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4
Insurance and Liability in the Transport and
Reception of Fuel for Storage in Russia*
Nikolay S. Pronkin
Scientific-Technical Center for Nuclear and Radiation Security
LEGISLATIVE bASE
In the Russian Federation, civil liability for losses and damages caused by
radiation (nuclear harm or damages) and its financial aspects are governed by the
following regulatory and legal documents:
• Federal Law on the Use of Atomic Energy (No. 170-FZ, dated Novem-
ber 21, 1995)
• Civil Code of the Russian Federation (adopted by the State Duma on
October 21, 1994)
• Vienna Convention on Civil Liability for Nuclear Damage (May 21,
1963, Vienna)
• Provisions for Licensing of Activities Involving the Use of Atomic En-
ergy (Resolution of the Government of the Russian Federation No. 865, dated
July 14, 1997)
The Federal Law on the Use of Atomic Energy (Chapter XII, Articles 53-60)
is the fundamental document governing liability for radiation-related losses and
damages to legal entities, individuals, and the health of citizens. These articles
cover the handling of spent nuclear reactor fuel imported from foreign states for
temporary technical storage and (or) processing, including
*Translated from the Russian by Kelly Robbins.
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SPENT NUCLEAR FUEL STORAGE FACILITIES
• transport of spent nuclear fuel through Russian territory in the process
of its import or export,
• its temporary technical storage in spent fuel repositories in Russian
territory,
• export of the products of spent fuel processing, and
• export of radioactive waste after spent fuel processing to the country
from which the spent fuel came.
FEDERAL LAW ON THE USE OF ATOMIC ENERGY
Under Article 53 of this law, civil legal liability for losses suffered by organi-
zations and individuals due to radiation impacts associated with the use of atomic
energy is borne by the operating organization in accordance with Russian Federa-
tion legislation (through licensing procedures). Compensation is due for damages
to the lives and health of citizens caused by radiation impacts or a combination
of radiation impacts and toxic, explosive, or other dangerous effects.
If in addition to losses caused by radiation effects, there are other losses that
cannot be quantified separately from those due to radiation, these losses are also
subject to compensation on the basis of this federal law.
Under Article 54, which defines the grounds for civil legal liability, the op-
erating organization is liable regardless of fault for losses and damages caused
by radiation effects. However, the operating organization is exempt from liability
for losses and damages caused by radiation effects arising as a result of force
majeure, military actions, armed conflicts, or the intentional actions of those suf-
fering the losses or damages. If the operating organization proves that the losses
and damages are completely or partially the result of intentional actions by the
victim, the operating organization is completely or partially relieved of liability
for compensating this individual or entity. Exemption from paying compensation
for losses and damages is granted according to judicial procedures.
Forms and limits of liability (Article 55) on the part of the operating orga-
nization for losses and damages caused by radiation effects are established by
Russian Federation legislation (through licensing procedures), depending on the
type of facility using atomic energy. The maximum limit of liability for any one
incident may not exceed the amount established by international treaties signed
by the Russian Federation.
The operating organization (Article 56) is required to have financial re-
sources equal to the liability limit established by Article 55 of the federal law. The
financial resources required of an operating organization in the event compensa-
tion for radiation-related losses and damage is needed consist of state guarantees
or other guarantees, as well as the organization’s own funds and its insurance
policy. The presence of documented confirmation of these financial resources is
a necessary condition for the operating organization to receie a license from
the relevant state safety regulatory agency to operate a nuclear facility, radiation
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INSURANCE AND LIABLITY IN TRANSPORT AND RECEPTION
source, or storage site. The conditions and procedures for providing insurance for
civil legal liability for radiation-related losses and damage, the procedures and
financing sources of the insurance fund, and the procedures for payment on social
guarantees are established by Russian Federation legislation.
Neither the insurer nor any other individual providing financial guarantees
regarding this liability in accordance with Article 56 may suspend or terminate
insurance or other financial support without providing written notice three months
in advance to the relevant state safety regulatory agencies. The same applies for
financial guarantees during the period of transporting nuclear materials or radio-
active substances when the insurance or financial guarantees cover the transport
of nuclear material or radioactive substances.
When losses or damages exceed the liability limit established by Article 55
of this federal law for a given operating organization, as well as in situations
stipulated in Russian Federation legislation, compensation for losses and damage
above this limit are paid by the government of the Russian Federation (Article
57) by providing the amounts needed to compensate fully for the losses and
damages incurred.
There is no statute of limitations regarding claims for compensation for
radiation-related losses and damages to the lies and health of citizens. The
statute of limitations for claims for compensation for radiation-related losses
and damages to property or the environment is three years from the date when
the victim became aware of or should have become aware of the violation of his
rights.
Under the above-mentioned federal law, the Russian Federation Law on
Environmental Protection, and other laws and regulatory acts of the Russian Fed-
eration and federation subjects, the operating organization is liable for radiation-
related damages to the environment (Article 59). Lawsuits claiming compensation
for losses are filed against the operating organization by state agencies and rel-
evant environmental protection agencies.
