Nuclear damage

A different approach from that adopted by the Oil Pollution Fund Convention has been adopted in the case of nuclear damage. The 1960 Paris Convention on Third Party Liability in the field of Nuclear Energy, concluded under the auspices of the OEEC (now OECD) was the first international convention to regulate the liability for risks arising out of the peaceful use of nuclear energy.

The purpose of the Paris Convention is to harmonize national legislation with regard to third party liability and insurance against atomic risks and to establish a regime for liability and compensation in the event of a nuclear incident. The Convention generally applies only to nuclear incidents occurring, and damage suffered, in the territory of Contracting States. In 1963, a supplementary convention to the Paris Convention was adopted ('the Brussels Supplementary Convention'.)

Article 3(b) of the Brussels Supplementary Convention (as amended by the subsequent 1964 Protocol) provides that the contracting parties undertake that compensation in respect of damage caused by a nuclear incident (other than one occurring entirely in a territory of a non-contracting State) shall be provided up to an amount of 120 million units of account per incident as follows:

1 up to an amount of at least 5 million units of account, out of funds provided by insurance or other financial security, such amount to be established by the legislation of the contracting party in whose territory the nuclear installation of the operator liable is situated;

2 between this amount and 70 million units of account, out of public funds to be made available by the Contracting Party in whose territory the nuclear installation is situated;

3 between 70 million and 120 million units of account, out of public funds to be made available by the Contracting Parties according to the formula for contributions specified in Article 12 of the Brussels Supplementary Convention.

Article 12(a) of the Brussels Supplementary Convention provides that:

The formula for contributions according to which the contracting party shall make available the public funds referred to in Article 3(b)(iii) shall be determined as follows

(i) as to 50%, on the basis of the ratio between the gross national product at current prices of each contracting party and the total of the gross national product's current prices of all Contracting Parties as shown by the official statistics published by the Organisation for Economic Co-operation and Development for the year preceding the year in which the nuclear incident occurs;

(ii) as to 50%, on the basis of the ratio between the thermal power of the reactors situated in the territory of each Contracting Party and the total thermal power of the reactors situated in the territories of all the Contracting Parties . . .

The Brussels Supplementary Convention therefore creates an international pool out of which the highest layer of compensation is payable in the event of damage from a nuclear incident, and levies contributions toward that pool from Contracting States according to a formula based upon GNP and total capacity of their nuclear reactors.

Unlike the Paris Convention, the 1963 Vienna Convention on Civil Liability for Nuclear Damage is potentially of worldwide geographical application. The Vienna Convention also establishes a regime for liability and compensation for nuclear incidents, but it permits the Contracting State within whose territory the installation is situated to limit the liability of the operator.

By Article VII, the installation State undertakes to require the operator to maintain insurance or other financial security covering his liability for nuclear damage in such amount as the State shall specify. But the installation State is bound to meet compensation claims up to the operator's limit of liability, if the operator's insurance or other financial security is inadequate to meet such claims. There is, however, no provision similar to the Brussels Supplementary Convention either in the Vienna Convention or elsewhere for any international pooling arrangement to pay compensation above the operator's limit of liability.