Space Industry Bill

Written evidence submitted by Fieldfisher (SIB02)

About Fieldfisher

Fieldfisher is a leading international law firm headquartered in London with a special focus on space business. Our Satellite and Space Projects team is recognised as a leading advisor on space projects of all sizes and shapes, working with clients in the UK and round the world.

These comments are prepared by John Worthy, partner and Head of Satellite and Space Projects at Fieldfisher, who has over 20 years' experience advising space clients on their strategic projects and business programmes.

Fieldfisher was awarded the title of Law Firm of the Year 2017 in the British Legal Awards. Thir firm's other accolades include: Global Award for Space Transactions 2016, Corporate Livewire, -Fieldfisher, and Space Transactions Lawyer of the Year UK 2014, Corporate Livewire - John Worthy.

1. Comments on Space Industry Bill

Among the issues arising from the Space Industry Bill, we would like to flag two areas in particular.

2. Executive Summary

In order to realise the UK objective of creating a positive environment for space business, we would encourage the government (a) to require the Secretary of State to set a liability cap on operators at the same level as set out under the Outer Space Act and, in the case of small/nano- satellites, at a level not disproportionate to the cost of the satellite, and (b) accelerate the publication of the detailed technical, safety and operational requirements to be included in secondary legislation and which is vital to prospective operators in planning their business and costing their business plans.

3. Liability caps

3.1 We recognise the need for spaceflight operators to be subject to strict liability for injury and damage caused to persons or property in the UK (clause 33 of the Bill) and to indemnify the UK government against claims brought against the government for loss and damage caused by their activities (clause 35), as a result of the 1972 Liability Convention.

3.2 While it is helpful for operators to know that the Secretary of State may apply a cap on third party liability under clause 33 (clause 33(5)) and on the indemnity under clause 35 (clause 11(2)), the fact that this is set out as a discretion leaves operators with two primary difficulties. First, until there is clarity about whether a cap will be provided and what that figure is, they will have difficulty in calculating the costs of being a spaceflight operator in the UK, knowing how to plan for their business and providing for risk management, as an essential component in a spaceflight business. Secondly, if an appropriate cap is not granted, they may be unable to obtain insurance cover and hence may choose to operate from another jurisdiction.

3.3 By contrast, the Outer Space Act 1986, which requires a similar indemnity to the UK government against loss and damage caused by an operator's activities, requires the Secretary of State to set a cap on the operator's indemnity. This amount, currently €60 million in most cases, was revised in 2015 to reflect international norms in government indemnity caps by other space nations. A lower limit is likely to be more appropriate for small satellites and nano -satellites.

3.4 Launch from the UK will be governed by the Space Industry Bill, while launch by a UK company from elsewhere will fall under the Outer Space Act. It would therefore be anomalous if the same indemnity cap applied to licences under the Outer Space Act is not (or may not be) applied under the Space Industry Bill. This would lead to a conclusion that a UK business launching from outside the UK could be offered better (and more insurable) licensing terms under UK law, than a UK business launching from the UK.

3.5 The effect of this uncertainty will be to make prospective spaceflight operators more reluctant to establish a UK business and more reluctant to launch from the UK.

3.6 In our view, the Secretary of State should be under the same obligation to apply the same defined cap under the Space Industry Bill as under the Outer Space Act. As the satellites launched from the UK are likely to be small or nano-satellites, this figure should be at a level which is not disproportionate to the cost of the satellite.

3.7 Similar arguments apply to the proposed role of the Secretary of State as insurer of last resort where the liability of an operator exceeds the insured amount.


4. Licensing requirements

4.1 The second issue concerns the early visibility for licence applicants of the detailed conditions and technical requirements of the licences.

4.2 Many potential licence conditions are already highlighted in the Bill – the regulators will have to determine which of these (and any other conditions) will form part of each licence in practice. While the selection will depend on the nature of the space activities, it will be essential for applicants to understand which terms are likely to be included in reality. It would therefore be highly valuable to operators to clarify which requirements are likely to be applicable to which activities. This will enhance the transparency of the process and clarify the level at which the regulatory bar will be set. In turn, it will enable applicants to plan their businesses more effectively.

4.3 In addition, for spaceflight operators, the critical licensing detail (including the operating, safety and insurance requirements) will determine how in practice they are required to operate their business. Even though this detail is yet to be published, hopeful spaceport operators and launch providers need to be creating their business plans and engaging with investors, financiers and insurers now. Thus, from the perspective of interested operators, we would encourage the government to accelerate the preparation of, and debates with industry on, the secondary legislation setting out these details. This will enable operators to achieve the certainty and clarity on how the regulatory frameworks fit together in practice, and hence finalise their spaceport business plans.

4.4 Early sight of the detail of these requirements will be valuable if the timetable of operational spaceports by 2020 is to be achievable.

John Worthy

Partner and Head of Satellite and Space Projects

Fieldfisher

London

January 2018

 

Prepared 24th January 2018