Radiation-induced harm to the lives or health of personnel (including those
on business travel) at nuclear facilities, radiation sources, and storage sites (Ar-
ticle 60), as well as the lives and health of personnel engaged in any other work
with nuclear materials or radioactive substances in connection with fulfillment of
their job duties, is subject to compensation in accordance with Russian Federation
legislation. In this regard, note the following provisions of this federal law:
• Liability for compensation for nuclear-related damages lies exclusively
with the operating organization (nuclear facility operator; Article 53).
• Liability for nuclear-related damages attaches regardless of any fault on
the part of the operating organization (nuclear facility operator; Article 54).
• The government of the Russian Federation pays compensation for
nuclear-related damages over the contractually established level of insurance
coverage (Article 57).
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SPENT NUCLEAR FUEL STORAGE FACILITIES
• An operating organization may be licensed to engage in activities involv-
ing the use of atomic energy only by presenting documented confirmation of the
availability of financial resources to compensate for nuclear-related damages
(Article 56).
• Suspension or termination of insurance on a nuclear facility is impossi-
ble without notification of the Federal Service for Environmental, Technological,
and Nuclear Oversight (Rostekhnadzor) three months in advance of the suspen-
sion or termination. Insurance on the transportation of radioactive materials may
not be suspended or canceled during the period that the shipment is under way
(Article 56).
THE 1963 VIENNA CONVENTION ON CIVIL
LIAbILITY FOR NUCLEAR DAMAGE
The Vienna Convention on Civil Liability for Nuclear Damage (hereafter the
Vienna Convention), dated May 21, 1963, was ratified on March 21, 2005, by
Russian Federation Federal Law No. 23-FZ on Ratification of the Vienna Conven-
tion on Civil Liability for Nuclear Damage.
The provisions of the articles included in Chapter XII of the Federal Law on
the Use of Atomic Energy on the whole reflect the provisions of the articles of
the Vienna Convention, which lays out the system recognized by the international
community for handling civil liability for nuclear damages.
A number of documents, including laws and associated acts (provisions,
regulatory documents, and so forth) must be developed in order to implement
the Vienna Convention in the Russian Federation. For example, the Federal Law
on Civil Liability for Causing Nuclear Damage and Its Financial Aspects is cur-
rently under development, and the contents of its articles are based on provisions
in the Vienna Convention. The draft of this law is currently under final revision,
taking into account the results of its second reading in the Russian Federation
State Duma.
FEATURES OF CURRENT RUSSIAN LEGISLATION
ON COMPENSATION FOR NUCLEAR DAMAGES
Following are some features of Russian Federation legislation regarding
compensation for nuclear damages:
In addition to third-party liability, the operating organizations bear absolute
and exclusive liability for damages to the enironment resulting from radiation
effects. Lawsuits for compensation of losses are filed against the operating orga-
nization by federal government agencies, relevant local government agencies, and
specially empowered government environmental protection agencies.
Absolute and exclusive liability of the insurer extends to not only nuclear
facilities as understood under international conventions but also activities associ-
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5
INSURANCE AND LIABLITY IN TRANSPORT AND RECEPTION
ated with the use of radioactive substances and ionizing radiation sources that are
not considered nuclear materials under international conventions. Furthermore,
the articles of Chapter XII formally do not coer spent nuclear fuel as one of
the usage categories in the Federal Law on the Use of Atomic Energy defined in
Article 3 inasmuch as spent nuclear fuel is not mentioned in Chapter XII.
The party suffering the nuclear damages has no right of redress (see page
12).
Liability for causing nuclear damages during the transportation of radioactive
cargo (spent nuclear fuel) shifts to the Russian recipient (operating organization)
from the moment the transport ehicle crosses the state border of the Russian
Federation, not the moment when responsibility for the cargo is transferred.
Accordingly, in the shipment of radioactive material to a foreign recipient, the
nuclear liability of the Russian operator terminates only at the moment when the
transport vehicle and its cargo leave the territory of the Russian Federation.
No determination has been made regarding the maximum leel of ciil liabil-
ity by the organization operating a nuclear facility for causing nuclear damage as
a result of a nuclear incident at the facility.
Passage of the Law on Civil Liability for Causing Nuclear Damage and Its
Financial Aspects will eliminate a number of discrepancies between Russian
legislation and international norms.
THIRD-PARTY LIAbILITY INSURANCE
The introduction of nuclear insurance in Russia may be considered to have
started as of the date when the Federal Law on the Use of Atomic Energy went
into effect in 1996 and especially when the Provisions for Licensing of Activities
Involving the Use of Atomic Energy were issued in 1997, inasmuch as licensing
was an effective tool for promoting “mandatory” insurance of the activities of
operating organizations that use atomic energy. The same period saw the creation
of a voluntary association of Russian insurance companies planning nuclear in-
surance activities (the nuclear insurance pool).
