Could I be liable if my space activities cause damage?
What damage is covered?
In general, the Space (Launches and Returns) Act 2018 (AUS) covers any damage which is caused by space objects and high power rockets.
For the purposes of the Act, the term ‘damage’ is expansive and shares the same meaning under the Liability Convention.
Damage includes:
- Impairment of health or injury; or
- The loss of life or loss of property.
The Act covers any damage that occurs on Earth, in the air or in outer space, whether within Australia or outside Australia, as long as it occurs during the ‘liability period’.
- For launching a space object, the liability period is 30 days from launch.
- For returns, the liability period is until the space object makes landing on Earth.
Who can be liable for damage?
Responsible party
If you are a ‘responsible party’ for the launch or return of a space object, you can be liable to pay compensation for any damage the space object causes on Earth, to aircraft in flight, or in outer space.
DEFINITION OF ‘RESPONSIBLE PARTY’
A ‘responsible party’ includes any person who:
- Holds a launch or return permit or authorisation for the space object; or
- As an Australian national, carried out the launch or return, or owned any part of the space object or its payload.
An ‘Australian national’ includes Australian citizens, residents and entities.
When will I be liable to pay compensation?
The Space (Launches and Returns) Act 2018 (AUS) sets out different rules and procedures for determining liability depending on where the damage occurs.
If damage occurs on Earth or in the air:
If your space object causes damage on Earth or to aircraft in flight, you will be subject to ‘absolute liability’. Damage on Earth or in the air covers any damage that occurs below the Kármán line, or in other words, within an altitude of 100 kilometres above sea level.
Absolute liability refers to responsibility for a breach of law for which no defence is available. In this case, you will be absolutely liable to pay compensation unless the damage was caused by the gross negligence or intentional conduct of a third party.
If damage occurs in outer space:
If your space object causes damage to another space object, or to persons or property in outer space, you will be subject to ‘fault liability’. In this instance, you will not be liable to pay compensation unless you or a ‘related party’ are at fault for the damage.
DEFINITION OF ‘RELATED PARTY’
A ‘related party’ includes any persons:
- With a financial or ownership interest in the space object;
- Involved in preparing any part of the space object for its launch or return;
- Contractors, subcontractors and suppliers involved in the launch or return, or its preparation; or
- Directors, officers, employees and agents of the responsible party.
IMPORTANT TO KNOW
In this sense, you will effectively be held liable for the actions of those who are closely involved with the launch or return of your space object – engineers, suppliers and manufacturers – even if you are not at fault for the damage.
Determining ‘fault’
As the law stands today, there is no international consensus regarding the way in which parties determine fault within a space application. Legal commentators have suggested that ‘fault liability’ traditionally equates to negligence; that is, the failure to exercise reasonable care in the circumstances.
However, within the context of space law and regulation globally there are few commonly-accepted standards, making it difficult to establish a breach.
If multiple parties are at fault for damage:
If multiple parties are at fault for the damage, each party will be subject to ‘joint and several liability’.
In this instance, liability will be proportionately shared between the parties according to their contribution, but a claimant may pursue a claim for the whole of their loss against any one or more of the parties.
Use cases & example scenarios
Angelina wants to know whether she is a responsible party for the damage caused by his rocket.
Angelina from ANGELS Aerospace recently launched a solid-fuel rocket into outer space from South Australia. The launch was authorised under Angelina’s Australian launch permit.
While in outer space, the ANGELS rocket collided with a GNSS satellite owned by Andromeda Space. The impact of the collision caused the GNSS transmitters on the satellite to malfunction and become non-operational. The collision occurred within thirteen days of the launch sequence.
In this case, Angelina is a ‘responsible party’ for the launch of the rocket and could be liable for damage.
- Damage covered: The Act would apply to the damage caused by ANGELS Aerospace. The rocket is a space object which was launched from Australia.
- Liability period: The damage occurred during the 30-day liability period of the launch. The collision occurred thirteen days after the launch.
- Responsible party: Andy is a ‘responsible party’ for the rocket. The launch was authorised and performed under Andy’s launch permit.
Angelica wants to know whether she could be liable for damage caused by her satellite collision.
