VZCZCXYZ0020
OO RUEHWEB

DE RUEHC #0958 2661448
ZNR UUUUU ZZH
O 221442Z SEP 08
FM SECSTATE WASHDC
TO RUEHMO/AMEMBASSY MOSCOW IMMEDIATE 0000
INFO RUEKJCS/SECDEF WASHINGTON DC IMMEDIATE
RHMFISS/JOINT STAFF WASHINGTON DC IMMEDIATE
RHEHNSC/NSC WASHINGTON DC IMMEDIATE 0000
RUEAIIA/CIA WASHINGTON DC IMMEDIATE 0000

UNCLAS STATE 100958 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: MARR PARM PREL RS
SUBJECT: JUNE 25, 2008 U.S.-RUSSIA JOINT DATA EXCHANGE 
CENTER (JDEC) LEGAL EXPERTS MEETING 
 
REF: 07 STATE 097376 
 
¶1. (SBU) Summary:  On June 25, a U.S. interagency delegation 
led by State/L conducted talks at the Russian Ministry of 
Foreign Affairs in Moscow to discuss liability provisions in 
the JDEC Memorandum of Agreement (MoA).  Failure to resolve 
liability and taxation issues has been an impediment to the 
implementation of the U.S.-Russia JDEC and Pre-Launch 
Notification System (PLNS) agreements since their signature 
and entry into force in 2000. On June 25, the Russian legal 
experts agreed to use the "Joint Statement on Liability and 
Taxation Provisions" - that Acting U/S Rood presented to DFM 
Kislyak on May 19 in Oslo - as the basis for subsequent 
negotiations.  The U.S. and Russian legal and policy experts 
made significant progress and the Russian side agreed ad ref 
to the liability provisions in the U.S. text - except as they 
related to possible claims against U.S. contractors.  After 
initially resisting, the Russians agreed to a waiver of 
state-to-state claims and a qualified waiver of claims 
against USG personnel per the U.S. proposal, but asserted 
that U.S. contractors (especially those working on the 
construction of the JDEC) should not receive the same 
protections and instead should be subject to an insurance 
regime and Russian law.  DoD,s Office of General Counsel 
will assess the Russian position on U.S. contractors to 
determine whether it is consistent with the protections from 
exposure for U.S. contractors in other agreements/contexts 
and what language adjustments might be possible. (Both 
delegations agreed that in any event Russian subcontractors 
would be subject to Russian law.) 
 
------------------------ 
June 25 Morning Session 
------------------------ 
 
¶2. (SBU) U.S. Head of Delegation John Arbogast opened the 
meeting by reviewing the background and rationale for the 
liability section of the proposed U.S. JDEC "Joint Statement 
on Liability and Taxation Provisions." Russian Head of 
Delegation Alexander Bavykin said that Mr. Arbogast's review 
was useful in laying out the history of the issue and the 
U.S. approach and expressed the hope that the U.S. and 
Russian delegations could narrow their differences even if 
full agreement was not reached.  He added that it was 
important to have the JDEC functioning in the near future. 
Further,  for the Russians, liability was the most 
complicated issue, while taxation was less complicated. In 
laying out the Russian perspective, Bavykin said that the 
Russians understood that the portion of the U.S. draft 
dealing with liability had been drawn from the 2006 Plutonium 
Disposition Liability Protocol and that while this language 
was fine for dealing with nuclear matters, Russia was 
doubtful about applying its principles in the JDEC context 
because the JDEC did not involve nuclear materials.  Arbogast 
replied that the United States had tailored its draft so that 
there were no provisions that were nuclear specific and that 
the U.S. draft provided a framework for dealing with 
contingencies that could create liability concerns.  He added 
that in drawing from the Plutonium Disposition Protocol the 
U.S. did not want to suggest that the risks of JDEC 
activities were in any way comparable to nuclear activities. 
He emphasized that the U.S. goal was to take already 
negotiated provisions in the context of a U.S.-Russian 
cooperative activity and to apply them to the cooperative 
activity of the JDEC.  Arbogast also noted that to achieve 
complete liability coverage, the U.S. wanted to add a 
provision that incorporated the NATO-Russia Partnership for 
Peace Status of Forces Agreement (PfP SOFA) which would for 
example cover the issue of third-party claims. (NOTE: 
Although Russia agreed to be bound by the PfP SOFA in August 
2007, its application and the significance of certain Russian 
"understandings" are currently being discussed within NATO 
forums.)  Bavykin said that Russia saw liability as being 
mainly connected with the construction of the JDEC and asked 
what was the nature of damage the U.S. could foresee that 
would give rise to liability.  Arbogast replied that the U.S. 
did not foresee catastrophic damage occurring during either 
the construction or operational phase, but there were things 
that could go wrong as is the case with any activity. 
Examples given included a drunken visitor to JDEC destroying 
computer equipment; an accident in the facility,s parking 
lot; or a design defect in the facility that contributes to 
collateral damage to the surrounding area in the case of a 
terrorist attack on JDEC. He added that incidents such as 
this, while unlikely, could happen and that we should have a 
liability regime in place to deal with them -- just as with 
any other cooperative activity between governments. 
 
