Licensing private outer space activities

05 July 2019

In our latest blog, Yanal Abul Failat, Associate of LXL and co consulting editor of Outer Space Law, discusses how the increasing shift to the private sector has triggered a complete repositioning of regulatory attention toward the enactment of national space laws.

During the 20th twentieth century, the so-called ‘Space Race’ was about the strength of spacefaring nations such as the United States (US) and the former Union of Soviet Socialist Republics (USSR), later Russia.  In the 21st century, private actors, who have been competing in developing and undertaking a range of space activities, have now largely occupied the arena of space, including in the areas of broadcasting, mining near-Earth objects, space transport, space tourism, operating launches, spaceports and satellite communications. While private entities were not excluded from undertaking space exploration in the past, they were not direct participants either. These actors have, however, now become more and more involved because of a long process of development down the years.

The current space law regime regulating private space activities is based on a package of treaties, dating back to the 1960s and 1970s. The principal treaty, the Outer Space Treaty 1967, provides that outer space is the province of all humanity and permits (or rather does not prohibit) private activity, yet fails to regulate it. The Outer Space Treaty also provides that States are responsible for authorising and supervising private activities and bear international liability for any damage or loss arising from them. This approach differs from the classical international law approach, whereby States are not internationally liable for acts of their nationals. It follows from the current international space liability regime that the rise of private activity increases exposure to liability among spacefaring nations.

This increasing shift to the private sector has triggered a complete repositioning of regulatory attention toward the enactment of national space laws designed to foster and govern commercial space activities, science and research. One source notes that the international community’s principal objective in the private space sector is to induce States to implement an adequate legal framework for private activities pursuant to which State responsibility may exist. International space law, however, neither stipulates the legal form of such a national regulatory regime nor gives any guidance on how States should discharge their obligations under the space treaties. In designing such frameworks, States ought to maintain a level of control over the private use and exploration of outer space, pass some of their international responsibility onto private operators and fill any regulatory voids that arise from the space treaties, which have proved inadequate in dealing with the private space sector. Further, they should seek to provide for the safety and protection of their citizens, protect the terrestrial environment (e.g. from space debris) and safeguard any national interests. Naturally, a coherent framework would promote predictability and transparency, which is necessary to provide spacefarers with a stable and credible investment climate. Licensing can also serve as a government seal of approval to facilitate equity investment and financing of a commercial space project.

The international responsibility of States for private activities and other international obligations has prompted the development by a number of States of national legal frameworks governing space activities.  A number of States are becoming active in the arena of space, whether through governmental or private activities. Technology is advancing at a fast pace so that, even in non-spacefaring countries, a range of players are involved in the space sector, including private space companies (e.g. satellite operators or owners), research institutions and enthusiasts. An increasing number of States are opting for licensing or an equivalent authorisation regime to regulate private space activities. These states have established or are in the process of creating national space agencies, which are afforded regulatory rights in respect of authorisation, supervision, registration, compliance monitoring, transfer of ownership, and control over space activities.

These frameworks function in conjunction with international laws to protect States and private players from the legal inadequacies of the international space treaties with regard to such matters such as liability, safety and environmental damage. Furthermore, domestic regimes are designed to attract investment in, and the development of, the commercial space sector.  No less than 32 States (regulating States) have enacted at least one law, resolution, edict, decree or some other form of legislation or policy to regulate space activities. The scope and content of regulatory and licensing regimes differ worldwide and are shaped by the features, number and range of space activities that are authorised and supervised by the relevant governments. A regulating State’s compliance obligations and responsibility for space activities over which it has jurisdiction under article VI of the Outer Space Treaty must be taken into account when designing any authorising or licensing framework.

Generally speaking, while regulating States have established national legal frameworks given the need to meet obligations under international law and to achieve similar policy objectives under their national regimes; they have done so differently, thus resulting, to an extent, in the fragmentation of the outer space legal framework. For example, most regulating States are indemnified by licensees against any liability to the third parties arising from private space activity, yet the requirements and levels for third party insurance vary. Private operators may, therefore ‘forum-shop’ and choose to be regulated by a State whose regime suits them, whether in terms of licence conditions, indemnification requirements, safety and operations standards, and tax. This is even more so with start-ups based in non-spacefaring countries or States that have no or minimal regulation. The development of outer space activities, technology and the space industry is highly dependent on the applicable legal framework, and it is natural for private entities to seek to operate from jurisdictions that incentivise them, are capable of sustaining the sector, and keep pace with developments over time, allowing for prosperity and advancement to the benefit of States, private players and humankind.

For more information and further analysis on licencing private outer space activities, please refer to Outer Space Law: Legal Policy and Practice.