The Japanese Liability System & Mass Disasters

I just saw a summary of a talk at Columbia Law School by Curtis Milhaupt, an expert on Japanese Law.  Here's what he says about liability for Tokyo Electric Power Co. (TEPCO):

Japanese law provides for strict and unlimited liability for a nuclear plant operator except for damages caused by a “grave natural disaster of exceptional character, which Milhaupt said would seem to apply here.

 

“To an American lawyer, if this doesn’t constitute a grave natural disaster, I don’t know what would,” said Milhaupt, an expert on Japanese law. “But very interestingly, several government officials came out shortly after the accident and said this exception does not apply.”

 

Even if Tepco were to claim the exception did apply, Milhaupt said that could create problems for the company. “The public anger at Tepco is so great that this may be a pyrrhic victory.”

 

Milhaupt, the Parker Professor of Comparative Corporate Law and Fuyo Professor of Japanese Law, said that suits may also be brought under Japanese corporate and securities laws. “One could imagine suits brought against Tepco by investors for misleading disclosure with respect to its crisis management systems,” said Milhaupt. He added that Tepco’s board of directors might also be sued for ignoring signs that its disaster prevention systems were woefully inadequate.

This could drive TEPCO into bankruptcy, but it won't because TEPCO is too big to fail. Milhaupt says

“Bankruptcy for Tepco is extremely unlikely. It’s too important a company for Japan and the impact on the other power companies would be too great,” Milhaupt said. “Whether through nationalization, or through capital injections, the bottom line is the Japanese government will have to support Tepco for years to come.”

ADL