[Senate Treaty Document 107-21]
[From the U.S. Government Publishing Office]
107th Congress Treaty Doc.
SENATE
2d Session 107-21
_______________________________________________________________________
CONVENTION ON SUPPLEMENTARY COMPENSATION FOR NUCLEAR DAMAGE
__________
MESSAGE
from
THE PRESIDENT OF THE UNITED STATES
transmitting
CONVENTION ON SUPPLEMENTARY COMPENSATION FOR NUCLEAR DAMAGE, DONE AT
VIENNA ON SEPTEMBER 12, 1997. CONVENTION ADOPTED BY A DIPLOMATIC
CONFERENCE CONVENED BY INTERNATIONAL ATOMIC ENERGY AGENCY (IAEA) AND
OPENED FOR SIGNATURE AT VIENNA, SEPTEMBER 29, 1997 DURING IAEA GENERAL
CONFERENCE
November 15, 2002.--Convention was read the first time, and together
with the accompanying papers, referred to the Committee on Foreign
Relations and ordered to be printed for the use of the Senate
LETTER OF TRANSMITTAL
----------
The White House, November 15, 2002.
To the Senate of the United States:
I transmit herewith, for Senate advice and consent to
ratification, with a declaration, the Convention on
Supplementary Compensation for Nuclear Damage done at Vienna on
September 12, 1997. This Convention was adopted by a Diplomatic
Conference convened by the International Atomic Energy Agency
(IAEA) and was opened for signature at Vienna on September 29,
1997, during the IAEA General Conference. Then-Secretary of
Energy Federico Pena signed the Convention for the United
States on that date, subject to ratification. Also transmitted
for the information of the Senate is the report of the
Department of State concerning the Convention.
The Convention establishes a legal framework for defining,
adjudicating, and compensating civil liability for nuclear
damage that results from an incident in the territory of a
Party, or in certain circumstances in international waters, and
creates a contingent international supplementary compensation
fund. This fund would be activated in the event of an incident
with damage so extensive that it exhausts the compensation
funds that the Party where the incident occurs is obligated
under the Convention to make available.
The international supplementary fund would be made up
largely of contributions from Parties that operate nuclear
power plants. The improved legal certainty and uniformity
provided under the Convention combined with the availability of
additional resources provided by the international
supplementary fund create a balanced package appealing both to
countries that operate nuclear power plants and those that do
not. The Convention thus creates for the first time the
potential for a nuclear civil liability convention with global
application.
Prompt U.S. ratification of the Convention is important for
two reasons. First, U.S. suppliers of nuclear technology now
face potentially unlimited third-party civil liability arising
from their activities in foreign markets because the United
States is not currently party to any international nuclear
civil liability convention. In addition to limiting commercial
opportunities, lack of liability protection afforded by treaty
obligations has limited the scope of participation by major
U.S. companies in the provision of safety assistance to Soviet-
designed nuclear power plants, increasing the risk of future
accidents in these plants. Once widely applied, the Convention
will create for suppliers of U.S. nuclear equipment and
technology substantially the same legal environment in foreign
markets that they now experience domestically under the Price-
Anderson Act. It will level the playing field on which they
meet foreign competitors and eliminate the liability concerns
that have inhibited them from providing the fullest range of
safety assistance.
Second, under existing nuclear liability conventions many
potential victims outside the United States generally have no
assurance that they will be adequately or promptly compensated
in the event they are harmed by a civil nuclear incident,
especially if that incident occurs outside their borders or
damages their environment. The Convention, once widely
accepted, will provide that assurance.
United States leadership is essential in order to bring the
Convention into force soon. With the United States as an
initial Party, other countries will find the Convention
attractive and the number of Parties is likely to grow quickly.
Without U.S. leadership, the Convention could take many years
to enter into force. The creation of a global civil liability
regime will play a critical role in allowing nuclear power to
achieve its full potential in the diverse and environmentally
responsible world energy structure we need to build in the
coming decades.
The Convention is consistent with the primary existing U.S.
statute governing nuclear civil liability, the Price-Anderson
Act of 1957. Adoption of the Convention would require virtually
no substantive changes in that Act. Moreover, under legislation
that is being submitted separately to implement the Convention,
the U.S. contingent liability to contribute to the
international supplementary fund would be completely covered,
either by funds generated under the Price-Anderson Act in the
event of an accident covered by both that Act and the
Convention, or by funds contributed to a retrospective pool by
U.S. suppliers of nuclear equipment and technology in the event
of an accident covered by the Convention but falling outside
the Price-Anderson system. In either case, U.S. taxpayers would
not have to bear the burden of the U.S. contribution to the
international supplementary fund.
The Convention allows nations that are party to existing
nuclear liability conventions to join the new global regime
easily, without giving up their participation in those
conventions. It also permits nations that do not belong to an
existing convention to join the new regime easily and rapidly.
The United States in particular benefits from a grandfather
clause that allows it to join the Convention without being
required to change certain aspects of the Price-Anderson system
that would otherwise be inconsistent with its requirements.
The Convention, without relying on taxpayer funds, will
increase the compensation available to potential victims of a
civil nuclear incident, strengthen the position of U.S.
exporters of nuclear equipment and technology, and permit us to
provide safety assistance to the world's least-safe reactors
more effectively.
I urge the Senate to act expeditiously in giving its advice
and consent to ratification of the Convention on Supplementary
Compensation for Nuclear Damage, with a declaration as set
forth in the accompanying report of the Department of State.
George W. Bush.
LETTER OF SUBMITTAL
----------
The Secretary of State,
Washington, DC, August 7, 2001.
The President,
The White House.
The President: I have the honor to submit to you the
Convention on Supplementary Compensation for Nuclear Damage,
done at Vienna on September 12, 1997. I recommend that this
Convention be transmitted to the Senate for advice and consent
to ratification, with a declaration.
This Convention was adopted by a Diplomatic Conference
convened by the International Atomic Energy Agency (IAEA), and
was opened for signature at Vienna on September 29, 1997,
during the IAEA General Conference. Then-Secretary of Energy
Pena signed the Convention for the United States on that date,
subject to ratification.
Acting in the light of the 1986 Chernobyl accident, the
General Conference of the IAEA decided in 1989, with U.S.
support, to establish within the IAEA a Standing Committee on
Nuclear Liability (SCNL). The SCNL's mandate was to examine
ways to strengthen the existing international legal regime
governing third party liability in the event of another nuclear
accident. The SCNL met formally 17 times in Vienna over the
intervening 7 years. It focused on two projects: (1)
modernizing and strengthening the Vienna Convention on Civil
Liability for Nuclear Damage of May 21, 1963 (the Vienna
Convention), to provide a greater level of protection to third
party victims of a nuclear accident to which that convention
applied; and (2) drafting a new convention on supplementary
funding that would mobilize funds on the international plane to
supplement national funds made available by the ``installation
state'' under its national law and its obligations under other
nuclear liability conventions to which it might also be party.
