Compensation for damage caused by space debris – just pie in the sky?

Author: Jaymion Hendricks
Attorney

Space launches have increased significantly in recent years and despite the global pandemic, the year 2020 (together with 2018) marked one in which the most orbital launches took place (114 launches, 104 of which were successful flights). In the past, space activity was mainly undertaken by a handful of well-resourced countries. With the increasing commercialisation of space, there has been a proliferation of private and public space activity. It follows that heightened space activity results in frequent launches which may increase the risk of accidents on the surface of the earth or to aircraft in flight. The risk, however, remains negligible if space actors adhere to the highest technical, safety and environmental standards. The minimal risk is generally outweighed by the economic value and social benefit of outer space activity (scientific knowledge, weather forecasting, telecommunications and earth observation etc.).

According to the The Economist, as at August 2019, no one is known to have been killed by re-entering space junk into the earth’s atmosphere. However, there are a number of recorded cases in which compensation was paid for injury, death or damage to property due to failed rocket launches. For example, the USA paid Cuba USD$2 million in 1960 when the second stage of the Thor Ablestar rocket plummeted to earth in the south of Cuba and parts of its fuselage landed on and killed a grazing cow, named Rufina.

Who is liable in the event of falling space debris?

International law governs liability for accidents arising from space activity. International treaties such as the Outer Space Treaty (1967) and Liability Convention (1972) outline States’ liability for damage caused by space objects. They hold launching State(s) absolutely liable to pay compensation for damage caused by space objects on the surface of the earth, or to aircraft in flight.

Under international law, private space actors such as SpaceX cannot be held directly liable as the relevant international treaties merely recognise the role of the State which bears international responsibility for national space activity. Domestic space legislation usually requires private space companies to maintain insurance cover which is ordinarily capped at a certain amount or set at the maximum probable loss; fully indemnifying the State in the event of a damages claim (i.e. the state has a right of recourse against the private company should the State have to pay compensation to a claimant).

Claim to be lodged via the diplomatic channels

If a claimant wishes to pursue a claim for damages to property, injury or death, it must approach its government which, in turn, presents the claim on the national’s behalf to the launching State through the diplomatic channels.

It is not necessary for local remedies to have been exhausted before the claim is presented (pursuing a domestic legal case would raise issues of state immunity). A claimant is not precluded from instituting a claim in a court or tribunal of the State whose space debris caused the damage; although the costs would be prohibitive, a number of jurisdictional hurdles would have to be overcome and the claimant would not enjoy the gravitas of having their State pursue the claim on their behalf. A claim cannot be presented via the diplomatic channels if the same claim is being pursued in any other court or tribunal. In the past, most claims have been settled through the diplomatic channels.

Amount of compensation

The amount of compensation will be determined in accordance with international law and the principles of equity and justice. Compensation can be claimed for “damage” defined in the relevant treaty as “loss of life, personal injury or other impairment of health; or loss of or damage to property of States or of persons, natural or juridical…”. The States may agree to another form of compensation other than monetary compensation.

Establishment of a Claims Commission

If within one year of notification of the claim no settlement of a claim is arrived at through diplomatic negotiations, the respective parties must establish a Claims Commission at the request of either party. The Claims Commission must be composed of three members: one appointed by the claimant State, one appointed by the launching State and the third member, the chairperson, to be chosen by both parties jointly. In this event, States are likely to approach the Permanent Court of Arbitration, an intergovernmental organisation based in The Hague, Netherlands, which provides a variety of dispute resolution services to States (and private parties) arising out of treaties.

The Claims Commission will decide the merits of the claim for compensation and determine the amount of compensation payable, if any. The decision of the Commission is final and binding if the parties have so agreed; otherwise the Commission shall render a final and recommendatory award, which the parties shall consider in good faith. It shall also deliver a certified copy of its decision or award to the Secretary-General of the United Nations.

In over 60 years of space exploration, there have only been a few third party liability claims arising from space activity and a substantial claim is yet to test the parameters of a space insurance policy. States’ absolute liability for national space activities ensures that they register and supervise national space activity which promotes overall safety and minimises the risk of space debris falling on your ceiling, or cow.

About the Author

Jaymion Hendricks is an admitted attorney (non-practising) and has a keen interest in international space law. He holds an LLM International Air, Space and Telecommunications Law (University of Pretoria). Born and raised on the Cape Flats, he is currently on assignment to The Hague, Kingdom of the Netherlands. He writes in his personal capacity.