Satellite Sales and International Liability

International outer space treaties may not be totally suited to modern commercial practices on transfer of ownership of communications satellites. This seems to be the conclusion of a recent symposium held by the legal subcommittee of the United Nations Committee on the Peaceful Use of Outer Space (UN COPUOS) on “Transfer of ownership of space objects: issues of responsibility, liability and registration.”

Treaties dating back to 1967 define liability and registration of satellites. The basic rule is that liability for space objects (i.e., satellites) rests on the launching state. A launching state is the country that launches or procures the satellite, or from which the satellite is launched — there can be more than one.

In addition, countries are supposed to register satellites. There is no particular barrier to buying and selling satellites while in space — it is a common practice. And there is no barrier to transferring the registration of a satellite from one country to another — so long as that country is a launching state.

The country that in practice is operating the satellite is theoretically responsible for that operation under space treaties, but cannot register it unless that country is itself one of the launching states. Further, the basic rule is “once a launching state, always a launching state” — they stay liable even if in practice they have no control over the operation of the satellite. Registration is irrelevant to liability of the launching state. As a result, one speaker at the symposium maintained that an original launching state has incentives to “control or even block every change of ownership to a foreign person.”

It is not clear that this assessment matches reality. Launching states do not appear to limit subsequent transfers of satellites. States assume jurisdiction and control over satellites in orbit if their nationals are operating them, whether or not they are launching states or even states of registry. Satellites are sold all the time.

Symposium presentations illustrated numerous examples of how countries go about treating the United Nations satellite registry for these sales. There are examples of countries maintaining registry status even after the satellite was transferred to another country. In one example, a country licensed a satellite operator, but did not consider itself as either the launching state or state of registry — but nevertheless assumed international responsibility for operation under other space treaty provisions.

Governments face these liability issues often by requiring operators to hold insurance. One symposium presentation noted that national space laws impose a variety of insurance coverage requirements and caps. However, some national laws have no specific references to liability and caps, some suggest limits, other do not — there is no consistent practice.

These most recent papers suggest that a problem needs fixing. International legal developments do not move very fast, as the legal subcommittee has been looking at these issues for at least a decade. Early work by the subcommittee resulted in a 2004 United Nations General Assembly resolution 59/115 on the concept of a “launching state.” Subsequent work by the subcommittee led to a 2007 Resolution 62/101 mainly focused on satellite registration practices. The subcommittee is now looking further at the tension between those rules and the way liability is assigned under international treaties to satellites in space.

The 2007 UN resolution maintained that the State from whose territory or facility a space object has been launched should work with the other possible launching States to determine which State or entity should register the space object. But agreements among the club of possible launching states do not answer what happens when the satellite is sold to yet another country.

One speaker suggested that the price of “second-hand” satellites could be elevated if this transfer versus liability issue were better addressed. This assessment would depend on whether launching states in practice limit foreign ownership transfers. Regardless of this pricing question, it seems clear that the international rules do not totally match commercial transfers of satellites. More work is obviously ahead.

Gerry Oberst is a partner in the Hogan Lovells Brussels office.