What is the Nuclear Damage Compensation Law?

What is the Nuclear Damage Compensation Law?
– Regarding Laws Governing Nuclear Damages.

1. The Purpose of the Nuclear Damage Compensation Law

The purpose of the Nuclear Damage Compensation Law is to help protect the victims and to help the development of the nuclear industry, by establishing in law the institution for providing financial compensation when nuclear damage occurs during nuclear reactor operation and so on. (Nuclear Damage Compensation Law, Article 1)

2. Nuclear Damage

“Nuclear Damage” means damage caused by the fission process of nuclear fuel materials or by the radioactivity of the nuclear fuel materials or other material, or by the toxic effect of the radioactive nuclear fuel materials or other radioactive material (i.e., the toxic effect and/or sequelae caused by absorption or ingestion of radioactive materials.) (Nuclear Damage Compensation Law, Article 2, Clause 2)
Generally, the object and range of damage compensation is for the damage in which causal relation is found, in the scope perceived as a nuclear accident, under socially accepted conventions. To be concrete, this not only includes the damage to life and body, but also mental and emotional damage, evacuation costs, damage from loss of business profits by shipments restriction and/or damage caused by harmful rumors and misinformation. Refer to the guidelines presented by Dispute Reconciliation Committee for Nuclear Damage Compensation.

3. No-fault Liability borne by Nuclear Operators

Nuclear Operators such as TEPCO are liable for damages regardless of whether there is intent or fault (negligence) on their part in the occurrence of nuclear damage. (No-fault liability. Nuclear Damage Compensation Law, Article 3, Clause1, text.)

Because, in Civil Code cases, it is the victims’ burden to prove the intent or fault of the perpetrator, in order for the victims to claim damages against the perpetrators, on tort in general, the No-Fault Liability clause is provided in the Nuclear Damage Compensation Law as a means to protect the victims. Nuclear Damage Compensation Laws in other countries ordinarily prescribe a no-fault liability of the perpetrators in the same way.

4. Indemnifying Nuclear Operators

Nuclear Damage Compensation Law prescribes to indemnify the nuclear operators for “the damages caused by Force Majeure (abnormally large natural disaster) and major social upheaval.” (Nuclear Damage Compensation Law, Article 3, Clause 1, Proviso) As in the case above, when the nuclear operators are indemnified, the nation (the government) will ensure the rescue of the victims and the prevention of damage escalation. (Nuclear Damage Compensation Law, Article 17)

Incidentally, on May 13, 2011, the government decided to indemnify TEPCO during the meeting of the cabinet task force in response to the economic damages caused by the nuclear power plant accident. The main reasons for this were: that “the abnormally large natural disasters” are expected to be great earthquakes, major volcanic eruptions, severe wind, flood damage and so on, which are, in general, historically unprecedented, whereas the earthquake and the tsunami of March 11, 2011 cannot be defined as historically unprecedented; the earthquake and the tsunami this time cannot be said to be as severe in its degree as “a major social upheaval” such as a war which is written down side by side with “abnormally great natural disaster” in Atomic Energy Damage Compensation Law, Article 3, Clause 1, proviso.; that the nuclear accident of March 2011 cannot be described as necessarily caused by the earthquake and/or tsunami; and finally that the station black out (SBO) as a result of the earthquake had been foreseen as a potential issue before the accident in this case.

5. Legal Channeling of Liability for Nuclear Operator

The entities other than the nuclear operators, e.g. the manufacturers (builders) providing various components, machinery and tools such as nuclear reactors, do not bear responsibility for compensation in atomic energy damages. (Nuclear Damage Compensation Law, Article 4, Clause 1) And in the Nuclear Damage Compensation Law, Article 4, Clause 3, it is prescribed that the Product Liability Law and other laws are not applied to entities other than the nuclear operators, resulting in no payment of damages by entities other than the nuclear operators. In this manner, the liability for nuclear damages is solely born by, and concentrated on, the nuclear operators. The main aim and idea based on this prescription is, aside from the protection of nuclear industry entities other than the operators, to allow the victims to clearly identify liability for the nuclear damage, in other words, the victims can easily understand that to receive payments for nuclear damages, they must go to the nuclear operators. Thus, this is seen as part of victims’ protection.

However, the true reason for excluding the nuclear reactor builders from the application of the Product Liability Law is believed to be that it is one of the terms and conditions presented by the United States when Japan began the nuclear power generation project with nuclear related technology from the United States. The reality is that the US nuclear reactor builders had the business acumen to put into law an exemption of liability, knowing they would not be able to assume the risk of bearing enormous liability as a result of emergency nuclear accidents caused by flaws in nuclear reactor facilities.

For this reason, countries which began nuclear power generation based on nuclear technologies provided by the United States all have nearly the same legal system on civil liability for nuclear accidents, and among those countries, it becomes the international standard rule not to make the nuclear reactor builders accountable for product liability.

India has challenge this “legal channeling of liability” head-on. India bears the legacy of the biggest and most severe chemical plant accident in the world. It is deemed that over 2,000 people died in one night as a result of the chemical agent methyl isocyanate leaking from a US corporation, Union Carbide Corporation in Bhopal, the state capital of Madhya Pradesh (the “central state”), India, in 1984 with 15 – 25 thousand more deaths later. Damage to health still continues in that area, and exact casualties are not clearly known. Meanwhile, the suit against Union Carbide Corporation and the issue of where liability lies have not been resolved.

Because of this historical background, India claims the right to bring legal action against the country exporting the nuclear power plant and against the nuclear reactor builders, when it imports the nuclear power plants. India makes this a part of the terms and conditions for importing nuclear power plants in its negotiations with the exporting countries.

6. The Measures Concerning the Nuclear Operator Damages and the Assistance by the Nation (Japanese Government)

The nuclear operators are obliged to make provisions against the situation in which liability for damage may occur (Measures Concerning Damages.) (Nuclear Damage Compensation Law, Article 7, Clause 1) These measures are to execute a nuclear energy liability insurance contract (which is a private insurance contract) and enter into an indemnity agreement for compensation of nuclear damage (which is a government indemnity agreement.) As the amount necessary for taking measures against damages is deemed to be, in principle, 120 billion yen (about 1.02 billion USD, as of March 20, 2015 (1USD = 119.72 yen)) per each business establishment, private nonlife insurance companies will normally pay up to 120 billion yen (amount of financial security) as nuclear damage compensation to the victims. When compensation for the nuclear damages exceeds this, due to natural disasters (e.g. earthquake, eruption, tsunami), the government will compensate for damages up to 120 billion yen to the victims according to the contract of indemnity between the nuclear operators and the government.

Also, in order to cover all victims, when the nuclear damage exceeds the financial security amount (120 billion yen), the nation (the Japanese government) may provide the nuclear operators with necessary assistance. (Nuclear Damage Compensation Law, Article 16) This means the nation (the Japanese government) will provide assistance, including, without limitation, granting subsidies and financing at low interest rates.