Angelica from ANGELS Aerospace recently launched a communications satellite into outer space from South Australia. While in outer space, Angelica’s satellite de-orbits prematurely due to anti-satellite operations carried out by Andromeda Space. The satellite crashes upon landing causing damage to a nearby factory.
In this case, Angelica would not be liable for the damage.
- Absolute liability: Although Angelica’s satellite caused damage on earth, the actions of Andromeda Space are an example of intentional conduct that Angelica would not be liable for.
What happens if a claim is made against me?
If you are seeking to sue, or believe you could be sued for damages, there are certain rules under the Act to consider before taking action.
Statute of limitations for claims
The Space (Launches and Returns) Act 2018 (AUS) will bar a claim for compensation from proceeding unless it is brought within certain time limits.
Generally, parties must bring claims within:
- 1 year of the damage occurring.
Claims brought outside these limits will be barred by the Court.
Detailed documentation is essential to support initiating a claim in the event that damage occurs.
However, where the complaining party was unaware of the damage, the law allows for claims to be brought:
- within 1 year of the date the damage was discovered; or
- within 1 year of the date the damage would have been discovered had the complaining party exercised due diligence.
These limitations are in place to allow a grace period for claims where damage is discovered after a protracted period of time.
Courts generally require detailed documentation to allow claims to be brought outside this period.
Limit on amount of liability
If the damage was caused by a launch or return authorised under a permit, your liability will be limited to the insured amount required under your permit.
Where you are liable to pay more than your insured amount to Australian nationals, the Commonwealth of Australia will cover the excess up to $3 billion. In other words, you will not be liable to pay compensation in excess of the insured amount for your permit.
However, your liability will not be limited where:
- your launch or return was not authorised by a licence or permit;
- the damage resulted from a breach of your permit conditions; or
- the damage resulted from your intentional conduct or gross negligence, or that of a related party.
USE CASE: Ally wants to know whether a claim for compensation can be made against her
Ally from ANGELS Aerospace recently launched several cubesats into outer space under her Australian launch permit. A few days after launch, Ally’s cubesats collided at high speed with an unmanned spacecraft owned by an Australian company, Andromeda Space.
The collision caused damage to the internal subsystems of the spacecraft. Ally is a responsible party for the launch and is at fault for the damage. Two years after the collision, Andromeda discovered damage to the spacecraft and pursued a claim against Ally three months later.
In this case, a claim could be pursued against Ally.
- Statute of limitations: Andromeda pursued a claim after three months of discovering the damage. Although this is over two years after the damage occurred, Andromeda pursued the claim within 1 year of the date they discovered the damage.
- Limited liability: As Ally holds an Australian launch permit, any liability she may incur will be limited to the required amount of insurance under her permit.
How much insurance will I need?
As a permit holder under the Act, you are required to obtain insurance for the ‘liability period’ of each and every launch or return conducted under your permit.
The insurance requirements under the Act are designed to provide financial protection against the consequences of liability in the event that damage is caused to third parties.
What are the insurance requirements?
For each and every launch and return, you are responsible for obtaining two forms of compulsory insurance:
- You must be insured for any liability to third parties that arises under the Act; and
- You must also hold insurance which covers the Commonwealth for any liability it may incur under the Liability Convention or under international law.
This may be done by holding separate policies or a single policy that covers both you and the Commonwealth.
What is the minimum required amount of insurance?
The Act mandates permit holders to hold a minimum total amount of insurance to meet these requirements. The total amount must not exceed $100 million, but it can be a lesser amount as calculated by your ‘Maximum Probable Loss’.
Maximum Probable Loss
Calculating Maximum Probable Loss is the prescribed method under the Space (Launches and Returns) (Insurance) Rules 2019 (AUS) to determine your minimum required amount of insurance.
CALCULATING MAXIMUM PROBABLE LOSS
All calculations of Maximum Probable Loss must be made by reference to the refreshed Maximum Probable Loss Methodology.
This includes calculating the value of:
- Third-party casualty losses;
- Third-party property losses;
- Losses arising from environmental damage; and
- Loss of economic use.
After a qualified person has independently verified your calculations, the sum of these values will be your Maximum Probable Loss.
