1. The production and use of atomic energy involves hazards of a special character and potentially far-reaching consequences. Despite the high level of safety achieved in this field, the possibility remains that incidents capable of causing considerable damage could occur.
2. A special régime for nuclear third party liability is necessary since the ordinary common law is not well suited to deal with the particular problems in this field. Indeed, if the ordinary law were applied, there are several different persons who might be held liable for damage caused by a nuclear incident and victims would, in all likelihood, have great difficulty in establishing which of them was, in fact, liable. Moreover, that person would have unlimited liability without being able to obtain complete insurance cover. The prime objective of this special régime is to ensure the adequate compensation of damage caused to persons and to property by a nuclear incident. However, the operators of nuclear installations should not be exposed to an excessively burdensome liability and all those (such as builders or suppliers) associated with the construction or operation of nuclear installations should be exempted from liability.
3. A special régime for third party liability should as far as possible provide a uniform system for all Western European countries. The effects and repercussions of a nuclear incident will not stop at political or geographical frontiers and it is highly desirable that persons on one side of a frontier should be no less well protected than persons on the other side.
For these reasons, an international agreement setting up such a régime is desirable. Such an agreement, supplementing the measures applied in the related and important fields of public health and safety and the prevention of accidents, may also facilitate the solution of third party liability problems at a national level.
4. Furthermore, the possible magnitude of a nuclear incident requires international collaboration between national insurance pools. Only by an effective marshalling of the resources of the international insurance market by coinsurance and reinsurance can sufficient financial security be made available to meet possible compensation claims. The establishment at an international level of uniform third party liability regulations is essential if this collaboration is to be achieved.
5. The core of the third party liability problem is upon whom, in what proportions and on what conditions, the risk of legal liability for damage caused by nuclear incidents should fall. The solution to this problem involves reconciling the various interests in question: compensating as fully as possible the victims, limiting the liability of the operator and exempting all other persons from liability. Finally, it should be noted that countries may provide in their legislation for supplementary compensation by means of public funds (1) .
6. This reconciling of the various interests in question has led to a system based on the following principles:
7. The Convention provides an exceptional régime and its scope is limited to risks of an exceptional character for which common law rules and practice are not suitable. Whenever risks, even those associated with nuclear activities, can properly be dealt with through existing legal processes, they are left outside the scope of the Convention.
The Convention does not apply to nuclear incidents occurring in the territory of non-Contracting States or to damage suffered in such territory, unless the national legislation of the operator liable otherwise provides [Articles 2 and 23(a)], but with one small exception which grants certain persons rights against operators even though operators are not liable under the Convention (see paragraph 37). The term "territory" as used in the Convention is understood to include territorial seas (2).
8. The special régime of the Convention applies only to nuclear incidents occurring at or in connection with certain nuclear installations, or in the course of transport of nuclear substances as defined. States remain free, of course, to take additional measures outside the Convention to apply its provisions to nuclear incidents not covered thereby, but this must be done through funds other than those made available under the Convention.
A nuclear incident is defined as any occurrence or succession of occurrences having the same origin which causes damage, provided that the occurrence or succession of occurrences, or any of the damage caused, are due to radioactivity or a combination of radioactivity with toxic, explosive or other hazardous properties of nuclear fuel or radioactive products or waste or due to ionizing radiations emitted by any other source of radiation which is inside a nuclear installation, as defined in the Convention. Thus, for example, an uncontrolled release of radiation extending over a certain period of time is considered to be a nuclear incident if its origin lies in one single phenomenon even though there has been an interruption in the emission of radioactivity. With this definition of "nuclear incident" it is clear that where both the occurrence and the damage are due to radioactivity, compensation may be claimed. Similarly, where the occurrence and the damage are conventional, there will be no claim. Compensation may, however, be claimed under the Convention either where an occurrence due to radioactivity causes conventional damage or injury or where an occurrence of conventional origin causes radiation damage or injury.
The situation may arise, however, where both a nuclear incident and a conventional occurrence are so closely interrelated that the resulting damage or loss may be said to have been caused jointly by the nuclear incident and such other occurrence. In such case, to the extent that the damage or loss caused by the conventional occurrence is not reasonably separable from that caused by the nuclear incident, such damage or loss is considered to be damage caused by the nuclear incident and thus compensation in respect thereof may be claimed under the Convention [Article 3(b), first sentence].
Where, however, damage has been caused jointly by a nuclear incident and an emission of ionizing radiation not covered by the Convention given that the source is outside a nuclear installation and is not constituted of materials covered by the Convention it has been provided in order not to prejudge the assignment of liability in such a case, that the Convention does not limit or otherwise affect the liability of any person in connection with such an emission of ionizing radiation [Article 3(b), second sentence].
9. Nuclear installations are defined as reactors (3) other than those comprised in any means of transport (see paragraph 11), factories for the manufacture or processing of nuclear substances, factories for the separation of isotopes of nuclear fuel, factories for the reprocessing of irradiated nuclear fuel, and facilities for the storage of nuclear substances. Where nuclear substances are stored only as an incidental part of their carriage -- for example, on a railway station platform -- the facilities used for such storage will normally not be deemed to come within the definition of nuclear installation because of the transitory and fortuitous nature of the storage. Nuclear fuel is defined as fissionable material, i.e. uranium, including natural uranium in all its forms, and plutonium in all its forms. Nuclear substances are defined as nuclear fuel, other than natural uranium and depleted uranium, and radioactive products or waste. Depleted uranium means uranium which contains a smaller proportion of the isotope U-235 than is contained in natural uranium (4).
