Memorandum 115
Submission from Gates and Partners
SUMMARY
This paper provides a high-level overview of
the existing international and UK provisions dealing with space
liability, summarises recent US commercial spaceflight legislation
applicable to space tourism and sets out a proposed framework
for future legislation taking into account lessons learned from
the impact of liability regimes upon the development of the airline
industry.
I. INTRODUCTION
Mass space tourism is no longer science fiction
but a number of technological, operational and legal hurdles need
to be addressed to support this nascent industry.
For present purposes we consider space travel
in a craft through suborbital and orbital space rather than the
concept of "space hotels" or colonies in orbit or on
the Moon.
II. OVERVIEW:
APPLICATION OF
INTERNATIONAL AIR
AND SPACE
LAW TO
SPACE TOURISM
A. Air or space law or both?
Many of the space passenger transportation vehicles
currently under development are two-part vehicles where the space-going
portion is carried on and launched from an aircraft. Will such
vehicles be subject to air law, space law or both (ie space law
whilst in "outer space" and air law at other times)?
This is a fundamental issue because the legal regimes for air
and space law are very different.
Unfortunately there is no straightforward answer.
At present, UK and international space law does not define where
"outer space" starts and finishes. The focus of air
and space law has previously been different: air law has recognised
the rights of sovereign States to control their airspace whereas
outer space is to be used by all States for the benefit of the
world.
The issue has been debated by the United Nations
Committee on the Peaceful Uses of Outer Space (UNCOPOUS) since
1967 without resolution and currently the Scientific and Technical
Committee is considering the issue from a technical perspective.
The debate has focused on two approaches: a direct or spatial
approach seeking to define "space" by reference to a
certain altitude (various altitudes between 90 and 110km above
sea-level have been suggested) or an indirect or functional approach
based on the purpose or functions of the vehicle. Similarly, the
development of new space vehicles led UNCOPOUS to issue a questionnaire
to States with questions concerning what it termed "aerospace
objects". States' views were sought as to how such aerospace
objects would be defined and which legal regime (air, space, both)
applied. The different responses of States demonstrated that achieving
consensus on this issue is likely to be challenging.
B. The existing space liability regime: international
The existing international space law treaties
date from the late 1960's and 1970's. They do not satisfactorily
deal with space tourism, since they were drafted in order to facilitate
governmental space activities at a time when private space activities
were non-existent.
There are five treaties applicable to activities
in space:
— the Outer Space Treaty 1967 (OST);[29]
— the Liability Convention;[30]
— the Rescue Agreement;[31]
— the Registration Convention;[32]
— the Moon Agreement.[33]
A detailed consideration of these treaties is
outside the scope of this paper and so we highlight some of the
main provisions arguably applicable to space tourism.
(i) Jurisdiction
A Launching State is responsible under the Registration
Convention for registering the space object[34]
if launched into earth orbit or beyond. However, at present, space
tourism flights are intended to be sub-orbital and so this Convention
will not apply.
The Launching State has jurisdiction and control
over objects launched into outer space on its registry and over
personnel while in outer space or on a celestial body.[35]
(ii) Passenger Liability
Arguably, the main problem with the existing
treaties is that they do not provide an effective mechanism to
limit liability to passengers. Limitation of such liability was
a key factor in supporting the development of the aviation industry[36]
and will be equally important to the developing space tourism
industry.
If a space passenger flight was launched into
earth orbit, then, because the State of registry under the Registration
Convention applies its jurisdiction to the spacecraft, any claims
for damage by the passenger would be pursued within that State.
The Liability Convention only covers liability
for damage to the surface of the earth, to aircraft in flight
or to the space objects (including personnel on board) of another
State: it does not deal with the issue of liability to personnel
on the space object itself. In any event, individuals have no
direct right of action under the Liability Convention: claims
must be brought by the affected State.
