Nuclear Liability: A Key Component of the Public Policy Decision to Deploy Nuclear Energy in Southeast Asia


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Mohit Abraham
Global Nuclear Future

Against the backdrop of the Fukushima accident and the entry of new players in the international nuclear energy space, such as India, the UAE, and Vietnam, existing nuclear liability principles are going to be revisited; this raises more issues and challenges. It is evident that a robust nuclear liability regime is essential for the growth of nuclear power as well as its public acceptance. This requires a great deal of cooperation among countries, regulators, international institutions, and the nuclear industry. Many questions are being raised against the extant nuclear liability regime, both on the issue of adequacy of compensation and on the issue of supplier liability.

Considering the difficulties that the world has already seen in developing a global nuclear liability regime, the focus on regional cooperation and arrangements in the area of international nuclear liability should consider the EU’s initiative for a European nuclear liability law. Regional initiatives would facilitate a global liability regime through regional efforts. Developing nations in South Asia and the ASEAN region have an intrinsic mutual interest in formulating and strengthening a regional framework, and it may be easier to achieve such a framework with a more modest goal of attaining uniformity and certainty in a region as opposed to the entire world.

At the same time, any viable nuclear liability regime would also have to provide sufficiently high levels of compensation and accessible funds. This should not be the responsibility of states alone; and the nuclear industry, including the supplier community, has to step forward in making reasonable contributions to such a regime within acceptable economic parameters that do not discourage the private sector from continuing its important role within the nuclear industry. The model of the CSC, whereby states contribute to an international pool of funds, can be further strengthened with contributions from the nuclear industry, including the supplier community. Any model that provides for maximum compensation must be welcomed, and to this end, the CSC appears to be a step in the right direction. The CSC also intends to supplement other liability frameworks, including the Paris and Vienna Conventions. In fact, Article XII (3) (a) and (b) of the CSC envisages that regional arrangements or agreements can be entered into by contracting parties to the CSC. Thus, while future regional frameworks could provide for principles of liability, transboundary incidents, and other critical aspects like siting as well as regional mapping of risk zones and possible risk scenarios within a region, the CSC model along with an additional contribution from the industry would provide a significant boost to these regional frameworks by providing accessible funds. Recent support from France and Japan for the CSC also brings it closer to coming into force. The CSC would therefore be a meaningful base on which a reformed nuclear liability regime could be built.

Any discussions on reconsidering international nuclear liability law should also factor in the unique challenges of countries that are new entrants in nuclear energy, in particular those that plan to rely exclusively on foreign operators and suppliers. Since none of the international or domestic laws deal with this scenario, it is important that some thought is provided on this aspect as well.

Another major issue, which is likely to be increasingly raised in the Asia region, is the new model of international nuclear liability law introduced by the CLNDA. If France and Russia agree to function under this law, it could set a precedent for the acceptability of supplier liability that would fundamentally alter commercial practices in the area of nuclear commerce. Wider acceptance of this liability regime would also have a significant impact on countries (such as Vietnam) that are in the process of formulating their own liability laws. Other countries in the ASEAN region, such as Malaysia and Indonesia, may also consider adopting the CLNDA model—particularly in light of the incident at Fukushima, where a large portion of the liability fell to the government and ultimately the Japanese taxpayer. Civil society played a strong role in highlighting the approach taken by India in formulating its liability law, and it is not inconceivable that this aspect of supplier liability would enter the public discourse of countries that are considering liability laws, and would put pressure on governments to strongly consider this aspect.

While the supplier community along with other major countries would continue to resist such a liability, it is imperative to recognize that for such liability to be excluded in the manner it presently is, the entire nuclear industry must play a stronger role in contributing to compensation for nuclear accidents. Thus, a system in which funds for nuclear accidents are contributed by all players—states, operators, and suppliers—would make available more funds than any of the present liability regimes and would be a strong step toward building an effective and fair nuclear liability regime. The recent joint declaration by the United States and France is also a positive step toward the realization of the CSC framework and can serve as a very good starting point to provide a future model in which states, operators, and suppliers play a part in contributing funds toward compensating nuclear accidents.

The IAEA ought to consider providing INLEX with terms of reference on a reexamination of the existing principles of international nuclear liability, including those in relation to regional arrangements and an expansion of sources of funds that are available in the case of a nuclear incident. The models adopted by CSC and the oil industry, as well as the U.S. approach of seeking retrospective pooling of funds from nuclear suppliers, could provide an existing structure on the basis of which a future nuclear liability model could be built.

Across the world, public acceptance of nuclear energy is already facing a critical challenge. Any weakness in liability frameworks, such as inadequate compensation or the inability to claim relief for a transboundary incident, will likely lead to stronger resistance to nuclear energy. All stakeholders need to work toward addressing this key issue. The traditional view of liability frameworks must shift to one that seeks a balance between encouraging the nuclear industry and ensuring adequate compensation in the event of an incident. The existing international conventions and domestic approaches, particularly the CSC, already provide a platform from which improved and effective liability regimes can evolve. The acceptability of nuclear energy would be significantly boosted by having an effective and practical liability framework in place.