Some activities, as for example, mining, milling and the physical concentration of uranium ores, do not involve high levels of radioactivity and such hazard as there is concerns persons immediately involved in those activities rather than the public at large. Hence, these activities do not fall within the scope of the exceptional régime of the Convention. Factories for the manufacture or processing of natural or depleted uranium, facilities for the storage of natural or depleted uranium, and the transport of natural or depleted uranium, since the level of radioactivity is low and there are no criticality risks, are also excluded.
Installations where small amounts of fissionable materials are to be found, such as research laboratories, are likewise outside the Convention. Particle accelerators, too, are excluded. Finally, where materials, such as uranium salts, are used incidentally in various industrial activities not related to the nuclear industry, such usage does not bring the plant concerned within the scope of the Convention.
10. Similarly, risks which arise in respect of radioisotopes usable for any industrial, commercial, agricultural, medical, scientific or educational purposes are excluded from the scope of the Convention, provided the radioisotopes have completed their final stage of manufacture and are outside a nuclear installation. Such risks are not of an exceptional nature and, indeed, are covered by the insurance industry in the ordinary course of business. Despite the rapidly increasing use of radioisotopes in many fields, which will require continual and careful observance of health protection precautions, there is little possibility of catastrophe. Hence no special third party liability problems are posed and the matter is left to ordinary legal régimes.
11. For different reasons, only reactors other than those comprised in any means of transport are covered; i.e., reactors which are used or incorporated for use in a means of transport as a source of power, whether for propelling it or for any other purpose such as, for example, serving as a source of electricity for lighting the means of transport, are excluded [Article 1(a)(ii)] (5).
12. Further, given that the possible applications of nuclear fusion are not yet clear, it does not seem possible or necessary to take this form of nuclear activity into consideration in the Convention.
13. So as to take account of future developments as well as new activities which may involve risks of an exceptional kind, it is provided that the Steering Committee for Nuclear Energy, the governing body of the OECD Nuclear Energy Agency (NEA), may extend the scope of the Convention to other nuclear installations [Article 1(a)(ii)]. The Steering Committee may furthermore include new fissionable materials in the definition of nuclear fuel [Article 1(a)(iii)]. It may also decide that a nuclear installation or nuclear fuel or nuclear substances at present included may, by reason of the small risks involved, cease to be covered by the Convention [Article 1(b)]. Decisions of the Steering Committee in all these matters are taken, in accordance with the Statute of NEA, by mutual agreement of the members of the Steering Committee representing Contracting Parties [Article 16].
14. In Western Europe, with but few exceptions, there is a long-established tradition of legislative action or judicial interpretation that a presumption of liability for hazards created arises when a person engages in a dangerous activity. Because of the special dangers involved in the activities within the scope of the Convention and the difficulty of establishing negligence in view of the complex techniques of atomic energy, this presumption has been adopted for nuclear liability. Absolute liability is therefore the rule; liability results from the risk irrespective of fault [Articles 3 and 4]. This does not, however, mean that merely to engage in a nuclear activity or to transport nuclear substances is to be considered in itself as a presumption of fault; but where an incident occurs, the liability of the operator of the nuclear installation concerned is absolute.
15. All liability is channelled onto one person, namely the operator of the nuclear installation where the nuclear incident occurs. Under the Convention, the operator - and only the operator - is liable for nuclear incidents at installations and no other person is liable. The Convention deals, of course, only with civil liability. The operator of a nuclear installation is defined as the person designated or recognized as the operator of that nuclear installation by the competent public authority [Article 1(a)(vi)]. Where there is a system of licensing or authorization, the operator will be the licensee or person duly authorized. In all other cases he will be the person required by the competent public authority, in accordance with the provisions of the Convention, to have the necessary financial protection to meet third party liability risks. Thus, during test operation when a reactor, for the initial trial period, is normally operated by the supplier before being handed over to the person for whom the reactor was supplied, the person liable will be appropriately designated by the competent public authority. Where an action is brought, the court concerned will be bound to consider the operator as the person considered as the operator by the competent public authority of the country where the operator's installation is situated.
Two primary factors have motivated in favour of this channelling of all liability onto the operator as distinct from the position under the ordinary law of torts. Firstly, it is desirable to avoid difficult and lengthy questions of complicated legal cross-actions to establish in individual cases who is legally liable. Secondly, such channelling obviates the necessity for all those who might be associated with the construction or operation of a nuclear installation other than the operator himself to take out insurance also, and thus allows a concentration of the insurance capacity available.
A Contracting Party may decide that, where one person operates a number of nuclear installations at the same site, these installations are to be treated as a single nuclear installation; this decision may include other premises on the same site where radioactive material is held but which are not nuclear installations as defined in the Convention [Article 1(a)(ii)]. Apart from possible advantages from the insurance point of view of all the installations on the site being grouped together, such a decision would enable victims to benefit from the same compensation régime without having to establish where on the site the incident originated.
16. No person other than the operator is liable for compensation for damage caused by a nuclear incident [Article 6(b)] except in the following cases:
- with regard to damage to the nuclear installation itself or to on-site property (as well as to any other nuclear installation on the same site) (see paragraph 40) [Article 3(a)(ii)] for which the operator is not liable under the Convention, the Convention leaves it to the ordinary rules of law to determine the liability of an individual where such damage results from an act or omission of that individual done with intent to cause damage [Article 6(c)(i)(1)]; such is also the case for damage for which the operator is not liable by virtue of Article 9 (see paragraph 48);-
- in addition, the Convention does not affect the liability of a person duly authorized to operate a reactor comprised in a means of transport where no operator is liable, under the Convention, for damage caused by nuclear substances coming from or going to that reactor [Article 6(c)(i)(2)] (see also paragraph 11).
