NUCLEAR

CHANGES TO THE UK NUCLEAR LIABILITY REGIME

CONTENTS
CHANGES TO THE UK NUCLEAR LIABILITY REGIME........................03

1.  KEY THINGS YOU NEED TO KNOW...................................................03

What are the key changes?..........................................................................04
What is the impact of these changes?.......................................................04

2. BACKGROUND............................................................................................05

3.  WHAT ARE THE KEY CHANGES?..........................................................06

Increase in maximum amount of compensation payable......................06

Three new categories of damage................................................................07

Interaction between Nuclear New Build Sites and Legacy

Nuclear Sites...................................................................................................08

Limitation period............................................................................................08

Wider category of potential claimants......................................................09

Transport of Nuclear Materials..................................................................09

4.  WHAT ARE THE IMPLICATIONS OF THESE CHANGES?...............10

02  |  NUCLEAR Changes To The UK Nuclear Liability Regime

CHANGES TO THE UK NUCLEAR
LIABILITY REGIME
1. KEY THINGS YOU NEED TO KNOW
The Nuclear Installations (Liability For Damage)
Order 2016 (“2016 Order”) was made on 4 May 2016
and is expected to become law in early 2017. The 2016
Order implements amendments to the Paris Convention
and the Brussels Convention1 in the UK and makes
major changes to the existing nuclear third party liability
regime. In the event of a nuclear incident an increased
amount of compensation will be available, in respect
of a broader range of damage, to a wider category of
claimants.
With the return to nuclear new build in the UK the
potential to be liable for nuclear damage will be of vital
importance to all parties in the nuclear supply chain as
well as investors and funders of new nuclear projects.
As a number of the new nuclear reactors in the UK will
be built adjacent to existing nuclear licensed sites the
2016 Order seeks to clarify the interaction of potential
liability between new build nuclear sites and legacy
nuclear sites.

1
Convention on Third Party Liability in the Field of Nuclear Energy of 29th July 1960, as amended by the Additional Protocol of 28th January 1964
and by the Protocol of 16th November 1982 (“Paris Convention”) and Convention of 31st January 1963 Supplementary to the Paris Convention of
29th July 1960, as amended by the additional Protocol of 28th January 1964 and by the Protocol of 16th November 1982 (Brussels Convention”).

