Nuclear Liability In The UK: Implementation Of The 2004 Protocols

On May 4, 2016, the Nuclear Installations (Liability for Damage) Order 2016 (the "2016 Order") entered into force in the United Kingdom. The 2016 Order, which implements the 2004 Protocols27 to the Paris Convention28 and Brussels Supplementary Convention29 (together, the "Paris/Brussels Conventions") into English law, revises the UK's existing nuclear liability regime to ensure that, in the event of a nuclear incident, higher levels of compensation will be available to a wider group of victims and for broader categories of damage. This article explains the background to the 2016 Order, sets out its primary provisions and discusses its impact on the UK's nuclear liability regime. It also considers additional and ongoing concerns with respect to the risk of exposure to nuclear liability from the perspective of nuclear licensees, their contractors and financial institutions doing business in the UK's nuclear sector.

Overview of the UK's Nuclear Liability Regime

Paris/Brussels Conventions

The UK is a contracting party to the Paris/Brussels Conventions. The Paris/Brussels Conventions, which were developed under the auspices of the OECD, together establish an international regime governing liability in the event of a nuclear incident. The contracting parties to the Paris/Brussels Conventions are primarily OECD member states and include many Western European states.30 Non-OECD member states require the consent of the contracting parties to the Paris Convention in order to join the Paris/Brussels Convention regime.

The Paris Convention sets forth the primary principles of civil liability for nuclear damage.31 Meanwhile, the Brussels Supplementary Convention makes available additional public funds if compensation payable under the Paris Convention is insufficient. These funds must be contributed jointly by all contracting parties according to a pre-determined formula.

Together, the Paris/Brussels Conventions regime provides three tiers of funds: (i) operator funds; (ii) state (host country) funds; and (iii) joint funds from contracting parties to the regime.

Joint Protocol

The Joint Protocol Relating to the Application of the Vienna Convention and the Paris Convention (the "Joint Protocol"),32 to which the UK is not a contracting party, links the Paris Convention with the Vienna Convention33 regime.

The UK has said that it will consider becoming a contracting party to the Joint Protocol in the near future. In the meantime, however, the UK does not have treaty relations with any Vienna Convention countries. Therefore, claims brought in Vienna Convention countries are not covered by the UK's nuclear liability regime.

2004 Protocols

Background to the 2004 Protocols

The UK is a signatory to the 2004 Protocols. However, these are not yet in force and, to enter into force, require ratification by two-thirds of the contracting parties to the Paris/Brussels Conventions.

As envisaged by Council Decision 2004/294/EC of March 8, 2004,34 which authorizes EU member state signatories to ratify the 2004 Protocol to the Paris Convention, these EU member states will ratify the 2004 Protocols simultaneously. Ratification by these EU member states, which is expected to occur in early 2017, will be sufficient to bring the 2004 Protocols into force.

The 2004 Protocols represent the modern iteration of international nuclear liability principles and generally follow the 1997 Vienna Convention (the modern iteration of the Vienna Convention) and the Convention on Supplementary Compensation (the "CSC").35 Their primary effect (which is explored further below) is to broaden the categories of damage and geographic scope of the Paris/Brussels Convention regime and increase the amount of compensation available to victims of a nuclear incident.

Implementation of the 2004 Protocols into UK law

In order to ratify the 2004 Protocols, the UK needed to promulgate implementing legislation. The Paris/Brussels Conventions are primarily implemented in the Nuclear Installations Act 1965 (the "NIA 1965"). The 2016 Order contains the amendments to the NIA 1965 to implement the 2004 Protocols.36

On February 22, 2016, the 2016 Order was laid before the UK's House of Commons. An Explanatory Memorandum, prepared by DECC,37 was also published.38

Most of the provisions of the 2016 Order will come into force upon ratification of the 2004 Protocols.

Effect of the 2004 Protocols

The 2004 Protocols have been implemented in UK law in the following way:

New categories of nuclear damage: Under the Paris Convention and the NIA 1965, an operator is liable for loss of life or personal injury and loss of or damage to property...