- Finally, this rule does not affect certain existing international agreements in the field of transport (see paragraph 35) nor is it intended to affect the rules of public international law with regard to any possible responsibility of states towards each other [Annex II to the Convention].
17. It is essential to the notion of channelling liability onto the operator that no actions may lie against any other person and in particular, for example, any person who has supplied any services, materials or equipment in connection with the planning, construction, modification, maintenance, repair or operation of a nuclear installation.
In the ordinary course of law, on the contrary, should an incident arise due to a defect in design or in material supplied, a person suffering damage may well have a right of action against the supplier, for example, on the basis of the so-called products liability.
18. Furthermore, the operator might well have a recourse for indemnity in respect of any compensation which he has to pay for damage to third parties. A corollary to the notion of channelling is therefore that possible recourse actions by the operator (or the insurer or other financial guarantor to whom the operator's right of recourse may have been transferred) against suppliers in respect of any sums which the operator has paid as compensation are barred. If they were not, each supplier would have to insure himself against the same risk already covered by the operator's insurance and this would involve a costly duplication of insurance with no benefit to victims.
19. There are, however, two exceptions to this rule. Firstly, where the damage caused by a nuclear incident results from an act or omission done with the intention of causing damage, the operator's normal right of recourse against the individual who so acts or omits to act is specifically retained [Article 6(f)(i)]. The right of recourse is limited to a right against the individual physical person who acts or omits to act with intent to cause damage. There is no right of recourse against the employer of such a person and the principle of respondeat superior is thus excluded. Imputation to the employer of acts or omissions of individuals done with intent to cause damage has been barred, for it would be contrary to the purpose of the Convention. Under the Convention, operators of nuclear installations can never be held to any civil liability beyond the amount laid down in accordance with Article 7 even if the damage was caused by them with intent to cause damage. For this maximum liability, insurance or other financial security will be available.
Secondly, rights of recourse may be exercised by the operator liable where and to the extent that they are expressly provided for by contract [Article 6(f)(ii)]. These rights of recourse may, of course, be exercised by the insurer or other financial guarantor by way of subrogation.
The provisions of Article 6(f) relating to the operator's right of recourse do not include his rights to recover from joint tortfeasors in the case where more than one operator is liable.
20. Where the damage gives rise to the liability of more than one operator, the liability of the different operators involved is joint and several and any of them may therefore be sued for the whole amount of the damage. The total amount of compensation available is therefore the aggregate of the sums of each of the operators concerned. This rule, however, does not apply to a nuclear incident involving nuclear substances in the course of carriage in one and the same means of transport, or involving such substances where they are stored incidental to the carriage, in one and the same nuclear installation; here the total amount of compensation is the highest amount established with respect to any of them. In any event, whether the nuclear incident occurs at or in connection with an installation or in the course of transport, no operator is liable to pay more than the maximum amount established for him in respect of a nuclear incident in accordance with Article 7 [Article 5(d)]. The ordinary operation of common law as regards contributions between persons jointly and severally liable will regulate the recovery of sums paid as compensation to third parties as between the different operators involved.
21. In the event of a nuclear incident involving nuclear fuel or radioactive products or waste which have been stolen, lost, jettisoned or abandoned, liability is imposed either on the operator from whose nuclear installation the materials came immediately before such an event or on any other operator who has assumed liability for them in accordance with the Convention [Articles 3(a) and 4].
22. When nuclear incidents occur in the course of transport of nuclear substances, the choice of the person liable must fall either upon the carrier or upon the operator of the nuclear installation in connection with which the substances are carried. The choice will not affect any contractual arrangements which may be made by the person liable and, in turn, such arrangements will not, of course, have any effect upon third persons.
It would seem normal, in the case of transport, for the carrier to be the person liable and this is the present situation at common law. However, in the case of nuclear substances, very special considerations are involved. The carrier will generally not be in a position to verify the precautions in packing and containment taken by the person sending the substances. Moreover, if the carrier is to be liable he will have to obtain the necessary insurance coverage in respect of potentially high liability, and this would result in increased transport charges for the operator. Transport insurance ordinarily covers only the value of the goods transported, i.e., their loss or destruction, and does not extend to damage which such goods may cause to third persons.
23. If liability is to be imposed on the operator, the operator in question must be defined: is it to be the operator who sends nuclear substances or who receives them? In principle, liability is imposed on the operator sending the substances since he will be responsible for the packing and containment and for ensuring that these comply with the health and safety regulations laid down for transport [Article 4(a)].
24. The liability of the sending operator ends when the operator of another nuclear installation has assumed liability for the substances pursuant to the express terms of a written contract [Article 4(a)(i) and (b)(i)]; but, if the contract contains no such express terms, his liability ends when the operator of another nuclear installation has taken charge of the substances [Article 4(a)(ii) and (b)(ii)]. It also ends when the substances have been taken in charge by a person duly authorized to operate a reactor comprised in a means of transport, if the substances are intended to be used in that reactor [Article 4(a)(iii)]. Thus, from the point of view of the person suffering damage, the burden of proof will be on the sending operator to show that the operator of some other nuclear installation has assumed liability under contract or that such operator or a person operating a reactor comprised in a means of transport has taken charge of the nuclear substances. The precise moment of the taking in charge will normally be determined by the competent tribunal in the event of actions (but also see paragraph 32). Similarly, if the substances are sent to the operator from a person operating a reactor comprised in a means of transport, the liability of the receiving operator begins when he has taken charge of them [Article 4(b)(iii)].
