New moves in UK space strategy and regulatory reform
17 July 2012
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
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
- 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