EURATOM Treaty - Chapter 6 Contractual Procedures SUMMARY

EURATOM Treaty - Chapter 6
Contractual Procedures
ESA Workshop
Luxembourg, 14 October 2014
SUMMARY
I.
Main supply provisions of EURATOM Treaty
II.
Conclusion of supply contracts (Art. 52)
III.
Contract notifications (Art. 75)
IV.
Contracts with intermediaries
V.
Storage contracts and AOB
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I.
Main supply provisions
of the EURATOM Treaty
• Task of the Euratom Community - to ensure that all users in the
Community receive a regular and equitable supply of ores and
nuclear fuels (Article 2 (d))
• Establishes common supply policy for the nuclear fuel, based
on principle of equal access to sources of supply (Article 52)
• Sets up the Agency and establishes tools of the Agency for the
implementation of the supply policy (Articles 52 – 76)
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I.
Main supply provisions of the
EURATOM Treaty
TOOLS OF ESA
1.
2.
3.
4.
The exclusive right to conclude supply contracts (Art. 52)
The right to receive notification on small quantities contracts (Art. 74)
The right to receive notification on transformation contracts (Art. 75)
Intervention to obtain Commission’s authorisation for export of
Community production (Art. 59 & 62)
5. The right of option (Art. 52)
All commercial information received by the Agency
is treated confidentially
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II. CONCLUSION OF SUPPLY CONTRACTS

CONCLUSION APPLIES TO:
 All supply contracts (except small quantities)
 Supplies from both inside and outside the Community

SUPPLY CONTRACTS HAVE TO BE CONCLUDED BY ESA
TO BE VALID under Community law
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II.
CONCLUSION OF SUPPLY CONTRACTS
.
.
.
“SUPPLY CONTRACT” MEANS
transfer of title
in the framework of all kind of transactions (purchases,
sales, exchanges, loans, EPC contracts…)
related to any kind of nuclear material (natural uranium,
depleted uranium, enriched uranium – including RepU,
thorium, plutonium)
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II.
CONCLUSION OF SUPPLY CONTRACTS
.
.
.
Rules of the Euratom Supply Agency (adopted, on the basis
of Article 60 of the Treaty) establish the Simplified Procedure for
the conclusion of the supply contracts.
Art. 5bis of the Rules - the simplified procedure applies only to
contracts concerning source materials (natural and depleted
uranium, thorium).
In practice, it is also applied by analogy to contracts
concerning special fissile materials (enriched uranium and
plutonium).
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II. CONCLUSION OF SUPPLY CONTRACTS –
Simplified Procedure
Before the submission of the contracts to the Agency for
conclusion
.
.
parties negotiate their supply contracts without
direct participation of ESA
parties are recommended to submit the draft contract
to ESA for advice in case of non-routine transactions
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II.
.
.
.
CONCLUSION OF SUPPLY CONTRACTS
Following the signature by the parties
The Agency:
 concludes the contract by co-signing the originals
 attributes a reference number
 keeps one original and returns the others to the
parties
If the Agency has reasons to object and refuses to co-sign
the contract
 Companies can appeal to the European Commission and
then to the European Court of Justice
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II. BASIC INFORMATION REQUIRED
At least the following information should appear in the Contract:
1. Designation of the contracting parties
2. Quantities of materials to be supplied
3. Annual calendar of delivery dates
4. Nature of the materials to be supplied
5. Country of origin of the materials to be supplied with
obligation code (if known)
6. Price and terms of payment
7. Duration of the contract
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II. RECOMMENDED IN ALL CONTRACTS
SAFEGUARDS CLAUSE
“ 1. On the territory of the Member States of the European Atomic Energy Community
(Euratom), the material under the scope of this contract as well as products derived
therefrom shall be subject to the safeguards provisions of the Euratom Treaty and the
relevant regulations of the European Commission of the European Communities as well as
the related agreements between the European Atomic Energy Community, the Member
States and the International Atomic Energy Agency in Vienna. Moreover, the relevant
safeguards provisions contained in international agreements concluded by the European
Atomic Energy Community will apply as the case may be.
2.
If exported from the Community, the material and the products derived therefrom shall be
subject to the obligation of use for exclusively peaceful non-explosive purposes and to
IAEA safeguards as applicable. ”
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II.
INVOLVEMENT OF THE
EUROPEAN COMMISSION
Commission’s authorisation is needed when:
 nuclear material produced in the Community is exported
• Art. 59(b) / 62 1.(c) Euratom
 contracts have a duration of more than 10 years
• Art. 60 Euratom
 Authorisation procedure is initiated by ESA
 Authorisation does not replace the conclusion of a contract
by ESA but is a pre-condition for co-signature
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II.
CONTRACT AMENDMENTS
 Any amendments are to be submitted to ESA like
initial supply contracts (Art. 5bis of the ESA Rules)
 Even if supply aspects (quantities, prices) do
not change
 Submission form not necessary for
amendments
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II.
REVISION OF ART. 52 SUBMISSION
FORM
 Aim at simplifying the form and removing
unnecessary fields
 Shortened Article 52 form
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II.
COMMON ISSUES/SHORTCOMINGS
 Respect of deadlines:
 Contracts are to be submitted within 10 working
days
 Lack of forms / explanations (cover letter)
 Lack of ESA reference
 in case of amendments
 for upstream/downstream contracts
 Asking for ESA reference before a contract is signed
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III.
NOTIFICATION OF CONTRACTS

