Nuclear liability developments – forum shopping in the US

Cheryl Parkhouse and Ian Salter provide an overview of the consequences for the global nuclear industry and an update on the Paris Convention amendments.

23 January 2018

The law on nuclear liability can move at a painfully slow pace. However, recent months have seen some significant changes. Recent decisions and new cases filed in US courts have shed light on an important concern regarding the protection afforded to suppliers by nuclear liability law.

Nuclear liability in countries, like the UK and Japan, channel liability arising from a nuclear incident absolutely and exclusively to the operator. The claims under these regimes are dealt with by courts, located in the country of the installation (generally), that are awarded exclusive jurisdiction for such claims.

However, we have been warning of the risks of claims being brought outside of these structured and established regimes under the laws of other countries, particularly the United States.

In 2012, the lawsuit Cooper et al v TEPCO was brought in California by US Navy Service members allegedly exposed to radiation when deployed to provide relief to the Fukushima accident. This was then further amended to extend to a number of suppliers, not just the operator TEPCO.

Applications by TEPCO to dismiss the claim on the basis of the US court not having jurisdiction; and declaration by the government of Japan of its interest of bringing all claims together in Japan were recently unsuccessful and the case remains in the US and will take a number of years to resolve.

Latest developments – another lawsuit

Now, in the last few weeks, a significant class action complaint, Imamura et al. v General Electric Company and ‘Does 1-100’, has been brought in the US District Court for the District of Massachusetts by named plaintiffs comprising property owners, businesses and other commercial enterprises. They are bringing the action on behalf of themselves and both a citizen and business class ‘economically devastated and literally ruined by the matters alleged in this complaint’.

The defendant, General Electric (GE), is a large, well-known and significant contributor to the nuclear global market, with its corporate headquarters and principal place of business in Massachusetts. The complaint maintains that GE designed and largely constructed the Fukushima Daiichi Nuclear Power Plant (FNPP) and was responsible for its maintenance.

What are the consequences?

The latest GE case is illustrative of claimants forum shopping to find the highest possible financial outcome if successful. In Japan, GE has no liability as Japanese law channels liability to the operator. However, in the US, this does not apply.

This ‘shopping’ for eligible defendants and forums is exactly what the international nuclear liability regimes were created to guard against and prevent. To achieve this, they provide a clear, single route for victims of a nuclear incident by clearly identifying the sole responsible party (the operator) by channelling liability absolutely and exclusively to that operator. Jurisdiction of those claims is then channelled to the courts of one jurisdiction (for example, in the territory of the contracting party where the incident occurred). In doing so, this aims to protect both potential victims and the economic viability of the nuclear industry through certainty and risk management.

However, channelling of liability and jurisdiction can only work where Treaty relations exist between countries i.e. where countries are party to the same legal instrument and therefore bound by the same rules of channelling. For example, while prior to the Fukushima accident, Japan already had a mature and well-developed nuclear liability regime in place, due to the lack of nuclear liability Treaty relations with other States, this is only applicable to Japan and no other States are bound to channel claims received in its own jurisdiction back to Japan.

Of course, since 2012, Japan, the US and other countries have signed the Convention on Supplementary Compensation (CSC) which does channel jurisdiction to the country of the contracting party where the incident occurred. However, the CSC did not come into force until April 2015, after the Fukushima accident, with US courts currently upholding that it cannot have retrospective effect and therefore apply to claims arising from the accident.

Therefore the impact of this class action is not just enormous in terms of potential financial pay-out, but in relation to the way in which the nuclear industry and global market can continue to operate as a whole. The industry is wholly dependent upon the provision and movement of skilled expert workers from all over the world to advise on, construct, operate and maintain nuclear power plants.

The US remains a particularly attractive forum for claims due to its potential large awards of damages, including potential punitive damages (awarded in addition to actual damages to deter the defendant and others from engaging in similar conduct) and trials before generous juries.

What is the potential impact on the UK?

As a contracting party of the Paris Convention, the UK currently has treaty relations with all other 14 Paris Convention contracting parties, namely Western European States. (This is to become 15 once Switzerland also becomes a contracting party when the 2004 Amending Protocol enters into force). However, this is the extent of its treaty relations with respect to nuclear liability, which represents a very small proportion of all states active in the UK and global nuclear market. As it has not ratified the Joint Protocol, unlike France which was the latest state to ratify in 2014, it also has no treaty relations with contracting parties of the Vienna Convention. Furthermore, and of particular significance to the role of US contractors in the UK nuclear market, the UK has no treaty relations with the US.

This is why so much emphasis and pressure continues to be placed, by the US in particular, on others such as the UK to enter into the CSC – to create treaty relations on a global level between as many States as possible and ensure the channelling of all eligible claims to one jurisdiction. Current contracting parties include the US, Argentina, Canada, Ghana, India (albeit to residual concerns), Japan, Montenegro, Morocco, Romania and the United Arab Emirates.

While we eagerly await developments of these cases, and whatever your own views on the CSC may be, it is likely that this will increase pressure from the US administration and other countries party to CSC for the UK and other States to ratify the CSC. This may perhaps even be more so in the context of Brexit and anticipated negotiation of the 123 Agreements. However, the UK government is currently still immersed in discussions about the revised PC.

Update on ratification and coming into force of the Paris Convention Amending Protocols

In the meantime, Paris Convention signatories have been pressing on with preparing for the ratification and the entering into force of the amendments to the Paris Convention. A meeting of the contracting parties took place on 6 December and it was originally envisaged that the target date for the coming into force of the amendments would be 1 July 2018. However, following this meeting, we have been informed that this date is now delayed to mid-2019 due to Italy being unable to lay its implementing legislation until autumn 2018, after its general elections.

This article was written by Cheryl Parkhouse.

Key contact

Ian Salter

Ian Salter Partner

  • Head of Nuclear
  • Head of Projects
  • Environment

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