Marcus Bagnall Gordon Moir June 24 2022 Liability limits needed to give greater certainty to UK space operators? Wiggin LLP | Tech, Data, Telecoms & Media - United Kingdom Marcus Bagnall, Gordon Moir Tech, Data, Telecoms & Media IntroductionOperator liabilityPotential to amend SIA and SIR?CommentIntroductionVirgin Orbit will launch the first satellite from the United Kingdom from Spaceport Cornwall in Summer 2022. Prometheus 2, a cubesat built by In-Space Missions and designed with Airbus Defence and Space UK in a collaboration between the Defence Science and Technology Laboratory and international partners, will be launched aboard Virgin Orbit's LauncherOne after being flown to altitude by a modified Boeing 747. The shoebox-sized cubesats will be used as a test platform for new imaging technologies.This mission coincides with the United Kingdom's renewed ambition to build an attractive space economy and develop its own ability to monitor, protect and defend its interests in and through space by 2030.Operator liabilityIndustry participants have long called for greater certainty regarding liability and insurance requirements imposed on spaceflight licensees to address risks to commercial launch from the United Kingdom and enable the United Kingdom to realise its ambitions.Some, but not all, operator liability is capped under the Space Industry Act 2018 (SIA) and the accompanying Space Industry Regulations 2021 (SIR).SIA liability DescriptionCan the operator's liability be limited? Must the operator's liability be limited? Section 34 liabilityInjury or damage caused to persons or property in the United Kingdom or territorial waters by the operator's spaceflight activities.Yes, if it is set out in the regulations, which can be as determined by the regulator – SIA section 34(5).Yes, the licence must specify a limit for section 34 liability as determined by the regulator – SIR rule 220.Section 36 liabilityClaims brought against the UK government in respect of damage or loss in connection with the operator's spaceflight activities.Yes, if it subject to a limit specified in section 12(2) – SIA section 36(3)(a).No – however, an operator licence may specify a limit for section 36 liability.Figure 1: SIA liabilityPotential to amend SIA and SIR?The UK government has so far baulked at amending the SIA and SIR to:set a maximum liability limit for either section 34 or section 36 liability; orrequire that section 36 liability must be limited in each licence.This is in part because this change cannot be made through regulations such as the SIR, but will require primary legislation to amend the SIA. The UK government has instead issued guidance on insurance requirements and liabilities under the SIA, stating unequivocally that all licences will limit the operator's liability with respect to liabilities under both the SIA sections 34 and 36 arising from the operator's spaceflight activities. By contrast, other jurisdictions legislate maximum operator liability limits, with the relevant government shouldering any further risk.The wording of the SIA and the SIR, notwithstanding assurances from the UK government, is also likely a factor contributing to high insurance premiums demanded from operators necessary to secure spaceflight licences.These ongoing risk concerns could be addressed by amending the SIA and SIR to:set an upper liability limit (rather than fixed liability) for section 34 and 36 liabilities, accompanied by an indemnity from the UK government for any excess loss. This liability limit could be tiered to account for different risks presented by different spaceflight activities; orrequire that a licence must limit liability for section 36 liability, which could be determined by the regulator. This would align with the approach to section 34 liability and at least eliminate the risk of operators carrying unlimited liability towards the UK government.CommentImproved transparency and certainty regarding licencing insurance and liability obligations arising from spaceflight activities would help address long-running industry concerns to make the United Kingdom a more attractive launch jurisdiction and move towards achieving the United Kingdom's space ambitions. The UK government has indicated that it will keep the SIA under review and may seek amendments if the opportunity arises.For further information on this topic please contact Marcus Bagnall or Gordon Moir at Wiggin by telephone (+44 20 7612 9612) or email ([email protected] or [email protected]). The Wiggin website can be accessed at www.wiggin.co.uk.