Space Debris Liability: Who Pays When Satellites Collide?

The Growing Collision Risk

The number of tracked objects in Low Earth Orbit has increased by 40% in the last two years alone. With mega-constellations continuing to deploy and debris from past events still circulating, the statistical probability of a collision event has moved from theoretical concern to operational reality.

The question is no longer if a significant collision will occur, but when — and who will bear the costs.

The Current Legal Framework

The Outer Space Treaty (1967)

The foundational treaty establishes that states bear international responsibility for national space activities, including those of private operators. However, it provides no mechanism for direct claims between operators.

The Liability Convention (1972)

The Convention establishes two liability regimes:

• Absolute liability for damage caused on Earth's surface or to aircraft in flight
• Fault-based liability for damage caused in outer space

The challenge: proving "fault" in a collision between two unmanoeuvrable objects — or between a manoeuvrable satellite and a debris fragment — is extraordinarily difficult.

The 1972 Liability Convention was written for an era when a handful of state operators launched a few dozen satellites. Applying it to a LEO environment with 30,000 active satellites and millions of debris fragments is like applying horse-and-cart traffic laws to a motorway.

The European Response

EU Space Law Proposal

The recently tabled EU Space Law includes specific provisions for collision liability:

• Mandatory collision avoidance capability for all EU-licensed satellites above a certain mass threshold
• Operator responsibility for conjunction monitoring and avoidance manoeuvres
• Rebuttable presumption of fault if an operator fails to execute a recommended avoidance manoeuvre

National Approaches

Several EU member states are developing supplementary national provisions:

• France: Updated Space Operations Act includes specific debris-related liability clauses
• Luxembourg: Space Resources Act extends to cover debris from resource extraction activities
• Germany: Draft amendments to the Space Activities Act include mandatory debris tracking requirements

Insurance Market Developments

The space insurance market is adapting to the new risk landscape:

New Products

• Collision liability insurance: Covering third-party claims arising from collisions
• Debris removal cost insurance: Covering the cost of removing operator's own failed satellites
• Constellation blanket policies: Covering entire satellite fleets under single policy frameworks

Pricing Challenges

Insurers face a fundamental problem: the lack of actuarial data for collision events. Premium pricing is based largely on modelling rather than historical claims experience, leading to significant variations between insurers.

Current market rates for collision liability coverage range from 0.5% to 2.0% of coverage amount, depending on orbit, manoeuvrability and operator track record.

The Economics of Collision

A significant collision event in LEO could generate costs across multiple categories:

• Direct damage: Loss of the satellites involved (€50M–€500M per satellite)
• Debris generation: Each collision generates thousands of new trackable fragments
• Cascade risk: Additional fragments increase collision probability for all other operators
• Service disruption: Loss of satellite services affecting downstream users
• Remediation: Cost of debris removal to restore orbital safety

Total economic impact of a major collision event has been estimated at €1–5 billion when cascade effects are included.

What Operators Should Do Now

Regardless of the evolving regulatory landscape, operators can take practical steps:

1. 1.Implement robust conjunction assessment processes using commercial and governmental data sources
2. 2.Maintain manoeuvre capability throughout mission lifetime
3. 3.Review insurance coverage for collision-related liabilities
4. 4.Engage with regulatory consultations to shape proportionate liability frameworks
5. 5.Invest in trackability — ensure satellites are visible to ground-based and space-based surveillance

The regulatory landscape will continue to evolve rapidly. Operators who proactively address collision risk will be better positioned when binding requirements enter force.