HomeInsightsLiability limits needed to give greater certainty to UK space operators?

Virgin Orbit will launch the first satellite from the UK 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 UK’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.

Industry participants have long called for greater certainty regarding liability and insurance requirements imposed on spaceflight licensees to address risks to commercial launch from the UK and enable the UK 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):

The UK Government has so far baulked at amending the SIA and SIR to (1) set a maximum liability limit for either section 34 or section 36 liability or (2) require 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. 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 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 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.
  • Alternatively, require 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.

Improved transparency and certainty regarding licencing insurance and liability obligations arising from spaceflight activities would help address long-running industry concerns to make the UK a more attractive launch jurisdiction and move towards achieving the UK’s space ambitions. The UK Government has indicated that it will keep the SIA under review and may seek amendments if the opportunity arises.