CONCLUSION OF THE CSC AND ITS DOMESTIC IMPLEMENTATION IN
JAPANKoichi MURAKAMI
Japan Energy Law Institute

Table of Contents

I.

Introduction: the circumstance for the conclusion and entry into force of
the CSC in Japan..............................................................................................................2

II. Legal examinations concerning Japan's conclusion of the CSC................................. 3
A. Examinations concerning the issues from Japanese legal points of view.............. 3
B. Enactment and revision of domestic law for CSC implementation....................... 5
III. Compensation for nuclear damage of the Fukushima incident and the CSC............ 6
A. The compensation system for nuclear damage in Japan after
the Fukushima incident.............................................................................................. 6
B. With a view to increasing the amount of compensation for nuclear damage........ 7
C. Re-examinations concerning nuclear liability in Japan and the CSC.................... 8
IV. Conclusion......................................................................................................................... 81

CONCLUSION OF THE CSC AND ITS DOMESTIC IMPLEMENTATION IN
JAPANKoichi MURAKAMI
Japan Energy Law Institute1
I.

Introduction: the circumstance for the conclusion and entry into force of the CSC
in JapanOn 15th April 2015, an important step to strengthen the global nuclear liability regime wastaken.
It is the entry into force of the Convention on Supplementary Compensation for Nuclear
Damage (hereinafter the "CSC")2.
The CSC was adopted with "the Protocol to Amend the Vienna Convention on Civil Liability
for Nuclear Damage" in 1997. The CSC had not entered into force for a long time because
the CSC comes into force when the number of Contracting Parties reaches five or more andtheir installed nuclear capacity exceeds 400,000 MWt. Japan concluded the CSC on 15th
January 2015 and the conditions of the entry into force of the CSC were satisfied with Japan's
conclusion.
In this paper, I would like to outline the conclusions of the CSC with Japanese legal points ofview, and consider domestic implementation with reference to the compensation system fornuclear damage after the incident which occurred on 11th March 2011 at the Fukushima
Daiichi nuclear power plant (hereinafter the “Fukushima incident”) in Japan.
Before the Fukushima incident occurred, when Japan was reviewing the best way to handle
their nuclear damage compensation system, Japan examined the possibility of Japan joining a
global regime of nuclear damage compensation3. At that time, the examination showed thatJapan could expect the CSC to be a legal foundation of international expansion of the JapanU.S. common nuclear industry. There were three reasons for Japan expecting the CSC to be alegal foundation. The first is that the contents of the CSC are easy to conclude for many states
including Japan as compared with other international regimes, such as the Vienna Convention
and the Paris Convention. The second is that the CSC prepares the system to supplement alack of financial security with contributions by the Contracting Parties. And the third is that
the Contracting Parties of the Vienna Convention, not parties to the international convention
and newly introduced countries of nuclear power may join the CSC universally. And the
USA which has a close relationship with Japan and its nuclear industry was led to ratify the
CSC. The examination also showed that Japan was not in a situation where it must
immediately join a global regime in 2008 because Japan had a domestic compensation system
suitable as advanced nuclear countries, but it was important to promote issues of theorganization and to prepare for future full-scale investigation about the CSC, as a realistic
choice for Japan.

1

The opinions expressed herein are the author's and not necessarily those of the institute.
IAEA Doc. INFCIRC/567 = 36 ILM 1473.
3
The First Report by the Panel on Reviewing the Nuclear Compensation System, 15th December 2008, pp.29-31.
22

