Skip to main content

Advertisement

SpringerLink
Log in

Compensation for nuclear damage: a comparison among the international regime, Japan and China

  • Original Paper
  • Published:
International Environmental Agreements: Politics, Law and Economics Aims and scope Submit manuscript

Abstract

Following the Fukushima disaster in Japan in 2011, how the compensation system for nuclear damage should be improved has obtained broad attention. The compensation system, including liability rules, insurance and government involvement, does not only concern to what extent the victims can be sufficiently compensated, but is also relevant to create incentives for the nuclear industry to enhance safety. International compensation regimes for nuclear damage started to emerge since 1960s, but still fail to engage some (potentially) big “nuclear power” ones. The Japanese and Chinese systems are such ones which received less attention until recently. This paper will, on the one hand, engage in a positive study by giving a comparison between the international regime, the Japanese and the Chinese system; on the other hand, provide a normative analysis by using economic criteria to examine the efficiency of the systems and formulate suggestions for reform.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. Two international regimes have been established until now under the auspices of the Nuclear Energy Agency (NEA) of the Organisation for Economic Cooperation and Development (OECD) and the International Atomic Energy Agency (IAEA) (the Paris Convention regime and Vienna Convention regimes).

  2. More specifically, strict liability, channelled liability to the nuclear operators; limited liability with mandatory insurance and exclusive jurisdiction. For details, see infra Section 2.

  3. The “Medium- and Long-term Nuclear Power Development Plan (2005–2020),” shows China is planning to increase its nuclear capacity to 40 GWe by 2020. The nuclear industry produced only 7 Gwe, which represents a rapid increase in nuclear power in the next decades. See National Development and Reform Commission, Nuclear Power Medium and Long-Term Development Plan (2005–2020) (2007).

  4. The “Reply to the Ministry of Nuclear Industry, the National Nuclear Safety Bureau and the State Council Atomic Energy Board in respect of Handling Nuclear Third Party Liability” of 1986 (the “1986 Reply”) (issued by the State Council Guohan (1986) No. 44), and the “Reply to Questions on the Liabilities of Compensation for Damages Resulting from Nuclear Accident” of 2007 (issued by the State Council, Guohan (2007) No. 64) (the “2007 Reply”). An English unofficial translation of the 2007 Reply can be found at: http://www.oecd-nea.org/law/nlb/nlb-80/documents/103_104_TextChina.pdf.

  5. We will systematically review the legal basis of the regime, the definition of nuclear damage, the scope of the liability regime, the question who can be held liable (including whether there is any channelling of liability) and finally the amount of compensation, including obviously who will generate this compensation.

  6. Attention will be paid to the incentives particular regimes generate for operators of nuclear power plants to internalize the externalities generated through the nuclear risk.

  7. Article III (a), the Paris Convention.

  8. Paragraph 39, the Exposé des Motifs of the Paris Convention.

  9. Article I (k), the Vienna Convention.

  10. Article I (a) (vii), the Protocol to the Paris Convention.

  11. Article I, 1 (k), the Protocol to the Vienna Convention.

  12. Julia Schwartz (2006), at 46.

  13. Article I (a) (vii), the Protocol to the Paris Convention.

  14. Article III (a), the Paris Convention.

  15. Point 48, the exposé des motifs of the Paris Convention.

  16. Article IX, the Paris Convention.

  17. Article I (1) (k), IV (1), (3), the Vienna Convention.

  18. Article IV (2), the Vienna Convention.

  19. Article IX, the Protocol to the Paris Convention; Article IV, the Protocol to the Vienna Convention.

  20. Article VI (a), (b), the Paris Convention.

  21. Article I (a) (vi), the Paris Convention.

  22. Article VI (c) (ii), the Paris Convention.

  23. Point 18, the exposé des motifs of the Paris Convention.

  24. Point 15, the exposé des motifs of the Paris Convention.

  25. Article VI (f), the Paris Convention.

  26. Article II (5), X, the Vienna Convention.

  27. Noticing that The Contracting Party can also require a lower amount according to the nature of the installation. The lower amount should be no less than 5 million SDRs (5.68 million Euro). Article VII (b), the Paris Convention.

