing the results of a consultation questionnaire, the outcome shows that the majority of stakeholders are in favour of harmonizing nuclear third party liability.

However, the majority of stakeholders do not want an EU-only solution which, in the view of many, would add to the patchwork instead of resolving it. Only 2 out of 43 responses voted in favour of a Euratom directive. Nevertheless, the legal study insists on a directive as a solution for nuclear insurances because it sees an obligation of the Community under article 98 of the Euratom Treaty to adopt a directive that harmonises nuclear insurances throughout the EU.

With respect to jurisdictional arrangements, the legal study does not see how the Community could come back upon the Council decisions that allowed the signature and ratification of the Protocol to the Paris Convention to switch to the ordinary rules of Regulation (EC) 44/2001.

For all other issues that may arise under nuclear third party liability, the legal study demonstrates that option B (27 to Paris) would be the most popular option, providing for a high degree of harmonization if successfully implemented but with little legal efficiency to guarantee a successful implementation, if it would only allow for a Community recommendation to the Member States. Options A (status quo) and C (22 to Paris, 5 opt-out) closely follow option B but provide for a lesser degree of harmonization if successful. Option C could only be fostered by means of a recommendation and may therefore not be efficient. Option E (Euratom Directive) would lack political support while a Euratom directive would according to the legal study require unanimity. Option D (Euratom accession to Paris) is called both legally and pragmatically the least viable option given the accumulation of both political and technical hurdles and its inability to achieve harmonization.

An in-depth analysis of the conclusions of the legal study would lead us too far, but some additional more or less controversial points can be highlighted :

1. The legal study suggests that the Community considers to opt either for maintaining the particularities of nuclear third party liability or, alternatively, considers doing away with the basic principles of the nuclear third party liability conventions and choose for unlimited liability made conditional upon a full switch to ordinary tort law.
2. The legal study seems to plead for operator pooling, i.e. a mutual mechanism by which nuclear operators spread their risks amongst each other through a pool, to whom each of them contributes in the event of a nuclear accident. It is suggested that some kind of safety standardization at overall EU level would be necessary to enable successful operator pooling.
3. The legal study is critical of accession to the CSC as a possible solution to solve the problem of the current European nuclear liability patchwork. It says that mainly Western European stakeholders insist on the historical importance of the Paris Convention and its higher level of compensation. It highlights that nuclear states are reluctant to accept its preferential treatment of victims outside the installation state, and adds that without nuclear states, the CSC is neither capable of providing for a high compensation (since more than 90% of its 2nd tier depends on contributions from nuclear states), rendering it therefore also less attractive to non-nuclear states, nor capable of securing its entry into force.
4. Some issues of compatibility of the nuclear third party liability regime with competition law are raised.
5. The Legal Study pleads for a streamlined European claims-handling system.
6. The Legal Study suggests the creation of a Group of Experts on Nuclear Third Party Liability.

The 2010 workshop “Prospects of a Civil Nuclear Liability Regime in the Framework of the European Union” co-organised by the Brussels Nuclear Law Association and the European Commission

During this conference reactions to the legal study were solicited from the depositaries of the international third party liability conventions and by representatives of countries party to the Paris Convention, the Vienna Convention and the CSC as well of a non-convention state. As to the solutions to the situation of “legal patchwork” in the EU, the conference hosted both speakers which were proponents of a wider adhesion to the Joint Protocol and speakers in favour of a global nuclear third party liability regime under the CSC.

The Joint Protocol has as objective to ensure a mutual recognition and extension of benefits between Paris and Vienna countries of the regime established by either Convention and thus creates a high degree of unification among the parties to those instruments. The advantage of a wider adhesion to the Joint Protocol is that it is could be achieved relatively quickly. However, the Joint Protocol did not foresee the participation of States not party to the Paris or Vienna regime, which renders it unattractive to some states. Moreover, it does not address questions connected to nuclear accidents occurring in the course of transport of nuclear material between States belonging to the two different regimes. Also, parties to the Paris regime have raised issues of reciprocity which leave further open questions regarding the actual levels of protection afforded by the Joint Protocol.

Proponents of the CSC claim that the CSC can achieve the objective of uniting the present fragmented international situation by allowing States party to either the Paris or the Vienna regime, as well as States not party to either of the two, to join. It could establish a global regime, not excluding the non-EU Member States. However, as pointed out in the legal study, nuclear states are reluctant to accept its preferential treatment of victims outside the installation state and this treaty has not yet entered into force (although progress seems currently to be made in this field).

Probably the most remarkable intervention during the conference co-organised by the European Commission and the Brussels Nuclear Law Association was the contribution by Melchior Wathelet, former judge at the European Court of Justice and former Vice-Prime Minister of Belgium, on the legal basis for an intervention by the European Union in the field of nuclear liability. He defended an extensive interpretation of article 98 of the Euratom Treaty, that could constitute a sufficient basis for harmonization of the legislation of the member states in the field of insurance as well as of liability for the nuclear risks. He is of the opinion that it is not necessary to have recourse to article 203 of the Euratom Treaty that requires unanimity in the Council.

In the concluding remarks on the Conference, the European Commission announced the establishment of an expert group on nuclear liability, the conclusions of which group we shall now examine further.