In May 1997, the SCNL adopted and forwarded to the IAEA
Board of Governors the texts of a Protocol to Amend the Vienna
Convention and of a ``Supplementary Funding Convention'' (as
the Convention on Supplementary Compensation for Nuclear Damage
was then known). The texts were considered by the Board of
Governors at its June 1997 meeting. It decided to convene a
Diplomatic Conference for the week of September 8-12, 1997, to
adopt the two texts and open them for signature. The Diplomatic
Conference adopted the two texts on September 12 and opened
them for signature on September 29, the first day of the 1997
IAEA General Conference. Along with the United States, six
other states (Australia, Lebanon, Lithuania, Morocco, Romania,
and Ukraine) signed the Convention on Supplementary
Compensation for Nuclear Damage (the ``CSC'') during the
General Conference. Six other states (Argentina, the Czech
Republic, Indonesia, Italy, Peru, and the Philippines) have
since signed the CSC, and three states (Argentina, Morocco, and
Romania) have ratified it. (The United States did not sign the
Protocol to Amend the Vienna Convention; it is not party to the
underlying Vienna Convention or to the Organization for
Economic Cooperation and Development's (OECD) Paris Convention
on Third Party Liability in the Field of Nuclear Energy of July
29, 1960 (the Paris Convention), because those conventions do
not take into account the U.S. system of tort liability based
on the laws of the States of the United States.)
The CSC is divided into two parts, a main body and an
annex. The main body creates mechanisms for compensating
nuclear damage caused within the territory of Parties to the
CSC (and in certain cases outside their territory) by a nuclear
incident in a covered installation for which an operator within
a state that is a Party to the CSC is liable under the CSC.
Under the regime created by the CSC, the first tier of
compensation is provided by funds made available under the laws
of the ``installation state.'' The CSC defines an
``installation state'' in relation to a covered nuclear
installation as the Party within whose territory that
installation is situated, or if it is not situated within the
territory of any state, the Party by which or under the
authority of which the nuclear installation is operated. The
minimum first tier compensation level for CSC Parties is set at
a convertible currency equivalent to 300 million special
drawing rights (SDRs) \1\ (about $400 million at current rates
of exchange). There is, however, provision for a phrase-in
period ending in 2007, until which time states may join the CSC
with a first tier amount equivalent to not less than 150
million SDRs (about $200 million). After 2007, the 300 million
SDRs requirement applies to all Parties.\2\ With respect to
accidents within the territory of the United States (including
its territory of the United States (including its territorial
sea), and certain accidents occurring outside U.S. territory,
the requirement for the United States to ensure the
availability of the equivalent of 300 million SDRs in first
tier compensation is already met (with two narrow exceptions)
\3\ by funds that would be provided under the Price-Anderson
Act (42 U.S.C. Sec. 2210).
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\1\ A special drawing right is the unit of account defined by the
International Monetary Fund and used by it for its own operations and
transactions.
\2\ By contrast, the current version of the Vienna Convention
allows parties to limit liability to as little as the equivalent of 5
million 1963 gold dollars (about $50 million at recent gold prices).
Under the Paris Convention (to which most Western European countries
belong) the operator's liability maybe limited to as little as 15
million SDRs per incident. The January 31, 1963, Brussels Convention
Supplementary to the Paris Convention (the Brussels Convention), to
which most Paris Convention Parties also belong, provides for the
Paris/Brussel system to make available no less than 300 million SDRs to
compensation damage in those Paris states that also being to the
Brussels Convention. By comparison, once broadly adopted the CSCs will
assure that no less than 600 million SDRs (about $800 million) will be
available to victims.
\3\ With respect to any nuclear incident occurring outside the
United States involving contractors of the Department of Energy (DOE)
transporting U.S. Government nuclear material, the Price-Anderson Act
limits aggregate legal liability to $100 million. DOE has already
recommended to Congress in its 1999 Report to Congress on the Price-
Anderson Act, submitted to Congress in March 1999 (the 1999 Price-
Anderson Act, submitted to Congress in March 1999 (the 1999 Price-
Anderson Report), that this amount be increased to about $500 million,
which would exceed the CSC requirement of 300 million SDRs. See the
analysis of Annex Article 5 below for a discussion of a narrow set of
potential accidents occurring outside the United States not covered by
the Price-Anderson Act, but for which the United States would be the
``installation state.''
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The second tier of compensation is provided by the
international supplementary compensation fund that gives the
CSC its name. The obligation to contribute to the fund would be
triggered if the ``installation state'' notifies the Parties
that the amount of all eligible claims may exceed the minimum
first tier amount that applies to that state. Approximately 90
percent of the international supplementary fund would be made
up of contributions assessed on the basis of the nuclear power
generating capacity (if any) of each Party to the CSC at the
time the incident occurs; the remainder would be made up of
contributions assessed on the basis of each Party's United
Nations assessment.
Were it needed in its entirety today and were all major
nuclear power generating states party to the CSC, the
international supplementary fund would provide in excess of 300
million SDRs to compensate victims. Of this amount, the United
States, as it possesses about one-third of the world's nuclear
generating capacity, would be obligated to contribute the U.S.
dollar equivalent of approximately 100 million SDRs (about $131
million). When only a few states are party, the U.S.
contribution would be far less (see discussion below of Article
IV(1)).
Legislation to implement this requirement in the United
States in a manner that does not impose a cost on U.S.
taxpayers is being submitted separately to Congress. It
provides that, if an accident covered by the CSC is also
covered by the Price-Anderson Act, funds drawn from
contributions made pursuant to that Act by U.S. nuclear
utilities will cover the U.S. contribution to the international
supplementary fund. In the event of an accident covered by the
CSC, but not covered by the Price-Anderson system, the
legislation would provide that U.S. firms that supply nuclear
equipment and technology will be required to contribute to a
retrospective risk pooling program that will be used to
reimburse the United States for its contribution to the
international supplementary fund (plus any interest and costs
awarded). The obligation of suppliers to pay into the pool
would be deferred until the United States is called upon to
contribute to the international supplementary fund with respect
to an actual covered incident.
A third tier of compensation would be available in some
states, such as the United States, that make available national
funds of more than 300 million SDRs under domestic legislation.
States that make available third tier funds are free to raise
and distribute them in accordance with domestic law, with the
single condition (already met by the United States) that the
availability of these funds not be conditioned on the existence
of reciprocal obligations with other nations that do not have
nuclear installations on their territory.
The CSC incorporates three well-accepted principles that
form the basis for the Price-Anderson system as well as the
Paris and Vienna conventions. It (1) requires that all claims
resulting from a covered nuclear incident be adjudicated in a
single forum (in most cases the courts of the Party within
which the nuclear incident occurs), (2) channels liability for
all claims to the nuclear installation operator, and (3)
provides for the strict liability of the operator (i.e.,
without the need to prove negligence).
The CSC establishes two legal criteria to be met by a state
wishing to become a Party. First, each CSC Party must also be a
Party to the 1994 Convention on Nuclear Safety. The United
States met this condition on July 10, 1999. The second is that
each Party to the CSC must also either be party to the Vienna
Convention, the Paris Convention, or must have domestic nuclear
liability statutes that conform to the requirements set forth
in the CSC's Annex. The Annex, in turn, contains a grandfather
clause specifically designed to permit the United States to
join the new Convention without substantive change to the
Price-Anderson system.
The CSC assures that in most cases significantly greater
resources will be available from both domestic and
international sources to compensate potential victims and
provide for restoration of the environment in the territory of
Parties in the event of a nuclear incident. It also lays the
foundation for a global legal regime governing nuclear
liability. This regime would link, through legally binding
treaty relations, states that are party to the Vienna
Convention (32 states, including a number of Central and
Eastern European states), the Paris Convention (17 states in
Western Europe) and those states that are currently not party
to either the Vienna Convention or the Paris Convention,
including the United States, Canada, China, Japan, Russia, and
South Korea, as well as many states that do not produce
nuclear-generated power. Previous efforts (in particular those
using the Vienna convention as a basis) failed to create such a
global regime because the United States, the world's largest
nuclear power-generating state, was not prepared to alter its
fundamental tort-law system to conform to the Vienna Convention
and because non-nuclear power generating states had no
incentive to join that regime.
