Nuclear operators should pay for nuclear accidents!

By Professor Michael G. Faure

Following the great east earthquake in Japan in March 2011, five years ago now, the subsequent accident at the Fukushima nuclear power plant shocked the world and triggered fierced debates on the future of nuclear energy in many countries. Not so long ago yet another earthquake took place close to the same area, reminding the potentially devastating effects of tsunamis, but especially of nuclear accidents. One of the questions that always arises in the context of a nuclear accident of the Fukushima type is why nuclear operators are largely protected as a result of outdated international conventions that seriously limit their exposure to liability. Those conventions, but also many national legislations, in fact provide a hidden subsidy to the nuclear industry as a result of which they only pay for a small amount for the losses they cause.

In the 1960s international conventions were created of which the main goal was to protect the (American) owners of the nuclear material that was delivered to European nuclear operators. Since liability was exclusively channelled towards operators in Europe only operators and no longer other parties could be held liable for potential damage. The international conventions imposed very low caps on the liability of the operator. After the Chernobyl accident (which happened on 26 April 1986) new conventions came into being that were supposed to increase the amount of compensation. Although Chernobyl already is more than 30 years ago, most of those new conventions have not entered into force yet. Moreover, when they will enter into force the amount available will only be 1,5 million Euro. Recent estimates of the damage caused by the Fukushima incident hold that the total amount of the damage could be as high as 170 billion Euro. This clearly shows that operators today are not liable for the consequences of the accident. Moreover, an important part of the damage is compensated through public funding, which means that the general public (the tax payers) pay the compensation.

This financial limit on the liability of nuclear power plant operators has several negative effects. One problem is that obviously insufficient compensation will be available for victims if a nuclear accident happens. A second problem is that since operators are not fully exposed to the total costs of the accidents they may cause, they also will not demand insurance cover for those amounts and hence they de facto pay too low premium. A third related consequence of this subsidization of nuclear power is that the relative price of nuclear power is too low, as nuclear operators are not forced to incorporate the full social costs of their activity into their prices. This may constitute a distortion of competition towards other energy forms that do not enjoy similar subsidies. Given the high subsidies the price of nuclear power also does not reflect the social costs as a result of which the demand for nuclear power will be too high. Finally and perhaps most importantly, the fact that nuclear operators are not fully liable for the consequences of a nuclear accident may lead to too low investments in prevention. In a provocative article Harvard Professor Mark Ramseyer argued that the Tokyo Electric Power Company (TEPCO), the operator of the Fukushima plant on purpose built the nuclear facility in an earthquake area, knowing that they are protected through the limited liability and can hence throw the consequences of their activity on society.

In many countries the life time of the first generation nuclear power plants has been extended. That can undoubtedly also increase the risks. Policy-makers should realise that times have changed: whereas in the 1960s an argument could be made that the newly established nuclear industry needed a support from the regulator in the form of a limitation of liability the same argument cannot be made any longer 60 years later, especially after the experiences with Chernobyl and Fukushima. The lesson from Fukushima should therefore be clear: the limitations on the liability of nuclear power plant operators whether they appear in national legislation or in international conventions should be abrogated and power plant operators should be fully exposed to unlimited liability in case of a nuclear accident, of course supported with financial guarantees.

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The government should promote insurability of natural disasters, not play Santa Claus!

By Professor Michael G. Faure 

To an increasing extent many EU Member States are victim of a variety of natural disasters, including heavy rainfall, flooding, earthquakes, volcano eruptions and tsunamis. During the period 1970-2007 there has been a substantial increase in the losses due to natural catastrophes. Even recently Italy was hit again by an earthquake causing substantial losses. A major problem is that after every new natural disaster politicians often have the tendency to play Santa Claus and provide substantial amounts of compensation to victims. Those ex post payments are problematic from various perspectives: 1. Since victims will be counting on ex post compensation by the government those payments will reduce the incentives of victims to invest in ex ante prevention, for example by not-building in flood prown areas or by avoiding to put valuables in the basement. 2. Ex post government compensation will also negatively affect the incentives to purchase insurance: solidarity kills market insurance. As a result of generous ex post compensation potential victims will not be willing to buy insurance cover for natural disasters. Why should victims pay premiums for insurance cover if they can freeride on the state?