  28. Gesetz über die friedliche Verwendung der Kernenergie und den Schutz gegen ihre Gefahren (Atomgesetz—AtG) vom 23. December 1959, Neufassung vom 15 Juli 1985, letzte Änderung vom 31 Juli 2011, (Act on the peaceful utilization of nuclear energy an the protection against its hazards (Atomic Energy Act) of 23 December 1959, as amended and promulgated on 15 July 1985, last amendment of 31 July 2011), § 31.

  29. Article V, the Vienna Convention.

  30. Noticing that The Contracting party can reduce the liability to be no less than 70 million Euro for an incident originating from a nuclear installation, or to be no less than 80 million Euro for the carriage of nuclear substances according to the reduced risks. Article VII (a) (b), the Protocol to the Paris Convention.

  31. Article X (b), the Protocol to the Paris Convention.

  32. Article V (1), the Protocol to the Vienna Convention.

  33. Article X, the Paris Convention; Article VII, the Vienna Convention.

  34. Article XI, the Paris Convention; Article VIII, the Vienna Convention.

  35. Article III (a) (b), the Brussels Complementary Convention.

  36. Article III (b), the Protocol to the Brussels Complementary Convention.

  37. Article III 1, IV 1, the CSC Convention.

  38. Among the five new conventions, only two have come into force: the Joint Protocol entered into force in 1992 and the Protocol to the Vienna Convention came into force in 2003. Until now (January 2013), only 5 countries have ratified the protocol to the Vienna Convention Schwartz (2009), 50.

  39. For a detailed analysis of the compensation system for nuclear damage in Japan as well as of the Fukushima incident, Weitzdörfer (2011)

  40. Telephone Interview with Mr. Kuni Shimada, Principal International Policy Coordinator, Global Environment Bureau, Ministry of Environment (Japan) (Dec. 26, 2011).

  41. Copies of English translations can be found at the website of NEA; see Japan, Nuclear Energy Agency, http://www.oecd-nea.org/law/legislation/japan.html (last visited Nov. 2, 2012).

  42. Genshiryoku Songai no Baisho ni Kansuru Houritsu [The Act on Compensation for Nuclear Damage], Law No. 147 of 1961, amended by Act No. 19 of 2009 (Japan).

  43. Id.

  44. Id. § 2 (2).

  45. Id.

  46. Section 3, the Act on Compensation for Nuclear Damage.

  47. Id. § 3.

  48. See infra Sect. 3.6.

  49. Section 10, the Act on Compensation for Nuclear Damage.

  50. Section 4 of the Act on Compensation for Nuclear Damage holds: “Where nuclear damage is covered by the preceding section, no other person other than the nuclear operator who is liable for the damage pursuant to the preceding section shall be liable for the damage”.

  51. Id. § 5.

  52. Id.

  53. Sections 6–7, the Act on Compensation for Nuclear Damage.

  54. Section 6 the Act on Compensation for Nuclear Damage.

  55. Id. § 7.1.

  56. Liability Insurance for Nuclear Installations, Common Clause 2000, art. 7, cited in Hirokazu (2000).

  57. Order for the execution of the act on indemnity agreements for compensation of nuclear damage.

  58. Section 7, the Act on Compensation for Nuclear Damage.

  59. Section 16 states: [w]here nuclear damage occurs, the Government shall give a nuclear operator (except the nuclear operator of a foreign nuclear ship) such aid as is required for him to compensate the damage, when the actual amount which he should pay for the nuclear damage pursuant to Section 3 exceeds the financial security amount and when the government deems it necessary in order to attain the objectives of this act. Act on Compensation for Nuclear Damage § 16(1).

  60. Indeed, Section 16(2) of the Act on Compensation provides that this aid shall be given to the extent that the government is authorized to do so by decision of the National Diet. Ultimately, the decision is the Japanese parliament’s. Section 16(2), the Act on Compensation for Nuclear Damage.

  61. The IAEA introduced INES system in 1990 to classify the significance of nuclear and radiological events. According to INES, events are divided into seven levels, with ten times difference in severity between each adjacent scale levels. See the website of IAEA: http://www.iaea.org/Publications/Factsheets/English/ines.pdf.