The CSC addresses the first of these problems by providing
the grandfather clause in Article 2 of the Annex that allows
the United States to become a Party without significantly
altering Price-Anderson as it currently exists.\4\
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\4\ Becoming a Party, would, however, affect the U.S. Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Sec. 9601, et seq.) (CERCLA), insofar as it applies
to a narrow category of nuclear incidents, namely those occurring in
international waters that affect the environment or natural resources
of the U.S. Exclusive Economic Zone (EEZ) and over which U.S. courts
would have jurisdiction under the CSC. This change would limit the
scope of parties liable for damage but would result in the guarantee of
more funds available to compensate nuclear damage from this category of
nuclear incidents than is available under CERCLA.
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The second problem is addressed by the international
supplementary fund, which has no analog in the Vienna
Convention. Fifty percent of the fund is to be used to
compensate damage occurring outside the ``installation state''
(transboundary damage), including transboundary damage
occurring in a non-nuclear power generating Party. The
availability of this fund, especially as half of it must be
applied toward transboundary damage, creates a strong incentive
for such non-nuclear states to join the regime, creating for
the first time the potential for a nuclear liability convention
that will apply globally.
Increasing potential compensation for victims and for
environmental damage and eventually creating a uniform global
legal regime are important goals in themselves, but U.S.
ratification of the CSC may also have two additional benefits.
First, the CSC can strengthen U.S. efforts to improve nuclear
safety, because, once widely accepted, the CSC will eliminate
ongoing concerns on the part of U.S. suppliers of nuclear
safety equipment and technology that they would be exposed to
damage claims by victims of a possible future accident at a
facility where they have provided assistance. This exposure to
liability exists not only in the country where safety work has
been performed and in other countries where damage might occur,
but also in the United States because the suppliers are based
here and are therefore subject to suit in U.S. courts. The CSC
provides a mechanism for removing these liability concerns for
suppliers, thus creating a legal environment that facilitates
the provision of safety assistance.
Second, U.S. participation in a global liability regime
will allow U.S. exporters of nuclear technology and equipment
to compete more effectively in foreign markets generally.
Today, as noted above, these firms are exposed to potentially
unlimited liability in their foreign businesses and to suit in
U.S. courts. Even if the suits are baseless, expenses to defend
such cases can be substantial. When the United States and the
state whose nationals are involved are both Parties to the CSC,
however, liability exposure will be channeled to the operator
in the ``installation state,'' thus substantially limiting the
nuclear liability risk of U.S. suppliers. Once the CSC is
widely adopted, the entire nuclear supplier industry will be
able to operate abroad under a single set of rules similar to
those that have applied in the United States under the Price-
Anderson Act since the beginning of the commercial nuclear
power industry in the 1950s, and that have contributed to the
development of safe and effective nuclear technology in this
country.
The following is an article-by-article analysis of the CSC:
The Preamble refers to the existing international
instruments and national legislation that form the legal
context within which the CSC is designed to operate, states the
goals of creating a worldwide liability regime and increasing
the amount of compensation for nuclear damage, and recognizes
that the existence of such a worldwide regime would encourage
regional and global cooperation to increase the level of
nuclear safety.
Article I contains definitions of 12 terms used in the CSC.
They include definitions of the Vienna and Paris Conventions,
``Special Drawing Right,'' ``nuclear reactor,'' ``installation
state,'' ``nuclear damage,'' ``measures of reinstatement,''
``preventive measures,'' ``nuclear incident,'' ``installed
nuclear capacity,'' ``law of the competent court'' and
``reasonable measures.'' The definition of ``nuclear damage''
is substantially longer and more involved than the others,
reflecting a need to accommodate different concepts of tort
liability found in a wide variety of domestic legal systems
while at the same time ensuring uniformity with respect to
certain core elements. The types of damage covered by CSC are
thus divided into two categories: those that must be
compensated (loss of life, personnel injury, and property loss
or damage), and those that are to be compensated ``to the
extent determined by the laws of the competent court.'' This
second category provides the national court adjudicating claims
under the CSC with flexibility to determine under that state's
legal system how and to what extent to compensate the following
types of losses: those economic losses not falling in the
categories of loss of life, personnel injury, and property loss
or damage; the costs of measures of reinstatement of impaired
environment; loss of income deriving from an economic interest
in any use or enjoyment of the environment; the costs of
preventive measures taken to mitigate damage from an imminent
or actual nuclear incident; and any other economic loss
recognized by the general law on civil liability of that court.
The types of loss or damage enumerated in Article I are (with
the exception of the costs of preventive measures) only covered
by the CSC to the extent that the loss or damage arises out of
or results from ionizing radiation emitted inside a nuclear
installation or emitted from nuclear fuel or radioactive
products or waste in, or of nuclear material coming from,
originating in, or sent to, a nuclear installation.
Article II lays out the overarching scope of the CSC and
the extent of its application and establishes the relationship
of the Annex to the CSC. Paragraph 1 states that the CSC's
purpose is to supplement the system of compensation provided
pursuant to national law that implements the Vienna Convention
or the Paris Convention or that complies with the CSC's Annex.
Paragraph 2 states that the CSC applies ``to nuclear damage for
which an operator of a nuclear installation used for peaceful
purposes situated in the territory of a Contracting Party is
liable'' under the Vienna or Paris Convention or under national
law that complies with the Annex. The limitation to
installations used for peaceful purposes excludes military
facilities from the coverage of the CSC.\5\ Paragraph 3
incorporates the Annex as an integral part of the CSC.
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\5\ Each Party will decide which of its installations are used for
peaceful purposes under the CSC. In the United States, installations
used for peaceful purposes would not include nuclear submarines and
other installations used for military operations, i.e., all operations
of the Department of Defense. Some of the installations operated by the
Department of Energy may also be excluded from coverage of the CSC.
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Article III contains the central undertaking of the CSC.
Paragraph 1(a) obligates the ``installation state'' to ensure
the availability of 300 million SDRs, or a greater amount it
may have specified to the Depository (the Director General of
the IAEA) before the incident, or an amount not less than 150
million SDRs during the transitional period ending September
29, 2007. The funds made available under this subparagraph
constitute the first tier of compensation available in the
event of a nuclear incident in a Party to the CSC. Paragraph
1(b) establishes the obligation on all Parties to the CSC to
make available public funds according to the formula specified
in Article IV. These contributions make up the international
supplementary fund that constitutes the second tier of
compensation.
Paragraph 2(a) requires that first tier funds be
distributed equitably without discrimination on the basis of
nationality, domicile or residence. The courts of the
``installation state'' are thus required to treat domestic and
transboundary victims without regard to their nationality when
allocating the first tier of compensation. Subject to
obligations it may have under other conventions on nuclear
liability, the ``installation state'' is, however, free to
include or exclude damage suffered in an non-Party state from
the first tier. Paragraph 2(b) subjects the international
supplementary fund to the same non-discrimination requirement,
subject to Article V (which determines the geographical scope
within which damage must occur in order to be eligible for
compensation from the fund) and Article XI(1)(b) (which
reserves 50 percent of the fund in favor of compensating
transboundary damage).
Paragraph 3 of Article III reduces contributions to the
fund proportionately among the contributing Parties if the
damage compensated does not use up the entire fund. Paragraph 4
creates a separate category of interest and costs that may be
assessed by a competent court and allocates any such interest
and costs among the various possible contributors to the first
two tiers proportionately. Contributions by the various
possible contributors of their proportionate share of any
interest and costs awarded will be required in addition to
their actual contributions made pursuant to paragraph 1(a) and
paragraph 1(b) of Article III and may cause their total
contributions to exceed the contribution caps or minimums
otherwise specified in the CSC. Interest and costs are allowed
by the Price-Anderson Act and CERCLA and will be provided for
in the implementing legislation that will be submitted with
respect to the financing of U.S. contributions to the
international supplementary fund.