The Nuclear Liability Expert Group created by the European Commission

The Nuclear Liability Expert group convened by the European Commission proceeded to work in three working groups that first met on April 5th, 2011:

1. Claims handling and related matters
2. Insurance amounts and capacity
3. The international conventions

Before coming to their conclusions, the working groups stated that their proposals were subject to the community competence in this field, to the subsidiarity and proportionality principles and to their compatibility with the 1997 Vienna Convention and the 2004 Paris Convention.

The first working group came up with the following recommendations:

1. The Member States should have a claims management system
2. The Member States are to establish a “one stop shop” for claims registration and record
3. Establishment of criteria for EU-wide claims handling communication in the case of an accident
4. Establishment of “one single desk” for claims handling (i.e. coordination between stakeholders, centralization of proceedings and recording of payments and follow-up of the availability of the funds)
5. Allowance for the assessment of insurers abilities by national authorities
6. Setting up of rules for advance payments on compensation
7. Clarification on how claims management costs are born

The recommendations of the second working group on insurance were the following :

1. The Member States must work jointly with nuclear operators and nuclear insurance providers, to put in place cover that fulfills the revised Convention requirements and ratify the Protocols to the applicable Convention as soon as possible.
2. The European Commission is to clarify and communicate the acceptable conditions under which EU states are allowed to act, directly or indirectly, to cover nuclear third party liability risks.
3. Ensure that all financial security provided is sufficiently secure, stable and solvent to guarantee maximum protection for nuclear accident victims; also ensure that a robust and effective claims handling system is put in place.
4. In the longer term the operators and financial security providers are to continue working together to investigate any additional nuclear liability capacity that might become available in the future.

Working group 3 recommended one or more EU decisions and a EU Directive. The EU decisions recommended are the following :

1.All EU members are required to join the Vienna Convention or the Paris Convention as amended respectively in 1997 and 2004, OR

2.EU members wishing to join the Vienna Convention or the Paris Convention should ratify exclusively the Vienna Convention or the Paris Convention as amended respectively in 1997 and 2004.

3.All EU members Parties to either the Vienna Convention or the Paris Convention are urged:

-to adhere as soon as possible to “their” respective amending Protocols of 1997 and 2004

-if they have not already done so, to adhere to the Joint Protocol

As to the recommended EU Directive, this should in its recitals recognize the relevance and robustness of the basic principles of the international conventions and the importance of the Joint Protocol. The provisions of the Directive would

-Establish amounts for nuclear third party liability and compulsory financial security op to these amounts in line with the 2004 Paris Convention provisions; Member States would have a reasonable timeframe to implement such requirements (e.g. 10 years);

-Require Member States to ensure that compensation available under their legislation shall indemnify victims in all EU Member States without discrimination based upon nationality, domicile or residence.

It is to be noted that the recommendations of the third working group were not made unanimously. Participants with a Vienna Convention background thought they were going too far. Others pleaded for unlimited liability or wanted a tabula rasa approach and wanted to return to common tort law principles for the law of nuclear third party liability.

The European Commission’s Public Consultation on Nuclear Liability

Between 30 July 2013 and 22 October 2014, the European Commission published an online questionnaire on nuclear liability. The outcome of this public consultation was presented by the DG Energy of the European Commission at the occasion of a second conference co-organised by the European Commission and the Brussels Nuclear Law Association in January of this year.

It concluded that there was a strong request for common rules, although there was some reluctance observed on the part of operators and public authorities, who also favored soft legislation over binding legislation.

With respect to claims management, the Commission observed a strong request for strengthening of all aspects, including registration, handling and settlement of claims, although the insurers considered there was no need for change. No clear request for change was perceived for the question of whether priority should be given to particular heads of damages.

With respect to insurance amounts, there was a clear overall response that current levels are insufficient, although the operators were of the opinion that current amounts are sufficient. Those who consider the amounts insufficient give a strong support for higher levels of financial security, while imposing unlimited liability alone is not seen as a complete solution.

The respondents of the questionnaire did not give a clear support for Euratom accession to the existing international conventions. Operators, public authorities and insurance companies are in support of maintaining the principle of channeling of liability as embodied in the conventions, while there is a significant interest for economic channeling primarily from citizens who replied to the public consultation.

Workshop “Taking nuclear third party liability into the future/Fair compensation for citizens and level playing field for operators co-organised in January 2014 by the European Commission and the Brussels Nuclear Law Association

Again, it would lead us too far to give a complete overview of all interventions of this conference. One of them, as seen before, was the presentation by the Commission of the outcome of the Public Consultation.

Another remarked intervention was that of a representative of Munich Re, from the German insurance world, who claimed it was possible, if all operators were obliged to take out this insurance, to create liability cover for catastrophic accidents for an amount of 10 billion Euros. A catastrophic accident as viewed in this scheme is an accident comparable with INES scale 5-7. There would be no intervention for nuclear accidents below this level on the INES Scale. The amount of 10 billion Euros would also be in excess of 2,5 billion Euros. This means that the catastrophe insurance would intervene only to the extent that other sources have already paid 2,5 billion Euros to the victims of the accident. However, most Paris Convention countries have only financial security available up to maximum 1,5 billion Euros, so that additional financial security would need to be found. In Vienna Convention countries the available financial security may even be less.