If your Maximum Probable Loss is less than $100 million, it will be your minimum required amount of insurance.
- For example, if by calculation, your third-party casualty and property losses both total $30 million, and your losses arising from environmental damage and loss of economic use amounts to $45 million, your minimum required insurance will be $75 million.
- Even if your Maximum Probable Loss exceeds $100 million, the Act prescribes $100 million as your minimum required insurance.
The Australian Space Agency has created a calculator tool to estimate your maximum probable loss, using the inputs in the Maximum Probable Loss Methodology. This tool can be accessed by emailing the Australian Space Agency at enquiries@space.gov.au.
Are there alternatives to taking out insurance?
The Act provides for alternative means to meet the necessary insurance requirements without having to take out insurance.
Direct financial responsibility
As an alternative to taking out insurance, you can meet the insurance requirements if you can demonstrate an ability to take ‘direct financial responsibility’ for paying a claim equal to your required insured amount.
Demonstrating direct financial responsibility is similar to the process of securing a loan. You will need to provide evidence of your available net assets or other financial means which are sufficient to cover any liability you may incur for causing damage.
- For example, if you own assets totalling a value of $750 million and your required insured amount is $100 million, you will be able to demonstrate direct financial responsibility.
USE CASE: Adrian wants to know his options for meeting the Act’s insurance requirements.
Adrian from ANGELS Aerospace holds an Australian launch permit and is planning to launch a remote sensing satellite later this year.
For an Australian launch permit, the specified minimum insured amount is $100 million. However, his verified calculations show that his Maximum Probable Loss is $88 million. Adrian also owns three factories, a launch facility and several rockets and satellites totalling a value of $160 million.
In this case, Adrian has two options for meeting the insurance requirements:
- Minimum insured amount: Adrian can use his Maximum Probable Loss of $88 million as his minimum required insured amount as it is less than the specified minimum insured amount of $100 million.
- Direct financial responsibility: As an alternative to taking out insurance, Adrian could choose to meet insurance requirements by demonstrating his direct financial responsibility. The value of Adrian’s available assets could cover a compensation claim up to his minimum insured amount of $88 million.
Link sources
Visit the Australian Space Agency’s website for more information on the liability provisions under the Space Activities (Launches and Returns) Act 2018 (AUS):
https://www.legislation.gov.au/Details/C2019C00246
Visit the Australian Space Agency’s website for more information on meeting insurance requirements:
https://www.industry.gov.au/regulations-and-standards/space-regulation
What to do next
1. Find out what permits are required for your space operations
You should ensure that you hold the necessary licences or permits under the Act to conduct space activities.
2. Understand your licence or permit conditions and level of insurance coverage
Take time to check your licence or permit conditions and understand your level of insurance coverage to ensure that your operations are fully complaint with the Space Activities (Launches and Returns) Act 2018 (AUS).
3. Get legal advice
To fully understand your rights and responsibilities, you should contact a lawyer who can provide specialised legal advice tailored to your circumstances.
Frequently Asked Questions
No, suppliers and manufacturers are not considered a ‘responsible party’ under the Space Activities (Launches and Returns) Act 2018 (AUS), and as such, will not be liable for damage.
This is the case even where the parts supplied are found to be at fault for the damage. However, this does not prevent purchasers from seeking legal recourse against you under contract, commercial or tort law.
Yes, even if your space object causes damage on Earth on behalf of an ‘act of God’ or force-majeure event, there is legal commentary to suggest that operators will still be liable to pay compensation.
- Examples of force-majeure events include natural disasters, armed conflict and other intervening events.
This question of law is yet to be settled by international or Australian courts.
Yes, the Act covers any damage caused by all launches and returns, regardless of whether or not they are authorised.
Those who conduct space activities without the proper permits can be liable for damage and will not benefit from the limits on liability which is exclusively afforded to permit holders.
Conducting an unauthorised launch or return is an offence under the Act which carries serious civil and criminal penalties.
No, Section 49 of the Space Activities (Launches and Returns) Act 2018 (AUS) explicitly states that operators are not precluded from taking out insurance in addition to the minimum amount.