Article IV establishes the formula under which
contributions to the fund are to be calculated.
Paragraph 1(a)(i) assesses 300 SDRs per unit of installed
capacity, which is defined in paragraph 2 as one megawatt of
thermal power. Paragraph 1(a)(ii) assesses an additional amount
equal to 10 percent of the amount assessed in (i), to be
contributed by all Parties on the basis of the ratio between
their United Nations rate of assessment for the year preceding
the year in which the nuclear incident occurs and the total of
such rates for all CSC Parties.
Subpargraph (b) states that each Party's contribution shall
constitute the sum of the amounts attributable to it under
subparagraph (a), provided that states assessed the minimum
rate by the United States and having no nuclear reactors shall
be exempt from the requirement to contribute. The proviso was
added in order to facilitate adherence to the CSC by very small
developing states (e.g., Pacific Island nations).
Subparagraph (c) contains a contribution cap. It provides
that the maximum contribution that may be charged to a Party,
other than the ``installation state,'' must not exceed a
specified percentage, equal to its UN rate of assessment plus
eight percentage points, of the fund as a whole. For the United
States this percentage would be 33 percent (assuming a United
Nations rate of assessment of 24 percent plus 8 percent); i.e.,
the U.S. share of the fund would be capped at one-third, based
on a U.S. assessment of 25 percent.\6\ Absent the cap, if the
United States and only a few other states were Parties (e.g.,
soon after the CSC enters into force), the proportion
represented by the U.S. contribution would otherwise be much
higher. For example, if the supplementary fund were to be
activated when the United States, South Korea, Canada and Japan
were the only nuclear power-generating states party to the CSC,
the U.S. contribution to the fund without the 33 percent cap
would be about 93 million SDRs out of a total fun of about 150
million SDRs (i.e., the United States would contribute 62
percent). Under the cap, however, the U.S. contribution would
be limited to about 50 million SDRs (33 percent of 150) and the
fund would actually total 107 million SDRs.
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\6\ The recent reduction in the U.S. assessment to 22 percent
lowers the U.S. contribution under Article IV(1)(b) and the U.S. cap
under Article IV(1)(c) with respect to covered nuclear incidents
occurring after the year 2001.
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When the cap applies, the fund created would be smaller
than it would otherwise have been, but this possible reduction
of funds available for victims was judged to be acceptable when
weighed against the likelihood that major nuclear power
generating countries would not ratify the CSC if they faced a
potentially disproportionate financial burden in the early
states of building a global regime. To emphasize the
transitional nature of the cap, the subparagraph further
provides that it begins to phase out when a substantial
fraction of the world's nuclear generating capacity, 625,000
MW, is represented by Parties to the CSC, at which point each
Party's cap is increased by one percentage point. For each
75,000 MW in excess of 625,000 MW represented by CSC Parties,
the level of the cap further increases one percentage point.
Paragarph 2, which defines a unit of installed capacity as
1 MW of thermal power, states that the formula shall be
calculated on the basis of the installed capacity of the
reactors shown at the date of the incident on a list
established and updated pursuant to Article VIII.
Paragraph 3 provides that for the purpose of calculating
contributions, a reactor shall be taken into account from the
date when nuclear fuel elements are first loaded into the
reactor and shall be excluded when all fuel elements have been
removed permanently from the reactor core and have been safely
stored in accordance with approved procedures. For the United
States, these procedures are those approved by the Nuclear
Regulatory Commission.
Article V, paragraph 1, describes the geographical
locations within which damage must be suffered in order to
qualify a claimant for compensation from the international
supplementary fund, provided a Party's courts have jurisdiction
under Article XIII. Nuclear damage is covered if suffered:
within the territory of a Party, or in or above the EEZ or the
continental shelf of a Party in connection with the
exploitation or exploration of the natural resources of that
zone or shelf. Also covered is nuclear damage suffered in or
above maritime areas beyond the territorial sea of any Party
(but outside the territorial sea of any non-Party) where the
damage is suffered (a) by a national of a Party; (b) on board
or by a ship flying the flag of a Party; (c) on or by an
aircraft registered in a Party; or (d) on or by an artificial
island, installation or structure under the jurisdiction of a
Party. Paragraph 2 permits a state to assimilate persons having
their habitual residence in its territory as its nationals for
the purposes of paragraph 1(b)(ii) (concerning treatment of a
national of a Party damaged while on the high seas). Paragraph
3 clarifies that the term ``national of a Contracting Party''
includes juridical and natural persons, as well as the Party
itself or any of its constituent subdivisions.
Article VI obligates the Party whose courts have
jurisdiction over claims arising from a nuclear incident to
notify the other Parties of the incident if it appears that the
damage caused by the incident exceeds, or is likely to exceed,
its first tier amount and that contributions to the
international supplementary fund may be required. Following
such notification, Parties are required to make arrangements
for determining which procedures shall apply for making funds
available, if subsequently required.
Article VII requires the Party whose courts have
jurisdiction, once it has given notice pursuant to Article VI,
to request the other Parties to make available funds for the
international supplementary fund (up to the maximum amount
required from each Party under the contribution formula) when
and to the extent required without any restriction and gives
that Party exclusive competence to disburse those funds.
Article VIII sets up a system for establishing a list of
nuclear reactors in each Party for the purpose of calculating
the contributions to the international supplementary fund in
the event an incident occurs.
Paragraph 1 obligates a state when it deposits its
instrument of ratification, acceptance, approval or accession
to communicate to the Depository a list of its reactors
containing the necessary particulars (i.e., the thermal
capacity) of those reactors. Paragraph 2 requires Parties to
communicate promptly modifications to their list of reactors.
When a reactor is to be added, the notification must be made at
least 3 months in advance of the introduction of nuclear
material into the reactor. Paragraph 3 permits other Parties to
challenge particulars contained in the list submitted under
paragraph 1 or subsequent modifications thereof and to submit
any unresolved differences to the CSC's dispute resolution
provisions discussed below. Paragraph 4 obligates the IAEA to
maintain, update and circulate the list on an annual basis.
Paragraph 5 obligates the IAEA to notify Parties of
communications and objections it receives with respect to this
list.
Article IX, paragraph 1, requires each Party to enact
legislation permitting it or other Parties to the extent they
have made contributions to the international supplementary fund
to benefit from any right of recourse (a right to recover
damages from a third party) enjoyed by the liable operator. The
implementing legislation to be submitted separately to Congress
will contain a provision giving effect to this requirement in
the CSC with respect to situations where the Price-Anderson Act
does not apply but there is a right of recourse. (There is no
right of recourse under the Price-Anderson Act.) Paragraph 2
permits the Party of the liable operator to provide for the
recovery from the operator of any public funds made available
to compensate damage from a nuclear incident if the damage
results from fault on the part of the operator. Paragraph 3
permits the Party whose courts have jurisdiction over claims
arising from an incident under the CSC to exercise the rights
of recourse provided under paragraphs 1 and 2.
Article X, paragraph 1, provides that the system of
disbursements of the Party whose courts have jurisdiction shall
be applied to all funds made available under the CSC. Paragraph
2 provides that the Party whose courts have jurisdiction shall
not require claimants to bring separate proceedings depending
on the source of the funds provided (i.e., whether they came
from first tier funds, the second tier comprised of the
international supplementary fund, or third tier funds provided
under the law of the ``installation state'') and that Parties
may intervene in the proceeding against the operator liable.
