SFN announces €60m cap on unlimited indemnity in the UK Outer Space Act

23 July 2015 – The Satellite Finance Network (SFN) has announced that the current unlimited indemnity in the UK Outer Space Act 1986 will be capped at €60m from 1 October 2015. The SFN have been pushing for this change in legislation for over 4 years and are delighted that this has now come to fruition.

Advance notification of the introduction of a liability cap for UK Outer Space Act 1986 licensees

How are the liability provisions of the Outer Space Act 1986 changing?

Currently, section 10 of the Outer Space Act 1986 (OSA) requires a party carrying out certain space activity to indemnify the Government against claims arising out of that activity on an unlimited liability basis.

Licences for space activity granted onwards of 1st October 2015 under the OSA will include a cap on the unlimited liability which is currently imposed on licensees.

Why are the liability provisions of the Outer Space Act 1986 changing?

In response to UK space industry concerns the Government set out its intention to reform the OSA by introducing a cap on the unlimited liability for licenced UK operators. The reform is being effected by the Deregulation Act 2015 which amends the OSA and the relevant provisions come into force on 1 October 2015.

This legislative change is designed to adequately balance the risks to Government arising from UK space activity, with the need to enable UK industry to fully exploit the opportunity available to them.

How will the liability cap be dealt with?

From 1 October 2015, a risk assessment will be performed for each new licence application to consider the potential risks posed by the mission and an appropriate liability cap will be determined (which will be set out in the licence, if granted). It is anticipated that, in the majority of cases, which involve single satellite missions employing established launchers, satellite platforms and operational profiles, the cap will be set at €60 Million (Euro)

How are existing licences affected?

A liability cap will not automatically apply to existing licensees. However, from 1st October 2015 existing licensees may write to the UK Space Agency and ask for a cap to be applied to their licensed mission. Each request will be assessed and notice of the decision will be given in writing.

How are the licensing regimes in the Crown Dependencies and Overseas Territories affected?

The liability cap will not apply in the Crown Dependencies and Overseas Territories to which the OSA has been extended and therefore the unlimited liability will continue to be in place in respect of missions licensed under those regimes. The authorities in each of these jurisdictions have been consulted regarding the possible extension of the new provision to their areas and further updates on if/when the liability cap will apply will be published in due course.

Are the standard insurance requirements changing?

There is no change to the UK Space Agency standard insurance requirement for licensees to insure themselves (with the UK Government named as an additional insured) against third party liabilities arising from each licensed activity (i.e. the launch and in-orbit phases of the mission). The insurance cover is currently set at €60 million for the majority of missions, although this figure is set to be reviewed for certain classes of satellite.