Opinion ID: 4528669
Heading Depth: 3
Heading Rank: 2

Heading: Japan's Compensation Scheme

Text: In 1961, Japan enacted the Act on Compensation for Nuclear Damage (Compensation Act), which governs the country's liability and compensation schemes for nuclear disasters. In the event of a disaster, the Compensation Act channels all liability for the resulting damages to the operator of the nuclear power plant; therefore, in Japan, TEPCO is the only entity liable for damages arising from the FNPP disaster. Furthermore, because the Compensation Act imposes strict liability on TEPCO, claimants need only prove causation and damages to obtain compensation. Additionally, the Compensation Act fixes a ten-year statute of limitations (set to expire in 2021) and provides no cap on damages -6- against the plant operator. Victims of the FNPP disaster may pursue compensation through three channels, which are not mutually exclusive: (1) file a lawsuit against TEPCO in the courts of Japan; (2) submit a direct claim to TEPCO; and/or (3) mediate a claim against TEPCO through the Nuclear Damages Dispute Resolution Center (ADR Center). As provided in the Compensation Act, in the wake of the FNPP disaster, the Japanese government established the Dispute Reconciliation Committee for Nuclear Damage Compensation (the Committee) within the Ministry of Education, Culture, Sports, Science, and Technology. The founding directive of the Committee is to mediate compensation disputes arising from the FNPP disaster and to issue guidelines for assessing claims. The ADR Center is a public mediation service (subordinate to the Committee) overseen by a three-member committee comprised of two independent lawyers and a law professor. It is tasked with mediating the settlement of claims for compensation brought against TEPCO by those affected by the accident at [the FNPP]. As of March 30, 2018, victims had filed 440 lawsuits against TEPCO, fifty of which ended with court judgments and 110 of which ended with settlements. Victims may sue in the first instance or after receiving an unsatisfactory settlement offer through one of the other two mechanisms. Lawsuits carry a filing -7- fee of no larger than one percent of a case's value. Although Japan has no class action mechanism for claims arising from a nuclear disaster, multiple plaintiffs may join together in a single lawsuit. In fact, several large groups of evacuees have banded together (either by choice or court-ordered consolidation) to sue TEPCO (often adding Japan as a co-defendant) and have successfully recovered sums totaling up to ¥1 billion. By the time of the litigation below, over two million victims had filed damages claims directly with TEPCO. TEPCO reviews these claims and calculates compensation awards based on standardized formulas from uniform guidelines, which it devised in accordance with the Committee's Interim Guidelines. Claimants may recover for the loss of property, including the temporary loss of property (in which case compensation is pro-rated for the duration of the evacuation), as well as additional costs, such as the costs of radiation testing. Businesses may also recover for reputational harm and loss of sales. As of February 1, 2019, claimants had submitted 24,426 claims to the ADR Center for mediation, 23,363 of which had been fully resolved. Of the resolved cases, 18,890 had reached a settlement agreement. There is no filing fee for submitting a claim to the ADR Center, where claimants can proceed pro se or with an attorney. Settlement procedures at the ADR Center are -8- generally conducted in accordance with the Committee's Interim Guidelines, which provide compensation for lost real estate value and damages associated with the interruption of business activities (e.g., reduced sales revenues, reputational harm). Publicly available information about the value of settled claims is sparse due to confidentiality provisions, but the range of settlements varies widely. In total, as of February 15, 2019, TEPCO had paid out approximately ¥8.721 trillion to individuals and businesses for damages wrought by the FNPP disaster. To ensure the compensation of the victims, the Japanese government has provided TEPCO with critical financial support. The Compensation Act required TEPCO to enter into both a liability contract with an insurance company and an indemnity agreement with the Japanese government. Together, these agreements insured TEPCO up to ¥120 billion. However, the Compensation Act requires the Japanese government to provide operators of nuclear power plants as much aid as is required to compensate for damages in excess of that amount where necessary to realize the statute's purpose. After the accident, the Japanese government provided an initial ¥188.9 billion to TEPCO pursuant to the indemnity agreement. Additionally, after approving TEPCO's official request for support, Japan enacted the Act on Nuclear Damage Compensation and Decommissioning Facilitation -9- Corporation (the NDF Act), which established an eponymous regulatory body to oversee a fund backed by government bonds to further subsidize the compensation process. By April 2018, TEPCO had received over ¥8 trillion from the fund, which has a maximum bond limit of ¥13.5 trillion.