The maturing law of outer space.

Commercial development of near-Earth space has forced a rapid maturation of the laws and regulations governing travel and other activities in outer space. In the mid-1990s, domestic private revenues from space commerce have topped $6 billion annually, and the sector continues to expand at well over 10 percent a year.(1) Internationally, expansion of commercial, scientific, and military space activities is even more dramatic.

Responding to this growth, all branches of space law--public international, private international, and domestic--have been changing rapidly to meet new economic needs.

Space law can be divided into three eras: the classical era (1957-79), the transitional era (1980-91), and the modern era (since 1992).(2) In the classic era, public international space law was dominant. Over time, as attitudes about space changed, the laws governing private enterprise in space emerged and gained prominence.

Public International Law

Early space law developed during the classical age of space exploration, from Sputnik to the space shuttle, and reflected the attitudes about space that prevailed at the time. First, the space endeavor was seen largely as a military or foreign policy escapade with little benefit for the day-to-day needs of the world. Second, reinforcing this image, the movement into space was viewed as solely the business of the two superpowers, the United States and the Soviet Union.

In this period, the United Nations produced four treaties on space that were ratified by most countries of the world, including the superpowers.(3) These treaties created a legal regime that reflected the twin attitudes about space. The law took on a pro-state, anti-private-enterprise hue that darkly colors space activities to this day.(4) The following two examples of treaty provisions still in effect today illustrate this mind-set.

Nations are responsible for the actions of their nationals in space.(5) This principle differs drastically from the rest of public international law. For instance, under international aviation law, if a U.S. plane crashes in a foreign city and causes hundreds of millions of dollars in damage, the U.S. company is solely responsible. On the other hand, if a U.S. rocket crashes into a foreign city and causes comparable damage, and if the manufacturer goes bankrupt, the U.S. government and its taxpayers will be directly and fully liable.

Moreover, the 1973 Liability Convention provides a standard of strict liability for damage on Earth (to land, air, or sea) caused from space.(6) Although strict liability is not unknown in international law, the negligence standard remains the norm.

For example, say a U.S. company has a satellite in orbit minding its own business, and a second satellite from another country slams into it, forcing the U.S. satellite to crash on a third nation. Assume also that the third nation is unable to recover damages from the manufacturer of the second satellite or its nation of origin. In this situation, not only is the U.S. company liable for all the damage because of joint and several liability, but the U.S. government and taxpayers are also liable.

Classical era space law, therefore, placed heavy impediments in the path of space commerce, especially private space commerce--impediments that remain in place today. Its development was largely the result of compromise between Soviet Marxism, which would have banned all private enterprise from space, and Western capitalism, which would have encouraged as much private activity as possible. Classical era space law was also nurtured by the belief that space was only a toy in the hands of two immature superpowers--and a dangerous toy, at that.

More recently, space law and the attitudes on which it is based have been transformed. In 1962, only a few private space activities were being conducted. By 1980, however, the space segment of the telecommunications industry had revenues exceeding $1 billion a year. Outer space was becoming crowded. Almost every nation in the world was involved in space applications either directly or indirectly through multinational programs or organizations. The space shut the and other sophisticated hardware offered tremendous promise for all the world.

The transitional period was marked by atrophying public international law. No treaty has been ratified by the major space powers since 1976. Domestic space law began filling the void, regulating new activities in space.

For example, here in the United States, the Department of Transportation (DOT) created the Office of Commercial Space Transportation to license and regulate launches. The Department of Commerce began to regulate "remote sensing" (using satellites to monitor the Earth from space). And the Federal Communications Commission (FCC) stepped up its regulation of space communications. Similarly, in nations around the world, governments began to deregulate communications industries, and private companies started to engage in space activities.

The fall of communism removed the last leg on which classical era space law stood--the rejection of private enterprise in space. The 1990s have seen the worldwide expansion and acceptance of this idea. For their part, the Russians, with only a few products to sell, have wasted little time marketing their space expertise and hardware.

Much of the Third World has rejected the statism of early space law and embraced the commercial promise of space business. At present, the United Nations Committee on the Peaceful Uses of Outer Space is conducting negotiations that may result in the first new space treaties in 20 years.

The archaic space law of the 1960s is giving way. In the modern era, space law is taking shape around a new commercial reality, just in time for the new millennium.

Private International Law

Private international space law has a long history, but the increased and varied scope of space activities in the 1990s has given the field added importance. Space commerce has engendered more and more cooperation--and sometimes conflict--among companies and countries around the globe.