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What are the key changes?
■■ Increase in the maximum amount of
compensation payable from £140m to €1.2bn.
■■ Broader range of damage covered – including
reinstatement of impaired environment, loss of income
derived from the environment and cost of preventative
measures.
■■ Addresses uncertainty around the interaction
between new nuclear build sites and legacy
nuclear sites – no new occurrence will arise if the
nuclear site licensee of the new build site disturbs a
previous discharge by a legacy nuclear site.
■■ Changes to the length of time claimants have
to claim – 30 years for death and personal injury and
10 years for all other claims.
■■ Wider category of potential claimants – including
those suffering damage in non-nuclear non-convention
states or in nuclear states which are not a party to the
Paris Convention but have equivalent and reciprocal
liability arrangements.
■■ The inclusion of installations for the disposal of
nuclear matter within the liability regime.
2
INDECS Consulting Ltd, Report to the Department of Energy and Climate Change on the commercial insurability of the increased liabilities following
implementation of the Paris and Brussels Conventions in the UK, October 2011.
04  |  NUCLEAR Changes To The UK Nuclear Liability Regime
What is the impact of these changes?
■■ Operators are required to maintain insurance or other
financial security in place to cover potential nuclear
liability to third parties under the Paris Convention.
Operators must increase their existing insurance (or
other financial security) to cover this additional level and
scope of liability. The increased level of liability will make
operators insurance obligations more onerous and more
expensive.
■■ The UK Government has acknowledged that in the
short term it may be difficult for operators to obtain
insurance cover for the full extent of liability under
the new regime2. The 2016 Order therefore empower
the government to step in and fill the gap in providing
insurance where the market is unable to meet this
demand.
■■ Contractors working on nuclear sites in the UK and
supplying equipment, technology and services to
nuclear operators should review the indemnities in their
supply contracts to ensure they are still fit for purpose
and afford contractors the full protection of the new
extended regime.
2. BACKGROUND
In two Protocols dated 12 February 2004 the contracting
parties to the Paris Convention and Brussels Convention
agreed a number of significant changes to the regime on
nuclear third party liability (“the 2004 Protocols”).
After 12 years of discussion and development the 2016
Order was made which, on commencement, will give
effect to the 2004 Protocols in the UK by amending the
Nuclear Installations Act 1965.
The Paris Convention establishes a framework for
allowing third parties to recover compensation when they
have suffered damage as a result of a nuclear incident.
The Paris Convention regime has been in place since
the 1960s and is one of the cornerstones of international
nuclear liability law with the principles established by
the Paris Convention being largely mirrored in other
international nuclear liability regimes. The concept of
strict channelling of liability means that the operator
of a nuclear installation will be liable for damage to
third parties caused by nuclear matter or ionising
radiation from that installation, regardless of whether
the operator is actually at fault or whether the damage
was caused or contributed to by someone other than
the operator3. The operator’s liability under the Paris
Convention is limited in amount and time.
The Chernobyl disaster in 1986 demonstrated the
inadequacy of the coverage provided under existing
international conventions and acted as a catalyst for
negotiation and reform of the existing nuclear liability
regime. The changes made by the 2004 Protocols
therefore widen the scope of the existing nuclear liability
regime and are intended to ensure that all victims of
nuclear incidents are afforded equitable compensation for
the damage they have suffered. In the event of a nuclear
incident an increased amount of compensation will be
available, in respect of a broader range of damage, to a
wider category of claimants.
The key provisions of the 2016 Order will come into force
when the 2004 Protocols comes into force in respect of
the United Kingdom. All member states who are parties
to the Paris and Brussels Conventions must ratify the
2004 Protocols simultaneously4. There will be no grace
period once the 2016 Order comes into force.

3
There are a limited number of exceptions to the strict liability rule under the Nuclear Installations Act 1965 - see section 12(3A) of the Nuclear
Installations Act 1965.
4
Council Decision 2004/294/EC10 of 8th March 2004.

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3. WHAT ARE THE KEY CHANGES?

Increase in maximum amount of compensation payable

The 2016 Order significantly increases the maximum level of liability payable by an Operator in respect of a nuclear
incident.

Type of Site Existing Regime New Regime

Standard installations (e.g. nuclear power Operator’s liability The liability cap is increased to €700m, rising by
plants) is capped at £140m €100m annually up to a maximum of €1.2bn.
for anyone incident.
Claimants will be able to claim up to €1.5bn, with
the additional €300m being “topped up” by the
UK Government.

Intermediate sites* (e.g. fuel fabrication, Liability is capped The liability cap is increased to €160m.
uranium enrichment and manufacture of at £140m.
radioactive isotopes)

Low risk nuclear sites* (e.g. small reactors Liability is capped The liability cap is increased to €70m.
used for research) at £10m.

Low risk disposal sites* N/A Liability is capped at €70m.

Low risk transport* (i.e. incidents Liability is capped The liability cap is increased to €80m.
involving transport of nuclear substances at £10m.
which are unlikely to cause significant
third party damage)

*The Department of Energy and Climate Change (now the Department of Business, Energy and Industrial Strategy)
published a consultation on 29 June 2016 entitled “Nuclear Third Party Liability: Defining prescribed sites and
transport”. The consultation considered how each of these categories of site and transport should be defined. It is
proposed that the Nuclear Installations (Prescribed Sites) Regulations 1983 will be revised and will set out the specific
criteria for each of these categories.

As under the existing regime, operators will continue to be required to put in place insurance or other financial
security to cover their potential liability.