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The Future of Empirical Legal Research in the Netherlands

Last Tuesday was the Empirical Legal Studies (ELS) conference organized at the Dutch Supreme Court (‘Hoge Raad’) in the Hague by the Nederlands Studiecentrum Criminaliteit en Rechtshandhaving (NSCR). All of a sudden, ELS is everywhere in the Netherlands. Last July, there was the first European Conference on Empirical Legal Studies in Amsterdam. Recently the Empirical Legal Studies initiative (ELSi), hosted by the Ius Commune Research School, came on the block. Now the NIELS conference. And upcoming January, a conference will be held by the VSR.

What particularly seems to be becoming more popular, is to talk about ELS – there is no evidence for an increase of the number of empirical legal studies that are conducted in the Netherlands. Some evidence by one of the presenters at Tuesday’s conference even suggested that the number of journal articles that present original empirical research (i.e. through data collection by the researcher / author himself or herself) has remained constant over the years. This observation is surprising, as multidisciplinary research may attract more funding, Ministries are calling for more empirical research, scholars seems to welcome more empirical legal research, and all of the Judiciary Council’s research is empirical. Moreover, empirical legal research that is conducted in the Netherlands is primarily done by researchers who have a social scientific background, with or without a law degree (Elbers 2016; for English summary click here).

Why is ELS seemingly on the rise but not resulting in more empirical research? One explanation is that there are other forces in play. While ELS is becoming more popular, the Dutch bar association has imposed stricter requirements as to the courses and topics Dutch law schools should teach. As a result, the vast majority of the course credits are and should be assigned to courses in private law, criminal law, and administrative and constitutional law.

It is a widespread belief that the bar requires Dutch law schools to only teach doctrinal scholarship to students. I doubt whether this belief is correct. Teachers may have more flexibility than they think regarding exposing students to different perspectives and approaches than merely a doctrinal approach, as long as they focus on the topics the bar wants them to focus on (e.g. tort law, criminal law). The issue, therefore, may not be so much the bar and its requirements, but the perception of legal academia of what the bar requires law schools to do.

Consequently, there are two conditions for empirical legal scholarship to flourish in the Netherlands. First, it will only evolve if teachers no longer believe that courses have to be taught doctrinally. Second, law schools need to stop believing that they need to hire doctrinally oriented teachers (at every level, from lecturer to professor) to teach their courses. This means that the success formula for empirical legal research in the Netherlands may ultimately be rather simple: just do it.

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A (Uniquely Unqualified American) Reflection of the EU&ME Summit

fullsizerenderThe EU&ME Summit (part of the Europe Calling! initiative) held on 9 December 2016 to celebrate the 25th Anniversary of the Maastricht Treaty was the event of the season. As an American that somehow wandered into this event, I was quite amused by Maastricht’s Mayor, Annemarie Penn-te Strake, and her welcoming speech that – among other delights – quoted former US President George Bush, who stated that the birth of the EU was something that was great for the entire world. As a happy migrant living in the Netherlands and working in the EU, I wholeheartedly concur with our former President and I feel extremely privileged – not just for having attended the summit, but more generally – to be living and working in Maastricht, the birthplace of the EU.

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Black Piets, Burqa Bans, and Radical Populism in a Kakistocracy

KakistocracyHere is a fun word that you may have come across recently: Kakistocracy. Based on the Greek word kakistos (meaning “the worst”), kakistocracy is a system of governance run by the least qualified, most “deplorable” citizens that the State has to offer. Fair or not, this term has been used in conjunction with the Brexit (as a movement that was cajoled by UKIP) or the Trump presidency (that materialized – in part – with the supposed support of the empowered radical right wing).

Kakistocracy might be a good word to have handy in our collective word bank given that we may soon bear witness to Prime Minister Wilders, President Le Pen, the rise of AfD, and depending on how the Italian referendum goes and whether Prime Minister Renzi stays, a potential Italian exit from the EU (colloquially referred to as ItaLEAVE, which would be worth a chuckle, if only the consequences for it weren’t so dire).

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Report from M-EPLI Talk with Prof. Marius de Waal – “The Limits of Freedom of Testation: Discriminatory Provisions in Testamentary Trusts in South African Law”

By William Bull & Stefan Cîrjan (European Law School Bachelor student)

 

On the 23rd of November 2016, M-EPLI had the pleasure of welcoming Professor Marius de Waal, a specialist in the law of succession from the University of Stellenbosch, to give a talk on the topic of ‘The Limits of Freedom of Testation: Discriminatory Provisions in Testamentary Trusts in South African Law’.

South African law is a hybrid legal system that traces its origins as far back as ancient Roman law. A multitude of procedural aspects have been inherited over time from British Common law, while the strong Roman-Dutch law influence can be seen in its substantive private law. The result is a complex relationship of contrasting elements that has major implications on fields such as the law of testation.

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