Convention on Supplemental Compensation for Nuclear Damage: Article by Article Analysis
The Preamble refers to the existing international instruments and national legislation which 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 will encourage regional and global cooperation to increase the level of nuclear safety.
Article I contains definitions of twelve terms used in the Convention 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 the CSC are thus divided into two categories, those that must be compensated (loss of life, personal injury, and property damage) and those that are to be compensated"to the extent determined by the law 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 economic loss not falling in the category of"loss or damage to property," 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 recognize by the general law on civil liability of that court. All forms of damage covered by the CSC are conditioned by the requirement that the damage must arise out of or result 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 states the purpose of the CSC and the extent of its application, and makes clear that the Annex is an integral part of the Convention. Paragraph 1 states that the Convention's purpose is to supplement the system of compensation provided pursuant to national law that implements the Vienna or Paris Convention or that complies with the CSC's Annex. Paragraph 2 states that the CSC applies"to nuclear damage for which the 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 Convention. Paragraph 3 ensures that the Annex is considered an integral part of the Convention.
Article III contains the central"undertaking" of the Convention. 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 Depositary (the Director General of the IAEA) before the incident, or a transitional amount not less than 150 million SDR during a transitional period ending September, 29, 2007. The funds made available under this subparagraph constitute the"minimum national compensation amount" that makes up the first tier of compensation available in the event of a nuclear incident in a State Party to the CSC. Paragraph l(b) establishes the obligation on all Contracting Parties to the Convention to make available public finds 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 the"minimum national compensation amount" be distributed equitably without discrimination on the basis of nationality, domicile or residence. The Installation State's courts 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 the Vienna or Paris Convention, the Installation State is, however, free to include or exclude damage suffered in a non-Contracting State from the first tier. Paragraph 2(b) subjects the international 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 prioritizes the first 50% of the fund in favor of"transboundary damage" suffered by nationals of a State Party).
Paragraph 3 of Article III reduces contributions to the fund proportionately among the contributing Contracting 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 the competent court and allocates any such interest and costs among the possible contributors to the first two tiers proportionately.
Article IV establishes the formula under which contributions to the fund are to be assessed. Paragraph l(a)(i) assesses 300 SDR per"unit of installed capacity," which is defined in paragraph 2 as one megawatt of thermal power. Paragraph l(a)(ii) assesses an additional amount equal to 10% of the amount assessed in (i), distributed among Contracting Parties on the basis of their UN rate of assessment for the year preceding the year in which the nuclear incident occurs.
Subparagraph (b) states that each Contracting 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 UN 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) is the contribution " cap." It provides that the maximum contribution that may be charged to a Contracting Party, other than the Installation State, shall not exceed a specified percentage, equal to its UN rate of assessment plus eight percentage points, of the fund as a whole. For the U.S. this percentage is 33% (UN rate of assessment of 25% plus 8%). Thus, the U.S. share of the fund is capped at one-third, when, as would be the case if only the U.S. and a few other States were Party (e.g., soon after the CSC had entered into force), the proportion represented by the U.S. contribution would otherwise be much higher.* When the cap_________________ *For example, if the supplemental fund were to be activated when only the U.S., South Korea, Canada and Japan were Party to the Convention, the U.S. contribution to the fund without the cap would be ---- and the total fund would equal With the U.S. contribution reduced by the cap, the U.S. would contribute ---- and the fund would total ------.
applies, the actual fund created would be somewhat 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 Convention if they faced a potentially disproportionate financial burden in the early stages. To emphasize the transitional nature of the"cap," the subparagraph further provides that it begins to phase out when a substantial fraction of the worlds nuclear generating capacity (625,000 MW) is represented by Contracting Parties to the CSC. For each 75,000 MW in excess of 625,000 MW represented, the level of the"cap" increases one percentage point.
Paragraph 2 defines a unit of installed capacity as 1 Megawatt thermal. It 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 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 core and have been safely stored in accordance with approved procedures.