After that, in the Japan-U.S. Summit Meeting on April 2012, President Obama mentioned hishopes for Japan's involvement in the CSC. The U.S. had repeatedly asked for Japan's
ratification of the CSC and the Government of Japan noted that the conclusion and the entry
into force of the CSC is meaningful in terms of the possibility of contribution to theconstruction of an international compensation system of nuclear damage, enhancement of thecompensation at the time of a nuclear incident, quick and equitable relief of victims, andimprovement of legal predictability. On 19th November 2014, the CSC was approved by the
National Diet.
When the CSC was approved, the relationship between the domestic law and the CSC werediscussed. In addition, in order to ensure proper implementation of the CSC, related law had
been enacted and amended. I think these are interesting in terms of watching the domestic
implementation of the CSC in Japan. I describe their details below;
II. Legal examinations concerning Japan's conclusion of the CSC
A. Examinations concerning the issues from Japanese legal points of viewAs I mentioned before, the CSC has easier contents to conclude than other international
conventions concerning compensation for nuclear damage for Japan. For example, withindomestic law in Japan, "the Act on Compensation for Nuclear Damage"(hereinafter the "Acton Compensation") provides that a case where damage is caused by a grave natural disasterof an exceptional character is an exception to the liability of the nuclear operator. The 1997
Vienna Convention and the 2004 Paris Convention don't allow exemption from compensation
for nuclear damage by a natural disaster, but states can join the CSC even if they havedomestic law which allows exemption by a "grave natural disaster of an exceptional
character".
In this way, I can say that the CSC, as an international regime which Japan has joined, has anaffinity with the Act on Compensation, but of course, Japan needed some of examination andmeasure concerning domestic law when Japan joined the CSC. I’d like to first introduce theviews seen in the Government of the Diet for the main legal issues pointed out before theconclusion of the CSC4, and then introduce the enactment and amendment of the law for its
domestic implementation.
Concerning the first point of legal issues, there is a difference in the definition of nuclear
damage in the CSC and the Act on Compensation. In Article I (f) of the CSC, it specificallylists certain types of damages that fall under the definition of nuclear damage, but the Act onCompensation prescribes it as "any damage caused by the effects of the fission process of
nuclear fuel, or of the radiation from nuclear fuel, etc., or of the toxic nature of such materials(which means effects that give rise to toxicity or its secondary effects on the human body byingesting or inhaling such materials)" only. The Government judged that the description of
the definition of nuclear damage in the Act on Compensation was different from the one in
the CSC, but the scope of nuclear damage in the Act on Compensation was consistent with

4

Terabayashi, Y. (2015), "On conclusion of the Convention on Supplementary Compensation for Nuclear
Damage", Legislation and Researches, Vol.361, Office of House of Councillors of the National Diet of Japan,
Tokyo, pp.46-51.

3

the one in the CSC and even if Japan joins the CSC, the scope of compensation for nuclear
damage wouldn’t change.
In the second point of mandatory financial security, the Annex to the CSC prescribes that theInstallation State, having regard to the nature of the nuclear installation or the nuclear
substances involved and to the likely consequences of an incident originating there from, may
establish a lower amount of financial security of the operator, provided that in no event shall
any amount so established be less than 5 million SDRs, and provided that the Installation
State ensures the payment of claims for compensation for nuclear damage which have been
established against the operator by providing necessary funds to the extent that the yield of
insurance or other financial security is inadequate to satisfy such claims and up to a limit of
the financial security; as stated in Article 5.1(a). The Act on Compensation prescribes that the
Cabinet Order may provide for a lesser amount than JPY 120 billion as the financial security
amount in the case of such reactor operation, etc., and the Cabinet Order provides for thelesser amount as JPY 24 billion or JPY 4 billion. According to the CSC, if a nuclear incident
occurs during reactor operations etc., 300 million SDRs are ensured. This amount is morethan the financial security of JPY 24 billion and JPY 4 billion provided by the Act onCompensation. As a result, there occurs a difference of account. But for securing of funds ofthis difference, the Act on Compensation prescribes that the Government shall give a nuclear
operator aid as is required for him and the Government judged that the point required by the
CSC is secured.
In the third point of channelling of jurisdiction, according to the Code of Civil Procedure in
Japan, an action relating to tort, where the place where the tort took place is located in Japan,
may be filed with a court of Japan. But in Article 13, the CSC prescribes that jurisdiction
over actions concerning nuclear damage from nuclear incidents shall lie only with the courtsof the Contracting Party within which the nuclear incident occurs. Thus, for example, if
nuclear damage caused by a nuclear incident in a Contracting Party other than Japan occurs
in Japan, victims in Japan must carry out the action in the Contracting Party, not in Japan. In
this regard, the Government mentioned that in case of pursuit of tort liability on the Civil
Code because of not being able to apply the Act on Compensation to a foreign nuclear
operator, it is extremely difficult for victims to prove claims of negligence of the nuclear
operator and even if the victims obtain a judgement of success in a domestic trial, it doesn'tmean that they can enforce it. And the Government explained that it thought channelling ofjurisdiction by the CSC was reasonable and positive because the Contracting Parties of theConvention have prepared the compensation system conforming to international standards,
ensured financial support of damage, and ensured enforcement of a judgement the court ruled.
In the fourth point of applicable law, Article 14.2 of the CSC prescribes that the applicablelaw shall be the law of the competent court. According to this, if nuclear damage caused by anuclear incident in Japan occurs in a Contracting Party other than Japan, it can apply
Japanese law too, but because in Article 17 of the Act on General Rules for Application ofLaws in Japan prescribes that "the formation and effect of a claim arising from a tort shall begoverned by the law of the place where the result of the wrongful act occurred", it is thoughtthat the law of the place where the result of the wrongful act occurred, that is, the law of theContracting Party other than Japan is applied. But in Article 20, it prescribes that theformation and effect of a claim arising from a tort shall be governed by the law of the placewith which the tort is obviously more closely connected, and the Government explained that4