Indeed, space law experts have focused their attention in recent years on codifying rules for handling and settling commercial and other disputes that arise in the international space law arena. Arbitration is a major topic of discussion.(7) Scholars and practitioners, however, have not agreed on whether the United Nations, affiliated agencies, academic groups, or bilateral agreements would be the best or most appropriate means to achieve this goal.

Whatever the means, the objective is to create a new commercial community in space based on common rules and common ends. This kind of new legal order will facilitate the rapid progress of international space commerce in the 21st century.

Domestic Space Law

U.S. space law dates at least as far back as the National Aeronautics and Space Act of 1958, the law that created the National Aeronautics and Space Administration (NASA).(8) At its inception, domestic space law was almost entirely regulatory and administrative. NASA was the operator of the space effort as well as its regulator, determining the rules and requirements for payloads carried on board spacecraft. The one truly private commercial sector of space in the early years was the telecommunications industry, which was always highly regulated by the FCC.

By the 1990s, the exploration of space had given way to the exploitation of space. Space commerce had become a well-defined economic sector with its own dynamic, segmented markets.

Space commerce can be divided into five sectors:

* transportation,

* telecommunications,

* remote sensing,

* in-space infrastructure, such as space stations and other space facilities, and

* in-space applications, such as manufacturing (for example, semiconductors and pharmaceutical products have been produced in space on an experimental basis).

The first three sectors each have annual revenues ranging from hundreds of millions of dollars to billions of dollars. The other two sectors are young but full of potential.(9)

The regulatory regime that governs these space activities is increasing in depth and sophistication. As a result, domestic space law is fast becoming a new legal subspecialty, like aviation and maritime law before it. Space rules and laws have spawned lawsuits, some of which have reached the U.S. Supreme Court.

For example, one issue that has been raised in the federal and state courts is cross-waivers of liability between the rocket-launching companies and their customers, especially the telecommunications companies. In legislation authorizing NASA and DOT to regulate space activities, Congress included provisions that limit private exposure to liability for space missions gone awry.(10) The objective was to encourage the development of space commerce.

Both acts require all parties signing a launch contract to waive their right to sue the other parties, including suppliers and subcontractors. The DOT act--known as the Commercial Space Launch Act of 1988--also sets a $500 million maximum on the amount of insurance space actors are required to carry, although DOT can set lower amounts for different types of rockets.(11) The act also provides that the government will indemnify the launching company for up to $1.5 billion in losses over the insurance amount.(12)

Not a Complete Shield

These cross-waivers have not been a complete shield against litigation. In 1987, Martin Marietta contracted with INTELSAT to launch two INTELSAT satellites. After the first launch failed, INTELSAT demanded compensation for the lost satellite in addition to relaunch, which was provided for in the contract.

Martin Marietta sought declaratory judgment based on the cross-waiver provisions in the contract. INTELSAT counterclaimed for damages for breach of contract, negligence, gross negligence, misrepresentation, and failure to disclose. The trial court dismissed the tort claims, holding that there were no tort duties separate from the contract.(13)

The Fourth Circuit reversed in part, ruling that another clause in the contract was ambiguous about whether relaunch was the sole remedy.(14) The court also found that the launch act did not preempt state law prohibitions against waivers for gross negligence.(15) Also, the parties made the contract in 1987, and the 1988 act did not expressly make itself retroactive. The parties settled out of court, with INTELSAT receiving special terms on another launch by Martin Marietta.(16)

Although INTELSAT won a few points based on the specific facts of the case, the main thrust of the decision was favorable to Martin Marietta, holding that the satellite company had no tort claim separate from the contract. This case was one of four in the early 1990s decided basically in favor of the launching company.

In Appalachian Insurance Co. v. McDonnell Douglas Corp., the insurers of a telecommunications satellite sued McDonnell Douglas--the launching company--and its subcontractors for negligence and strict liability for the 1984 failure of the Westar VI satellite to reach its intended orbit. The trial court granted summary judgment for the defendants, and the California Court of Appeal upheld the lower court's ruling that waiver clauses were valid and extended to subcontractors.(17)

The victory for launchers was only partial, however, as the court ruled that the law did not read these clauses into all contracts. The clauses had to be written in the contract.(18)

In Lloyd's v. McDonnell Douglas Corp., involving a failed Indian satellite, the court decided the case under India's laws, finding that nation recognizes waivers.(19) Finally, in Lexington Insurance Co. v. McDonnell Douglas Corp., the court found that whether a waiver was in the contract was a triable issue of fact. In this case, however, the court did not reach that question because it found that McDonnell Douglas had already proven it had not been negligent.(20)

Although waivers have become standard around the world, in the United States they remain subject to the vagaries of state law. To provide national uniformity in launch law, some legal scholars have advocated stricter federal preemption of state launch law. Others have proposed relying on federal common law, allowing judges to craft a unitary rule.(21) This dispute reveals the dynamism that characterizes the rapidly changing law of outer space.

