Commercial Space Launch Accidents: Who Pays?

by Pamela Meredith

Eighth Annual McGill Conference on International

Aviation Liability & Insurance Montreal

April 18, 2015

© Pamela L. Meredith 2015

Who pays for satellite launch failures?Waivers of liability and insurance

Who pays for the launch failure:The launch provider?The subcontractor with the defective part?The satellite customer whose satellite is lost?A secondary payload owner whose satellite caused the failure?The launch site operator?Other?

2Text: Pamela L. Meredith © 2015

Customary risk allocation: Satellite customer waives liability: Comprehensive waiver of liability covering

all participants in the launch, regardless of fault; waiver flow-down where no privity. (U.S. Commercial Space Launch Act or “CSLA” requires it)

Commercially, the parties often expand the waiver in their contracts Satellite customer takes out launch and in-orbit insurance (replacement)

Prudent launch providers/manufacturers request subrogation waivers Satellite lenders require additional insured and loss payee status

Who pays for damage to the launch pad?Waivers of liability and insurance

Who pays for damage to the launch site:The launch provider?The subcontractor with the defective part?The satellite customer whose satellite is lost?A secondary payload owner, if the cause?The launch site operator?The U.S. Federal Gov’t.?Other?

3Text: Pamela L. Meredith © 2015

Risk allocation – distinguish U.S. Federal ranges and commercial launch sites: CSLA mandatory insurance for U.S. Federal ranges – launch provider

obtains Does not apply to commercial launch sites

CSLA mandatory waiver scheme covers all participants in the launch, including the launch site operator; applies launch site damage For Federal ranges, the waiver applies if claims exceed the insurance For commercial sites, the waiver applies from the first dollar

Commercial launch participants obtain insurance as needed

Who is liable for injury and death?Waivers of liability and insurance

Who is liable for injury and death:The spaceflight operator?The vehicle subcontractor with the defective part?The crew?The spaceflight participant (SFP)?The sponsor of the SFP?The insurer and, if so, whose?

4Text: Pamela L. Meredith © 2015

Risk allocation – rules and practices in the formative stage: No mandatory CSLA insurance for SFPs (not third parties) No mandatory SFP CSLA liability waiver against the spaceflight operator;

SFP informed consent CSLA mandatory SFP waiver of liability against the U.S. Gov’t State statutes designed to shield the spaceflight operator from liability

Require warning statements (“inherent risk”) to and signature by SFP Not apply if “reasonably should have known of a dangerous condition”

Contractual waivers, liability insurance and subrogation waivers a must