Space law at a crossroads: regulating risk in an era of commercial expansion

As space activity accelerates and diversifies, the legal framework governing it is under growing strain.

What was once the preserve of states and scientific missions is now shaped by commercial launches, private satellites, tourism ventures and the renewed push for sustained human activity beyond Earth, as seen in NASA’s Artemis II mission which paves the way for future missions to return humans to the Moon. The question facing policymakers, insurers and operators alike is whether space law, largely built for a very different era, is still fit for purpose.

A framework built for another time

Modern space law rests on a small group of United Nations treaties agreed between 1967 and 1979, particularly the Outer Space Treaty. These instruments established high level principles designed for a Cold War context, where space activity was state led and geopolitical rather than commercial in nature.

Those principles remain important. They prohibit national sovereignty claims over celestial bodies, commit states to peaceful use, and place responsibility for space activity firmly at state level. But they were arguably not designed to regulate today’s reality of commercial launches, mega constellations of satellites, space tourism or competing plans to exploit extraterrestrial resources.

As a result, the core legal framework operates at a very general level and is increasingly misaligned with how space is actually being used. Regulation has shifted toward non binding “soft law” guidance, such as sustainability and debris mitigation standards, and fragmented national regimes. This creates legal uncertainty, regulatory competition and gaps in oversight at precisely the moment when risk in orbit is intensifying.

Structural questions still unresolved

Several foundational issues in international space law remain unsettled. There is still no agreed definition of where airspace ends and outer space begins. The application of the “non appropriation” principle to commercial resource extraction remains ambiguous. And responsibility and liability at an international level continue to sit with states, even as activity becomes increasingly private and multinational.

Alongside these structural questions sit urgent practical challenges. Space debris has become a systemic risk, driven by congestion, collisions and uncontrolled re entries, yet remains governed largely by voluntary standards rather than binding law. Dispute resolution mechanisms under the treaties are limited and untested, offering little comfort as commercial stakes rise.

New initiatives such as the Artemis Accords illustrate both the growing appetite for space governance, even among states without major space programmes, and the absence of universal consensus. They reflect a pragmatic, coalition based approach, but also underline the fragmentation of the current legal landscape.

At a high level, the existing framework still functions. The deeper question is whether a system designed for state driven activity can effectively regulate an industry dominated by private actors, commercial competition and global supply chains.

Launching rockets: law, liability and insurance

For operators, launching involves navigating a complex mix of international law, domestic regulation and detailed commercial arrangements. 

Under the Outer Space Treaty, states are responsible for all space activities carried out by their nationals. Launch providers must therefore obtain government authorisation and accept ongoing state supervision. Liability is central. Under the Liability Convention, a launching state is strictly liable for damage caused on Earth, even where a launch is conducted by a private company.

States manage this exposure by pushing risk back onto operators through licensing conditions. These typically include mandatory insurance, indemnities, cross waivers and financial responsibility limits. Operators must also register space objects, determining which state has jurisdiction and control.

Because international law operates at a state to state level, practical risks, particularly for cross border, joint or sea based launches, are managed through contracts and insurance. For insurers, this makes licensing structures, indemnity frameworks and operational controls critical to risk assessment.

Who owns space - and its resources?

Space law is clear on one point: no state can own the Moon or other celestial bodies. The Outer Space Treaty prohibits claims of sovereignty or territorial ownership. What it does not clearly address is whether minerals or resources extracted from space can be owned once removed.

That ambiguity has become commercially significant as lunar and asteroid mining moves from theory to planning. Attempts to regulate this collectively at an international level, most notably through the Moon Agreement, failed to gain widespread support. In the absence of global consensus, some states have adopted national laws recognising private rights over extracted resources, while others argue that this risks undermining the collective nature of space.

The Artemis Accords reflect a pragmatic middle ground. They reaffirm the ban on territorial ownership but take the position that extracting and using space resources does not amount to sovereignty. They also promote concepts such as “safety zones” to avoid harmful interference, relying on non binding norms rather than new treaties.
The result is a patchwork approach: land ownership in space remains prohibited, while ownership of extracted resources is increasingly shaped by soft law and state practice rather than settled international rules.

Debris, damage and accountability

Space debris is widely recognised as a growing environmental and operational threat, yet there is no binding international regime that directly regulates its creation or removal. Existing treaties say little about debris, leaving governance largely to voluntary guidelines.

Similarly, when things go wrong in space, international law places liability on states. Launching states face absolute liability for damage on Earth and fault based liability for damage in space. The practical question is how effectively that risk is transferred to operators through insurance and indemnities—and whether existing arrangements are adequate as collision risk and congestion increase.

For insurers and risk managers, debris, re entries and satellite interference now sit at the intersection of environmental, operational and reputational risk.

The UK’s position: opportunity through refinement

The UK took a major step forward with the Space Industry Act 2018, which finally provided a clear legal basis for domestic launches. If the UK is to compete with established launch states, the challenge now is not more law, but better application.

Streamlined licensing, a more risk based approach to liability and insurance, and clearer regulatory guidance could significantly reduce cost and uncertainty for operators. The balance between safety, international obligations and commercial competitiveness will be critical.

This debate is sharpened by developments in the EU, which is moving toward a harmonised EU Space Law covering areas such as supervision, cybersecurity and sustainability. That creates both competitive pressure and an opportunity for the UK to differentiate itself through a more agile, commercially responsive framework.

Looking ahead

Governments are not starting from zero. In the UK, space has long been identified as a strategic growth sector, and regulatory reform is already underway. The critical issue now is delivery: regulatory certainty, coordinated oversight and targeted support that allows companies to scale.

As space becomes more commercial, contested and congested, the law will increasingly be tested as a tool for managing risk rather than enabling ambition. Whether it can rise to that challenge, without losing the cooperative principles that underpin it, will shape the next phase of the space economy.