Space Policy 20 (2004) 117–122

ARTICLE IN PRESS

*Correspondi

E-mail addre1Ph.D., Erasm

Leiden, The Net

Science and Law2Opened for

U.N.T.S. 187.

0265-9646/$ - see

doi:10.1016/j.spa

The 1972 Liability Convention: time for revision?

Yun Zhao*,1

School of Law, City University of Hong Kong, Tat Chee Avenue, Kowloon, Hong Kong

Abstract

The 1972 Liability Convention is an example of the interaction of international policy, international relations and economy. It

helps define liability for damage caused by space objects. However, with more and more space activities taking place on a daily basis,

along with the trend towards commercialization, the continued application of the Convention faces severe challenges. Consequently,

a serious review of the Convention is needed after more than 30 years of its existence. With possible revision the Convention would

offer clear guidelines for decision makers to decide cases in a rational way best suited to the development of space operations.

r 2004 Elsevier Ltd. All rights reserved.

Keywords: Liability; Damage; Commercialization; International Space Station

1. Introduction

The international liability regime governing spaceactivities came into being with the enactment of theConvention on International Liability for DamageCaused by Space Objects (hereinafter ‘‘Liability Con-vention’’).2 This regime is a clear example of theinteraction of international policy, international rela-tions and economy. As humans become more active inspace, disputes will arise and claims concerning damagecaused in outer space will need to be settled. TheLiability Convention undertakes the task of definingliability in case of damage caused by space objects. Ittook almost 10 years to complete the Convention giventhe great complexity of the issue.

The Convention contains 28 articles and supplementsthe provisions of the 1967 Outer Space Treaty. TheConvention is broad in scope, trying to include all typesof possible damage that might occur in outer space inone document. It provides for the possibility ofcollisions and malfunctioning and their consequences,including the identification of certain kinds of harm forwhich damages might be recovered.

ng author. Tel.: +852-27887387; fax: +852-27887530.

ss: lwzhao@cityu.edu.hk (Y. Zhao).

us Univeristy Rotterdam, The Netherlands; LL. M.,

herlands; LL. M., LL. B., China University of Political

, Beijing, China.

signature on March 29, 1972, 24 U.S.T. 2389, 961

front matter r 2004 Elsevier Ltd. All rights reserved.

cepol.2004.02.008

As an important international legal document, theConvention is not solely an attempt to resolve principlesof public international law; rather it is an internationaleffort to produce an international codification of privatelaw doctrines [1]. Although the drafters of the Conven-tion attempted to establish internationally acceptedprinciples of liability, it does little more than set forthgoals for a space law adjudicator [2]. This result isunderstandable considering the diverse political interestsheld by the USA, the former Soviet Union, India andthe European nations during the negotiations.

Scholars have commented on the Convention in depthconcerning its application in space operations. Althoughadmittedly the Convention has some drawbacks, it didhelp define liability in case of damage. The more than 30years of its peaceful existence clearly demonstrates itsapplicability. Nevertheless, with more and more spaceactivities taking place on a daily basis, along with thetrend towards commercialization, the Convention facessevere challenges to its continued application. Particularconcerns have been raised with the ongoing constructionof the International Space Station (ISS) and launchactivities. While founding documents of these activitiescan provide specific exceptions to the Convention, thiswill largely compromise its integrity. It is indeed time tocarry out a serious review of the Convention and makerevisions to take account of the development of spaceactivities.

This paper will present the changes and developmentsin space activities which lay a solid basis for accom-modating the demand for a serious review of the

ARTICLE IN PRESSY. Zhao / Space Policy 20 (2004) 117–122118

Convention and its possible revision. Several areas forpossible revision will be further identified. A shortconclusion shall be made concerning the application ofthe revised Convention.

2. New developments in space activities

Since the first man-made space object entered outerspace on 4 October 1957, the exploration of outer spacehas been on the immediate agenda of human beings.This can be evidenced by the large budget allocatedannually by spacefaring states. Setting foot on theMoon, the wide use of satellites, etc. have been amongthe most significant developments in space activities.The rapid development of technology, together withample resources in outer space, provide a strongincentive for more challenging space activities. Spaceactivities are becoming more complicated than at thetime when the Liability Convention was drafted.

2.1. Commercialization and privatization of space

activities

Space activities require sufficient financial support.Until the 1980s only states could afford the requiredbudget. Meanwhile, the benefits of space activities couldnot be instantly realized. In contrast, private entities,with difficulties in financing relevant space programs,had little interest in a business with no instant or short-term profits. Nevertheless, technological developmentchanged the whole situation.

