The power puzzle

Nuclear power stations in the former Eastern Bloc need Western help to make them safe - but giving it could mean huge liabilities. Robert Verkaik reports on the legal wrangle
International law is blocking aid for Eastern European nuclear safety programmes, according to nuclear law experts in this country. They say vital aid from the West which is needed to make safe many of the old Soviet-built reactors, now falling into disrepair, is being held up because Western governments and investors fear they might be sued for many millions following a nuclear accident.

Professor Alan Boyle of Edinburgh University, a public international lawyer with expertise in international nuclear law, says that a number of Russian-designed reactors are not operating to international safety standards. "They haven't got the money or the technical skill to replace them or upgrade them to make them safer, so they do need assistance," he says.

But what prevents many governments and their nuclear agencies from delivering the necessary aid, via the European Commission's nuclear safety programme, is the question of third party liability. Under a number of Eastern European countries' legal systems anyone who has assisted in the development of a nuclear power plant can be held liable for damages following an accident. In UK law (the Nuclear Installations Act 1959) and under the terms of the Paris and Vienna nuclear liability conventions of 1960 and 1963 respectively, third parties such as designers, builders, repairers and suppliers are immune from legal action. The only party liable is the nuclear plant operator. Unfortunately, Professor Boyle says, a number of the countries of the former Soviet Union, including Russia and Ukraine, are not signatories to the conventions, and the international nuclear regulatory agencies, such as the International Atomic Energy Authority, do not have the teeth to force them to make safety improvements.

Professor Boyle says that as the liability law stands in some Eastern European countries, it would be "imprudent" for a company to supply certain assistance to these nuclear industries. Nevertheless, a number of British companies, such as British Nuclear Fuels (BNFL) and Magnox Electric, and many other Western European nuclear agencies, are keen to develop their international nuclear businesses.

Alvin Shuttleworth, BNFL company secretary and senior lawyer, says: "We would be more ready to do business with a convention country. [If we were contracting with a non-convention country] we would have to make alternative arrangements to make sure the liabilities were adequately covered."

BNFL has recently been working with some Eastern European countries on research and development projects. Last year Mr Shuttleworth met the head of the legal department of the Chernobyl power station in Ukraine, which is still producing electricity, to discuss the differences in the two countries' operating systems. Other BNFL executives have had similar meetings with their counterparts in the former Eastern Bloc.

The threat of nuclear accident in the East is exacerbated by the greater use countries there make of nuclear power. In Lithuania 87 per cent of the country's energy is nuclear-generated. In Slovakia, Hungary, and Slovenia the proportion is almost half. One obvious way to reduce the risk of disaster would be for Eastern European countries to sign up to the conventions. What prevents them from doing so is the mutual indemnity insurance fund which most Western countries have agreed to contribute to if one of the convention countries has a nuclear accident. Professor Boyle explains the dilemma for the West: "It's far more likely that a Eastern European nuclear reactor will go sky high and then everyone will have to pay out in proportion to their nuclear generating capacity."

As more and more of the old Soviet-built nuclear reactors need technical assistance, both Eastern European and Western governments are looking to nuclear and public international lawyers to try to break the deadlock.

The Americans have not built a nuclear reactor for 10 years, leaving their lawyers lacking in the relevant expertise. But in the UK there are only one or two private-practice lawyers who might be able to fulfil that role.

Paul Bowden, Freshfields head of environment, who advises BNFL on litigation and liability matters, is one. He says the Eastern European countries even have difficulty getting nuclear fuel from the West - previously they had been dependent on Russia - unless they sign up to the conventions. He says not only governments are looking for advice as to the channelling of liability under the conventions. The European Commission and the European Bank of Reconstruction and Development, which are doing a lot of behind- the-scenes funding of nuclear programmes, also need guidance. "The key to this is that if there were a catastrophic nuclear accident like a Chernobyl, then no company, no matter how big, could afford the potential liability," he says. It appeared many governments now recognised the urgent need to create a collective liability and regulatory regime as the best way to safeguard against nuclear accident. "There is a growing trend towards imposing responsibilities on states, under public international law, for not only the releases of radioactivity but also to the building of installations."

Mr Bowden warns that the tensions between nuclear and non-unclear countries could lead to a spate of actions being brought to the International Court of Justice at the Hague. Such a case was recently brought by New Zealand against France in an attempt to prevent further nuclear testing in the Pacific.

Freshfields is advising an inter-governmental organisation called Keydo, set up by the US, Japanese and South Korean governments, with the European Union as a signatory, to design, supply and build two new light water reactors in North Korea.

In this country our own nuclear power industry received an indirect boost from Tony Blair when he told delegates at the Earth Summit that he was committed to a long-term reduction of carbon dioxide. Mr Shuttleworth regards Mr Blair's comments as very encouraging for the UK nuclear industry: "This leaves the door open for the future and might mean a speedier return to more nuclear power than otherwise might be expected." It might also mean good news for the handful of UK lawyers with nuclear law expertise.

Last month saw the publication of The Law of Nuclear Installations and Radioactive Substances by Stephen Tromans and James FitzGerald, environmental lawyers at the City law firm Simmons & Simmons. Nuclear law is surely the most niche of all practices. Nevertheless, public international lawyers in tune with developments in the nuclear industry hold the key to unlocking the aid which nuclear plants in Eastern Europe so desperately needn