New moves in UK space strategy and regulatory reform

Pursuing its mandate to promote growth in the UK space sector, the UK Space Agency has set out its latest strategy plans and issued a consultation on reforming the Outer Space Act.

New Civil Space Strategy – On 10 July 2012, the UK Space Agency published its new Civil Space Strategy for 2012-2016, setting the direction for the UK space sector.

Building on the strong growth of 7.5% p.a. in UK space-related turnover in 2010-2011, the new strategy aims to support the UK's ambition of achieving a 10% share of the world space market by 2030.

Highlighting key areas of opportunity, such as satellite communications and navigation, earth observation/remote sensing, new applications for satellite and terrestrial data services and innovative launch systems, the strategy outlines how the UK Space Agency will assist in promoting opportunities for development of new space systems and services.

Support for export opportunities features strongly in the strategy, including reducing barriers (such as excessive regulation/regulatory costs) and stimulating further reform of the UK regulatory environment.  The Agency is also keen to promote awareness of the UK's financing expertise in the satellite sector in order to encourage growth.

One of the major proposals to reduce regulation is the current consultation on the reform of the UK Outer Space Act.

Reform of the UK Outer Space Act – Back in the Spring 2011, the UK Government announced plans to streamline the UK Outer Space Act requirements by introducing an upper limit on liability for UK operators. The latest consultation from the UK Space Agency seeks views on whether the unlimited liability currently placed on satellite operators should be capped at €60m.

• The issue for satellite operators
  
  The UK Space Agency's traditional approach has been driven by the UK Government's liability under international treaties for damage caused through activities in outer space by organisations under its jurisdiction.  Thus, the current section 10 of the Outer Space Act requires licensees to indemnify the UK Government against third party liabilities incurred by the Government.  There is no cap on this indemnity.
  
  This potential unlimited exposure to UK Government has presented difficulties for satellite operators in securing finance.  Other countries, such as the US and France, offer a less demanding licensing structure in allowing the operator's liability to be limited to the extent of insurance cover.
  
  
• Current proposals
  
  In July 2011, the UK Government reduced its requirement for insurance to €60m, in a first step in easing the burden on UK satellite operators.  The latest proposal goes further in capping the liability on satellite operators to €60m, in line with the insurance requirements.
  
  In addition, the capped liability and insurance requirement could be waived for "cubesats" which meet certain criteria.  Cubesats are small, low-cost satellites and, for many of these projects, a €60m liability/insurance obligation would be out of proportion to their project cost.
  
  However, the UK Government would retain the ability to increase the liability cap/insurance requirement for a non-standard, high-risk mission.
  
  
• Assessing the proposals
  
  These proposals provide a welcome improvement to the regulatory environment for UK satellite operators and bring the UK more into line with many other space-faring nations.  For those involved in cubesat missions, the lighter touch regulatory approach is particularly encouraging.
  
  The major area of concern is the extent to which the Government may use its discretion to increase the liability cap/insurance requirement in cases of a non-standard, high-risk missions.  If this assessment is not made on objective grounds, UK operators may still face an unlevel international playing field.  And there is a risk that the promoters of particularly innovative projects may be reluctant to be based in the UK.
  
  
• Next steps
  
  Responses to the consultation should be submitted by 31 August 2012 to the UK Space Agency.  A detailed response to the consultation is due in November 2012, after which a timetable for the reforms will be announced.
  
  

For further information, please contact John Worthy, Partner at Field Fisher Waterhouse LLP.