Commercial Space Launch Accidents: Who Pays? by Pamela Meredith Eighth Annual McGill Conference on International Aviation Liability & Insurance Montreal April 18, 2015 © Pamela L. Meredith 2015

Who pays for satellite launch failures? Waivers of liability and insurance Who pays for the launch failure:  The launch provider?  The subcontractor with the defective part?  The satellite customer whose satellite is lost?  A secondary payload owner whose satellite caused the failure?  The launch site operator?  Other? 2 Text: Pamela L. Meredith © 2015 Customary risk allocation:  Satellite customer waives liability: Comprehensive waiver of liability covering all participants in the launch, regardless of fault; waiver flow-down where no privity. (U.S. Commercial Space Launch Act or “CSLA” requires it)  Commercially, the parties often expand the waiver in their contracts  Satellite customer takes out launch and in-orbit insurance (replacement)  Prudent launch providers/manufacturers request subrogation waivers  Satellite lenders require additional insured and loss payee status

Who pays for damage to the launch pad? Waivers of liability and insurance Who pays for damage to the launch site:  The launch provider?  The subcontractor with the defective part?  The satellite customer whose satellite is lost?  A secondary payload owner, if the cause?  The launch site operator?  The U.S. Federal Gov’t.?  Other? 3 Text: Pamela L. Meredith © 2015 Risk allocation – distinguish U.S. Federal ranges and commercial launch sites:  CSLA mandatory insurance for U.S. Federal ranges – launch provider obtains  Does not apply to commercial launch sites  CSLA mandatory waiver scheme covers all participants in the launch, including the launch site operator; applies launch site damage  For Federal ranges, the waiver applies if claims exceed the insurance  For commercial sites, the waiver applies from the first dollar  Commercial launch participants obtain insurance as needed

Who is liable for injury and death? Waivers of liability and insurance Who is liable for injury and death:  The spaceflight operator?  The vehicle subcontractor with the defective part?  The crew?  The spaceflight participant (SFP)?  The sponsor of the SFP?  The insurer and, if so, whose? 4 Text: Pamela L. Meredith © 2015 Risk allocation – rules and practices in the formative stage:  No mandatory CSLA insurance for SFPs (not third parties)  No mandatory SFP CSLA liability waiver against the spaceflight operator; SFP informed consent  CSLA mandatory SFP waiver of liability against the U.S. Gov’t  State statutes designed to shield the spaceflight operator from liability  Require warning statements (“inherent risk”) to and signature by SFP  Not apply if “reasonably should have known of a dangerous condition”  Contractual waivers, liability insurance and subrogation waivers a must