EXCEPTIONS from Art. 52
 Notification of contracts as an exception to their
conclusion:

Article 74: Small quantities

Article 75: Transformation services
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NOTIFICATION OF CONTRACTS – ART. 74
III.
Article 74
The Agency shall be notified of
- transfer 
- import 
- export 
of small quantities of
- ores
- source materials
- special fissile
 materials
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III.
NOTIFICATION OF CONTRACTS – ART. 74
Small quantities
(Reg. 66/2006 - OJ L 11 Vol.49 of 17 January 2006)

Ores - Source materials
- max. 1 ton U and/or Th per transaction
- max. 5 tons/user/year

Special fissile materials
- max. 200 g U235 , U233 or Pu per transaction
- max. 1 Kg/user/year
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III. NOTIFICATION OF CONTRACTS – ART. 74
WHEN:
At least quarterly
WHAT:
- date of contract
- parties
- place of production
- chemical and/or physical nature of product
- quantities
- end use
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III.
NOTIFICATION OF CONTRACTS – ART. 75
Article 75 (no supply)
The Agency shall be notified of "processing & shaping":
- Conversion
- Enrichment
- Fabrication
- Reprocessing
services
- Ores
- Source materials
- Special fissile materials
of
Where the MATERIAL is to RETURN to the OWNER.
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III. REVISION OF ART. 75 NOTIFICATION
FORM
 Aim at simplifying the form and removing
unnecessary fields
 Art. 75 forms combined (previously separate for
enrichment contracts)
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III.
ESA REFERENCE NUMBERS
 Should be mentioned in the “Advance
Notifications of imports/exports"
 Art. 52:
 AGA = Depleted, AGN = Natural, AG = EUP/Pu/MOX
 Art. 74 (small quantities):
 AGAK = Depleted, AGNK = Natural, AGK = EUP/Pu/MOX
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III.
ESA REFERENCE NUMBERS
 Art. 75:
AGT: enrichment
AGC: conversion
AGF: fuel fabrication
AGW: reprocessing of irradiated material
(AGS : storage)
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III. CONVERSION SERVICES CONTRACTS
Contracts with Primary Converters:
Utility provides U3O8 to the convertor, receives corresponding
amount of UF6:
Art. 75 notification of a service
"Conversion contracts" with intermediaries:
Utility provides U3O8 to the intermediary, receives
corresponding amount of UF6:
• However, intermediary does not provide conversion
services, buys and sells two different types of materials
Art. 52 supply contract
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IV. CONTRACTS WITH EU INTERMEDIARIES
 "Intermediary": any person or undertaking, as defined in
Art. 196 of the Treaty, purchasing nuclear materials on
their own name with the purpose of re-selling them.
 Since intermediaries do not have processing facilities
but "only" buy and sell materials, all contracts
concluded with intermediaries are to be considered as
nuclear material supply contracts.
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IV. CONTRACTS WITH EU INTERMEDIARIES
 Contracts to be submitted to ESA depending on
• whether the nuclear materials come within the EU's
supply chain or not:
 materials are physically present in the EU, or
 materials on the seller’s account in the EU, or
 to be physically delivered to the EU, or
 to be delivered by book transfer to the buyer’s
account in the EU
 If YES, contract to be submitted to ESA for co-signature
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IV.CONTRACTS WITH EU INTERMEDIARIES
 In case the materials do not "touch" the EU, the
contract should be treated as being outside the
EU's supply chain and does not need to be
submitted to the Agency.
 Example: Intermediary X, established in EU Member State Y,
buys NatU in Australia and sells it to a Korean utility, without
the material coming into the EU (during the time the
intermediary holds title to it).
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V.
STORAGE CONTRACTS
 No processing nor shaping (Art. 75)
 Do not notify storage contracts anymore
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V.
SUPPLY POLICY
 Ensure that utilities do not become over
dependent on any external source
 4 pillars of nuclear security of supply:
1) Adequate strategic inventories for several
reloads
2) Long term diversified contracts
3) Diversified supplies for all parts of the fuel
cycle
4) Viable EU industry
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V.
Involvement of the European
Commission
 Commission authorisations (Art. 59, 60 and 62)
 Cooperation ESA - Commission’s DG ENER
 Negotiation / Implementation of Euratom
Agreements
 Accountancy / Safeguards
 Appealing to the Commission to overrule ESA
decisions
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Thank you!
http://ec.europa.eu/euratom/procedures.html
Picture: NASA – Earth’s City Lights
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