¶3. (SBU)  Russian HOD Bavykin said that the existing 
U.S.-Russian JDEC Joint Statement on Privileges and 
Immunities (P&I) covered the question of liability. 
DOD/OGC-Carl Tierney responded that there was individual 
liability and state-to-state liability and that the P&I Joint 
Statement protected individuals while the U.S. draft Joint 
Statement on Liability and Taxation addressed state-to-state 
claims.  Bavykin asked whether the discussion was about 
state-to-state liability or contractor liability.  Arbogast 
replied that the discussion was about both and that the U.S. 
wanted a liability regime in place that afforded basic 
protection while providing a framework for resolving any 
liability issues that arose.  Bavykin responded that he did 
not see any problem in the state-to-state relationship 
involving liability - he did not foresee Russia suing the USG 
during construction - but that in dealing with contractors 
and subcontractors there needed to be a different model.  He 
added that there would be nothing unusual about the JDEC 
construction site and that it was not necessary to invent any 
liability provisions.  Liability for contractors should be 
protected against by insurance (e.g., for car accidents) and 
governed by Russian law, not an international agreement. 
Arbogast replied that it was not just a question of 
contractors because USG employees would be at the site.  He 
added that it was a common feature of 
government-to-government agreements to have liability 
provisions and that the plutonium disposition protocol's 
provisions did not only apply to catastrophic events but also 
to normal activities that are part of a cooperative effort. 
It therefore made sense to have these provisions apply to the 
JDEC's type of cooperative activity.  Bavykin again raised 
the point that if the JDEC did not involve nuclear damage, 
there was no need to apply the Plutonium Disposition 
Protocol.  He said that the MFA could not go to the Duma and 
say that Russian or foreign firms would be immune from 
liability; the MFA could not justify this position. 
 
¶4. (SBU) Arbogast suggested that the discussion focus on 
government-to-government claims.  DOD/OGC-Tierney noted that 
both the U.S. and Russia were parties to the PfP SOFA in 
which they had agreed to a state-to-state liability waiver. 
MOD Col. Il'in said that the PfP SOFA dealt with joint 
military exercises or operations within the context of the 
PfP, but that JDEC activities have nothing to do with the PfP 
and that the JDEC was a bilateral activity whose purpose is 
to minimize the risk of use of nuclear weapons.  Tierney 
responded that the USG takes a broader view of the PfP SOFA's 
application in the sense that the U.S. viewed U.S. personnel 
in a receiving State as covered by its provisions even if 
they were not involved in PfP activities.  He added that 
without the JDEC agreements the U.S. would look to the PfP 
SOFA by default, since it is a multilateral agreement both 
the U.S. and Russia have agreed to and that Russian personnel 
in the U.S. for JDEC activities would also be covered by it. 
Tierney said that the PfP SOFA is a baseline in that if 
issues arose that were not covered by the U.S. draft Joint 
Statement, the PfP SOFA would provide guidance.  He added 
that it was a framework among allies - a model for 
cooperative relations around the world -- that the U.S. was 
not seeking advantage from its liability provisions and that 
while there may never be a claim, we need a structure in 
place just in case claims arise.  Bavykin replied that there 
was agreement on having liability provisions but that the 
question was what kind of liability provisions were 
appropriate. 
 