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 fund, provided a Contracting Party's courts have jurisdiction under Article XIII. These locations are: within the territory of a Contracting Party; in or above maritime areas beyond the territorial sea of any Contracting Party, but outside the territorial sea of any non-Contracting Party, where the damage is suffered on board or by a ship flying the flag of a Contracting Party or on or by an aircraft registered in a Contracting Party or on or by an artificial island, installation or structure under the jurisdiction of a Contracting Party or by a national of a Contracting Party; or in or above the exclusive economic zone or the continental shelf of a Contracting Party in connection with the exploitation or exploration of the natural resources of that zone or shelf Paragraph 2 permits a State at the time it accedes or signs the Convention to assimilate persons having their habitual residence in its territory as its nationals for the purposes of paragraph 1 (b)(ii)(a national of a Contracting party damaged while on the high seas). Paragraph 3 clarifies that the term"national of a Contracting Party" includes juridical as well as natural persons, including a Contracting Party itself.
Article VI obligates the Contracting 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 minimum national compensation amount and that contributions to the international fund may be required. Article VII requires the Contracting Party whose courts have jurisdiction to request the other Contracting Parties to make available funds (up to the maximum amount allocated to each Contracting Party under the contributions formula) when and to the extent required without any restriction and gives that Contracting Party exclusive competence to disburse those funds.
Article VIII sets up a system for establishing a list of nuclear reactors in each Contracting Party for the purposes of calculating the contributions to the international fund in the event an incident occurs.
Paragraph 1 obligates Contracting States to communicate to the Depositary when it deposits its instrument of ratification, acceptance, approval or accession a list of its reactors containing the necessary particulars (i.e., the thermal capacity) of those reactors. Paragraph 2 requires Contracting States to communicate promptly modifications to its list of reactors. When a reactor is to be added, the notification must be made at least three months in advance of the introduction of nuclear material into the reactor. Paragraph 3 permits other Contracting States to challenge the list submitted under paragraph 1. Paragraph 4 obligates the IAEA to maintain, update and circulate the list on an annual basis. Paragraph 5 obligates the IAEA to notify Contracting States of communications and objections its receives.
Article IX, paragraph 1 requires each Contracting Party to enact legislation permitting them or other Contracting Parties to benefit from any right of recourse enjoyed by the liable operator to the extent they have made contributions to the international fund. Paragraph 2 permits the Contracting Party of the liable operator to provide for the recovery of any public funds made available to compensate damage from a nuclear incident for which that operator is at fault. Paragraph 3 permits the Contracting party whose courts have jurisdiction over claims arising from an incident under the Convention to exercise the rights of recourse provided under paragraphs 1 and 2.
Article X paragraph 1 provides that the system of disbursements of the Contracting Party whose courts have jurisdiction shall be applied to all funds made available under the Convention. Paragraph 2 provides that the Contracting Party whose courts have jurisdiction shall not require claimants to bring separate proceedings depending on the source of the funds provided and that Contracting Parties may intervene in the proceeding against the operator liable. Paragraph guarantees that no Contracting Party will be asked to contribute to the international fund if sufficient funds are available under the minimum national compensation amount.
Article XI, paragraphs stipulates the allocation of the international fund. Sub-paragraph l(a) allocates one half of the international fund for the compensation of damage in all Contracting Parties without differentiation. Sub-paragraph 1(b) gives priority to the compensation of "transboundary damage." If claims for transboundary damage do not exhaust this part of the fund, the balance becomes available for compensation of other claims (i.e., damage within the Contracting Party whose operator is liable). Sub-paragraph l(c) provides that if the minimum national compensation amount is less the 300 million SDR (i.e., if the incident Contracting State is benefiting from the 10-year phase in when the incident occurs), the proportion of the fund prioritized for transboundary damage is proportionately increased.
Paragraph 2 deals with the special case when a Contracting Party has exercised its option under Article III. 1.(a) to declare a minimum national compensation amount that is greater than 600 million SDRs. In that case, the prioritization in favor of transboundary damage disappears and the entire international fund is available on a non-differentiated basis.
