Who Pays When Satellites Crash Into Each Other?

Introduction

Accidents are bound to happen with the over 15,000 satellites orbiting Earth, but who is responsible for paying for damages? Over eighty countries have satellites in space, each costing millions–some even billions–of dollars. Although the Liability Convention under the United Nations Office for Outer Space Affairs establishes liability rules for damages caused by space objects, only a few space collisions have resulted in formal compensation.

This diffusion of responsibility becomes especially concerning when considering the growing risk of satellites crashing into one another, especially satellites of different countries. As space becomes increasingly crowded with satellites and debris, many space-law scholars and organizations have warned that the risk of collisions is continuing to grow. 

The Collision of Iridium 33 and Cosmos 2251

When considering satellites crashing into each other, the most salient case is the 2009 collision between Iridium 33, an active American communications satellite, and Cosmos 2251, a defunct Russian military satellite. 

This collision occurred at nearly 17,000 miles per hour and resulted in the destruction of both satellites. More importantly, it created over 2,000 pieces of trackable debris, along with thousands of smaller fragments that are orbiting in space and around Earth today. These fragments pose highly concerning risks to other satellites and even the International Space Station. Because these debris fragments travel at thousands of miles per hour, even extremely small pieces can damage satellites upon impact. Experts often compare orbital debris to high-speed projectiles because of the enormous kinetic energy generated by objects moving at orbital velocity.

Despite the scale of the damage, no formal claims for compensation were made by either side. According to a fact sheet published by the Secure World Foundation, the Liability Convention requires fault to be determined for damages occurring in orbit, yet “a legal definition does not currently exist for fault within the context of the Liability Convention.” The report also notes that the Liability Convention has never been formally invoked in cases such as the Iridium-Cosmos collision. Because both countries could plausibly argue that the other side shared responsibility, getting compensation would have caused a lengthy and uncertain diplomatic dispute.

Cosmos 2251 had been inactive for years before the collision, meaning it was essentially uncontrolled space debris still orbiting Earth. This could suggest negligence on Russia’s part because the satellite remained in orbit without any system to avoid collisions or safely deorbit. 

However, the United States also shared some responsibility. American tracking systems were capable of monitoring objects in orbit and identifying potential collision risks. Yet, conjunction-warning systems at the time were still limited, and operators regularly received hundreds of close-approach alerts each week, making it difficult to determine which warnings required immediate satellite maneuvers. 

Coordination between countries was also still limited, making it unclear who should have acted first. Because both countries could argue that the other was partially at fault, establishing clear legal responsibility became extremely difficult. Rather than entering a complicated international dispute with uncertain outcomes, neither side pursued formal legal action or demanded compensation. A decision that left both sides with massive damages and financial losses, and left the world questioning whether the existing legal system is actually functional. 

Under the Liability Convention, compensation claims must be brought through diplomatic channels between governments rather than through a traditional international court. If negotiations fail, countries can establish a Claims Commission to investigate the dispute and recommend compensation. However, no major satellite collision case has ever fully tested this process. Even though the damage was clear, assigning blame was not; and without clear fault, the countries are forced to bear the damages.

The Outer Space Treaty

The foundation of space law is the 1967 Outer Space Treaty. This treaty established that countries are responsible for any objects they launch into space. According to Article VII, “launching State [country] shall be absolutely liable to pay compensation for damage caused by its space objects on the surface of the Earth or to aircraft, and liable for damage due to its faults in space.” 

While legal experts do not formally describe this relationship as “parental,” the comparison helps explain the treaty’s logic: countries are expected to supervise and take responsibility for the actions of the satellites and companies they authorize to operate in space. Article VI of the Outer Space Treaty specifically states that nations bear responsibility for both governmental and “non-governmental entities” operating in space.

However, the treaty leaves major questions unanswered. While it clearly establishes responsibility, it does not explain how compensation should work in practice. Damage occurring on Earth is easier to address because it falls under existing national legal systems and courts. Outer space, however, has no single governing authority capable of directly enforcing international rulings.

For example, if a satellite damages another object on the Moon or in orbit, who determines the values? Who receives compensation? And how would such repairs even be carried out in an environment where no single country has jurisdiction? Questions like these highlight the growing strain placed on international space law as space activity rapidly expands. A recent academic analysis of the Outer Space Treaty argued that current legal frameworks are facing “unsustainable pressures” from increasing public and private space activity.