  62. Such a committee was established according to the Act on Compensation, which allows the establishment of such an organization to be “in charge of mediating reconciliation of any dispute arising from compensation of nuclear damage and of preparing general instructions to help operators reach a voluntary settlement of such disputes”. See Act on Compensation, Section 18 (1).

  63. For example, the guidance allows compensation for business damage, damage due to rumors and indirect damage. Physical damage is not required to award compensation for such titles of damage.

  64. Article 1, the Act to Establish Nuclear Damage Compensation Facilitation Corporation.

  65. This is different in other jurisdictions, e.g. the European Directive concerning Environmental Liability explicitly excludes nuclear risks and ecological damage resulting from nuclear activities from the scope of the directive (art. 4.4 of Directive 2004/35/EC of 21 April 2004, Official Journal L143 of 30 April 2004, 56).

  66. [The General Principles of Civil Law] (promulgated by the Nat’l People’s Cong., April 12, 1986, effective Jan. 1, 1987) art. 106 (China).

  67. [Tort Liability Law of the People’s Republic of China] (promulgated by the Standing Comm. Nat’l People’s Cong. Gaz., Jan. 1, 2010, effective July 1, 2010) art. 70 (China).

  68. Note that the promulgation of the Tort Liability Law does not mean that the GPCL becomes invalid. See article 83 of the Law on Legislation of China: “In the case of national law, administrative regulations, local decrees, autonomous decrees and special decrees, and administrative or local rules enacted by the same body, if a special provision differs from a general provision, the special provision shall prevail; if a new provision differs from an old provision, the new provision shall prevail.” [Law on Legislation] (promulgated by the Standing Comm. Nat’l People’s Cong., Mar. 15, 2000, effective July 1, 2000) 2000 Standing Comm. Nat’l people’s cong. Gaz. 112, art. 2 (China). Hence, article 70 is the special and new law. It shall have the priority when applied to nuclear damage. For issues not addressed by it, the GPCL still applies.

  69. According to Chinese “Law on Legislation”, administrative regulations are formal legal sources and their issuance needs a formal and sophisticated promulgation procedure. Hence the two replies are not administrative regulations, but only normative rules. They can only be used as sources of argument but not the sole sources of the judgement. For a detailed discussion about the binding focus of the two replies, see Liu and Faure 2012, Section III, B.

  70. Article 9, the 2007 Reply.

  71. Article 69, Tort Liability Law.

  72. It is worth noting that the channeling of liability under the two replies is potentially in contradiction to the Product Quality Act (the PQA), which holds the producer of a defective product liable for personal injury and other property damage caused by the defect. (Article 41–42 of the PQA) If these provisions apply to nuclear cases, the nuclear suppliers may be held liable if they also contribute to the nuclear damage.

  73. [Product Quality Law] (promulgated by the Standing Comm. Nat’l People’s Cong., Feb. 22, 1993, effective Sept. 1, 1993) art. 73 (China)

  74. Article 41, the PQA.

  75. Article 3, the 1986 Reply.

  76. Article 7, the 2007 Reply.

  77. The amount of financial security should be sufficient to cover the cap of their liability. See Article 8, the 2007 Reply.

  78. Article 7, the 2007 Reply.

  79. It is worth noting that the extent of the subsidy also depends on the way the fund is financed. If it is financed through the general revenues, more inefficiencies are caused. If it is the polluters who pay for it, then it is not a subsidy anymore. One such example exists in the US. It ratified the CSC in 2008, under which it has the obligation to make 300 million SDRs available in case of an accident happening on its territory. However, this ratification of the CSC relieves the suppliers from potential liability for foreign victims; the suppliers are required to participate in a retrospective risk pooling program to cover the contribution of the US according to the CSC. Thus it are actually the polluters, rather than the public, who finance the compensation. See: Energy Independence and Security Act of 2007, Pub. L. No. 110-140, § 934 (a) (1) (D), 121 Stat. 1492, 1744 (2007).