The Launching State is itself responsible for
damage caused by a space object to its own nationals or foreign
nationals participating (by invitation) in the operation of that
space object (from launch until descent) or in the immediate vicinity
of a planned launching/recovery area if they are invited by the
Launching State.
(iii) Third Party Liability: Surface Damage
Under the Liability Convention, a Launching
State[37]
faces strict liability for any damage caused on the surface of
the earth or to aircraft in flight. A Launching State is liable,
upon proof of fault, for damage to space objects of other States,
or personnel on those objects.
There is no provision limiting the liability
of the launching State but usually States transfer the burden
of liability to private companies or insurance through domestic
legislation. In case of an accident the claim for compensation
can only be presented to a launching State through diplomatic
channels, giving thus a political tone to the settlement procedure
and leaving private entities with little control.
(iv) Search and Rescue
The Rescue Agreement imposes two general obligations
on States. First, to render any assistance to astronauts as required.
Secondly, a State is required to inform the Launching State and
the United Nations if it discovers that a space object has returned
to earth and, if requested, to take steps to recover and return
it to the Launching State. Strictly speaking the Rescue Agreement
does not cover passengers. However, under an expansive interpretation
of the term "personnel of a spacecraft" passengers might
be affected by its provisions. If so, passengers in distress are
entitled to all feasible assistance from any relevant State. Furthermore,
they have the right to be safely and promptly returned to representatives
of the launching authority.
C. The existing space liability regime: United
Kingdom
The legal framework for regulating commercial
space activities in the UK is governed by the Outer Space Act
1986 ("the 86 Act").
Sections 1 and 2 provide that the 86 Act applies
to UK nationals, firms and bodies incorporated under the laws
of any part of the UK that launch or procure the launch of a space
object, operate a space object or carry any other activity in
outer space, regardless of whether these activities are carried
out in the UK or elsewhere. By restricting the application of
the 86 Act to UK nationals, the UK runs the danger that a foreign
national who conducts space activities in the UK would not be
subject to regulation and thus UK would not be adequately protected
as a Launching State.
Before issuing a licence, the British National
Space Centre (BNSC) may require the licensee to insure itself
against liability incurred in respect of damage or loss suffered
by third parties in the United Kingdom or elsewhere, as a result
of the activities authorized by the license. The UK does not impose
a compulsory third party insurance requirement, although the government
may impose this condition upon the grant of a licence.
Section 10 of the 86 Act requires all persons
carrying on space activities to indemnify the UK government against
any claim for loss or damage, if such person is one to whom the
Act applies. Currently, the BNSC requires the licensee to provide
evidence of third party liability insurance of £100 million
and for the UK government to be an additional insured to the insurance
policy. Therefore, the UK government does not indemnify licensees
who bear all financial responsibility for third-party claims,
but limits the insurance requirement to £100 million to facilitate
operators to buy insurance coverage on reasonable terms.
The insurance policy should cover both the launch
and the in-orbit phase (at least three years). If a licence is
granted for the launch of a number of satellites, and a claim
is made following one of the launches which exhaust the £100
million cover, the licensee is required to renew the cover for
the remaining launches.
D. The existing aviation legal regime: international
If it was determined that aviation law applied
to a space tourism flight for all or part of its journey, then
the following regime would apply.
International carriage by air of passengers,
baggage and cargo is generally subject to a regime based upon
the Warsaw Convention 1929, the Warsaw Convention as amended by
the Hague Protocol 1955 or the Montreal Convention 1999, depending
upon the routing of the flight. In the European Union, Regulation
(EC) No 889/2002 of the European Parliament and of the Council
of 13 May 2002 amending Council Regulation (EC) No 2027/97 on
air carrier liability in the event of accidents is also applicable
to Community Air Carriers. For passenger death or bodily injury
resulting from an accident in the course of carriage by air, embarking
or disembarking, the carrier is liable without proof of fault.