¶5. (SBU) Arbogast noted that the understanding coming out of 
the June 27-28, 2007, JDEC plenary meeting (reftel) was that 
the Plutonium Disposition Liability Protocol provisions would 
be the basis for further deliberations.  He asked if the 
discussion could proceed on that basis and on the basis of 
Russian comments to the U.S. draft.  Col. Il'in responded 
that it was only agreed at the June 2007 meeting that legal 
experts should review the Plutonium Disposition Protocol 
approach.  Arbogast replied that the U.S. approach was that 
both sides have agreed to certain basic liability provisions 
not only in the plutonium disposition context but also in the 
PfP context and that the U.S. approach was fair, workable, 
and took into account the nature of JDEC activities.  A lot 
of hard work had gone into the PuD liability agreement and it 
does reflect a real cooperative approach, with a great 
emphasis on consultations.  He added that the liability 
provisions of the U.S. draft were not unique to the plutonium 
disposition protocol, that these provisions fit the JDEC 
context, and that they should not be hard to explain to the 
Duma or anyone else. 
 
¶6. (SBU) Bavykin said that the problem with the U.S. approach 
was not the waiver of government-to-government liability, but 
the waiver of liability for contractors and he asked whether 
Russian firms would be free from liability.  Arbogast asked 
if it was possible to view state and contractor liability 
separately and that if the U.S. text modified its references 
to contractors, would the Russians agree to the U.S. draft as 
it relates to claims against the USG and its employees. 
Bavykin replied that he would favorably recommend  this to 
his superiors.  He added that he did not know whether this 
would be approved.  Arbogast said that this would be a good 
step forward and that the U.S. would want to see the Russian 
approach regarding contractors.  In summarizing his position, 
Bavykin said that it was fair to state that (1) both 
governments would not sue each other in relation to 
construction work and the activity of the JDEC once it is in 
place; (2) contractors' activities being predominantly 
construction or related activities would not be covered by 
the liability provisions but by provisions of Russian law; 
and (3) U.S. government personnel working at the JDEC would 
enjoy the privileges and immunities of U.S. Embassy personnel 
in Moscow.  OSD/MDP - Phil Jamison noted with regard to 
contractors that it was the U.S. understanding from the JDEC 
negotiating record that the vast majority of contractor 
personnel would be Russian subcontractors (not covered by the 
U.S. draft's liability waiver) with a U.S. prime contractor 
managing the project.  Bavykin responded that it would be 
necessary to take into account all the elements of our 
agreements and to look at the situation in terms of a new 
JDEC site to assess the work responsibilities of the 
different types of contractors and their liability status. 
Arbogast said that the U.S. delegation was pleased to have a 
meeting of the minds on governmental claims. 
 
------------------------- 
June 25 Afternoon Session 
-------------------------- 
 
¶7. (SBU) At the start of the session, Russian HOD Bavykin 
gave the U.S. delegation a copy of a four-point paper he had 
prepared over the lunch break entitled "Preliminary Views on 
Civil Liability Issues as Possible Grounds to Elaborate 
Relevant Provisions in a Document to the JDEC Memorandum of 
Agreement."  It included the three points above plus a fourth 
stating that paragraph 4 of the U.S. draft Joint Statement 
(which sets out five basic provisions such as non-waiver of 
sovereign immunity) shall be construed as applying to the two 
governments only (and not contractors). Arbogast commented on 
each without agreeing expressly to the formulations, and 
observed primarily that the provision dealing with 
contractors and their coverage under Russian law would have 
to be studied further back in Washington. (NOTE: DoD,s 
Office of General Counsel will assess the Russian position on 
U.S. contractors to determine whether it is consistent with 
the protections from exposure for U.S. contractors in other 
agreements/contexts and what language adjustments might be 
possible. Both delegations agreed that in any event Russian 
subcontractors would be subject to Russian law.) 
 