Paragraph 3 guarantees that no Party will be asked to
contribute to the international supplementary fund if required
first tier funds are sufficient to cover all claims.
Article XI, paragraph 1, stipulates the allocation of the
international supplementary fund. Subparagraph 1(a) allocates
one half of the fund for the compensation of damage in all
Parties without differentiation. Subparagraph 1(b) makes the
other half of the fund available for the compensation of
transboundary damage. Subparagraph 1(c) provides that if the
funds in the first tier are less than the equivalent of 300
million SDRs (i.e., if the ``installation state'' is benefiting
from the 10-year phase in when the incident occurs), the
proportion of the international supplementary fund available
for transboundary damage is proportionately increased.
Paragraph 2 deals with the special case when a Party has
exercised its option under Article III(1)(a) and has declared a
first tier amount that is 600 million SDRs or greater. In that
case, the allocation to transboundary damage is eliminated and
the entire international supplementary fund is available on a
non-differentiated basis.
Article XII deals with the relation between the CSC and
other existing or possible future conventions in the field of
nuclear liability. Paragraph 1 allows Parties to the Vienna
Convention or Paris Convention to invoke their rights under
those conventions against other Parties to them that are also
party to the CSC in order to accumulate public funds that they
may be called upon to supply to the CSC's international
supplementary fund. Paragraph 2 permits Parties to make
provisions for a third tier of compensation of nuclear damage
above and beyond the first tier amount and the international
supplementary fund should they so choose (e.g., the provisions
under the Price-Anderson Act that would result in additional
compensation with respect to a U.S. accident once the first
tier and the international supplementary fund had been
exhausted). Where availability of the third tier under a
Party's domestic law would otherwise depend on reciprocity from
a Party, lack of reciprocity may not be used to deny
compensation to a Party that has no nuclear installations on
its territory. (The Price-Anderson Act does not require
reciprocity in any case, and, because Price-Anderson makes the
U.S. third tier open to all, U.S. citizens would meet
reciprocity requirements of any Party that mandates them.)
Paragraph 3 makes clear that Parties are free to enter into
regional or other agreements for the purpose of accumulating
funds to satisfy their obligation to provide first tier funds
or to provide other additional funds for the compensation of
nuclear damage. Notice of an intention to enter into such
agreements must be given to the other Parties.
Article XIII determines which Party's courts shall have
jurisdiction over claims brought under the CSC and how
judgments rendered by the courts of one Party are to be
recognized by those of another. Paragraph 1 states the general
rule that (vis-a-vis the courts of other Parties) only the
courts of the Party within which the incident occurs shall have
jurisdiction. Paragraph 2 deals with the exceptional case where
the incident occurs within a maritime area coextensive with an
EEZ (i.e., an area extending seaward up to 200 nautical miles
from the baselines from which a state's territorial sea is
measured) that has been or could be established by a Party and
that has been notified to the Depositary. (The United States
will notify the Depositary of its EEZ upon deposit of its
instrument of ratification.) Under this paragraph, the courts
of the coastal Parties exercise exclusive jurisdiction vis-a-
vis the courts of other Parties. Parties to the Paris or Vienna
Convention are permitted to follow the corresponding
jurisdictional provisions of those Conventions with respect to
non-Parties to the CSC. Paragraph 3 grants exclusive
jurisdiction to the courts of the ``installation state'' vis-a-
vis the courts of other Parties where the incident occurs
outside the territory of any Party and outside the maritime
area defined in paragraph 2. Paragraph 4 requires the Parties
involved to determine by agreement which of their courts will
have exclusive jurisdiction where jurisdiction would lie with
the courts of more than one Party under the foregoing rules
(e.g., if the incident were to occur in a maritime area where
the actual or potential economic zone claims of two or more
Parties overlap). Paragraph 5 stipulates that once no longer
subject to appeal, a judgment rendered under the CSC in one
Party's courts shall be recognized in the courts of all other
Parties, except when the judgment was obtained by fraud, the
defendant was not given a fair opportunity to present his case,
or where the judgment is contrary to the public policy (order
publique) of the Party where enforcement is sought or is not in
accord with fundamental standards of justice. Under paragraph
6, a judgment recognized under paragraph 5 shall be enforceable
as though it were a judgment of the courts of the Party where
enforcement is sought and the merits shall not be subject to
further proceedings there. Paragraph 7 extends the recognition
of judgments to include settlements effected in accordance with
conditions established by national legislaiton that are paid
out of the international supplementary fund.
As with similar jurisdictional provisions in earlier
treaties submitted to the Senate for advice and consent to
ratification, it is anticipated that the provisions of Article
XIII would be applied without the need for further implementing
legislation. It should be noted that, after the United States
deposits its instrument of ratification to the CSC, the effect
of Article XIII will be to remove jurisdiction from all U.S.
Federal and State courts over cases concerning nuclear damage
from a nuclear incident covered by the CSC except to the extent
provided in the CSC. Where jurisdiction would lie with courts
in the United States under the CSC, however, the CSC will not
affect the allocation of jurisdiction between State and Federal
courts within the United States.
Article XIV determines which law shall be applied by the
competent court to cases arising under the CSC. Paragraph 1
stipulates that the Vienna Convention, the Paris Convention, or
the Annex to the CSC, as appropriate, shall apply exclusively
to a nuclear incident. Paragraph 2 stipulates that the law
applied shall be that of the competent court, subject to the
provisions of the Vienna Convention, the Paris Convention, or
the Annex, whichever applies pursuant to paragraph 1.
Article XV provides that the CSC does not affect the rights
and obligations of a Party under public international law.
Article XVI deals with dispute settlement. Paragraph 1
obligates the Parties involved in a dispute over the
interpretation or application of the CSC to consult with a view
to settling the dispute by negotiation or other peaceful means.
Paragraph 2 permits any Party to a dispute to submit it after 6
months of consultations to binding arbitration or to the
International Court of Justice. Paragraph 3 permits a Party to
opt out of either of the dispute settlement procedures provided
in paragraph 2 by declaring, at the time of ratification,
acceptance, approval or accession, that it does not consider
itself bound by either or both of the dispute settlement
procedures provided for in paragraph 2. I recommend therefore
that that the U.S. instrument of ratification be subject to the
following declaration:
As provided for in paragraph 3 of Article XVI, the
United States of America declares that it does not
consider itself bound by either of the dispute
settlement procedures provided for in paragraph 2 of
that Article, but reserves the right in a particular
case to agree to follow the dispute settlement
procedures of the Convention or any other procedures.
Paragraph 4 permits a Party that has taken advantage of the
option presented under paragraph 3 to reverse its decision at
any time.
Pursuant to Article XVII the CSC was opened for signature
by all states on September 29, 1997, and it remains open for
signature until its entry into force.
Article XVIII deals with ratification, acceptance and
approval of the CSC. Under paragraph 1, instruments of
ratification, acceptance or approval may be accepted by the
Depositary only from a state that is party to the Vienna
Convention or the Paris Convention, or that declares that its
national law complies with the provisions of the Annex, and
provides further that such state, if it has a nuclear
installation on its territory, must also be party to the 1994
Convention on Nuclear Safety. Paragraph 2 designates the
Director General of the IAEA as the CSC's Depositary. Paragraph
3 requires each Party to provide the Depositary with a copy of
its national legislation implementing the Vienna or Paris
Convention or the provisions of the Annex, as well as any
notification pursuant to Article III(1)(a) (designating a first
tier amount greater than 300 million SDRs), Article XI(2)
(indicating a first tier amount not less than 600 million
SDRs), or Article III(1)(a)(ii) (taking advantage of the phase-
in of the minimum national compensation amount). The Depositary
is required to circulate these notifications to the Parties.