06  |  NUCLEAR Changes To The UK Nuclear Liability Regime

Three new categories of damage
The existing regime covers liability for death, personal
injury and property damage. Under the 2016 Order the
operator’s liability will be extended to include:
1. the reasonable cost of measures to reinstate the
impaired environment. Only public authorities in the
UK who undertake, arrange or pay for reinstatement
measures may claim under this new category of
damage and compensation is only payable if the
reinstatement measures have been approved by
the Secretary of State;
2. loss of income derived from an activity which
entails directly exploiting the resources in part of
the environment, where a person is no longer able
to carry on that activity as a result of a significant
impairment of that environment (e.g. loss of right
to fish);
3. costs of taking reasonable preventative measures
presented by an actual or a “grave or imminent
threat” of a nuclear incident and any further loss or
damage caused by such measures.
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Interaction between Nuclear New Build Sites and
Legacy Nuclear Sites
The 2016 Order seeks to resolve uncertainty around
the potential scope for liability every time historical
discharges of radioactive materials are disturbed.
The UK Government sees nuclear energy as a
fundamental element of the UK’s transition to a low
carbon economy. The UK currently has a number
of reactors which generate the baseload of the UK’s
electricity. All but one of these reactors is scheduled
to be retired by 2030 and the government is therefore
supporting the building of a new fleet of nuclear power
stations in the UK. Plans are currently in place for new
nuclear power stations to be built at Hinkley Point C,
Moorside and Wylfa.
Many of the new nuclear power stations which are
planned to be built in the UK will be built adjacent to
an existing nuclear licensed site. There is potential for
activity on the new nuclear site to disturb or interfere
with radioactive materials previously discharged by the
neighbouring legacy nuclear site.
The 2016 Order seeks to clarify the interaction of
potential liability between new build nuclear sites and
legacy nuclear sites. Under the 2016 Order, the mere
presence of nuclear matter in a place as a result of a
previous occurrence is not to be treated as a separate
“occurrence”. No new occurrence would therefore arise
in relation to nuclear matter previously released from a
legacy nuclear site, which is subsequently disturbed and
moved to a new place. The 2016 Order inserts a new
section 26(2A) into the Nuclear Installations Act 1965
which provides:
“if nuclear matter is in a place at a particular time as a
consequence of an occurrence falling within section 7(1B)…
neither the presence of the matter in that place at that time
nor any effect that the matter produces at that time is to be
treated as a separate occurrence falling within any of those
provisions”.
5
Magnohard Limited and Others v The United Kingdom Atomic Energy Authority and Scottish Environment Protection Agency, 2004, SC 247, SLT 1083.9.
Department of Energy and Climate Change Consultation on the Implementation of Changes to the Paris and Brussels Conventions on Nuclear Third
6
Party Liability, January 2011.
08  |  NUCLEAR Changes To The UK Nuclear Liability Regime
The Government’s intended effect of this new section
is to:
■■ reverse the position under Magnohard Limited v
UKAEA [2004]5, which took an expansive view of the
meaning of “occurrence” and said that an occurrence
took place every time nuclear matter that had been
discharged on a previous occasion was disturbed and
moved to a new place. The Government’s view is that
“occurrence” should not be so broadly construed; and
■■ as no new ‘occurrence’ arises, the time limits for
bringing a claim under the NIA are not reset and
instead attach to the original occurrence.
The purpose of Government’s proposed amendment is
to tie the presence of previously released nuclear matter
to the original release6. There is a single “occurrence”,
being the original release and liability would still attach
to the operator of the legacy nuclear site. No new
occurrence will therefore arise if the nuclear site licensee
of a new build site disturbs a previous discharge from a
legacy nuclear site.
Limitation period
Under the current regime there is limitation period of
30 years from the date of the nuclear incident in which
to bring a claim. However, claimants can only make a
claim against the operator up to 10 years from the date
of the nuclear incident. Claims made outside this 10 year
period (but within 30 years of the incident) would not
be met by the operator and the UK Government would
step-in.
The 2016 Order retains the 30 year period for personal
injury claims. However, claimants may claim against the
