Changes to compensation for nuclear incidents published by UK government

Out-Law Analysis | 08 Mar 2016 | 2:34 pm | 4 min. read

FOCUS: Changes to the rules governing compensation for nuclear incidents will increase the amounts payable, as well as expand the categories of damage for which compensation may be claimed.

The changes reflect international agreement on nuclear compensation as set out in revisions to the Paris Convention and the Brussels Supplementary Convention, which were adopted in 2004. These conventions establish an international regime governing liability for the payment of compensation following a nuclear incident. The UK intends to implement the new regime by way of amendments to the 1965 Nuclear Installations Act (NIA 1965), and has laid a draft Nuclear Installations (Liability for Damage) Order (56-page /433KB PDF) before UK parliament to introduce the amendments.

The UK parliament must approve the draft order before it can be made, which is anticipated to happen within the next few months. However, the substantive provisions in the order will not come into force until the revised conventions are ratified by all of the signatory countries. The UK government is committed to ratifying the amendments to the conventions, but ratification is not expected until January 2017.

The amendment to NIA 1965 will upgrade the existing nuclear liability regime. In particular, it will increase the amount of compensation available in the event of a nuclear incident and broaden the 'heads of damage' for which compensation is potentially recoverable. Currently, NIA 1965 allows for personal injury and property damage claims, but the amendments will also allow claims for compensation payments in respect of the cost of measures of reinstatement to the impaired environment, loss of income derived from the environment and the cost of preventative measures, including measures taken in response to a threatened occurrence – referred to in the draft order as an "event".

The conventions: a summary of the liability regimes

The Paris Convention imposes no-fault liability on the operator of a nuclear installation that causes damage. It channels all liability to that operator, meaning that victims are able to bring a claim against the operator regardless of the cause of the damage.. Operators are required to take out insurance or make other provision to cover their liability, and victims in all countries that are contracting parties to the convention have equal access to compensation.

The Brussels Supplementary Convention provides additional public funds for compensation over and above that provided by the Paris Convention.

The countries that have ratified the Paris Convention to date include: Belgium, Denmark, Finland, France, Germany, Greece, Italy, the Netherlands, Norway, Portugal, Slovenia, Spain, Sweden, Switzerland, Turkey and the UK. These countries have also ratified the Brussels Convention, with the exceptions of Greece, Portugal and Turkey.

The main changes

Compensation amounts

The liability limit of operators in the UK in respect of claims arising from an occurrence or event will initially be increased to €700 million, rising incrementally to €1,200 million over five years. There is also a power to prescribe lower liability limits for sites that are deemed to present low or intermediate level risk.

Claims will also be permitted in respect of damage suffered in "qualifying territories" - that is, the territory or maritime zones of non-Paris Convention countries which have no nuclear installations or which have an equivalent and reciprocal liability regime - up to the Paris Convention limit of €700m.

The amount of public funds required to top up the amount available for compensation once the applicable liability limit is exhausted is increased to €1,500 million where the claim is a 'special relevant claim' for damage incurred in a country that is a party to the Brussels Supplementary Convention, or €700m otherwise. Claims on these public funds must be made by bringing proceedings against the appropriate authority.

Recovery of compensation

Persons not subject to a duty under NIA 1965, but who have paid compensation, will now be able to claim against the holder of the duty. Similar amendments will also be made to the provisions allowing for compensation to be reduced where the loss or damage is attributable to an act done intentionally, or with reckless disregard as to the consequences.

To avoid double recovery when a claim is made for compensation for damage to property, the court will be required to take into account any measures of reinstatement affecting that property.

Time limits

The time within which claims for radiation-linked personal injury must be brought against an operator will be increased from 10 to 30 years from the date of the occurrence or event. All other claims under NIA 1965 must be made within 10 years of the date of the occurrence or event.

Liability

The liability regime will be extended to cover operators of "relevant disposal sites" – that is, installations for the disposal of nuclear matter. The requirement that operators of nuclear licensed sites make financial provision to cover their potential liability, whether by insurance or otherwise, will also be extended to operators of relevant disposal sites; and provision is also made for different levels of liability depending on the category into which the particular operator falls. The requirement on operators to notify the relevant government minister once claims in a specified period reach a set amount is also extended to operators of relevant disposal sites.

The provisions on liability relating to the carriage of nuclear matter are amended so that liability is only transferred from one operator to another where the receiving operator has a direct economic interest in the nuclear matter being carried. In the case of claims involving nuclear matter in the course of carriage, compensation available for damage to the means of transport will be limited so that other claims take priority up to €80 million.

Helen Peters is an environmental law expert at Pinsent Masons, the law behind Out-Law.com.