Article XIX deals with accession. It applies the same
criteria and provisions that are applied by Article XVIII to
states that ratify, accept, or approve the CSC to states that
accede to it (i.e., states that do not sign the CSC, but seek
to become party after its entry into force).
Article XX states that the CSC will enter into force on the
90th day following the date on which at least five states
representing among them at least 400,000 units of installed
nuclear capacity have deposited an instrument of ratification,
acceptance, or approval and that the CSC will enter into force
for any state which subsequently ratifies accepts, approves, or
accedes to the CSC 90 days following the deposit of its
instrument. Article XXI permits any Party to denounce the CSC
upon 1 year's notice.
Article XXII deals with cessation. Under paragraph 1, if a
Party notifies the Depositary that it has ceased to be party to
the Vienna or Paris Convention, it shall cease to be party to
the CSC unless it notifies the Depositary that its national
legislation complies with the provisions of the Annex and has
provided the Depositary with a copy of that legislation. Under
paragraph 2, a Party whose national law no longer complies with
the provisions of the Annex and which is not party to the
Vienna or Paris Convention ceases to be party to the CSC.
Under paragraph 3, any Party having a nuclear installation
on its territory which notifies the Depositary that it has
ceased to be party to the 1994 Convention on Nuclear Safety
ceases to be party to the CSC.
Pursuant to Article XXIII, the CSC continues to apply to
any nuclear damage caused by a nuclear incident which occurs
before a Party's denunciation or cessation becomes effective.
Article XXIV authorizes the Depositary to convene, after
consultations with the Parties, a conference for the purpose of
revising or amending the CSC, and requires the Depositary to
convene such a conference at the request of not less than one-
third of the Parties.
Article XXV deals with amendment of the CSC by simplified
procedure. Under paragraph 1, the Depositary is required to
convene a meeting of the Parties on the request of at least
one-third of them for the limited purpose of amending the
amounts stipulated in Article III(1)(a) and (b) (the first tier
amount, the minimum level at which a state may phase in its
first tier amount, and the amount of the international
supplementary fund yielded by application of the contribution
formula set out in Article IV) and the categories of
installations, including contributions payable for them,
referred to in Article IV(3). This reference to the categories
of installations referred to in Article IV(3) was intended to
allow the Parties to change the date when a nuclear reactor
would be included or excluded from the contribution
calculation. Under paragraph 2, amendments proposed at the
meeting shall be adopted if no negative votes are cast. Under
paragraph 3, amendments adopted at the meeting shall be
notified to all Parties. If, within a period of 36 months
following the notification, it is accepted by all states that
were Parties at the time the amendment was adopted, the
amendment will enter into force 12 months after the final
acceptance is received. Under paragraph 4, if the amendment is
not accepted by the states that were Parties at the time it was
adopted within the 36-month period, it is to be considered
rejected. Under paragraph 5 if a state becomes a Party to the
CSC during the 36-month period, that state will be bound by the
amendment if it enters into force. If a state becomes a Party
after the 36-month period, it will be bound by the amendment
when it enters into force. In both cases, the amendment enters
into force for the state in question when the amendment enters
into force or when the CSC enters into force for that state,
whichever is later.
Article XXVI specifies the functions of the Depositary,
which is required to notify Parties and all other states and
the Secretary-General of the OECD (the Depositary of the Paris
Convention) of all significant developments concerning the CSC.
Article XXVII establishes the authentic languages of the CSC
and directs the IAEA's Director General to send certified
copies of the CSC to all states.
The Annex obligates a Party to the CSC that is not party to
the Vienna or Paris Convention to ensure that its national
legislation is consistent with the provisions of the Annex,
insofar as those provisions are not directly applicable as
national law in that Party. A Party having no nuclear
legislation necessary to enable it to give effect to its
obligations under the CSC. As noted above, in the few instances
where implementing legislation is needed to meet the CSC's
obligations, such legislation will be submitted to Congress
separately. With respect to the CSC's other obligations, its
provisions would operate directly.
Article 1(1) sets out definitions of certain terms used in
the Annex (the terms defined in Article I of the CSC also apply
to their use in the Annex). Five terms are defined in Article
1: ``nuclear fuel,'' ``nuclear installation,'' ``nuclear
material,'' ``operator,'' and ``radioactive products or
waste.'' Paragraph 2 permits an ``installation state'' to
exclude a nuclear installation or small quantities of nuclear
material from the application of the CSC if criteria and limits
for such exclusions have been established by the IAEA's Board
of Governors and the exclusions satisfy those criteria and do
not exceed those limits.
Article 2 is a grandfather clause that permits the United
States to become a Party to the CSC with only minor changes to
the Price-Anderson system (although as noted below, certain
provisions of the Annex could supersede other U.S. laws which
could govern any nuclear incident that were to occur in the
EEZ, to the extent such U.S. laws are inconsistent with the
Annex and such unclear incident is not covered by the Price-
Anderson system). In particular, the grandfather clause permits
the United States to retain the concept of economic channeling,
under which operators are required to indemnify those legally
liable for nuclear damage. The Paris and Vienna Conventions, as
well as the Annex provisions from which the United States is
exempted under the grandfather clause, employ the concept of
legal channeling, under which all legal liability for nuclear
damage is imputed exclusively to the operator. In both systems,
the end result is essentially the same in that no one but the
operator is responsible for compensating nuclear damage caused
by an incident in an installation of involving nuclear material
for which the operator is responsible. Paragraph 1 deems the
national legislation of a Party to be in conformity with the
provisions of Annex Articles 3, 4, 5, and 7 if that legislation
contained on January 1, 1995, and continues to provide for
three elements: (1) strict liability in the event of a nuclear
incident, (2) the indemnification of any person liable for
nuclear damage other than the operator (i.e., economic
channeling of liability to the operator), and (3) the
availability of the equivalent of at least 1,000 million SDRs
in the event of an accident in a civil nuclear power plant and
at least 300 million SDRs in the event of an accident in other
types of civil nuclear installations. The United States is the
only state that meets these three criteria, through the Price-
Anderson Act. It is intended that, where the Price-Anderson Act
does apply, it will apply to the exclusion of any other causes
of actions or remedies (except for availability of funds from
the international supplementary fund) that might be implied in
or created by the CSC.
Subparagraph 2(a) permits a Party that satisfies the
criteria of paragraph 1 to apply a broader definition of
nuclear damage than other Parties, thus allowing the damage
concept under applicable U.S. law to be applied without any
restrictions with respect to incidents where the United States
is the ``installation state.'' Paragraph 2(b) permits a
grandfathered Party to apply a more narrow definition of
``nuclear installation.'' This definition is found in paragraph
3 and is consistent with the types of installations currently
covered by the Price-Anderson Act.
Paragraph 4 of Article 2 applies the provisions of Annex
Articles 3-11 to a nuclear incident occurring outside the
territory of a grandfathered Party over which its courts have
been granted jurisdiction under Article XIII, but to which the
national law under which it qualified as a grandfathered Party
(i.e., the Price-Anderson Act) does not apply. To the extent
Annex Articles 3-11 are inconsistent with other laws of the
grandfathered Party, the Annex provisions prevail. In the case
of the United States, the Price-Anderson Act, under which the
United States qualified for grandfathered status, does not
apply to most potential incidents within the U.S. EEZ, but
Article XIII grants U.S. courts jurisdiction over incidents
occurring there.\7\ Annex Articles 3-11 would as a result apply
directly to a non-Price-Anderson incident covered by the CSC
occurring in the U.S. EEZ, and would prevail over other
existing U.S. statutes to the extent they are inconsistent. For
example, CERCLA currently imposes potential liability on
several categories of parties connected to the nuclear material
in the event of a nuclear incident in the U.S. EEZ (vessel
owners, vessel operators, shippers, cask manufacturers, etc.).