Article XII deals with the relation between the CSC and other existing or possible conventions in the field of nuclear liability. Paragraph 1 allows parties to the Vienna or Paris Convention, and, in particular, parties to the Paris Convention that are also party to the Brussels Supplementary 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 they may be called upon to supply to the international fund. Paragraph 2 permits Contracting parties to make provisions for compensation of nuclear damage above and beyond the minimum national compensation amount and the international fund (the"third tier" ) should they so choose (e.g., the provisions under the Price Anderson Act for compensation beyond the 300 million SDR minimum national compensation amount.) Where availability of the third tier would otherwise depend on reciprocity from a contracting party, lack of reciprocity may not be used to deny compensation in a contracting party that has no nuclear installations on its territory (Price Anderson satisfies this requirement). Paragraph 3 makes clear that Contracting Parties are free to enter into regional or other agreements for the purpose of accumulating funds to satisfy their obligation to provide the minimum national compensation amount or to provide other additional funds for the compensation of nuclear damage. Notice of such agreements must be given to the other contracting parties to the Convention.
Article XIII determines which Contracting party's courts shall have jurisdiction over claims brought under the Convention and how judgments rendered by the courts of one Contracting party are to be recognized by those of another. Paragraph 1 states the general rule that (vis a vis the courts of other Contracting Parties) only the courts of the Contracting State 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 exclusive economic zone that has been or could be established by a Contracting State (i.e., an area extending seaward up to 200 nautical miles from the baselines from which a State's territorial sea is measured). Under this paragraph, the courts of the"coastal Contracting State" exercise exclusive jurisdiction vis a vis the courts other Contracting Parties. Paragraph 3 grants exclusive jurisdiction to the courts of the Installation State where the incident occurs outside the territory of any Contracting Party and outside the maritime area defined in Paragraph 2. Paragraph 4 requires the Contracting 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 Contracting 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 Contracting Parties overlap). Paragraph 5 stipulates that once no longer subject to appeal, a judgment rendered under the Convention in one Contracting Party's courts shall be recognized in the courts of all other Contracting 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 (ordre publique) of a Contracting Party 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 Contracting 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 that are paid out of the international fund.
Article XIV determines which law shall be applied by the competent court to cases arising under the Convention. Paragraph 1 stipulates that the Vienna Convention, the Paris Convention, or the Annex to the Convention shall apply exclusively. 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 ensures that the Convention is does not affect the rights and obligations of a Contracting party under the general rules of public international law (e.g., the doctrine of State responsibility for damages arising from activities not contrary to international law, to the extent it is or may become applicable to civil nuclear activities.)
Article XVI deals with dispute settlement. Paragraph 1 obligates the Contracting Parties involved in a dispute over the interpretation or application of the Convention 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 six months of consultations to binding arbitration or to the International Court of Justice. Paragraph 3 permits Contracting States to opt out of either of the dispute settlement procedures provided in Paragraph 2. (The U.S. intends to take advantage of this provision to opt out of both binding dispute settlement procedures.) Paragraph 4 permits a Contracting party that has taken advantage of the option presented under Paragraph 3 to reverse its decision at any time.
Article XVII opens the Convention for signature by all States on September 29, 1997; it remains open for signature until its entry into force.
Article XVIII deals with ratification, acceptance and approval of the Convention. 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, 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 Convention on Nuclear Safety. Paragraph 2 designates the Director general of the IAEA as the Convention's Depositary. Paragraph 3 requires each Contracting 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 notification pursuant to Article III. (a) (designating a minimum national compensation amount greater than 300 million SDR), Article XI. 2 (opting out of one or both of the binding dispute settlement procedures), 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 Contracting 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 Convention to States that accede to it (i.e., States that do not sign the convention, but seek to become Party after its entry into force).
Article XX states that the Convention will enter into force on the ninetieth day following the date on which at least five States representing among them at least 400,000 megawatts (thermal) of installed nuclear capacity have deposited an instrument of ratification, acceptance or approval and that the Convention will enter into force for any State which subsequently ratifies, accepts, approves, or accedes to the Convention ninety days following the deposit of its instrument.
Article XXI permits any Contracting Party to denounce the Convention by mean of a written notification to the Depositary. Denunciation shall take effect one year following the receipt of the notification by the Depositary.
Article XXII deals with cessation. Under paragraph 1, if a Contracting 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 a copy of that legislation. Under paragraph 2, a Contracting 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 Contracting Party having a nuclear installation on its territory which notifies the Depositary that it has ceased to be party to the Convention on Nuclear Safety ceases to be Party to the CSC.