  80. For example, unlimited liability was adopted in Austria and Germany. In Denmark and Sweden, the unlimited liability is seriously considered or will be applicable when the revised Paris Convention comes into force. See Schwartz (2009), 43, 54

  81. Section 3, the Order for the Execution of the Act on Indemnity Agreements for Compensation of Nuclear Damage.

  82. Act to amend the Atomic Energy Act of 1954 (Price-Anderson), Pub. L No. 85–256, 71 stad. 576 (1957).

Abbreviations

CSC:

The Convention on Supplementary Compensation for Nuclear Damage

GPCL:

The General Principles of Civil Law of the People’s Republic of China

IAEA:

The International Atomic Energy Agency

INES:

International Nuclear Event Scale

NEA:

The Nuclear Energy Agency

OECD:

Organisation for Economic Co-operation and Development

PQA:

The Product Quality Act of the People’s Republic of China

SDRs:

Special Drawing Rights

TEPCO:

The Tokyo Electric Power Company

References

  • Ameye, E. (2010). Channelling of nuclear third party liability towards the operator: Is it sustainable in a developing nuclear world or is there a need for liability of nuclear architects and engineers? European Energy and Environmental Law Review, 19(1), 33.

    Google Scholar 

  • Cai, X (2004). The Civil Liability for Nuclear Damage (Ph.D dissertation, Wuhan University, China) (pp. 291–292). http://c79.cnki.net/oldcnki/index4.htm. Accessed 17 February 2014.

  • Duncan, E. J. Currie. (2008). The problems and gaps in the nuclear liability conventions and an analysis of how an actual claim would be brought under the current existing treaty regime in the event of a nuclear accident. Denver Journal of International Law and Policy, 35(1), 85–127.

    Google Scholar 

  • Faure, M. (1995). Economic models of compensation for damage caused by nuclear accidents: some lessons for the revision of the Paris and vienna conventions. European Journal of Law and Economics, 2(1), 21–43.

    Article  Google Scholar 

  • Faure, M., & Fiore, K. (2008). The civil liability of european nuclear operators: Which coverage for the new 2004 protocols? Evidence from France. International Environmental Agreements, 8, 228–248.

    Article  Google Scholar 

  • Faure, M., & Fiore, K. (2009). An economic analysis of the nuclear liability subsidy. Pace Environmental Law Review, 26, 419–447.

    Google Scholar 

  • Faure, M., & Liu, J. (2012). The tsunami of March 2011 and the subsequent nuclear incident at Fukushima: Who compensates the victims? William and Mary Environmental Law and Policy Review, 37, 129–218.

    Google Scholar 

  • Faure, M., & Van den Borre, T. (2008). Compensating nuclear damage: A comparative economic analysis of the US and international liability schemes. William and Mary Environmental Law and Policy Review, 33(1), 219–286.

    Google Scholar 

  • Faure, M., & Weiqiang, H. (2011). Towards a reform of environmental liability in China: An economic analysis. Asia Pacific Journal of Environmental Law, 13, 225–247.

    Google Scholar 

  • Hirokazu, O. (2000). Nuclear damage and liability insurance for nuclear damage. Oita University economic review, 51(6), 21–47.

    Google Scholar 

  • Japan Nuclear Energy Safety Organization (2010). Current status of nuclear facilities in Japan (p. 1) http://www.jnes.go.jp/english/activity/unkan/e-unkanhp1/e-unkanhp1-2010/book1/book.pdf. Accessed 17 February 2014.

  • Jia, Y. (2011). Nuclear liability insurance in China, China Insurance 218, 47 (Chinese).

  • Liu, J., & Faure, M. (2012). Compensating nuclear damage in China. Washington University Global Studies Law Review, 11(4), 781–816.

    Google Scholar 

  • Mosk, M. (2011). Fukushima: Mark 1 nuclear reactor design caused GE scientist to quit in protest, in ABC World News. http://abcnews.go.com/Blotter/fukushima-mark-nuclear-reactor-design-caused-gescientist/story?id=13141287#.UEft8Y2PWRE. Accessed 17 February 2014.