25. The Convention clearly cannot impose liability upon persons not subject to the jurisdiction of the Contracting Parties. If the substances are consigned to a destination in a non-Contracting State, it is therefore the sending operator who is liable until the substances have been unloaded from the means of transport by which they arrived in the territory of the non-Contracting State [Article 4(a)(iv)] subject to the conditions described in paragraphs 27 and 28.
26. In the converse situation, where substances are being carried from a non-Contracting State to a Contracting Party, i.e. where there is no sender in the territory of the Contracting Parties it is vital for victims that there should always be somebody liable within the territory of the Contracting Parties: liability in this case is imposed upon the operator for whom the substances are destined, and with whose written consent they have been sent, from the moment that they have been loaded on the means of transport by which they are to be carried from the territory of the non-Contracting State [Article 4(b)(iv)] subject always to the conditions described in paragraphs 27 and 28.
27. In the cases referred to in paragraphs 25 and 26, the liability of the operator is, however, normally more restricted than may appear from Article 4(a) and (b). As has already been pointed out (see paragraph 7) the operator will not be liable under the Convention, unless the national legislation of the Contracting Party in whose territory his installations is situated otherwise provides, for nuclear incidents occurring in or damage suffered in the territory of a non-Contracting State, though certain persons may have rights which they can enforce against him (see paragraph 37).
28. Thus, in the case envisaged in paragraph 25, the liability of the operator sending the substances normally ceases when the substances enter the territory of the non-Contracting State (including its territorial waters). He will be liable on such territory only if use has been made in his national legislation of the option under Article 2 to extend the territorial field of application of the Convention.
Similarly, in the case envisaged in paragraph 26, the operator for whom the nuclear substances are destined is normally liable only from the moment when the substances leave the territory (territorial waters included) of the non-Contracting State. He will be liable on such territory only if this same extension of the territorial field of application of the Convention has been made under his national legislation.
29. In addition, since nuclear substances may be stored temporarily in the course of their carriage it was necessary to establish a clear rule as to which operator would be liable if such storage took place in a nuclear installation. Although facilities where nuclear substances are stored only incidentally to their carriage are normally excluded from the definition of "nuclear installation" (see paragraph 9), such facility may itself be a nuclear installation within the meaning of Article 1(a)(ii). However, the operator of a nuclear installation will not be liable for damage caused by a nuclear incident involving only nuclear substances which are stored at his installation incidental to their carriage where another operator or person is liable pursuant to Article 4 [Article 5(b)].
30. There is one exception to the basic principle that only the operator is liable under the Convention. A Contracting Party may, by legislation, on condition that the requirements of Article 10(a) with regard to financial security are fulfilled, provide that a carrier be liable under the Convention in substitution for an operator of a nuclear installation in its territory. Such substitution will be in accordance with the terms laid down in the legislation and by decision of the competent public authority. Moreover, the substitution must be requested by the carrier and have the consent of the operator of the nuclear installation situated in the territory of the Contracting Party in question. Once the decision has been taken, the carrier will be liable in accordance with the Convention in place of that operator. For all the purposes of the Convention, the carrier is then considered, in respect of nuclear incidents occurring in the course of carriage of nuclear substances, as an operator of a nuclear installation in the territory of the Contracting Party whose legislation has provided for the substitution [Article 4(d)].
Where, in respect of the carriage of nuclear substances coming from or destined for different operators, the carrier has assumed, by substitution, the liability of each of the operators concerned, such carrier is considered as if he were each of the different operators concerned and the rules relating to liability of more than one operator will apply in the same way as if there had been no substitution.
31. In order to facilitate the transport of nuclear substances, especially in the event of transit through a number of countries, it is provided that in respect of each carriage the operator liable in accordance with the Convention must provide the carrier with a certificate issued by or on behalf of the insurer or other person providing the financial security required pursuant to Article 10. However, this general obligation operates in the case of international carriage only, each Contracting Party being free to dispense with it in relation to carriage which takes place wholly within its territory. The certificate must contain the name and address of the operator liable and the details of the financial security. This information may not be subsequently contested by the person by whom or on whose behalf the certificate was issued. The certificate must also include an indication of the nuclear substances involved and the carriage in respect of which the security applies, as well as a statement by the competent public authority that the person named is an operator within the meaning of the Convention [Article 4(c)] (6).
32. For transport of nuclear substances to or from installations situated in its territory, a Contracting Party may require the operators of the installations for whom the substances are carried from abroad to take the substances in charge the moment the substances reach its territory or even earlier. Similarly, in the case of nuclear substances sent by operators of nuclear installations in its territory to a foreign destination, a Contracting Party may require that the nuclear substances shall remain in the charge of such operators until they have left its territory or even longer.
33. The possession of a certificate by a carrier does not imply any right to enter the territory of a Contracting Party. Moreover, a Contracting Party may subject the transit of nuclear substances through its territory to the condition that the maximum amount of liability of the foreign operator concerned is increased if it considers, taking account of the special dangers of the nuclear substances in the particular transit in question, that such amount does not adequately cover the risks. But the maximum amount thus increased, which applies only to incidents occurring on the territory of the State being transited, cannot exceed the maximum amount of liability of operators of nuclear installations situated in its territory [Article 7(e)].