Annex Article 3 of the CSC, however, provides for channeling of
all nuclear liability to the operator on the basis of strict
liability, and would thus prevail over the provisions of the
CERCLA to the extent such provisions would otherwise permit
different defendants to be sued. In addition, to the extent
CERCLA or any other existing law established lower limits on
operator liability than does Annex Article 4, the provisions of
the Annex would prevail.\8\
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\7\ In the 1999 Price-Anderson Report, the Department of Energy
suggested that Congress consider amending the Price-Anderson Act by
revising the definition of the United States to include the EEZ. Such
action would eliminate almost all situations where the United States
would have jurisdiction under the CSC but Price-Anderson would not
apply.
\8\ To avoid any ambiguity concerning the application of Article 4,
legislation, which is being submitted separately to Congress, should be
adopted to make explicit that, notwithstanding any other provision of
law, the legal liability of the operator may not be limited to less
than 300 million SDRs, plus the amount to be made available under the
international supplementary fund with respect to nuclear incidents
outside the United States for which U.S. courts have jurisdiction
pursuant to the CSC but as to which Price-Anderson is not applicable.
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With respect to incidents occurring outside the U.S. EEZ
(other than those involving DOE contractors and U.S.
Government-owned material, to which the Price-Anderson Act
applies) with regard to which the United States is the
``installation state,'' but which cause damage only in the EEZ
or territory of another CSC Party and not in the U.S. EEZ or
territory, neither Price Anderson nor CERCLA currently apply.
In such circumstances, Annex Articles 3-11 would create causes
of action cognizable in U.S. courts for loss of life, personal
injury, and property loss or damage. Consistent with the CSC
definition of ``nuclear damage'' in Article 1(f), Annex
Articles 3-11 would not, however, create any obligations with
respect to any other economic loss (such as the cost of
environmental restoration in international waters), unless
there is a cause of action for such other economic loss
recognized under U.S. law independent of Price-Anderson or
CERCLA.
Article 3 establishes and describes the liability of the
operator in the event of a nuclear incident. As noted above,
since the United States would benefit from the Article 2
grandfather clause, for the United States Article 3 would only
apply to an incident that is not covered by the Price-Anderson
Act. Paragraph 1 establishes the operator's liability for
nuclear damage when it is proved that the damage was caused by
a nuclear incident in that operator's installation or involving
nuclear material coming from or originating in that
installation over which that operator has control, unless the
incident involves nuclear material in transit stored in that
installation, but for which another operator is responsible.
Paragraphs 1(b)(iv) and 1(c)(iv) are intended to establish
when an operator of a nuclear installation covered by the CSC
is liable for nuclear damage with respect to nuclear material
sent between such covered installation and a person within the
territory of a non-Party.
Paragraph 2 permits Parties under their national law to
allow a carrier of nuclear material or a person handling
nuclear waste to be designated as an operator at the carrier's
request and with the approval of the actual operator concerned
so that the carrier is treated under the CSC as the operator
with respect to that nuclear material.
Paragraph 3 states that the liability of the operator for
nuclear damage shall be absolute (i.e., applying the doctrine
of strict liability to nuclear incidents covered by the
Article).
Paragraph 4 deems non-nuclear damage that is not reasonably
separable from nuclear damage to be nuclear damage. Paragraph 4
also provides that, to the extent that damage is caused jointly
by a nuclear incident covered by the CSC Annex and by an
emission of ionizing radiation not covered by it, the Annex
does not limit or otherwise affect the liability of any person
who may be held liable in connection with the emission of
ionizing radiation.
Subparagraph 5(a) excuses an operator from liability if the
nuclear incident was caused directly by an act of armed
conflict, hostilities, civil war or insurrection. Subparagraph
5(b) similarly excludes damage caused by a nuclear incident
directly due to a grave natural disaster of an exceptional
character unless the law of the ``installation state'' provides
to the contrary.
Paragraph 6 permits Parties through their national law to
relieve an operator from the obligation to pay compensation to
a person the operator proves was responsible for the incident
due to gross negligence or an intentional act or omission.
Subparagraphs 7(a) and (b) relieve the operator from
liability for nuclear damage to the installation itself and
associated property or to any other nuclear installation on the
same site. Subparagraph 7(c) relieves the operator in the event
of a transport incident from liability for nuclear damage to
the means of transport upon which the nuclear material involved
was at the time of the incident, unless otherwise provided by
the national law of the ``installation state.'' In that case,
damages paid to compensate nuclear damage to the means of
transport may not reduce the operator's remaining liability
below 150 million SDRs or any higher amount established under
that national law.
Paragraph 8 stipulates that the operator's liability
outside the CSC for damage to means of transport for which the
operator is not liable under subparagraph 7(c) remains
unaffected.
Paragraph 9 states that the right to compensation for
nuclear damage may only be exercised against the operator
liable, or, if national law permits, against any supplier of
funds (e.g., an insurer or pooling arrangement among operators)
made available under national law to ensure compensation. This
paragraph incorporates the principle of legal channeling, which
is central to the Vienna and Paris Conventions. As noted above,
the Price-Anderson Act employs economic channeling to reach
substantially the same objective.
Paragraph 10 states that the operator shall not incur
liability for damage that lies outside the provisions of
national law that is in accordance with the CSC. This provision
is intended to prevent Parties from defining damage covered by
the CSC as non-nuclear in their domestic law, thus
circumventing the CSC's channeling requirement.
Article 4 elaborates upon the obligation created in Article
III(1) (a) to make available a first tier of compensation funds
of not less than 300 million SDRs (subject to a possible phase-
in) with respect to Parties that are subject to the Annex
(i.e., non-Parties to the Vienna or Paris Convention), to the
extent they are not exempted from Article 4 by the grandfather
clause (as the United States is with respect to those nuclear
incidents covered by the Price-Anderson Act). In situations to
which Article 4 applies, paragraph 1 allows such Parties to
limit the liability of its operators to an amount not less than
150 million SDRs per incident if public funds are available to
make up the difference between that amount and 300 million
SDRs.\9\ Paragraph 2 creates an exception to paragraph 1,
allowing such Parties to reduce maximum operator liability to
not less than five million SDRs having regard to the nature of
the nuclear installation or the nuclear substances involved and
to the likely consequences of an incident arising from that
installation or material, again so long as public funds are
available to cover the gap between the operator's liability and
the applicable first tier amount. Under paragraph 3, the
amounts established under paragraphs 1 and 2 are to be applied
wherever the nuclear incident occurs.
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\9\ To the extent that there are currently not any limits in U.S.
law on the liability of operators for damages arising from certain
nuclear incidents (e.g., an accident on the high sea not covered by
Price-Anderson or CERCLA), neither the ratification of the CSC by the
United States nor the changes in U.S. domestic law contemplated in
connection with ratification will establish upper limits on that
liability.
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Article 5 deals with financial security to be provided by
operators. Under subparagraph 1(a) operators in ``installation
states'' that are Parties subject to the Annex, to the extent
such states are not exempted by the grandfather clause (as the
United States is with respect to those incidents covered by the
Price-Anderson Act), must be required to obtain financial
security (e.g., insurance) to cover their liability for nuclear
damage in such amount, of such type, and under such terms as
the ``installation state'' may require. Claims that exceed the
yield of financial security maintained by the operator must be
met through the provision of public funds, up to the applicable
limit, if any, established under Article 4. When an
installation state has not limited the liability of an
operator, the amount of financial security that operator is
required to obtain may not be less than 300 million SDRs.