operator at any time during this 30 year period.
For all other claims a 10 year limitation period will apply.
There will be no extended period in which claimants can
claim against the Government.
Wider category of potential claimants
The regime prior to the implementation of the
2016 Order does not apply to any nuclear incidents
occurring or damage suffered in a non-convention
state. Instead such claimants may bring claims in their
home country courts which exposes operators to
claims greater in amount or scope than under the Paris
Convention. It also means that claimants can bring claims
against non-operators in their home country courts as
the convention rules on strict channelling of liability do
not apply.
The new regime will extend the geographical scope of
the Paris Convention to include:
■■ non-nuclear countries who are not a party to the Paris
Convention; or
■■ nuclear countries which are not a party to the Paris
Convention but have equivalent and reciprocal liability
arrangements.
This means that claimants from non-convention states
can bring claims in the UK. It does not however, prevent
claimants from non-convention states from bringing
claims in their home country courts.
A claimant in Ireland (Eire) who suffers damage from a
nuclear incident occurring in the UK could therefore
bring a claim in the English courts under the Paris
Convention regime. That claimant would also be able to
make a non-convention claim in the Irish courts which
would not be subject to the restrictions and caps of the
regime.
Transport of Nuclear Materials
As a general rule an operator sending nuclear matter
remains liable for them in the course of carriage
and will only be relieved of liability in certain limited
circumstances. The 2016 Order prescribes that liability
can only pass from one Convention operator to another
where the receiving operator has a direct economic
interest in the relevant nuclear material. A person who
receives a financial or other benefit for or in connection
with undertaking or arranging the carriage of nuclear
matter is not deemed to have a direct economic interest.
As stated in the table above, where the shipment of
nuclear material is deemed a low-risk activity, liability is
capped at €80m.
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4. WHAT ARE THE IMPLICATIONS OF THESE CHANGES?
■■ Given the extended scope of liability under the new
regime, operators will be required to increase the
insurance they have in place to cover this increased
third party liability.
■■ The UK Government has acknowledged that in the short
term it may be difficult for operators to obtain insurance
to cover the full extent of their increased liability under
the new regime. In particular coverage is unlikely to be
available for the extended 30 year personal injury claims
limitation period. The 2016 Order empowers the UK
government to provide insurance cover on commercial
terms to the extent it is not available in the market.
The UK Government is therefore able to step in and fill
any gap in the provision of insurance or other financial
security if the insurance market is unable to meet this
demand. The phased increase in liability by €100m each
year is intended to give the insurance market time to
adjust to demand for increased level of cover.
■■ Suppliers of goods and services to nuclear operators
should check whether their exposure under existing
contracts is affected by the new regime and whether the
indemnities contained in those contracts still afford them
adequate protection. For example the existing indemnity
provisions may indemnify contractors against third
party claims arising from a nuclear incident but only in
relation to the lower liability cap and narrower scope of
the previous regime. Indemnities in existing supply chain
contracts should therefore be reviewed to ensure they
are still fit for purpose and afford contractors the full
protection of the new extended regime.
■■ Although the 2016 Order extends the geographical
scope of the Paris Convention, there remains a risk in
respect of claims brought by claimants who are domiciled
in non-convention states but who suffer damage as a
result of a nuclear incident in the UK bringing claims in
their home country courts. Claims could be brought
against parties other than the operator (e.g. contractors
working on UK nuclear sites) as the strict channelling of
liability principles will not apply to non-convention claims.
This could lead to uncapped and uninsured liabilities from
claims brought by claimants in non-convention states.
10  |  NUCLEAR Changes To The UK Nuclear Liability Regime
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FOR FURTHER INFORMATION PLEASE CONTACT:

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012  |  NUCLEAR Changes To The UK Nuclear Liability Regime