It was recognized, however, that a right of entry in case of urgent distress into the ports of States and a right of innocent passage through territorial seas is granted under international law and that by agreement or under international law there may be a right to fly over or land on the territory of States; hence the provisions of Article 7(e) do not apply to a transit by sea or by air in these cases [Article 7(f)].
34. Where, and this may well be a normal case, the carriage involves nuclear substances sent by a number of different operators, the maximum total amount for which such operators are jointly and severally liable is the highest amount established with respect to any of them pursuant to Article 7. As has already been stated (see paragraph 20), there is no accumulation of amounts for a nuclear incident in the course of transport when the nuclear substances involved are in one and the same means of transport or are stored incidentally to the transport, in one and the same nuclear installation.
35. It has been thought advisable not to interfere with existing international agreements in the field of transport in force or open for signature, ratification or accession at the date of the Convention (29th July 1960) especially since countries outside Europe are parties to them. International agreements in the field of transport are understood to mean international agreements dealing with third party liability for damage involving a means of transport and international agreements dealing with bills of lading. To avoid the possibility of conflicting provisions, it is laid down that the Convention does not affect the application of such agreements [Article 6(b)].
36. Hence, a person suffering damage caused by a nuclear incident occurring in the course of transport may have two rights of action: one against the operator liable under the Convention and another against the carrier liable under existing international agreements in the field of transport (7).
Where the operator liable is at the same time the carrier, for example, where he transports nuclear substances on his own means of transport, these two possible actions may be brought against one person. In this case, however, the operator cannot take advantage of the provisions of international agreements in the field of transport to reduce or alter his liability under the Convention.
37. A person so liable under any international agreement or under any legislation of a non-Contracting State acquires by subrogation the rights under the Convention of the person whom he has compensated [Article 6(d)]. If a nuclear incident occurs in the territory of a non-Contracting State or damage is suffered in such territory, any person who has his principal place of business in the territory of a Contracting Party or who is the servant of such a person acquires the rights which the person whom he has compensated would have had under the Convention had it not been for Article 2 [Article 6(e)]. This rule, which provides for rights against the operator in circumstances where he is not liable under the Convention to persons suffering damage, i.e., in non-Contracting States, is the only derogation from the general principle of Article 2. But these rights, and the rights of subrogation mentioned earlier, can only be exercised by a person against the operator to the extent that the operator does not have a right of recourse against him [Article 6(g)].
The rules relating to damage or loss caused jointly by a nuclear incident and by an incident other than a nuclear incident or caused jointly by a nuclear incident and by an emission of ionizing radiation not covered by the Convention (see paragraph 8) apply equally to nuclear incidents occurring in the course of transport.
All these rules relating to transport apply to all the different means of transport.
38. Although actions for compensation under the Convention, whether arising out of nuclear incidents occurring at or in connection with nuclear installations or in the course of transport, can in principle only be brought against the operator, the right to bring actions against the insurer or other person providing the financial security, either as an alternative to the operator or in addition to him, is maintained where the national law of the court having jurisdiction grants a right of direct action in such a case [Article 6(a)].
39. The Convention contains no detailed provisions determining the kind of damage or injury which will be compensated, but it is provided merely that damage must be to persons or property and related causally to a nuclear incident. What should be considered as damage to persons or property and the extent to which compensation will be recoverable, is, in view of the very wide divergence of legal principles and jurisprudence in the law of torts in European countries, left to be decided by the competent court in accordance with the national law applicable [Article 3].
40. In respect of property, however, there is no right of compensation under the Convention for damage to the installation itself or to any other nuclear installation, including one under construction, on that same site. The purpose of this last exclusion is to avoid the financial security constituted by the operator from being used principally to compensate damage to such installations to the detriment of third parties. On-site property which is used or is to be used in connection with any such installation is also excluded from the third party liability of the nuclear operator; this exclusion does not affect the personal property of any person employed on the site.
Furthermore, the nuclear operator must compensate damage to the means of transport upon which the nuclear substances involved were at the time of a nuclear incident occurring in the course of carriage and outside a nuclear installation.
However, the compensation of damage to the means of transport must not have the effect of reducing the liability of the operator in respect of other damage to less than either 5 000 000 Special Drawing Rights (SDRs) of the International Monetary Fund (see paragraph 43) or, since this amount of 5 000 000 SDRs is considered to be a minimum, any higher amount established by the legislation of a Contracting Party [Article 7(c)]. In practice, if the damage other than that to the means of transport is less than this amount, the part of the amount not used is available, if necessary, for compensation for damage to the means of transport. On the other hand, if other damage is more than 5 000 000 SDRs, there may be proportional distribution of the total amount available to cover all the damage including damage to the means of transport. This might involve paying compensation of more than 5 000 000 SDRs for other damage but cannot result in reducing the amount of compensation for such other damage below 5 000 000 SDRs.
Where property belongs to the operator himself, no action for compensation would lie in any event since a person cannot sue himself.
41. The operator cannot be liable outside the Convention for damage to on-site property. However, where a right to compensation for damage exists by virtue of contractual arrangements, such right remains unaffected by the Convention.
42. Any person who suffers damage caused by a nuclear incident, whether he is a third party inside or outside the installation or an employee of the operator of the installation in question, is covered by Article 3. In most countries, employees who suffer damage may also be entitled in respect of such damage to compensation under national or public health insurance, social security, workmen's compensation or occupational disease compensation systems. In principle it is felt that benefits under such systems should be retained for employees whether of the installation in question or employed in other establishments, but it is left to the law establishing such systems to decide this as well as whether employees should also be entitled to compensation under the Convention. This law will also decide whether the bodies responsible for such systems can turn to the operator to recover for payments made, it being understood that in any event the operator cannot be obliged to pay more than the maximum liability laid down. Where such systems have been established by an intergovernmental organisation these questions are left to be decided by the regulations of the organisation [Article 6(h)].