The requirement of “mandatory” civil-legal liability insurance for losses and
damages caused by radiation effects, the creation of the insurance fund, and the
payment of social guarantees is included in Article 56 of the Federal Law on the
Use of Atomic Energy.
In accordance with Point 12d of the Provisions for Licensing of Activities
Involving the Use of Atomic Energy (No. 865, dated July 14, 1997), a license for
a particular type of activity involving the use of atomic energy may be obtained
if the applicant has documents confirming the availability of financial resources
to cover civil-legal liability for losses and damage caused by radiation effects.
This license is issued by Rostekhnadzor.
In issuing licenses for transborder shipments of radioactive materials,
Rostekhnadzor proposes that the following recommendations be observed:
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6 SPENT NUCLEAR FUEL STORAGE FACILITIES
• The baseline liability limits recommended by Rostekhnadzor should
be used in considering the question of the financial resources required to cover
third-party liability for nuclear damages during the transitional period.
• Coverage for terrorist acts and theft of radioactive materials should be
included in the insurance contract.
• The insurance policy must be issued by a Russian insurer.
• Liability on the part of the insurer begins (ends) at the moment the trans-
port vehicle and its cargo enter (exit) the territory of the Russian Federation.
• The coverage amount in the nuclear liability insurance policy for Rus-
sian territory must be as close as possible to the liability limit of the insurer for
transport of the given cargo in the territory of a neighboring state.
• Insurance coverage in the territory of the Russian Federation must be
no worse than the policy conditions for liability insurance for the transport of the
given cargo in the territory of a neighboring state.
General principles for nuclear insurance are based on the Civil Code of the
Russian Federation (Articles 927-970 of Chapter 48, “Insurance”). Civil liabil-
ity insurance for operating organizations/atomic energy facilities (the insured)
by the insurance company (the insurer) is based on a contract between these
organizations documenting all basic provisions of relations between the insured
and insurer. The contract is the fundamental document defining the subject of
agreement, contract duration, procedures for premium payment, coverage limit,
premiums, insurance awards and compensation payments, special conditions,
and so forth. After paying the premium, the insured receives from the insurer an
insurance policy that indicates the object insured, the coverage limit (liability
limit on the part of the insurer), and the dates on which coverage under the policy
begins and ends.
The organization issuing the insurance (the insurer) must meet the following
requirements:
• Insurance is issued only by insurance organizations that are (1) regis-
tered in the Russian Federation, (2) licensed according to established procedures
by the Department of Insurance Oversight of the Russian Ministry of Finance to
provide civil-legal liability insurance to operating organizations during the trans-
port of nuclear materials, and (3) operating according to procedures established
by Russian Federation legislation.
• As a rule, contracts for insurance covering the transport of nuclear
materials are concluded with insurance companies that are licensed by the Rus-
sian Federal Security Service to engage in operations associated with the use of
information classified as state secrets.
• In accordance with the recommendations of the Order on the Creation of
a Single Insurance System under the Russian Ministry of Atomic Energy (Federal
Atomic Energy Agency [Rosatom] Order No. 255, dated April 22, 1996), insur-
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7
INSURANCE AND LIABLITY IN TRANSPORT AND RECEPTION
ance contracts are concluded with insurance companies belonging to the Russian
Nuclear Insurance Pool.
• The insurance company must have qualified personnel competent in
issues regarding nuclear insurance and nuclear and radiation safety to fulfill the
company’s obligations regarding the insurance contracts it has signed.
• The insurance company must have sufficient financial resources and
stability.
CONCLUSIONS
The Russian Federation has created a legal foundation that defines the basic
principles for civil liability for losses and damages caused by radiation effects
(nuclear harm or damages) as well as its financial aspects.
The Russian Federation’s ratification of the Vienna Convention is a very
important step on the path to achieving universal international law and order with
regard to the safe use of atomic energy.
Adoption of the Vienna Convention is a serious incentive factor in the devel-
opment of special legislation to ensure financial guarantees for compensation for
nuclear damages. The draft Federal Law on Civil Liability for Causing Nuclear
Damage and Its Financial Aspects is in the development stage. A wide range of
related legal acts specifying fundamental legal and legislative provisions remain
to be developed.
Nuclear liability insurance practices have developed in the Russian Federa-
tion on the basis of principles of absolute and exclusive liability of the insurer and
the presence of a maximum liability limit for the nuclear facility operator above
which damages are covered by the state. This is in accordance with the principles
of the Vienna Convention regarding compensation for nuclear damages and with
the national laws of many countries.
In the event that a contract is signed regarding the processing and (or) tem-
porary technological storage of spent nuclear fuel of foreign origin in the Russian
Federation, the coverage amounts in the nuclear insurance contracts for such risks
will be set at the level stipulated in the Vienna Convention.
Taking into account the nuclear risk insurance practices that have taken shape
in Russia with regard to shipments of nuclear materials, it would be expedient to
apply a system of reinsurance for insurance covering risks of transporting spent
nuclear fuel of foreign origin.