Again, if the yield of financial security is insufficient to
meet claims up to the amount of security required, the
difference must be made up through public funds. A provision
similar to that found in Article 4(2) is included in
subparagraph 1(b) to permit ``installation states'' to impose a
requirement that operators obtain financial security as low as
five million SDRs with respect to installations and materials
that pose a reduced risk of nuclear damage in the event of an
incident, but in this case public funds must be made available
to cover any claims not covered by this lower amount of
security up to the limit specified in subparagraph 1(a).
Paragraph 2 exempts Parties and their political subdivisions
that are operators for the purposes of the CSC from the
requirement found in subparagraph 1 to obtain insurance or
other financial security. Paragraph 3 states that funds
provided by insurance or other financial security or by the
``installation state'' pursuant to paragraph 1 of Article
4(1)(b) shall be used exclusively for compensation due under
the Annex. Paragraph 4 states that no insurer or financial
guarantor shall suspend or cancel the insurance or other
financial security provided pursuant to paragraph 1 without
giving at least 2 months' written notice to the competent
public authority, or, in the case when insurance applies to
nuclear material being transported, while the material is being
transported.
Article 5 does not apply to the United States with respect
to incidents covered by the Price-Anderson Act. It would apply
to the United States with respect to any nuclear incidents
outside the United States not covered by the Price-Anderson Act
where the United States is the ``installation state.'' Such
situations would be rare because U.S. shippers normally
transfer title to nuclear materials to their foreign consignees
(which then become the operator for purposes of the CSC) when
the shipment first enters international waters. To cover the
unlikely possibility that title is not transferred,
administrative authority exists under the Atomic Energy Act
that could be used to require that insurance be taken out by
U.S. operators to the extent it was determined that the nature
of the transportation and the nuclear material involved and the
likely consequences of a nuclear incident during transportation
required mandatory insurance.\10\ As noted above, if the
proceeds of such insurance and the contribution of the liable
operator were to fail to cover claims up the applicable limit
of liability, or if there were no insurance, the U.S.
Government would be obligated to make up the differences or pay
any otherwise unpaid portion of the required United States
share.
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\10\ This administrative authority also could be used to specify
requirements as to when title transferred and could establish certain
necessary terms of any insurance required to be obtained by shippers.
---------------------------------------------------------------------------
Article 6 (from which the United States is not exempted
under the grandfather clause) pertains to incidents occurring
during the transportation of nuclear materials. Paragraph 1
states the general rule that during carriage the maximum amount
of liability is determined by the national law of the
``installation state.'' \11\ Paragraph 2 creates an exception
to the general rule, permitting a Party through whose territory
nuclear material is passing to require that the liability of
the operator be increased to an amount not to exceed the limit
of liability of an operator of a ``nuclear installation''
situated in that state. Paragraph 3 stipulates that the option
created under paragraph 2 may not be exercised with respect to
shipments of nuclear material by sea when there is a right of
entry in cases of urgent distress into the ports of a Party or
a right of innocent passage through its territorial sea, or to
shipments by air where, by agreement or under international
law, there is a right to fly over or land on the territory of a
Party.
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\11\ See footnote, page 39.
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Article 7 covers the theoretically conceivable case where
more than one operator may be liable for a single nuclear
incident. (The Article does not apply to the United States
under the grandfather clause with respect to those incidents
covered by the Price-Anderson Act.) Under paragraph 1, the
operators liable shall be held jointly and severally liable
unless the damage attributable to the respective operators is
reasonably separably. The ``installation state'' is authorized
to limit the amount of public funds made available in this case
to the difference between the amount made available by the
liable operators directly or through their insurers and the
first tier compensation amount established pursuant to Annex
Article 4(1) and Article III(1)(b).
Paragraph 2 deals with an incident occurring during
transportation (e.g., when nuclear material belonging to more
than one operator is being shipped together). In this case, the
total amount of liability shall not exceed the highest amount
applicable to any one of the operators involved pursuant to
Article 4(1). Under paragraph 3, the liability of any one
operator involved shall not exceed the amount applicable to
that operator under Article 4(1). Paragraph 4 covers the
possibility of an operator having more than one installation
involved in the same incident. In this case, the liability
limit applicable to that operator is multiplied by the number
of installations involved. The ``installation state,'' however,
is authorized to limit public funds made available to the
difference between the total amount made available by the
operator and the amount it has established pursuant to Article
4(1).
Article 8 deals with compensation under national law. (The
United States is not exempt from Article 8 or subsequent Annex
Articles.) Under paragraph 1, the amount of compensation
provided pursuant to the CSC shall be determined without regard
to any interest or costs awarded. Paragraph 2 requires that
compensation for nuclear damage outside the ``installation
state'' be provided in freely convertible form. Paragraph 3
allows the national law of the Party where damage has been
compensated to be applied to the question of whether and to
what extent public health insurance, social insurance, and
other national or applicable intergovernmental programs that
may have compensated victims of a nuclear incident have rights
of recourse.
Article 9 establishes periods of extinction for rights of
compensation for claims brought under the CSC. Paragraph 1
establishes the period of extinction at 10 years, but allows
this period to be extended if, under the law of the
``installation state,'' the liability of the operator is
covered by insurance or other financial security or by state
funds for a longer period, which then becomes the limit under
the CSC. Under paragraph 2, the period of extinction for an
incident involving stolen, lost, jettisoned, or abandoned
nuclear material is calculated from the date of the incident,
but in no case, unless the national law of the ``installation
state'' permits and operator and state funds remain available,
shall the period exceed 20 years from the date of the theft,
loss, jettison, or abandonment. Paragraph 3 permits the law of
the competent court to establish a period of prescription or
extinction of not less than 3 years from the date a person
suffering nuclear damage had actual or constructive knowledge
of the damage and of the operator liable for that damage, but
this period may not exceed the periods established under
paragraphs 1 and 2. Under paragraph 4 the law of a Party that
provides for a period of extinction or prescription longer than
10 years must contain provisions for the equitable and timely
satisfaction of claims for loss of life or personal injury
filed within 10 years from the date of the nuclear incident.
The provisions of the Price-Anderson Act already satisfy these
requirements. With respect to nuclear incidents not covered by
Price-Anderson (i.e., certain incidents outside U.S.
territorial waters), the provisions of Article 9 govern and, in
the absence of U.S. statutory provisions for a period of
extinction longer than 10 years, rights of compensation will be
extinguished in the United States if an action is not brought
within 10 years from the date of the nuclear incident.
Article 10 addresses rights of recourse. It permits the
national law of a Party to allow an operator to have rights of
recourse against others only if these rights are provided for
by a written contract or, if the nuclear incident for which the
operator is liable under the CSC results from an act or
omission done with intent to cause damage, against the
individual who has acted or omitted to act with such intent.
Article 11 states that, subject to the provisions of the
CSC, the nature, form, extent and equitable distribution of
compensation for nuclear damage caused by a nuclear incident
shall be governed by the law of the competent court.
The Department of Energy, the Nuclear Regulatory Commission
and other interested U.S. Government agencies join the
Department of State in recommending that the Convention on
Supplementary Compensation for Nuclear Damage be transmitted to
the Senate at an early date with a view to receiving its advice
and consent to ratification, subject to the declaration
permitted under Article XVI, paragraph 2, as described above.
Respectfully submitted.
Colin L. Powell.