43. In the absence of a limitation of liability, the risks could in the worst possible circumstances involve financial liabilities greater than any hitherto encountered and it would be very difficult for operators to find the necessary financial security to meet the risks.
The maximum liability in respect of any single nuclear incident, whether occurring at or in connection with a nuclear installation or in the course of carriage of nuclear substances, has been fixed at 15 000 000 SDRs (8). However, it is possible to derogate from this amount in two ways.
In the first place, a Contracting Party may, taking into account the possibilities for the operator of obtaining insurance or other financial security up to the level normally required under the Convention [Article 10], establish by legislation either an amount greater than 15 000 000 SDRs or a lower amount; such lower amount may not, however, be less than 5 000 000 SDRs [Article 7(a) and (b)].
In the second place, a Contracting Party may also establish a limit of liability at less than 15 000 000 SDRs when the nuclear installation or, in the case of carriage, the nuclear substances involved are not considered by that Contracting Party as likely to cause great damage as compared to the other nuclear installations and transports referred to in the Convention (e.g. certain small research reactors or laboratories). The aim of this option is to avoid burdening the nuclear operators concerned with unjustified insurance or financial security costs; its use, however is subject to the condition that the reduced amount so established may not be less than 5 000 000 SDRs (9).
44. If no special rule were envisaged with respect to maximum liability for nuclear incidents occurring in the course of transport, an operator might be liable for varying amounts depending on the countries crossed in the course of the voyage. To avoid this it is provided that, subject to the provisions of Article 7(e), the maximum liability will, in the same way as for nuclear incidents occurring at or in connection with nuclear installations, be determined by the national legislation of the operator liable [Article 7(d)].
45. The possibility of removing the limit in the case of fault on the part of the operator or his employees was considered, but it was feared that in the absence of experience in operating nuclear installations, the notion of fault or gross negligence would be very difficult to define and would tend to be given a wide interpretation. Moreover, unlimited liability could easily lead to the ruin of the operator without affording any substantial contribution to compensation for the damage caused.
46. The amount fixed for the maximum liability in accordance with Article 7 does not include interest and costs awarded by a court in actions for compensation. Such interest and costs are payable by the operator in addition to any sum for which he is liable under Article 7 [Article 7(g)].
47. Bodily injury caused by radioactive contamination may not become manifest for some time after the exposure to radiation has actually occurred. The legal period during which an action may be brought is therefore a matter of great importance. Operators and their financial guarantors will naturally be concerned if they have to maintain, over long periods of time, reserves against outstanding or expired policies for possibly large but unascertainable amounts of liability. On the other hand, it is unreasonable for victims whose damage manifests itself late to find no provision has been made for compensation to them.
A further complication is the difficulty of proof involved in establishing or denying that delayed damage was, in fact, caused by the nuclear incident. A compromise has necessarily been arrived at between the interests of those suffering damage and the interests of operators.
A period of ten years running from the date of the nuclear incident is provided, after which a right to compensation is extinguished if no action has been brought before a competent court [Article 8(a)].
Where nuclear fuel or nuclear substances have been stolen, lost, jettisoned or abandoned it is provided that, while the period of ten years is to be calculated from the date of the nuclear incident, it shall in no case exceed a period of twenty years from the date of the theft, loss, jettison or abandonment [Article 8(b)]. It seems that insurers will not be able for the time being to give cover for a period exceeding ten years from the date of the theft, loss, jettison or abandonment of nuclear substances.
States may, however, establish a shorter period of not less than two years running from the time when the damage and the operator liable have become known to the victim or ought reasonably to have become known, provided that the ten-year period is not exceeded [Article 8(c)]. This shorter period may constitute a conventional period of prescription which may be suspended or interrupted even, where this is recognized, by a mere extrajudiciary demand, provided always that such suspension or interruption does not have the effect of prolonging the period beyond ten or twenty years, as the case may be. On the other hand, the shorter period may be an absolute period after which no right to compensation exists.
Proceedings may also be brought after the ten-year period in two cases. Firstly, if under the national legislation of the operator liable his liability is covered for a longer period, the law of the competent court may provide that proceedings may be brought during such longer period. Any such extension of the period, however, may not affect the rights of compensation under the Convention of any person who, within the ten-year period, has brought an action against the operator in respect of loss of life or personal injury [Article 8(a)]. Secondly, a person who suffers an aggravation of the damage for which he has already brought an action for compensation within the time-limit laid down, may amend his claim after the expiry of the time-limit provided that no final judgment has yet been entered by the competent court [Article 8(e)].
The rules governing the choice of the competent court are laid down in Article 13 (see paragraphs 54-56) and where the courts of more than one Contracting Party might be competent, the competent court is left to be determined by the European Nuclear Energy Tribunal [Article 13(c)(ii)]. In these cases a victim cannot bring his action until the Tribunal has made its determination. In order to deal with this situation, it is provided that the right to compensation shall not be extinguished if, within the time-limits provided for in accordance with the Convention, prior to the determination by the Tribunal, an action has been brought before any of the courts from which the Tribunal can choose or a request has been made to a Contracting Party to institute a determination pursuant to Article 13(c)(ii) by the Tribunal and an action is brought subsequent to such determination within the time, if any, fixed by the Tribunal [Article 8(d)].
