Private Space Industry and Its Legal Framework

In 2019, the first privately funded Israeli rocket “Beresheet” was launched to further explore the moon. Up until 2025, SpaceX, a U.S. company specialized in design, manufacture and launches of advanced rockets and spacecraft, intends to bring almost 12.000 new satellites into space to improve global internet coverage. Big private space projects like these and a large amount of natural resources are all indicators to expect an increasing private involvement in the space industry.

The Influence of Digitalization on Private Space Industry

Digitalization has a major impact regarding this future development. The space industry is a high-tech sector. Investments are highly expensive. In 2001, the first space tourist, U.S. millionaire Dennis Tito, was charged US$ 20 million to fly to the International Space Station. There is no doubt that within this price segment only few people will get involved. Further, the successful exploration of space requires a certain lifetime of machinery and reliable security and construction standards. To comply with these criteria is particularly challenging in technical terms.

Digitalization has helped to improve every one of these possible impediments for private companies. Additive manufacturing and topology optimization tools make the production process of space ships, rockets and satellites more effective, faster and cheaper. Data pools help companies to exchange knowledge and data. Working with technical simulation software as well as artificial intelligence[1] reduces default quotas. Moreover, the possible use of information collected by continuously more efficient satellites expands because of digital data and image processing. Getting back to the topic of space tourism, human space travels are presently available for around US$ 250.000 and could already become reality this year with the U.S. commercial Spaceline Virgin Galactic’s. One can expect that within a strong digital environment, that unites planning, engineering, construction and testing management, the private space industry can reach its full potential.

Space – A Legal Black Hole?

With an increased economic activity in space the question arises as to the legal framework. Since 1967, the United Nations have adopted five treaties on outer space that have been ratified by up to 109 states. The best known is the “Treaty on the Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies“ (Outer Space Treaty) of 1967. Furthermore, five declarations on legal principles have been made and eleven other agreements have been concluded. They regulate for example telecommunication or express the common intention to explore space for the benefit of and in the interest of all states. Nevertheless, these rules are largely insufficient to cover all legal issues arising out of private activities in space.

The Need for Space Law

One example is the question of liability for potential damages caused by space activities. Art. VI of the Outer Space Treaty deals with the issue of responsibility. According to its provisions, bound states shall be liable not only for governmental activities but also for non-governmental activities. This liability is further specified in the Liability Convention of 1972. However, full state liability is not tailored to private space economy. On the contrary, it could cause considerable damage to the respective states, if private companies could simply pass off risks. A more realistic approach is to change the existing risk distribution. National regulations will therefore become prospectively indispensable. While some states such as Russia and the United Kingdom have already shifted liability to the operating companies, others such as China and Germany have not yet done so.

The emerging need for exhaustive national regulations is also evident with regard to the legal issue of attribution of property rights in space. The ratifying states agreed in Art. II of the Outer Space Treaty that space “is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means.” However, this wording does not expressly prohibit the claiming of ownershipof resources. The moon and asteroids are rich in natural resources in particular metals such as iron, nickel and tungsten cobalt. The U.S. therefore enacted national laws in this respect in 2015 and Luxembourg in 2017. It grants companies the legal right to acquire space resources.

Conclusion

The aforementioned is just a selection of many unregulated or only partially regulated legal issues that will arise. For now, the private space industry is therefore far from ready from a legal perspective. Elaborated national space law or an exhaustive international regulation is the key to legal certainty in this upcoming field. Until then, it is recommended to closely identify the applicable law and its consequences when investing, inventing or participating in the private space industry.

[1] see also https://iot.taylorwessing.com/the-laws-of-ai-new-challenges-and-opportunities/