Liability Convention

To expand on the gaps of the Outer Space Treaty, the 1972 Liability Convention was introduced to provide more detailed rules about compensation. This agreement distinguishes between two types of liability.

First, it established absolute liability for damage caused on Earth or to aircraft. This means that a country is required to compensate victims for damages caused by its space objects regardless of fault. If a satellite crashes into a populated area, the launching country is legally obligated to pay for the resulting damages, even if the accident was unintentional. 

However, for damage that occurs in space, the convention uses a fault-based system. This means that a country is only required to pay if it can be proven that it was at fault. 

This fault-based system is at the center of the problem with the Liability Convention. The concept of “fault” in space is not clearly defined. Satellites move at extremely high speeds, tracking systems are not perfect, and responsibility is often shared. Countries can exploit this ambiguity and argue that a collision was not their fault, making enforcing of compensation close to impossible. Current discussions among space-law experts and organizations such as UNOOSA increasingly focus on developing clearer standards for orbital debris mitigation, satellite tracking cooperation, and collision responsibility as commercial space activity rapidly expands.

Another major limitation of the Liability Convention is that private companies cannot directly file claims under the treaty. As private corporations like SpaceX increasingly dominate space activity, the fact that only governments are officially recognized under international space law creates a significant risk. 

If a private company’s satellite causes damage in space, the company itself is not legally responsible under the Liability Convention. Instead, responsibility falls on the country that authorized or launched the spacecraft. At the same time, private companies cannot directly demand compensation if one of their satellites is damaged. They must rely on their government to file claims on their behalf. 

Some countries partially address this issue through licensing agreements and insurance requirements that can force companies to financially reimburse governments for damages. In the United States, for example, the Federal Aviation Administration (FAA) requires commercial space launchers to provide evidence of financial responsibility through insurance or reserved funds before obtaining their launch licenses. However, under international law, responsibility still officially falls on the country itself rather than the corporation directly, revealing how modern commercial space activity has evolved far beyond the government-focused legal systems created during the Cold War. This creates a major imbalance in modern space law, where corporations play a dominant role in space activity but aren’t held responsible for any of their actions.

Solution/Problems

While the Outer Space Treaty and Liability Convention provide a basic legal framework, both agreements were written during a time when only a few governments operated in space. Today, thousands of satellites are launched by both countries and private corporations, making the current laws increasingly outdated. 

One possible solution would be establishing clearer international standards for what counts as “fault” in space. Countries and companies could be required to share satellite tracking data, use collision-avoidance systems, and safely deorbit inactive satellites after their missions end. An independent international organization could also be created to investigate collisions and determine responsibility, rather than leaving countries to argue among themselves.

However, implementing these solutions would be extremely difficult. Smaller or developing space programs may not have the money or technology needed to follow strict international requirements, leading some experts to argue that future regulations should vary depending on a country’s technological abilities or include international support systems such as shared tracking databases and debris-monitoring programs. Others could argue that even one poorly monitored satellite can threaten every country operating in space, meaning all nations should follow the same safety standards regardless of their resources. 

At the same time, space has become both an economic and military asset, causing many countries to resist stricter international oversight or sharing sensitive satellite information. Some critics propose that powerful nations benefit from the ambiguity of current space law because vague liability standards provide flexibility during disputes and reduce the likelihood of binding enforcement. As more satellites enter orbit every year, the lack of enforceable accountability increases the risk of future collisions, larger debris fields, and disputes that current treaties are unequipped to handle.

Conclusion

As space becomes more crowded, satellite collisions are no longer rare accidents but growing international concerns. Although treaties such as the Outer Space Treaty and the Liability Convention attempt to establish responsibility for damages in space, major loopholes and vague definitions make accountability extremely difficult to enforce in practice.

The collision between Iridium 33 and Cosmos 2251 demonstrated that even when damages are severe and clearly visible, countries can avoid responsibility by disputing fault or refusing to pursue legal action. This rise of private corporations in space activity has only made these legal gaps more apparent, exposing how outdated international space law has become.

Without stronger regulations, clearer definitions of liability, and systems capable of holding both countries and corporations accountable, the question of who pays when satellites crash into each other may continue to remain unanswered.