Article XXIII continues to apply the provisions of the CSC to any nuclear damage caused by a nuclear incident which occurs before a Contracting Party denounces the Convention or it ceases to apply to such Contracting Party.
Article XXIV authorizes the Depositary to convene, after consultations with the Contracting Parties, a conference for the purpose of revising or amending the Convention, and requires the Depositary to convene such a conference at the request of not less than one-third of the Contracting parties.
Article XXV deals with amendment of the Convention by simplified procedure. Under paragraph 1, the Depositary is required to convene a meeting of the Contracting Parties on the request of one-third (or more) of them for the limited purpose of amending the amounts stipulated in Article III. (a) and (b) (the minimum national compensation amount, the minimum level at which a State may phase in its minimum national compensation amount, and the amount of the international 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. Under paragraph 2, amendments proposed at the meeting shall be adopted by vote if no negative votes are cast. Under paragraph 3, amendments adopted at the meeting shall be notified to all Contracting Parties. If, within a period of 36 months following the notification, it is accepted by all States that were Contracting 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 Contracting Parties at the time it was adopted within the thirty-six month period, it is to be considered rejected. Under paragraph 5 if a State becomes Party to the Convention during the thirty-six month period that State will be bound by the amendment if it enters into force. If a State becomes Party after the thirty-six 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 Convention enters into force for that State, whichever is later.
Article XXVI specifies the functions of the Depositary. He is required to notify Contorting Parties and the Secretary-General of the OECD (who is Depositary of the Paris Convention) of each signature to the Convention, each deposit of an instrument of ratification, acceptance, approval or accession, the Convention's entry into force, and declarations, denunciations, notifications submitted pursuant to various provisions of the Convention, as well as any other pertinent notifications relating to it.
Article XXVII states that the Convention in
Arabic, Chinese, English, French, Russian and Spanish, all of which
shall be considered equally authentic, shall be deposited with the
Director General of the IAEA, who shall send certified copies to all
The introduction to the Annex obligates a Contracting Party to the CSC which 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 Contracting State through operation of the doctrine of self-executing treaty obligations. A Contracting Party having no nuclear installations on its territory is required only to have legislation necessary to enable it to give effect to its obligations under the Convention.
Article 1(l) sets out definitions of terms used in the Annex (the terms defined in Article 1 of the Convention 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 Convention 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." Paragraph 1 deems the national legislation of a Contracting Party to be in conformity with the provisions of Articles 3, 4, 5, and 7 if that legislation contained on January 1, 1995 and continues to provide for three elements: strict liability in the event of a nuclear incident, the indemnification of any person liable for nuclear damage other than the operator (i.e., channeling of liability" to the operator), and the availability of at least one billion SDR in the event of an accident in a civil nuclear power plant and at least 300 million SDR in the event of an accident in other types of civil nuclear installations.
(The U.S. is the only State that meets these three criteria.) Paragraph 2(a) permits a Contracting Party that satisfies the criteria of paragraph 1 to apply a broader definition of nuclear damage than that which applies to other Contracting Parties. (This definition is in conformity with U.S. law.) Paragraph 2(b) permits a"grandfathered" Contracting Party to apply a different definition of " nuclear installation" (that is consistent with U.S. law) found in paragraph 3, permitting a"grandfathered" Contracting Party to exempt from the coverage of the definition (and therefore from the coverage of the Convention) certain civil facilities for the processing, reprocessing or storage of nuclear material if that Party determines that the small extent of the risks involved warrants their exclusion. Paragraph 4 applies the provisions of Annex Articles 3-11 to a nuclear incident over which the courts of a"grandfathered" Contracting Party have jurisdiction pursuant to Article XIII but which occurs outside its territory and to which its national law does not apply (e.g., an incident for which an operator of another Contracting Party is liable that occurs in the U.S. Exclusive Economic Zone, to which the Price Anderson Act would not apply.)
