Peril liability related to nuclear energy in Turkey

May 2013 | EXPERT BRIEFING | SECTOR ANALYSIS

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Global energy demand continues to increase. At the same time, the energy sector has been the top sector for foreign direct investment in Turkey for the last two years. This is due to Turkey’s geographical position, natural resources, stable growing economy, and young labour force. As the world’s energy demands are rising quickly, the need for energy and natural resources that do not harm the environment have become an important issue. To that end, countries have begun to reconsider their energy policies and the occurrence of nuclear energy and liability issues have been put on the top of their lists. The unfortunate Fukushima nuclear power plant accident has forced legislators to adopt and regulate their laws to increase safety measures and to take into consideration third party civil liability with regard to nuclear incidents.

Turkeyhas been considering the installation and operation of nuclear power plants in the provinces of Amasya and Sinop. Beside these projects, the installation of the Akkuyu nuclear power plant in Mersin was commissioned by Russia’s Rosatom as of May 2010. The construction of the site is expected to be commenced within the year. Furthermore, as has been reflected in the press, Kırklareli province is also being considered as another spot for the installation of a nuclear power plant.

The current liability situation in Turkey

The Law on Installation and Operation of Nuclear Power Stations and Sale of Energy, dated 9 November

2007 (the Nuclear Energy Law) has been put into force in order to regulate the establishment and operation of nuclear power plants within the borders of Turkey. However, this piece of legislation does not regulate any rules regarding third party civil liability or peril liability. In this regard, there are international treaties which Turkey has been party to for more than 50 years. Turkey signed the Paris Convention on 29 July 1960 and the additional protocols respectively on 10 April 1964, 16 November 1982, and finally on 12 February 2004, regarding the third party liability in the field of nuclear energy. The latest amendments – which broaden the definition of nuclear damages, increase the limits of liability and raise the claims of compensation for loss of life up to 30 years – have not yet been ratified by the Turkish Grand National Assembly. Therefore, the version of the Paris Convention revised in 1982 is still in effect.

That said, the long-awaited new Turkish Code of Obligations (New TCO) entered into force on 1 July 2012 replacing their very old predecessors and introducing the peril liability. As per the new regulated article (Article 71 of the New TCO), the peril liability is related to a facility, when the nature of its activities or the materials, tools or powers used for this activity are considered, is prone to causing frequent or dire damages regardless of any precautionary measures which may be expected to be enforced by an expert in the related field of activity. Furthermore, if a considerable risk arises due to damage borne as a result of the operation of a facility, the owner of the facility and the operator of the facility are deemed as jointly liable with regard to such damage.

There is no doubt that the operations of nuclear power plants embody huge risks and the estimated results would be considered within the scope of the above-given article of the New TCO. However, since the New TCO fails to bring specific provisions with regard to the nuclear installations, the Paris Convention will remain the leading and foremost legislation for nuclear incidents.

Further to the above, as per Article 90 (5) of the Turkish Republic Constitution, the international agreements duly put into effect bear the force of law. In the case of a conflict between international agreements and the domestic laws due to differences in provisions on the same matter, the provisions of international agreements shall prevail. In this respect, it is worth mentioning that the joint liability provisions foreseen in the New TCO will not apply to nuclear incidents.

According to the Paris Convention, in most circumstances, the operator of the nuclear installation is liable for losses or damages to a person or property caused by a nuclear incident. To that end, the liability of the operator is deemed as a strict liability regardless of whether fault is established, similar to the relevant article of the New TCO. However, under certain circumstances, the operator shall not be liable for damages caused by a nuclear incident directly due to an act of armed conflict, hostilities, civil war, insurrection or a grave natural disaster of an exceptional case, such as the Fukushima incident.

Compensation claims

As set forth by the Paris Convention, the maximum liability of the operator in respect of damage caused by a nuclear incident is determined by the IMF as SDR15m (Special Drawing Rights) – SDR 1 is equal to €1.17. The same convention also allows signatory parties to set a different amount, provided that the amount is not less than SDR 5m, which will be determined by taking into account the nature of the nuclear installation and the possible consequences of the incident. To that end, it is worth mentioning that Turkey has not introduced any piece of regulation regarding the determination of the limit of compensation. To put it another way, the limit of compensation shall be considered on a case-by-case basis within the given limit of the Paris Convention.

Furthermore, as to the statute of limitations for third party civil liability claims, it is regulated in the Paris Convention that the right of compensation shall be extinguished if an action is not brought within 10 years of the date of the nuclear incident. However, in the case of damage caused by a nuclear incident involving nuclear fuel or radioactive products or waste, which, at the time of the incident have been stolen, lost, jettisoned or abandoned and have not been recovered, the above estimated period may be increased up to 20 years from the date of the occurrence of the specific incident.

Similar to the approach of the Paris Convention, the prescription period relating to the peril liability under the New TCO is parallel to the above-mentioned provisions. Further to the relevant article of the New TCO, the period is determined as two years from the date when the claimant becomes aware of the damage and the person causing the damage, and general period of 10 years starting from the date when the damage-causing event occurs.

Steps to be taken

The steps taken by the Turkish government in the last two years prove that Turkey intends to strengthen its presence in the field of nuclear energy. In this framework, it is imperative that Turkey continues to invest in these areas in order to reach its 2023 goals. On the road to achieving its targets, all kinds of measurements should be taken with consideration to state of the art technology in order to protect the environment and public. In this regard, the latest additional protocol of the Paris Convention should be ratified as soon as possible and a national legislation needs to be prescribed regarding the untouched areas of the third party civil liability such as the liabilities exceeding the monetary liability limits provided in the Paris Convention.

Pelin Baysal is a partner and Görkem Bilgin is an associate at Mehmet Gün & Partners. Ms Baysal can be contacted by email: pelin.baysal@gun.av.tr. Mr Bilgin can be contacted by email: gorkem.bilgin@gun.av.tr.

Pelin Baysal and Görkem Bilgin

Mehmet Gün & Partners