The rapid development of space technology has to alarge extent shortened the interval between spaceoperations and the realization of profits. Moreover,private entities have also developed in structural terms.Various multinational corporations, large corporationsand non-governmental organizations have come intobeing with solid financial capability and potential. Whilethe exploration and use of outer space is carried outin the common interest of all mankind,3 the ambiguityin the wording concerning property rights in relevanttreaties (see generally Zullo [3]) does not preventthe involvement of private entities: they firmly believethat space activities will bring profits to them inthe end.

More and more private entities are getting involved inspace activities. The need to privatize, commercializeand promote space activities by private entities has beenaddressed by scholars (see Wassenbergh [4] and Bock-steigel [5]). Nevertheless, their participation causes aproblem for the Liability Convention: is it still appro-priate, under the current system, for the state to be

3Article 1, the 1967 Space Treaty.

directly liable for private space activities? According toArticle VI of the Liability Convention, only a launchingstate that qualifies the requirement of the Conventionshall be responsible for damage. Private entities are nota qualified subject of the Convention. This was reason-able during the drafting of the Convention when fewprivate entities were involved. However, this is not thecase now.

One significant example is the active engagement ofprivate entities in launch activities. This successfulbusiness brings companies substantial profits. But ifdamage occurs during or after launch, the launchingentities are not held liable, rather it is the launchingstate, as defined in Article I of the Convention. Undersuch a legal framework, a state should be heldresponsible for the activities of private entities registeredin its territory that procure a launch in a different state,irrespective of the host state’s knowledge or involvementin the launch [6]. With more and more private entitiesgetting involved in space activities, it is neither feasible,nor fair, for relevant states to be responsible in all cases.

Furthermore, the Convention does not take intoaccount the individual liability of private satelliteoperators when the space object has been transferred,whether by sale, lease, or secured financing, to privateoperators in countries that are not launching states [7].It is totally unfair to still hold the original state liable insuch cases.

Consequently, a regime whereby private entitiesaccept liability in certain situations should be developedas commercialization and privatization move forward[8]. It is necessary for private entities which participatein and benefit from commercial space activities to acceptinternational liability, at least for damage to thirdparties resulting from their private launching activities[9,10].

Another problem with the Convention can be theapportionment of liability [11]. The Convention specifiesthree types of states as ‘‘launching state’’. In case ofinternational cooperation, more than one state can beliable, including the state where the private entities areestablished. One scholar has even made a list of 15possible states that may be responsible [12–15]. Anothersituation involves satellite launches from floating plat-forms on the High Seas, rather than the territory of anyspecific state. One example quoted was the launch on 27March 1999 by the Consortium Sea Launch, using aplatform located on the Equator in order to make thelaunch cost-effective and competitive (see further [16]).In this situation, liability apportionment will pose adifficult problem [17]. No appropriate resolution can beexpected from the present Convention. It is thusnecessary to add clauses on this issue in the Convention.We might refer liability apportionment to differentlevels of states concerned, thus avoiding the evasion ofliability.

ARTICLE IN PRESSY. Zhao / Space Policy 20 (2004) 117–122 119

2.2. The ISS and cross-exemption of liability

The International Space Station (ISS) is consideredthe largest international scientific cooperative programin the history of space exploration. Sixteen States areinvolved in the program. After lengthy negotiations theprogram partners were able to reach an Intergovern-mental Agreement (IGA) in 1988. However, with theinvolvement of Russia in 1990s, renegotiations concern-ing the IGA 1988’s terms gave rise to the IGA 1998,which created a long-term international cooperativeframework for detailed design, development, operationand utilization of a permanently manned civil SpaceStation for peaceful purposes [18].4

To encourage cooperation and participation in theexploration, exploitation and use of outer space,the IGA established a broad cross-waiver of liabilityby the partner states and related entities involved. Thescope of Article XVI is broad enough to cover allprotected space operations, which include all activitiesor actions related to Space Station operation, unlesscaused by wilful misconduct, and claims made bynatural persons for injury or death, claims between apartner state and its own related entity or entities andintellectual property claims.5

To prevent uncertainty, Article XVI clarifies that thecross-waiver of liability also applies to the LiabilityConvention, provided that the damage is directly relatedto protected space operations [19]. In contrast to theLiability Convention, the IGA defines the term ‘‘da-mage’’6 and separates the definition of the launch vehicleinto two parts—the ‘‘vehicle’’ and its ‘‘payload’’.7 Thecross-waiver of liability is not applicable to claims madeby a natural person, the state, survivors or subrogees forbodily injury, other impairment of health, or deathunless the claim has been subrogated to the partnerstate.8

In cases where other nations besides the partner statesare offered the opportunity to send astronauts toand conduct experiments on the Space Station,