48. The absolute liability of the operator is not subject to the classic exonerations such as force majeure, Acts of God or intervening acts of third persons, whether or not such acts were reasonably foreseeable and avoidable. Insofar as any precautions can be taken, those in charge of a nuclear installation are in a position to take them, whereas potential victims have no way of protecting themselves.
The only exonerations lie in the case of damage caused by a nuclear incident directly due to certain disturbances of an international character such as acts of armed conflict and hostilities, of a political nature such as civil war and insurrection, or grave natural disasters of an exceptional character, which are catastrophic and completely unforseeable, on the grounds that all such matters are the responsibility of the nation as a whole. No other exonerations are permitted. The national legislation of the operator liable may, however, provide that he is to be liable even in the case of a grave natural disaster of an exceptional character [Article 9].
Where the incident or damage is caused wholly or partly by the person suffering damage, it will be for the competent court, in accordance with national law, to decide the effect of such negligence upon the claim for compensation.
As has been pointed out (see paragraph 16), where the operator is exonerated, if the applicable law so provides an individual may be liable for damage caused by a nuclear incident resulting from that individual's act or omission done with intent to cause damage.
49. To meet liability towards victims, it is provided that the operator shall be required to have and maintain financial security up to the maximum amount established pursuant to Article 7 of the Convention [Article 10(a)]. Financial security may be in the form of conventional financial guarantees or ordinary liquid assets, though more probably, insurance coverage. A combination of insurance, other financial security and State guarantee may be accepted. An operator may change the insurance or other financial security, provided that the maximum amount is maintained.
Although the operator will thus be required to have financial security available for each nuclear incident, in practice insurance coverage will, it seems, only be available per installation for a fixed period of time rather than in respect of a single incident. There is nothing in the Convention which prevents this, provided that the maximum amount available is not reduced or exhausted as a result of a first incident without appropriate measures being taken to ensure that financial security up to the maximum amount is available for subsequent incidents.
It is for the competent public authority to determine the type and terms of the insurance or other financial security which the operator will be required to hold. The type and terms envisaged do not imply the establishment of a supervisory authority in the field of insurance in those countries where control by such an authority over insurance activities does not at present exist, but only the control necessary to ensure compliance with the Convention. Thus the competent public authority must ensure that insurance policies are satisfactory in that they do not contain clauses which might render them ineffective, for example, that the insurer or other financial guarantor cannot put up any defences such as non-payment of premiums against persons seeking compensation.
Whatever conditions are laid down by the competent public authority, something untoward could happen, such as where the financial guarantor is bankrupt, or where insurance is per installation for a fixed period and after a first incident it is impossible to reinstate the financial security up to the maximum liability of the operator. It was recognized that these circumstances could not set aside the obligation of the operator under Article 10 or that of the State which is required to ensure that the operator always holds financial security up to his maximum liability. The Contracting Parties may therefore be led to intervene in such a situation to avoid their international responsibilities being involved.
Where one operator operates two or more reactors or other nuclear installations on a site, and the Contracting Party concerned has not, pursuant to Article 1(a)(ii), determined that they shall be treated as a single installation, that Contracting Party will nevertheless have to decide whether it is necessary for the operator to have and maintain insurance or other financial security for each of the nuclear installations or for the site as a whole.
The guiding principle is that financial security must be available in the amount established in accordance with Article 7 for each nuclear incident, whatever system is adopted by the competent public authority in regard to licensing and insurance of nuclear installations.
The relations between the operator and the insurer or other financial guarantor, for example, with regard to rights of recourse against the operator by these persons, are left to be settled by each State.
50. To ensure as far as possible that there will never be a period in which less than the full amount fixed is available, it has been necessary to provide that the financial security can only be suspended or cancelled, i.e., brought to an end before the expiry of the period provided for in the policy, after a period of at least two months' notice has been given to the competent public authority. The competent public authority may, of course, fix a longer period of notice. Where the financial security is provided in respect of the operator's liability for nuclear incidents occurring in the course of transport, the competent public authority must be satisfied that the financial security is provided for the duration of the liability of the operator in respect of any carriage, and, in particular, that it cannot be suspended or cancelled before a transport has been completed [Article 10(b)].
51. All sums provided as financial security can only be drawn upon to pay compensation for damage caused by a nuclear incident; they need not be segregated but cannot be used to meet any other claims [Article 10(c)].
52. Claims for compensation following a nuclear incident may differ greatly in nature, amounts and time, and measures may be necessary to ensure an equitable distribution of the amount of compensation available if this amount is or may be exceeded. It will be for the competent court, in accordance with national law, to decide the nature, form and extent of the compensation, within the limits of the Convention, as well as equitable distribution [Article 11]. Thus, the granting of annuities and their amounts and, as has already been noted, the effect on his claim to compensation of contributory negligence on the part of a person suffering damage, will be directed by national law.
It is for each State to decide whether measures for equitable distribution should be taken in advance or at the time when actions are brought. Measures may involve providing a limit per person suffering damage or limits for damage to persons and damage to property.
53. If the system envisaged under the Convention - in particular the recognition of a single competent forum to deal with all actions arising out of the same nuclear incident and the enforceability of its judgments in all Contracting Parties - is to be effective, it is necessary to ensure that there are no impediments, for example, by way of exchange control or other financial regulations. Therefore, it is laid down that insurance and reinsurance premiums, sums which have to be paid out as insurance or reinsurance, or other financial security, as well as sums due as compensation and interest and costs, shall be freely transferable between monetary areas of the Contracting Parties [Article 12]. This freedom to transfer in regard to insurance is not intended, however, to affect national regulations governing insurance activities such as, for example, the establishment of technical reserves.