to apply "the law of the place with which the tort is obviously more closely connected",
which is the Act on Compensation, fits within the spirit of the Convention.
In addition to these discussions, upon conclusion of the CSC, to enable the implementation of
the CSC in accordance with domestic law, Japan has given the following three reservations:•••With respect to nuclear installations and small quantities of nuclear material, any
exclusion by an Installation State satisfies the criteria by the Board of Governors of
the IAEA.
The operator is liable in accordance with the national laws and regulations of Japan in
the case of where a nuclear incident involving nuclear material carried between a
Japanese operator and an operator of another Contracting Party occurs within the
territory of the area of the exclusive economic zone of Japan.
The operator is liable for nuclear damage to any property on that same site which isused or to be used in connection with any such installation except the operator's
damage in accordance with the national laws and regulations of Japan.

B. Enactment and revision of domestic law for CSC implementation
In the following, I would like to describe the enactment and amendment of relevant law toensure proper implementation of the CSC.
With the implementation of the CSC, the act on the aid of funds of compensation for nuclear
damage, etc. attendant upon the enforcement of the "Convention on Supplementary
Compensation for Nuclear Damage" was enacted as the law to determine the aid of funds andother necessary matters in order to compensate for nuclear damage. The act prescribes that if
the total amount of claims of nuclear damage of a nuclear operator exceeds 300 million SDRs,
the Government aids a part of the fund of compensation for nuclear damage, and theGovernment collects special contributions from a nuclear operator who receives claims of
nuclear damage for more than 300 million SDRs in order to cover the cost of contributions towhich the amount is calculated by the provisions of the CSC article IV.1(b) and collects
general contributions from nuclear operators who operate a reactor each year in order tocover the cost of contributions to which the amount is calculated by the provisions of article
IV.1(c).
In addition, in order to adapt the compensation system of Japan to the CSC, the Act onCompensation and the Act on Indemnity Agreements for Compensation of Nuclear Damage(hereinafter the "Act on Indemnity Agreements") were amended. Their specific contents are
that:
•
•
•

Special agreement of matters relating to liability for nuclear damage in accordancewith transportation of nuclear fuel material, etc. between nuclear operators shall be inwriting (Article 3.2 in the Act on Compensation),
An operator shall have a right of recourse when nuclear damage occurs by intent of"individuals", special agreement of a right of recourse shall be in writing (Article 5 in
the Act on Compensation).
A liability insurance contract or indemnity agreement with the Government inaccordance with the transportation of nuclear fuel material, etc., cannot be cancelled5during transportation (Article 9 of 2 in the Act on Compensation, Article 16 in the Act
on Indemnity Agreements).
III. Compensation for nuclear damage of the Fukushima incident and the CSC
A. The compensation system for nuclear damage in Japan after the Fukushima
incident
I would like to consider the CSC as an international nuclear damage compensation systemwith reference to the compensation system for nuclear damage after the Fukushima incident.
The CSC is not applied retrospectively to the Fukushima incident, but I think that it issignificant to put the Fukushima incident in mind as one of the cases of compensation for
nuclear damage.
According to the New Comprehensive Special Business Plan of the Tokyo Electric Power
Company (hereinafter "TEPCO"), the prospect of the Required Amount of Compensation is a
total of JPY 7,658.5 billion5 and it is necessary to compensate for the huge amount of damage
that far exceeds the financial security amount. In the Act on Compensation, the liability of a
nuclear operator is unlimited, but at the same time the Act on Compensation, according to
Article 16, prescribes that the Government shall give a nuclear operator such aid as isrequired for him to compensate the damage, when the actual amount which he should pay forthe nuclear damage exceeds the financial security amount and when the Government deems it
necessary in order to attain the objectives of this Act.
After the Fukushima incident, on 10th May 2011, TEPCO requested aid of the Government
by reason of the difficulty in funding on the basis of Article 16 of the Act on Compensation.
In response to this, the Government examined the framework of aid on the assumption thatTEPCO has the liability uniquely, and as the framework for embodiment of the Government's
aid on the basis of Article 16 of the Act on Compensation, the "Nuclear Damage
Compensation Facilitation Corporation Act"(after the revision, the "Nuclear Damage
Compensation and Decommissioning Facilitation Corporation Act") (hereinafter the"Corporation Act") was enacted in August, in the same year.
The compensation scheme on the basis of the Corporation Act is briefly stated below:••