4Agreement among the government of Canada, governments of

Member States of the European Space Agency, the government of

Japan, the government of the Russian Federation, and the government

of the United States of America concerning Cooperation on the Civil

International Space Station, January 29, 1998, in [18].5See further IGA, Article XVI.6According to IGA, Article XVI, para. 2 (c), damage refers to bodily

injury to, or other impairment of health of, or death of, any person;

damage to, loss of, or loss of use of any property; loss of revenue or

profits; or other direct, indirect or consequential damage.7 IGA Article XVI, para. 2 (d) defines the term ‘‘launch vehicle’’ as

an object (any part thereof) intended for launch, launched from Earth,

or returning to Earth which carries payloads or persons, or both; the

term ‘‘payload’’ means all property to be flown or used on or in a

launch vehicle or the Space Station.8See IGA 1998, Article XVI, para. 2 (a).

the exemption of liability will also apply to thesenations.9

The IGA further provides that the partners shallconsult promptly on any potential liability and on thedefense of such claim in the event of a claim arising outof the liability. Regarding the provision of launch andreturn services, the partners concerned may concludeseparate agreements regarding the apportionment ofany potential joint and several liability arising out of theLiability Convention.10

As far as cross-waiver of liability is concerned, we canmake further reference to the Launch Services Agree-ment (LSA) between a launch company and theprovider of the space object to be launched. The originalNASA Launch Services Agreement provided that,because the parties were engaged in the common goalof the meaningful exploration, exploitation and use ofouter space, the parties would further this goal byagreeing to a no-fault, no-subrogation, inter-partywaiver of liability.11 The inter-party waiver was ex-tended to other customers involved in the spaceoperation and to the contractors and sub-contractorsat every level of participation [20].

The provisions above diverge from the general rules inthe Liability Convention: nations are held strictly liablefor any damage caused on Earth or to aircraft in flightby space objects they have launched;12 nations are heldto be a fault-based liability standard for damage causedin space.13 However, the existence of these provisions isnot fortuitous. The high risks entailed in space opera-tions require close cooperation among partner states.Cross-exemption of liability can be a good way tosoothe tension and maintain a good relationship.

The growing complexity of space operations willfurther intensify the need for closer cooperation amongstates. More and more states tend to work together tocarry out a specific space project. The cross-exemptionof liability in the IGA and the LSA sets a good examplefor space operations. It has become common incommercial space operations for the parties to agree toassume the consequences of losses however caused,whether attributable to the acts of another party or not,and to agree not to make a claim against any responsibleparty in the space operations. With more space practicein place, we need to reconsider the rules in the LiabilityConvention: whether it is necessary to include thisexemption in the Convention and, if so, in what way.

What is more, while concluding a separate agreementon liability apportionment in the IGA provides a flexibleapproach [21], it also carries the risk that the partners

9See IGA 1998, Article XVI.10See IGA 1998, Article XVII.11The LSA is the contract between NASA and the launch company.

NASA created the first LSA in 1986.12The Liability Convention, Article II.13The Liability Convention, Article III.

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may not be able to reach a satisfactory agreement.Failure to do so could have adverse effect on furthercooperation [22]. Accordingly, it is advisable to lookfurther into this issue and find appropriate means orguidelines for such agreements.

3. Defects inherent in the convention

Heated discussions have taken place since the enact-ment of the Convention. Because of the politicalsituation (Cold War) during the drafting period,scholars tend to be satisfied with the achievementsmade. Nevertheless, the situation has totally changed inthe new era. It is now time to have a second look at theConvention. One obvious defect that has been pointedout is the absence of a meaningful provision for generalproblems that may arise when injuries are sustained inthe environment of space or on a celestial body [23]. Tomake the Convention a real Liability Convention inOuter Space, it is necessary to include this point. Oneway forward would be the extensive explanation of‘‘space object’’, which is discussed in the following.

3.1. Space objects

To claim liability, the claimant must establish that thedamage is caused by a space object. The Conventionsimply provides that ‘‘space object’’ includes componentparts of a space object as well as its launch vehicle andparts thereof.14 Natural objects such as meteorites areexcluded [24]. This definition is obviously not sufficientwith the construction of the ISS. As provided in theIGA, the definition is improved by clarifying theindividual components of the ISS provided by thepartners as ‘‘space objects’’.15 Scholars have argued thefeasibility of this extensive definition.16 Some suggestedthat the minimal requirement of a space object was thatit should be an object designed for movement in outerspace [25]. This minimum requirement is not the end ofthe story. What about space debris? What is the status ofthe property contained within or attached to a spaceobject or component parts facilitating the objectives ofthe launch? It is also irrational to set apart a specificinstrument from a stated space object. Accordingly, thevagueness in this term is detrimental to the applicationof the Convention. It is important to look into thisdefinition and offer a clear scope for space objects.

