1. London Institute of Space Policy and Law
Course on Space and Satellite Insurance
Sa’id Mosteshar

2. Insurable Space Risks Direct and Indirect, consequential
b. Pure economic
c. Damage on Earth and in Aerospace
d. Damage in Space

3. Introduction
Time will soon be ripe for the international law governing damage caused by space objects to reflect modern realities.
Urgency from two inter-related factors
government and international organizations have been overtaken by private commercial entities
many new areas of space activity are becoming commercially viable and attractive (space transportation, geographic positioning and navigation systems)

4. Scope and meaning of the liability and responsibility provisions of the Liability Convention and of the Outer Space Treaty already discussed
Discuss gaps and issues to be resolved for clarity and certainty necessary for commercial activity
Consider an international liability regime fit for modern commercial space activity

5. Structure of the International Regime
International regime can be system administered and adjudicated by an international body or tribunal, or by formulation of norms to be applied by states through municipal laws
International regime merit - dealing with international risk at international level
Need dispute resolution forum and enforcement mechanism
Foundation for jurisdiction over private entities lacking

6. alternatively harmonize the domestic laws of damage from space activity
Ideally a level of certainty about the risk of liability
Harmonization ensures commercial entities directly responsible and liable for damage from space activity
States may desire to limit overall exposure of commercial entities to liability through insurance etc.
States continue to have unlimited liability

7. A Hybrid Solution
Make ITU frequency allocations subject assumption of liability by the state and the operator
Apply to all objects without new treaty
Self-enforcing - retain spectrum priority
Regime does not remove state involvement or directly create international liability by the private entities
Certainty of the identity of the liable entity
States need to implement liability obligations in their licensing or regulatory procedures

8. Liable Entity
Liable entity depends on the nature of the regime
Harmonization would require liable entity be identified under domestic legislation
Where liability part of the spectrum regime of the ITU, would require states to implement liability obligations through licensing or regulatory procedures

9. Damage
First step in establishing a workable regime is to define the central terms of “damage”, “fault”, “cause” and “space object”
Focus on “damage”, “cause” and “space object”
The present system of liability concentrates on damage caused by a “space object”

10. Liability
Can there be recovery of compensation without any physical damage
Some argue that where damage is not “caused “by” a space object, but by the space activity or by an activity partly using outer space,” action for damages could be based on the responsibility of the state
under OST, Article VI, “States Parties to the Treaty shall bear responsibility for national activities in outer space…”
under OST, Article VII “..Each State Party to the Treaty ….is internationally liable for damage … by [its space] object …”

11. Responsibility v Liability
Distinction already covered
Liability Convention provides:
Art II “A … State shall be … liable …. for damage caused by its space object ..”
Art III also links liability to “damage … caused …. by a space object ….”

12. Direct, Consequential & Pure Economic Loss
Liability for damage only if causation proved
Causation is showing the damage is legally the normal consequence of the relevant act
damage may be direct or consequential
Does consequential or indirect damage have to be associated with physical damage

13. Many discussions of liability focus on recoverability of indirect or consequential damage as well as direct damage
Clear distinction not always made between such damage and pure economic loss
Whether the expenses of relatives looking after a person injured by fragments of a crashing space object are recoverable is an example of a question of indirect damage, as is the cost of cleaning-up radiation pollution caused by a space object
Such questions involve the concept of remoteness and foreseeability

14. Remoteness and foreseeability are also relevant in the recoverability of pure economic loss
Assume a satellite fails to keep station and drifts into the transmission path of a broadcasting satellite and blocks the transmissions for a sufficient period to prevent transmission of some advertising
Loss of income to broadcaster
Broadcasting satellite not damaged
Loss to the broadcaster is clearly caused by the space object
Damage is direct, natural and foreseeable consequence of the failure to keep station

15. Article XII of the Liability Convention provides:
The compensation which the launching State shall be liable to pay for damage under this Convention shall be determined in accordance with international law and the principles of justice and equity, in order to provide such reparation in respect of the damage as will restore the person, natural or juridical, State or international organization on whose behalf the claim is presented to the condition which would have existed if the damage had not occurred.
On the issue of indirect damages arising out of activity in outer space it has been said that the Liability Convention is silent by design

16. Indirect damages frequently raised by the UN ad hoc Committee on the Peaceful Uses of Outer Space ("COPUOS") in the context of a space object impacting the earth with indirect damages being some remote injury from that event
Thought of damages being caused by a space object still in space not appear a part of the deliberations
Some writers consider indirect damage not recoverable under the Liability Convention and some have expressed doubts about recovery
Others suggest the absence of any mention of indirect damage in the Convention intended to leave it open for consideration in each case. They conclude that such damage is in principle recoverable.

17. There is a curious difference between Articles II and III, in the wording where damage is caused "on the surface of the Earth" and in the case of other damage. Except on the surface of the Earth all other damage must be to some physical object.
If some physical damage to property is necessary in all cases, it would have been more appropriate for Article 2 to provide:
a launching State shall be absolutely liable to pay compensation for damage caused by a space object to property on the surface of the Earth or to aircraft in flight.

18. Article 2 should be read in the sense of damage to property on the surface of the Earth because different standards of liability apply on the surface of the Earth and elsewhere.
It would be a curious result if on the collision of a satellite belonging to State A with a communication satellite of State B a claim could lie for damage to the satellite of State B only on a showing of fault but State A could be held absolutely liable for loss of profits which would have been generated by State B from its satellite.

19. The View of the United States
Commentators have had to rely on the stance taken by the United States in interpreting the extent and scope of both the Liability Convention and Article 7 of the Outer Space Treaty
The Inter-Governmental Agreement supports the view of the United States that indirect damages are not covered by the Liability Convention
Definition of "damage" in the IGA refers to "loss of revenue or profits; or other direct, indirect or consequential damage” extending the provisions of the Liability Convention