  • Nomura, T., Hokugo, T. & Takenaka, C. (2012). Japan’s nuclear liability system. In OECD Nuclear Energy Agency (Ed.), Japan’s compensation system for nuclear damage: As related to the TEPCO Fukushima daiichi nuclear accident (pp. 15–28). https://www.oecd-nea.org/law/fukushima/7089-fukushima-compensation-system-pp.pdf. Accessed 17 February 2014.

  • OECD (2008). Nuclear legislation in OECD countries, regulatory and institutional framework for nuclear activities: Sweden, 13. http://www.oecd-nea.org/law/legislation/sweden.pdf. Accessed 17 February 2014.

  • Pelzer, N. (2007). International pooling of operators’ funds: An option to increase the amount of financial security to cover nuclear liability? Nuclear Law Bulletin, 79, 37.

    Article  Google Scholar 

  • Ramseyer, M. J. (2011). Why power companies build nuclear reactors on fault lines: The case of Japan. Theoretical Inquiries in Law, 31(2), 457.

    Google Scholar 

  • Schäfer, H., & Müller-Langer, F. (2009). Strict liability versus negligence. In M. Faure (Ed.), Tort law and economics (pp. 3–45). Cheltenham/Northampton: Edward Elgar.

    Google Scholar 

  • Schwartz, J. A. (2006). International nuclear third party liability law: The response to Chernobyl, In International Nuclear Law in the Post-Chernobyl Period (pp. 41–44), Paris, OECD-NEA.

  • Schwartz, J. A. (2009). Great expectations: Where do we stand with the international nuclear liability conventions? In Norbert Pelzer (Ed.), European nuclear liability law in a process of change Berlin, Nomos, 43 et seq.

  • Shavell, S. (1980). Strict liability versus negligence. Journal of Legal Studies, 9, 1–25.

    Article  Google Scholar 

  • Trebilcock, M., & Winter, R. A. (1997). The economics of nuclear accident law. International Review of Law and Economics, 17, 215–243.

    Article  Google Scholar 

  • Van den Borre, T. (2007). Shifts in governance in compensation for environmental damage: 20 Years after Chernobyl. In M. Faure & A. Verheij (Eds.), Shifts in compensation for environmental damage (pp. 261–311). Vienna: Springer.

    Chapter  Google Scholar 

  • Vásquez-Maignan, X. (2010). Nuclear liability in China. Asia Power, 20–22. http://www.gide.com/front/files/AsianPower_GLN_NuclearLiabilityInChina_feb2010.pdf. Accessed 17 February 2014.

  • Vásquez-Maignan, X. (2011). Fukushima: Liability and compensation. NEA News, 29(2), 9–11.

    Google Scholar 

  • Watabe, A. (2006). An economic analysis of nuclear accidents in Japan. In G. Liu (Ed.), Perspectives on international state and local economics (pp. 209–234). New York: Nova Science Publishers Inc.

    Google Scholar 

  • Weitzdörfer, J. (2011). Die haftung für nuklearschäden nach japanischem atomrecht—rechtsprobleme der reaktorkatastrofe von Fukushima I ((Liability for Nuclear Damages Pursuant to Japanese Atomic Law—Legal Problems Arising from the Fukushima I Nuclear Accident). Zeitschrift für Japanisches Recht, Journal of Japanese Law, 31, 61–115.

    Google Scholar 

Download references

Acknowledgments

Michael Faure is grateful to the China Ministry of Education and to the Research Centre for Law and Economics of CUPL for their support.

Author information

Authors and Affiliations

  1. Wuhan University, Wuhan, China

    Jing Liu

  2. Comparative and International Environmental Law, Maastricht University, Maastricht, The Netherlands

    Michael Faure

  3. Comparative Private Law and Economics, Erasmus University Rotterdam, Rotterdam, The Netherlands

    Michael Faure

Authors
  1. Jing Liu
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Michael Faure
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Jing Liu.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Liu, J., Faure, M. Compensation for nuclear damage: a comparison among the international regime, Japan and China. Int Environ Agreements 16, 165–187 (2016). https://doi.org/10.1007/s10784-014-9252-7

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10784-014-9252-7

Keywords

Search

Navigation