Article 3 establishes and describes the operator's liability in the event of a nuclear incident. Because the U.S. benefits from the"grandfather clause," Article 3 t would not apply to an incident that is 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 his installation or involving nuclear material coming from or originating in that installation over which he has control. Paragraph 2 permits Contracting Parties under their national law to allow a carrier of nuclear material to be designated as an"operator" at his request and with the approval of the [actual] operator concerned. Paragraph 3 states that the liability of the operator for nuclear damage shall be absolute (i.e., applies 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 and excludes damage caused by ionizing radiation that is not covered by the Convention that occurs in conjunction with a nuclear incident from being treated as"nuclear damage." Paragraph 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. Paragraph 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 Contracting Parties 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. Paragraph 7(a and b) relieves the operator from liability for nuclear damage to the installation itself and associated property or to any other nuclear installation. Paragraph 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 Installation State's] national law. 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 SDR or any higher amount established under that national law. Paragraph 8 stipulates that the operator's liability outside the Convention for damage to means of transport for which he is not liable under paragraph 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 (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. The Price Anderson Act employs"economic channeling" to reach substantially the same objective -- that no one but the operator is responsible for compensating nuclear damage caused by an incident in an installation or involving nuclear material for which he is responsible. This divergence of approach led to the"grandfather clause" found in Article 2, intended to allow the U.S. to become a Contracting Party without being required to alter an important component of its domestic legislation.) 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 Convention. It is intended to prevent States parties from defining damage covered by the Convention as"non-nuclear" in their domestic law, thus circumventing the channeling requirement.
Article 4 elaborates upon the obligation created in Article III. (a) of the Convention to make available a"minimum national compensation amount" of not less than 300 million SDR (subject to a possible phase-in) with respect to Contracting Parties that are subject to the Annex (i.e., non-parties to the Vienna or Paris Convention) and not exempted from Article 4 by the"grandfather clause" (as is the U.S.). In paragraph 1 it allows such Contracting Parties to limit the liability of its operators to an amount not less than 150 million SDR per incident if public funds are available to make up the difference between that amount and 300 million SDR. In paragraph 2 it creates an exception to paragraph 1, allowing such Contracting Parties to reduce operator liability to not less than five million SDR 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"minimum national compensation amount." Under paragraph 3, the amounts established under paragraphs 1 and 2 are to be applied wherever the nuclear incident occurs.
Article 5 deals with financial security to be provided by operators. Under subparagraph l(a) operators in Installation States that are Contracting Parties subject to the Annex and not exempted by the grandfather clause" (as is the U.S.) 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 SDR. 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 SDR 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 l(a) Paragraph 2 exempts Contracting Parties and their political subdivisions that are operators for the purposes of the Convention from the requirement found in paragraph 1(a) 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 or 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 two months' written notice or, in the case when insurance applies to nuclear material being transported, while the material is being transported. (This provision is addressed directly to insurers, but should probably be interpreted as an obligation imposed on the relevant Contracting Parties to include such requirements in their national legislation.)
Article 6 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. Paragraph 2 creates an exception to the general rule, permitting a Contracting 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 Contracting 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 its territory.
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 U.S. under the"grandfather clause.") Under paragraph 1, the operators liable shall be held jointly and severally liable unless the damage attributable to the respective operators is reasonably separable. 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 and their insurers and the minimum national compensation amount established pursuant to Article 4(l). 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 of the operators involved pursuant to article 4(l). Under paragraph 3, the liability of any operator involved shall not exceed the amount applicable to him 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 difference between the total amount made available by the operator and the amount it has established pursuant to Article 4(l).
Article 8 deals with compensation under national law. Under paragraph 1, the amount of compensation provided pursuant to the Convention 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 Contracting 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 programs that may have compensated victim of a nuclear incident have rights of recourse.
Article 9 establishes periods of extinction for rights of compensation for claims brought under the Convention. Paragraph 1 establishes the period of extinction at ten 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 Convention. 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 twenty 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 three 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 Contracting State that provides for a period of extinction or prescription longer than ten years must contain provisions for the equitable and timely satisfaction of claims for loss of life or personal injury filed within ten years from the date of the nuclear incident.
Article 10 addresses rights of recourse. It permits the national law of a Contracting Party to allow an operator to have rights of recourse against others only if these rights are provided for by a written contract or against an individual who has intentionally acted or omitted to act to cause the nuclear incident for which the operator is liable under the Convention.
Article 11 states that, subject to the provisions of the Convention, 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.