54. There are many factors motivating in favour of a single competent forum to deal with all actions against the operator - including direct actions against insurers or other guarantors and actions to establish rights to claim compensation - arising out of the same nuclear incident. Most important is the need for a single legal mechanism to ensure that the limitation on liability is not exceeded. Moreover, if suits arising out of the same incident were to be tried and judgments rendered in the courts of several different countries, the problem of assuring equitable distribution of compensation might be insoluble.
The general rule is that a court of the Contracting Party in whose territory the nuclear incident occurs has jurisdiction [Article 13(a)].
55. Special arrangements are necessary in the case of a nuclear incident which occurs outside the territory of a Contracting Party or where it is not possible to determine with certainty the place of the nuclear incident. For example, an incident may occur on the high seas or, where an incident is due to continuous radioactive contamination in the course of transport, it may not be possible to determine the place of such incident. Accordingly, it is provided that the competent court in such incidents is the court of the place where the installation of the operator liable is situated [Article 13(b)]. Whilst there might be some practical disadvantages for the victims in recourse to the jurisdiction of the operator as a result of the distance involved, it has not been possible to find another solution which would enable the victims to refer to their national courts and which would at the same time secure unity of jurisdiction.
56. If the provisions relating to jurisdiction result in the courts of more than one Contracting Party being competent, special rules have been included to secure unity of jurisdiction.
Where the nuclear incident occurs partly outside the territory of the Contracting Parties and partly within the territory of one of them, a court of that one Contracting Party has jurisdiction [Article 13(c)(i)].
In any other case jurisdiction will lie with one of the courts which would have been competent, determined, at the request of a Contracting Party concerned, by the European Nuclear Energy Tribunal as being the most closely related to the case in question [Article 13(c)(ii)].
57. The competent court in all cases is intended to deal with all actions which might be brought against an operator, either directly by persons suffering damage [under Article 3] or by other persons who might be liable under international agreements in the field of transport or under the legislation of a non-Contracting State [Article 6(d) and (e)]. The forum for actions in recourse by an operator under Article 6(f) or for actions for contribution by an operator against other operators in the case of joint and several liability is not fixed in the Convention and will be decided by national law.
58. The concept of a single forum carries with it the need to ensure that final judgments rendered in that forum will be recognized by and can be enforceable in the other countries without re-examination of the merits. Hence such final judgments will be enforceable in any of the other Contracting Parties as soon as the formalities required have been complied with [Article 13(d)].
Final judgments enforceable under Article 13(d) do not include judgments rendered against persons other than the operator liable under Article 6(b), judgments rendered in actions in recourse by the operator under Article 6(f), actions against the operator under Article 6(h) or actions for contribution between persons jointly and severally liable.
59. Where a Contracting Party is sued for compensation under the Convention, it is provided that such Party may not invoke any jurisdictional immunities which it might otherwise have, except in respect of measures of execution [Article 13(e)].
60. The competent court must apply the provisions of the Convention without any discrimination based upon nationality, domicile or residence [Article 14(a)] and for all matters, both substantive and procedural, not governed by these provisions, the national law or legislation, including rules of private international law, which are not affected by the Convention. Such national law or legislation must also be applied without any discrimination based upon nationality, domicile or residence [Article 14(c)].
61. The establishment of a limited liability necessarily involves a possible reduction in compensation for damage suffered, and in the event of a catastrophe it may well be that the limited amount of compensation available is inadequate to meet all the claims. For social and psychological reasons it seems difficult to accept this consequence without recognizing that the intervention of the State may be necessary.
62. Furthermore, it is recognized that in addition to any intervention which may be necessary to ensure that the requirements of Article 10 with regard to financial security are fulfilled (see paragraph 49), a Contracting Party may take such measures as it deems necessary to provide for an increase in the amount of compensation specified in the Convention [Article 15(a)] whether within the third party liability of the operator or outside such liability. Where a Contracting Party takes measures to provide for compensation above 5 000 000 SDRs in so far as it is to be paid out of public funds, such measures, whether within the third party liability of the operator or outside such liability, may be applied under special conditions which derogate from the provisions of the Convention and in particular need not be applied without discrimination to all victims [Article 15(b)]. Hence, the Convention does not regulate the methods and means of application of State intervention and the availability of additional compensation above 5 000 000 SDRs out of public funds for foreign victims is left to be dealt with outside the Convention.
The relations between the State and operators in so far as actions by the State against its operators are concerned, are left to be settled by each State.
63. The final clauses of the Convention deal with disputes [Article 17], reservations [Article 18], ratification [Article 19], amendments [Article 20], accession [Article 21], duration, revision and withdrawal [Article 22], notification of the application of the Convention to territories for whose international relations the Contracting Party is responsible [Article 23], and notice to the Signatories of receipt of the various instruments deposited pursuant to the final clauses [Article 24]. In the case of disputes as to the interpretation of the Convention, it is provided that these shall be examined by the Steering Committee for Nuclear Energy and in the absence of friendly settlement shall, upon the request of a Contracting Party concerned, be submitted to the European Nuclear Energy Tribunal set up by the Security Control Convention of 20th December 1957. The Tribunal will act in accordance with the rules governing its organisation and functioning, which are set out in the Protocol annexed to the Security Control Convention and in its Rules of Procedure.