Warsaw/Warsaw Hague Conventions limit liability in the absence
of wilful misconduct by the carrier: the Montreal Convention provides
for unlimited liability although the carrier is not liable above
100,000 Special Drawing Rights if they establish that they took
all necessary measures to avoid the loss.
Regulation (EC) No 261/2004 of the European
Parliament and of the Council of 11 February 2004 establishing
common rules on compensation and assistance to passengers in the
event of denied boarding and of cancellation or long delay of
flights provides for compensation for passengers in the event
of denied boarding or delay.
E. The existing aviation legal regime: domestic
Domestic carriage in the UK is governed by the
Application of Provisions Order 2004 which applies a modified
version of the Montreal Convention. EC Council Regulation No 889/2002
is also applicable to domestic carriage where the carrier is a
Community Air Carrier.
There are many legislative provisions implementing
public and private international air law convention requirements
such as the Chicago Convention referred to above and providing
for air traffic rights, rules of the air and accident investigation.
The "Liability Convention" opened
for signature at London, Moscow, and Washington on 29 March 1972.
To date only the US has developed specific legislation in respect
of space tourism.
The background to this is that on 11 February
1988, President Reagan issued the National Space Policy and he
announced a 15-point Commercial Space Initiative (CSI) which,
inter alia, established a comprehensive risk allocation regime
between the government and private sector for use of government
launch facilities for commercial purposes and recognised a commercial
space sector distinct from the military and civilian government
sectors.
The Commercial Space Launch Amendments Act of
1988 ("CSLA") codified into law these policies and responded
to the industry's concerns. The CSLA and the accompanying regulations
provide a risk-allocation system amongst the various participants
involved in launch services. The aim was to facilitate the development
of the US commercial launch industry by allowing it to compete
in the international marketplace and to provide launch participants
with protection against the risk of catastrophic losses and unlimited
liability. The CLSA forms the basis of the three-tiered comprehensive
risk allocation regime currently in force and encompasses a complex
system of insurance requirements, state indemnification, reciprocal
waivers of liability, limitations of liability, contractual remedies
and clauses excluding liability.
The US legal framework requires licensees to
obtain liability insurance or demonstrate financial responsibility
based on Federal Aviation Administration (FAA) determination of
the maximum probable loss (MPL). Currently, US law provides for
a statutory limit in the amount of insurance or financial responsibility
required of US$500 million for third party claims for injury,
loss, or damage, and US$100 million for claims by the US government
for damage or loss to Government property resulting from an activity
carried out under the license. If the maximum liability insurance
available on the world market at reasonable cost is less than
US$500 million/$100 million, it is provided that the cap may be
lowered to reflect the market's capacity.
Launch participants are also required to enter
into no-fault, no subrogation reciprocal or cross-waivers of claims
under which each participant accepts its own risk of property
damage or loss and agrees to be responsible for injury, damage,
or loss suffered by its employees.
To the extent that third-party liability claims
exceed the MPL-based cap, the US government will pay for claims
up to US$1.5 billion (approximately US$2 billion today), provided
that the damage did not result from the wilful misconduct of the
licensee. For damage to government property, the U.S. government
waives claims for property damage above the required insurance.
Government indemnification for third-party risks
is capped at $1.5 billion. Above that amount the launch provider
bears exclusive responsibility for covering claims.
(i) The Commercial Space Launch Amendments Act
2004
On 23 December 2004 the Commercial Space Launch
Amendments Act 2004 (CSLAA) was enacted in the US to facilitate
the "development of the emerging commercial human space flight
industry" by expressly authorising the licensing of manual
re-usable launch vehicles (RLV's), extending the liability indemnification
regime for commercial human space flights and establishing a new
system for experimental re-usable suborbital rockets.