¶8. (SBU)  U.S. HOD Arbogast suggested a brief discussion of 
where things stood regarding the taxation provisions of the 
U.S. draft and observed that in the past the Russians had 
said that once liability was resolved taxation should not be 
a problem.  He asked Bavykin to give a sense of any problems 
the Russians saw with how taxation was addressed by the U.S. 
draft.  Bavykin said that he was a specialist in liability, 
that he had not looked carefully at the U.S. taxation 
language, but that he did not see any major problems and that 
Col. Il'in could speak to taxation.  Col. Il'in noted that 
the U.S. taxation language was not within the MOD's 
competence but was within the jurisdiction of the Ministry of 
Finance.  He added that as with the liability language, 
references to contractors would have to be removed from the 
taxation language. He also noted that the word "any" would 
have to be replaced in the sentence mentioning waiver of 
taxes and fees for any equipment, supplies, materials or 
services brought into Russia to implement the JDEC MoA.  He 
recommended replacing "any" with "necessary."  On the 
question of removing reference to contractors in the taxation 
language, Tierney responded that a potential problem with 
this approach was that it went to the aspect of the JDEC 
involving shared costs and that the U.S. could end up bearing 
more costs than Russia. 
 
¶9. (SBU) Arbogast said that the U.S. delegation would be 
returning to Washington with the understanding that Russia 
accepted the U.S. draft with the exception of the bracketed 
liability language on contractors and that the taxation 
language would need further review.  Bavykin replied that 
this was basically the case and that his delegation had no 
problem accepting the approach laid out in the U.S. draft 
with the adjusted language.  Arbogast asked if there would be 
any Russian adjustments beyond the reference to contractors. 
Bavykin said the Russians would like to reserve the right to 
introduce changes in other areas of the draft.  He added, 
that while in principle accepting the concept of the draft, 
they still wanted to review it carefully and that changes 
might go beyond what had been discussed but would not 
challenge the overall approach of the U.S. draft. (NOTE: The 
PfP SOFA provision (para 9) of the U.S. draft might also end 
up being a recommended deletion by the Russian side, in view 
of the strong views expressed by Col. Il,in on the subject.) 
 
¶10. (SBU) Arbogast inquired as to whether the U.S. could 
expect a response in two weeks on the taxation provisions. 
Bavykin replied that it might take more than two weeks to 
provide a response on liability as well as to get the 
response of the Ministry of Finance and other relevant 
agencies.  Col. Il'in said that a Russian delegation could 
not go to Washington in July to discuss JDEC taxation issues 
and that responses from Russian tax agencies would be 
conveyed through diplomatic channels.  Arbogast raised the 
possibility of having a meeting on taxation in early August 
in Moscow if a U.S. delegation went there to discuss JDEC 
site facility issues. 
 
¶11. (U) Participants: 
 
United States 
 
John Arbogast - State Department Office of the Legal Adviser, 
Head of Delegation 
Phil Jamison - OSD Office of Missile Defense Policy, Deputy 
Head of Delegation 
Carl Tierney - DOD/Office of the General Counsel 
CDR Nadeem Ahmad - Joint Chiefs of Staff Office of Legal 
Counsel 
Bradley Martin - U.S. Strategic Command 
Steve Rosenkrantz - State Department Office of Missile 
Defense and Space Policy, 
Delegation Executive Secretary 
Margaret Hawthorne - Head of Political External Section, U.S. 
Embassy, Moscow 
Yuri Shkeyrov - Interpreter, Department of State 
 
Russian Federation 
 
Alexander Bavykin - Deputy Director MFA Legal Department, 
Head of Delegation 
Alexander Borisov - Councilor, MFA Legal Department 
Alexandra Kotsuybinskaya - MFA Legal Department 
Vladimir Lapshin - Senior Councilor, MFA North America 
Department 
Sergey Kashirin - Councilor, MFA Security and Disarmament 
Affairs Department 
Col. Yevgeny Il'in - MOD 
Col. Vadim Stalinsky - MOD 
Col. Viktor Grigorenko - MOD 
RICE