If the Required Amount of Compensation is expected to exceed the amount offinancial security, the nuclear operator may make an application for financial
assistance to the Nuclear Damage Compensation and Decommissioning Facilitation
Corporation (hereinafter the "Corporation"). If the Corporation has received theapplication, the Corporation decides whether to provide financial assistance as well
as deciding the substance and the amount of such financial assistance.
The Corporation prepares a Special Business Plan for the nuclear operator's
implementation of compensation as well as for the financial assistance, working
jointly with the nuclear operator. The Special Business Plan receives the approval of
the competent minister.

5

Tokyo Electric Power Company (2016),"Outline of Change of Special Business Plan",
http://www.tepco.co.jp/en/press/corp-com/release/betu16_e/images/160331e0201.pdf (accessed 11th July 2016).

6

•
•

•

The Corporation receives delivery of government bonds for the necessary funds to
conduct granting funds in connection with the financial assistance based on the
Approved Special Business Plan.
The nuclear operator receiving the financial assistance pays the Special Contribution
and nuclear operators engaged in reactor operation, etc. including the nuclear
operator receiving the financial assistance pay the General Contribution to the
Corporation.
The Corporation receiving the payment of contribution pays the difference of the
profit and loss calculation to the Treasury.

As a result, TEPCO receives JPY 7,469.5 billion after deducting the received amount ofmoney, which is the amount of financial security, from JPY 7,658.5 billion, which is theprospect of the Required Amount of Compensation to the Corporation. According to the 2015
Fiscal Year Report of TEPCO6, TEPCO had paid a cumulative total of approximately JPY
6,043.8 billion as of the 31st March 2016.
In contrast, the Special Contribution and the General Contribution have been paid to the
Corporation every year. It is worth noting, in Fiscal Year 2015 the amount of the Special
Contribution paid by TEPCO was JPY 70 billion, and the total amount of the General
Contribution was JPY 163 billion. It can be said that the mechanism by the Corporation Act
is a mechanism of mutual assistance7 including irrelevant nuclear operators to an incident andnuclear damage by the Fukushima incident have been compensated under the mechanism of
mutual assistance. In addition to this, the Corporation is the largest shareholder of TEPCO
holding about 54% of its shares. The Corporation is planning to pay a percentage of its profit
from sale of shares as a benefit, in addition to the contribution of nuclear operators.
B. With a view to increasing the amount of compensation for nuclear damage
As stated in the Preamble of the CSC, the Contracting Parties recognizing the importance ofthe measures concerning compensation for nuclear damage, desirous of establishing aworldwide liability regime to supplement and enhance these measures with a view toincreasing the amount of compensation for nuclear damage, have agreed with the CSC.
The CSC prescribes that the Installation State shall ensure the availability of 300 million
SDRs as compensation in respect of nuclear damage per nuclear incident in Article III (a) (i).
Japan, one of the Contracting Parties, sets the amount of financial security to more than 300
million SDRs (actual amount: JPY 120 billion) except for the small amount of financial
security described above. This has come about based on what the 2004 Paris Convention has
raised the amount of financial security to EUR 700 million and the underwriting capacity ofprivate liability insurance and was adopted in Japan in 2010.
But if JPY 7 trillion of the Required Amount of Compensation occurs, it is clear that theamount of financial security is insufficient even if the amount of financial security is JPY 120
billion or 300 million SDRs. As a countermeasure to this, it is conceivable that the CSC will
6

Tokyo Electric Power Company Holdings, "Report for the 2015 Fiscal Year",
http://www2.tse.or.jp/disc/95010/140120160527403721.pdf (accessed 11th July 2016).
7
Japan Energy Law Institute (JELI). (2014), "Future's subject of investigation on nuclear liability systems:
focusing on the accident of the Fukushima Daiichi nuclear power plant of the Tokyo Electric Power Company,",
JELI-R-129, JELI, Tokyo, p. 55.