The CSLAA purports to establish a distinct commercial
human space flight by creating a "clear legal, regulatory
and safety regime". The Act requires regulatory standards
governing human space flights to evolve as the industry matures
and vests the authority to the FAA /Associate Administrator for
Commercial Space Transportation (AST) to regulate the industry
under 49 U.S.C. Subtitle IX, Chapter 701. This authorisation includes
the promulgation of regulations for the safety and health of crew
and space flight participants; and for the launch vehicle design
or operation that will take into consideration the evolving standards
of safety in the commercial space flight industry.
The main points of the Act are the following:
(a) Flight participants
A space flight participant is defined as an
individual, who is not crew, carried within a launch vehicle or
re-entry vehicle. The CSLAA requires that the holder of a licence
or a permit informs the space flight participant in writing about
the risks of the launch and re-entry including the safety record
of the RLV. The licence holder must also inform the space flight
participant in writing prior to receiving any remuneration from
that participant, that they US government has not certified the
vehicle as safe for carrying crew or space flight participants.
In turn, the space flight participant must provide a written informed
consent to participate to the launch and re-entry and also a written
certification of compliance with physical examinations prescribed
by the FAA.
On 15 December 2006, the FAA issued final regulations
(the Regulations) relating to space flight participants. In a
nutshell, the regulations include the following:
— Informed consent: RLV operators should
inform in writing the flight participants (they must be at least
18 years old) about the known and unknown hazards and the risk
of the flight in an understandable manner, ie the likelihood and
the consequences of any reasonable foreseen hazardous event and
safety-critical system failures that could result to their death,
injury, disability and total or partial loss of physical and mental
function. RLV operators should describe to each flight participant
the safety records of their vehicle and of all launch and re-entry
vehicles that have carried persons on board, providing also an
opportunity for the participants to ask questions.
— Training: RLV operators should provide
safety training to the participants and should impose security
requirements, similar to those applied to airline passengers.
Operators are required to train passengers on how to respond during
emergencies such as fire, smoke or loss of cabin pressure. Physical
examination of passengers is not mandatory, but the FAA recommends
it.
(b) Crew
The CSLAA requires that the crew receives training
and satisfy medical or other standards specified in the licence
or permit. Pilots are required to hold a pilot's certificate with
an instrument rating and to possess the aeronautical experience
and skills necessary to pilot and control the vehicle.
Crew members with a safety-critical role are
required to obtain second-class airman medical certificates issued
within a year of the flight and maintain a physical condition
and mental state sufficient to perform safety-related roles. Furthermore,
the Regulations provide for the operators to train crew members
on how to perform their roles to ensure the vehicle will not harm
the public. No further guidance is being provided in the Regulations,
but the FAA committed itself to carry out further research. The
RLV operator must also inform crew members in writing prior to
them agreeing to fly or prior to being employed, that the US government
has not certified the vehicle as safe for carrying crew or space
flight participants.
(c) Experimental permits
To encourage the development of reusable suborbital
rockets, the CSLAA provides for the issue of experimental permits
allowing for an unlimited number of launches. However, this permit
is not transferable and does not authorise a rocket to be operated
for carrying any property or human being for hire or reward.
Furthermore, the Act limits the FAA/AST's authority
to issue permits for reusable suborbital rockets to those rockets
that will be launched or re-entered solely for: (1) research and
development to test new design concepts, new equipment, or new
operating techniques; (2) showing compliance with requirements
as part of the process of obtaining a licence; or (3) crew training.
(d) Liability insurance and indemnification
The CSLAA excludes crew and space flight participants
from the definition of third party and requires crew and space
flight participants to execute reciprocal waivers of claims involving
the DOT/FAA. Under this regime each party waives and releases
claims against the other and agrees to assume financial responsibility
for property damage it sustains and in respect of bodily injury
or property damage sustained by its own employees or by space
flight participants resulting from licensed activity regardless
of fault.
Furthermore, the liability indemnification regime
of the CSLAA is inapplicable to space flight participants. This
means that the US government will not entertain a successful third
party claim against a space flight participant involved in a licensed
flight.
