TNAG-0950-FCO40-1169-Effect-of-nuclear-exports-to-China-on-Hong-Kong-Guangdong-nu-1980 — Page 196

CONFIDENTIAL

DSR 11C

GUANGDONG: THIRD PARTY LIABILITY

to be prepared by Dept I Energy

1.

The construction and operation of a nuclear power

station inevitably carries the risk of a nuclear accident

causing damage to persons and property unconnected with the

station itself. Although the probability of such an

accident is small, the resulting damage could be very great.

It is generally accepted that the scale of the potential

damage is such that it is uninsurable and that it is

unrealistic to expect commercial companies to bear the risk

of third party claims.

2.

The question has arisen whether in view of its interest

Guangdong in the project HMG should assume some share of this

1 financial liability. To the extent that it takes an equity

holding in the proposed Hong Kong Investment Company which

is to be the joint owner and operator of the nuclear power

station it will inevitably do so, since this investment will

be at risk.

There are additionally certain liabilities

which attach to the transport of nuclear materials to and

from the UK (described at Annex A). But these arise in any

arrangement for the supply of fuel sessions by the UK, and

are not affected by the particular circumstances of the

project. Et Is there any reason why HMG

Guangdong

should accept any further liability?

3. The normal practice established by international

conventions to which the UK (but not the PRC) is party (see

Annex B) is for strict liability (ie without proof of

negligence or other fault) to be placed on the responsible

operator up to a fixed (insurable) limit, with the relevant

government bearing liability for damage in excess of this,

again up to a fixed limit. In the present case the PRC

CONFIDENTIAL