7

raise the amount of financial security from 300 million SDRs, but in light of the current
insurance market, it is not realistic to set such a huge financial security as a countermeasureof an incident like the Fukushima incident. Even if the CSC decides that the amount offinancial security is set to a little more than EUR 700 million, which the 2004 Paris
Convention set, it is necessary to consider carefully because raising the amount of financial
security might create a hurdle to join the CSC. In considering increasing the amount ofcompensation for nuclear damage, it is significant to put the Fukushima incident in mind, on
the other hand, excessive awareness of the Fukushima incident may make us lose sight of adesirable figure of a nuclear damage compensation system.
In addition, Japan established the compensation scheme based on the Corporation Act after
the Fukushima incident. I think it is important to examine, well in advance, the compensation
scheme in the case of the Required Amount of Compensation far exceeding the amount offinancial security.
C. Re-examinations concerning nuclear liability in Japan and the CSC
The Corporation Act prescribes that as soon as possible after the enforcement of this act, theGovernment shall review the best way of addressing such matters as State responsibility
under the system of compensation for nuclear damage, etc., and also review the establishmentof organizations for the prompt and appropriate resolution of disputes involving
compensation for nuclear damage, and shall take necessary measures based on the results ofthese reviews, including a fundamental re-examination of the amendment, etc., of the Act onCompensation in Article 6 of the Supplementary Provisions. In response to this, the Japan
Atomic Energy Commission established an expert committee on the compensation system fornuclear damage, and the best way of the compensation system for nuclear damage has been
examined from professional and comprehensive points of view since May, 2015.
Concerning the discussion of the best way of nuclear damage compensation system in Japan,
with respect to the CSC, strict liability, channelling of liability and limitation of a right ofrecourse are the common principles of international conventions, including the CSC, and will
be maintained in light of the CSC, which Japan joined. The core discussion in the expert
committee seems to be whether liability of a nuclear operator should be limited or not andhow to design a system that best fits a State responsibility in light of the scope of nuclear
operator's liability.
And there is also an opinion that the compensation scheme based on the Corporation Act canbe sustainable, but after the electricity market's liberalization, it will be difficult to continue
to maintain the system of contribution based on the fully distributed cost method before theelectricity market is liberalized.

IV. Conclusion
Japan originally had domestic law not inferior to the demands of the international nuclear
damage compensation system. In addition to this, when Japan joined the CSC, it carried out
the development of some of its legal system with an awareness of being consistent withdomestic law and the CSC, and further enhanced consistency with the CSC. And Japan
constructed the scheme of mutual assistance based on the Corporation Act for huge
8compensation for nuclear damage by the Fukushima incident and is going to pay thecompensation. On the other hand, re-examination of the best way to handle the new nuclear
damage compensation system in light of the Fukushima incident is still being developed in
the framework of the CSC.
The Government of Japan, being the State that caused the Fukushima incident, thought it is
the responsibility of our country to contribute to the construction of an international nuclear
damage compensation system and therefore joined the CSC. Currently, nuclear reactors
which are applicable to the CSC are more than those which are applicable to the Vienna
Convention or the Paris Convention 8 . It can be said that the presence of the CSC as aninternational nuclear damage compensation system is very high. In the future, it will be
required to focus on the further universalization of the international nuclear damage
compensation system.
In recent years, nuclear power use in Asian countries has expanded, but on the other hand, theAsia Pacific Ocean Zone usage of the international nuclear damage compensation system had
been obsolete for a long time. In the sense of taking one step forward, it can be said that theentry into force of the CSC in 2015 and India's joining the CSC are indeed gratifying. It may
not be easy for Japan to request neighboring countries such as China and Korea to join the
CSC, but I hope that the international frameworks, including the CSC, become morefunctional globally and the lessons learned from the Fukushima incident by Japan is utilized
more globally.

8

McRae, B. (2015), "Entry into force of the Convention on Supplementary Compensation for Nuclear Damage:Opening the umbrella", Nuclear Law Bulletin, No.95, NEA, Paris, pp. 7-8.

9