The Regulations purport to clarify that the
complex system of cross-waivers applies to the death of a flight
space participant and also that it covers the estate, successors
and assigns of a crew or passenger. Furthermore, the Regulations
do not require a waiver of claims against the operator, yet operators
may make it part of their contractual arrangements. The FAA explicitly
rejected a request to require the operator to provide personal
insurance for passenger noting that, historically, space flight
participants are expected to purchase first party insurance.
III. CONCLUSION
Neither the international nor UK domestic existing
legislation provides an adequate framework for dealing with space
tourism and, even in the US, where legislation has been enacted
in response to the developing industry many issues are not yet
fully developed or resolved. The technology and the business opportunities
are developing faster than the legal regimes. Space tourism flights
should be subject to one legal regime specifically tailored to
space tourism. Any solution involving the application of air law
to one part of the flight and space law to another would be practically
unworkable. The aviation industry is a mature and fully-established
industry, highly regulated and involving minimal risk to passengers.
The space passenger industry is young, developing and, as with
the early days of aviation, will involve greater risks to passengers.
The space sector is important to the UK economy,
as the UK has a key role to play in developing these innovative
technologies. It is therefore desirable that the UK is at the
forefront of developing domestic legislation to support this technology,
yet mindful of international obligations.
Key goals for such domestic legislation would
be:
— To ensure that the fledgling industry
is not stifled by the threat of litigation and unlimited, uninsurable
liability.
— To be clear so that business is attracted
by legal certainty to the UK.
— To develop a forward-thinking strategy
providing a practical regulatory framework for space tourism—for
example traffic management, environmental, safety and accident
investigation both domestically and internationally.
Any legislation would need to ensure that there
are fully enforceable and absolute waivers of liability in respect
of passengers. Domestically, exemptions would need to be made
to the Unfair Contract Terms Act 1977 which prevents exclusion
of liability for death/personal injury.
The existing space law treaties were drafted
at a time when space exploration and activities were the province
of States rather than commercial organisations and the time is
now ripe to draft a new international treaty prepared specifically
to support and develop space tourism, drawing parallels with the
development of the legal regime surrounding the aviation industry.
Providing clear and enforceable limited liability
is just the starting point of such a treaty. There are many other
issues which need to be considered and legislated for. The commercial
aviation industry is one of the most heavily-regulated industries
in the world. In addition to a mature liability regime and developed
product certification requirements, ancillary activities are also
regulated. For example, the Chicago Convention on International
Civil Aviation 1944[38]
and its Annexes provide a fundamental basis for the promotion
of flight safety worldwide. Among the eighteen Annexes adopted
by the Council of the International Civil Aviation Organization
(ICAO), fifteen refer to technical issues of air navigation by
prescribing specifications for "physical characteristics,
configuration, material, performance, personnel, or procedure".[39]
As the space tourism industry develops, these issues will need
to be considered as well and there will be a need for the space
equivalent of ICAO—International Commercial Space Organisation.
April 2007
29 The Treaty on Principles Governing the Activities
of States in the Exploration and Use of Outer Space, including
the Moon and Other Celestial Bodies 1967. Back
30
The Convention on International Liability for Damage Caused
by Space Objects 1972. Back
31
Agreement on the Rescue of Astronauts, the Return of Astronauts
and the Return of Objects Launched into Outer Space 1968. Back
32
The Convention on Registration of Objects Launched into Outer
Space 1976. Back
33
Agreement Governing the Activities of States on the Moon and
Other Celestial Bodies 1979. Back
34
Registration Convention Article II. Back
35
Supra Article VIII. Back
36
Convention for the Unification of Certain Rules Relating to
International Carriage by Air, Signed at Warsaw on 12 October
1929 (Warsaw Convention 1929). Back
37
ie a State that launches, procures the launch of, or from whose
territory a space object is launched. Back
38
Convention on International Civil Aviation, signed at Chicago
on 7 December 1944. Back
39
Annex 11, at vi. Back
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