Other Nations

The United States had the only coherent body of domestic space law until well into the 1980s. In the last 10 years, however, the worldwide commercialization of space has forced more and more countries to address the need to regulate this growing economic sector The different treatments of this subject among the nations demand a systematic analysis.

U.S. space law is scattered among many statutes, agencies, and other sources. In the United Kingdom, the Parliament has focused all its space legislation in the Space Act of 1988, which puts ultimate authority for space activities in the secretary of state.(22)

Some nations simply ignore the issues; others define them away. For instance, the German government has not enacted new legislation to deal with space. Instead, it has simply defined "air" to include space and subjected space activities to aviation requirements. A spacecraft is thus an aircraft for regulatory purposes.(23)

Comparing space law in different countries could bear ripe fruit for researchers and practitioners interested in clues about national perceptions and treatments of space activities.

Space law remains an area poised for major expansion. It remains like aviation law in the 1920s: Everyone knows that it will be big, but no one knows when.

In the 1990s, the human reach into space remains tentative. As humankind begins to push back the limitless frontier beyond our horizon, space law will be a tool to help us take advantage of the limitless opportunities that lie beyond the Earth.

Notes

(1) OFFICE OF AIR & SPACE COMMERCE, U.S. DEP'T OF COMMERCE, TRENDS IN COMMERCIAL SPACE (1995). (2) See generally Nathan C. Goldman, Three Generations of Space Law, 11 PRINCETON/SSI CONFERENCE ON SPACE MANUFACTURING (1993). (3) See generally Space Law: "The Big Five," BARRISTER, Winter 1988, at 30. (4) NATHAN C. GOLDMAN, SPACE POLICY 24-30 (1988). (5) Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Including the Moon and Other Celestial Bodies, Jan. 27, 1967, art. VI, 18 U.S.T. 2410. (6) Convention on International Liability for Damage Caused by Space Objects, Mar. 29, 1972, art. II, 24 U.S.T. 2389. (7) See generally Karl-Heinz Bockstiegel, Reconsideration of the Legal Framework for Commercial Space Activities, 33 INT'L INST. SPACE L.3 (1990); Francis Lyall, Space Law-What Law or Which Law? 34 INT'L INST. SPACE L. 240 (1991). (8) Pub. L. No.85-568,72 Stat.426 (1958) (codified as amended at 42 U.S.C. [subsections] 2451-2477 (1988)). (9) See generally NATHAN C. GOLDMAN SPACE COMMERCE: FREE ENTERPRISE ON THE HIGH FRONTIER (1985). (10) National Aeronautics & Space Act, 42 U.S.C. [subsections] 2451-2477; Commercial Space Launch Act, 49 U.S.C. [subsections] 2601-2623 (1988). (11) 49 U.S.C. [sections] 2615(a)(1)(A). (12) Id. [sections] 2615(b)(1)(B) (13) Martin Marietta Corp. v. INTELSAT, 763 F. Supp. 1327 (D. Md. 1991). (14) Martin Marietta Corp. v. lNTELSAT, 991 F.2d 94, 97-98 (4th Cir. 1993). (15) Id. at 100. (16) Michael Dornheim, Industry Outlook, AVIATION WK & SPACE TECH., June 28, 1993, at 13. (17) 262 Cal. Rptr. 716, 721 (Ct. App. 1989). (18) Id. (19) No. 90-833-Civ.-Orl.-18 (M.D. Fla. 1990). (20) No. 481713 (Cal., Orange County Super Ct. May 23, 1990), cited in J. Lee Haney, Gase Law Notes, 18 SPACE L. 41 (1990). (21) Van Ernest, Note, Third Party Liability of the Private Space Industry: To Pay What No One Has Paid Before, 41 CASE W. RES. L. REV. 503 (1991). (22) Francis Lyall, U.K Space Law,35 INT'L lNST. SPACE L. 385 (1992). (23) Jurgen Reiforth, Interrelation Between German Air law and Space Regarding the Passage of Spacecraft Through National Air Space, 26 INT'L INST. SPACE L. 89 (1983).

Nathan C. Goldman, an adjunct professor of space law at South Texas College of Law practices high-tech and space law in Houston.