Background

The construction of the United Arab Emirates’ first nuclear power plant is currently underway, and is scheduled to enter service in 2017. To prepare for its arrival, the UAE is set to announce the implementation of Federal Law by Decree No 4 of 2012, concerning Civil Liability for Nuclear Damage (the “Law by Decree”), which will come into force on the date of its publication in the Official Gazette.

Owing to the potentially significant cross-border consequences of nuclear accidents, in this context it is common for national laws to be supplemented by international conventions: principally, the Vienna Convention on Civil Liability for Nuclear Damage implemented by the IAEA (the “Vienna Convention”) and the Paris Convention on Third Party Liability in the Field of Nuclear Energy implemented by the OECD (each as supplemented and amended). The Vienna Convention was formally ratified by the UAE in early 2012.

The Law by Decree was drafted in consultation with the legal team at the IAEA to ensure its consistency with the Vienna Convention and other international obligations. Further, the Law by Decree will stipulate that the Vienna Convention will apply wherever no provision is made in the Law by Decree.

The competent authority responsible for implementing the Law by Decree is the UAE’s Federal Authority for Nuclear Regulation (“FANR”).

The effect of the Law by Decree

Liability

The aim of the legislation is to regulate the provisions and determine the scope of liability in the event of nuclear disaster in the UAE.

The most notable provision is that liability for a nuclear accident will lie solely and exclusively with the nuclear facility operator, regardless of fault. Further, it will be possible in some cases to establish the operator’s liability without having to prove that the operator acted negligently.

The amount of liability will also be capped at 450 million Special Drawing Rights (the international currency unit used by the International Monetary Fund), which is roughly equivalent to 2.5 billion UAE dirhams, $694 million or £432 million. As a consequence, the operator will be required to maintain insurance, or other financial security, for up to this amount.

In the event that the operator is unable to provide the requisite insurance cover as determined by FANR, the UAE Government will cover the risks covered by such insurance.

What damage will be covered by the Law by Decree?

Death and personal injury, loss of or damage to property, economic loss, cost of restoring the impaired environment or loss of income as a result of such impairment, preventative measures and any other economic loss caused by the accident will all be covered.

Jurisdiction of the courts and time limits

The court of the country where the nuclear accident occurs will have exclusive jurisdiction to hear the civil action arising from it.

It will only be possible to bring an action for compensation under the Law by Decree within three years from the date the person suffering damage had knowledge (or ought to have knowledge) of the damage and of the operator liable for the damage.

There will be no right to compensation at all if the claim is not brought within 30 years for loss of life or personal injury, or within 10 years for other types of damage, from the date of the nuclear accident.

It should be noted that the provisions of the Law by Decree will not affect the rights or obligations of anyone to obtain compensation under any health insurance scheme, employees’ compensation or other occupational disease scheme.