3.2. ‘‘Fault’’ and ‘‘Gross Negligence’’

The Convention provides two bases of liability:absolute liability and fault-based liability [26]. However,

14The Liability Convention, Article I (d).15 IGA 1998, Article 5, para. 1.16See for example Lee, supra note 7, at 212–213.

no definition is provided for ‘‘fault’’ [27], nor does theConvention refer to a duty of care in outer space, thebreach of which would constitute fault.17 Generallyspeaking, we can assert ‘‘fault’’ only when the actviolates duty of care or standard of conduct. Whilerequiring proof of fault, the Convention does notprovide a clear obligation to act or to abstain. Thus,proof of fault is difficult to implement in practice.

Likewise, the lack of a definition of ‘‘gross negli-gence’’ can also cause problems in further application:what is the standard of care? Can force majeure and actsof a third party be valid defenses against liability? Andso on. Moreover, no provision was made for imputingnegligent conduct to others or for the attribution of aprincipal’s vicarious liability for an agent or employee[28]. No substantive rules were formulated in theConvention to guide the application concerning damagearising out of fault or negligence. Such loopholes willcause serious problems in light of the rapidly increasingamount of space operations in which damage may besustained.

3.3. Damages

The Convention provides for the availability ofdamages; however, no further clarification is providedconcerning direct and indirect damages. Obviously,direct damage should be compensated; however, indirectdamage constitutes a gray area for the Convention. Nostatutory or jurisprudential guidance exists to helpdecide exact recoverable damages in the context ofspace tort. Moreover, the Convention offers flexibleguidance on the standard of compensation: in accor-dance with international law and the principles of justiceand equity to restore the damaged party to the conditionwhich would have existed if the damage had notoccurred [29].18 Such guidance is difficult to follow inreality since some basic areas still remain blank: howshould one compute the quantum of damages inindividual cases? Which national law should be appliedto determine recoverable damages? In this respect, theWarsaw Convention for the Unification of CertainRules Relating to International Carriage by Air19 couldoffer a good example for resolving this problem:providing the maximum compensation in differentsituations, see for example Fuomarola [30]. Theprovision of a maximum would also make it easier tosolve insurance problems [31].

Another point to note is the criterion for determiningdamage that does not become apparent until long after

17Firestone, supra note 3, 761.18The Liability Convention, Article XII.19 ICAO Doc. 7838, 9201 (1929).

ARTICLE IN PRESSY. Zhao / Space Policy 20 (2004) 117–122 121

the event. A time limit should be introduced for thispurpose.20

3.4. Exception to the principles of total compensation

Article VII of the Convention provides one exception:the Convention shall not apply to damage caused by aspace object of a launching state to (a) nationals of thelaunching state; (b) foreign nationals, during such timeas they are participating in the operation of that spaceobject from the time of its launching or at any stagethereafter until its descent, or during such time as theyare in the immediate vicinity of a planned launchingstate.21 This exception is obviously subject to debate,since these two categories of persons are actually theones running the highest risks [32]. According to thisexception, individuals on a Space Station cannot resortto the Convention even when they suffer damageresulting from intentional or negligent wrongdoing.

Based on this exception, several other situations areconsequently excluded from the Convention, e.g. pollu-tion control requirements because of the development ofpower complexes; security of space stations, includingobtaining temporary jurisdiction and control overvisiting objects and personnel coming within a defined‘‘security zone’’; intellectual property protection forproducts emanating from materials processing and othernew inventions (see Sgrosso [33]). It is obvious that thesesituations will occur more frequently with the develop-ment of new space operations. Accordingly, it isnecessary to examine the feasibility of this exception.

4. Conclusion

The Liability Convention was a great achievement inestablishing internationally accepted principles of liabi-lity in space in the 1970s, considering the complicatedpolitical environment of the time. It offers a good basefor claiming damages. However, with the developmentof space operations and the change in the politicalenvironment, it is time to look seriously at theConvention again and evaluate its application.

It is obvious to all that, while compelling a just andequitable decision, the Convention does not provide anyprocedural or substantive guidelines to achieve the saiddecision. It leaves too much discretion to the decisionmakers. The emergence of new space operations,demanding consistent rules in place, further weakensthe Convention’s applicability. Consequently, a seriousreview of the Convention is now needed. With somerevision the Convention would offer clear guidelines for

20Diederiks-Verschoor, supra note 13, at 41.21The Liability Convention, Article VII.

decision makers to decide cases in a rational way bestsuited to the development of space operations.

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