As you will all have noticed, there is something of a nuclear renaissance underway. Among existing nuclear powered countries those leading the comeback are the US, China and India, all building, or with ambitious plans to build many more nuclear power plants. There is also substantial interest in nuclear power from countries that do not currently have nuclear power. Of these countries, the United Arab Emirates (UAE) can probably claim to be one of the furthest along the path of nuclear new build having recently announced the award of a contract to build four nuclear reactors to a South Korean consortium and with first power to the grid scheduled for 2017. So what does an aspiring nuclear powered country need to do from a legal perspective and as a leading example, what is the UAE doing in this regard? This blog will consider two areas: safety and the role of the regulator, and liability for third party nuclear damage.
Safety and the Role of The Regulator
As anyone involved in the nuclear industry will testify, safety is paramount both in the inherent design characteristics of the technology itself and in the operating procedures adopted on site. For safety also to be seen to be paramount, the role of an independent oversight authority is of critical importance, as enshrined in the IAEA Convention on Nuclear Safety. Under the convention the regulator is required to implement and enforce a regulatory framework which sets out national safety requirements, a system of licensing for nuclear installations and a system of inspections and assessment of nuclear installations. Aspiring nuclear powered countries will need to set up such a regulatory body, and ensure its independence.
In this regard it is interesting to note that as well as setting up an independent regulator headed by an internationally recognised individual (the former Executive Director for Operations of the United States Nuclear Regulatory Commission), the UAE has also collected together an illustrious group of individuals to comprise an International Advisory Board to advise it on matters such as safety and security. As the UAE has recognised, an acceptance of peer review, openness and an absolute commitment to safety and security as well as the peaceful use of nuclear energy is essential in convincing existing nuclear countries to allow and encourage their contractors, reactor vendors and suppliers to share their technology and work on new nuclear new build projects in a country.
Liability for third party nuclear damage
The term third party nuclear damage means broadly, damage to property and people unconnected to the nuclear installation but caused by a nuclear incident – in contrast to conventional damage which is has no nuclear cause. It is extremely rare. Yet, it’s the big risk to the nuclear supply chain and the big issue for populations of nuclear powered countries or countries near to nuclear powered countries (nuclear damage doesn’t respect territorial boundaries). As such the international nuclear world has devised a way of addressing the risk and seeking to balance the needs of any victims of third party nuclear damage with ensuring that the nuclear industry can operate without fear of financial ruin. Essentially the big idea is to channel all the liability for third party nuclear damage to the operator of the nuclear installation where the nuclear incident occurred. This means all the victims know who to sue, the insurance industry knows who to insure, and the other parts of the supply chain only need to worry about (and insure) conventional liabilities. Of course it is more complicated than that and currently debates abound about the scope of damage covered and the limitations to the operator’s liability, but essentially the key is the channelisation of liability.
As you will have realised, channelisation is only any good if the principle is harmonised across the globe so that if damage does occur in the neighbouring country to the nuclear installation country, the victims in that neighbouring country should still be able to (and be obliged to) sue the operator. Different rules shouldn’t apply. Such an international harmonised regime was the goal behind the development of a number of international conventions which enshrine these ideals, known as the Paris convention and the Vienna convention, and then latterly the Convention on Supplementary Compensation for Nuclear Damage.
Unfortunately no such harmonised regime is in place. Over half the nuclear reactors worldwide are currently in countries which have not ratified any of these international conventions. While a number of these countries do have national laws which reflect the principle of channelisation they don’t and can’t address trans-boundary issues.
The UAE in its Policy Statement clearly recognises the need for the UAE to introduce a regime of nuclear liability which complies with these international conventions and also indicates an intention to conclude the Vienna convention. This would be a welcome development to those who seek a harmonised regime, and give new impetus to such efforts. It is to be hoped that the nuclear renaissance can lead to increased pressure on all nuclear powered countries to adhere to these principles as part of a globally harmonised regime.
In the manner in which it has addressed and has committed to address key legal issues for new nuclear new build, the UAE has set the bar high and it is to be hoped that other countries in the region will follow suit when developing their legal and regulatory framework for nuclear power plants in their countries. In this regard the author will be attending the Middle East Nuclear Energy Summit in Jordan next week at which representatives from Jordan, Saudia Arabia, Bahrain, Yemen and the Arabic Atomic Energy Agency will be speaking and hopes to learn of a similar approach being adopted.