Star wars: navigating legal disputes in the commercial space sector

No longer confined to the realm of science fiction, commercial activity in outer space has grown in the past 20 years, with the area predicted to be a trillion-dollar industry by 2030. This growth has also seen a rise in space industry disputes, with parties seeking to establish and protect their property, contractual and private interests once they leave the Earth’s atmosphere.

Despite this, ‘Space Law’ has yet to be clearly demarcated as an area of legal practice. It is better understood as an industry sector bound by general domestic law and various international regulatory frameworks. As a result, many assume that legal disputes concerning commercial space primarily occur when property is damaged, often resulting from a collision with the debris littering low Earth orbit (LEO). However, these risks are the tip of a much larger iceberg, with disputes concerning commercial space traversing contracting issues, ownership rights and a complicated matrix of international obligations. This article explores the common issues affecting parties looking to enter commercial space and examines how businesses can best navigate through space-related disputes using arbitration.

Debris and (debatable) property rights – the ‘typical’ Space Law dispute

Businesses ready to engage in commercial space-related ventures may see several regulatory hurdles and possible disputes on the horizon. A common Space Law issue associated with private ventures is assigning liability for ‘space debris’, which includes items of various sizes left abandoned in LEO. According to the World Economic Forum (WEF), around 25,081 objects, including 12,000 active satellites, were tracked in LEO as of September 2025. This represents a complicated issue with economic, security and diplomatic implications. According to the WEF’s January 2026 report, even a single debris-related incident is liable to trigger financial claims, service disruptions and broader reputational harm. Further, the WEF expects that insurance premiums may surge as loss probabilities continue to increase, leading coverage to narrow and rendering parts of the orbital environment uninsurable. 

In Australia, parties responsible for a ‘space object’ (that is, an object which enters or returns from Earth’s atmosphere) may be liable to compensate third parties for damage caused during the liability period under the Space (Launches and Returns) Act 2018. Compensation is capped unless the damage resulted from a breach of permit (or launch facility licence) conditions, intentional conduct or gross negligence. Given the expected trajectory of the space industry, it is likely that property damage both on Earth and in orbit will increase, forcing parties to consider how best to address any possible dispute arising in the event that their space assets cause economic damage.  

Commercial ventures in the final frontier often also grapple with the concept of ‘ownership’, particularly when launching mining ventures in outer space. There is currently no Australian framework that addresses private resource ownership obtained in space, despite Australia being a party to all five space treaties. This uncertainty is further complicated by Australia’s ratification of the 1967 Outer Space Treaty, which provides that ‘outer space, including the moon and other celestial bodies, is not subject to national appropriation’. Ownership of resources mined from the Moon is separately addressed by the ‘Moon Treaty’, which similarly says that neither the subsurface of the Moon nor any of its natural resources ‘in place’ shall become property. While various interpretations of the Moon Treaty suggest that ownership of the resources is permitted once they have been extracted, the current ambiguity leads many to expect that disputes over resource interests are inevitable. Until Australia addresses private ownership in domestic regulations as the United States and Japan have done, parties will remain wary of their rights in space, and any associated legal conflicts that may arise from private space mining.  

Although the above represents what many assume to be typical Space Law disputes, more common issues are arising for those involved in commercial space activities. Although less visible at the commercial outset, parties should be alive to the more frequent dispute risks preventing lift-off for private space ventures.  

Common conflicts affecting private space ventures

While it is easy to assume that Space Law disputes concern elements found in LEO, common conflicts often arise back on Earth in the form of contractual disputes and cross-border engagements. Parties will be required to navigate supply chain issues when managing typical commercial aerospace projects, including the production of satellites or reusable rockets, or the installation and operation of off-planet mining equipment. In situations where supply delays occur, possibly due to rigid export controls or other international regulatory requirements, contractors may find themselves in a dispute with their supplier for failure to perform. These disputes can have flow-on consequences for the broader private space venture, particularly where the scope of work includes strict timeframes to achieve completion. Similarly, suppliers of key satellite components, reusable rocket and launch technology and autonomous systems face increased pressure due to ongoing fuel shortages. As with many industries, supply-related disputes are a real risk in commercial space activity, whether due to global disruptions or small-scale security concerns impacting export activities. 

“Parties that address export controls, sanctions and foreign investment requirements early, and allocate these risks clearly in their contracts, will be better placed to avoid such disputes or resolve them efficiently.”

The global lens of commercial space presents further issues when parties are contracted by government agencies looking to install orbital infrastructure. Although private activity in space has increased markedly, the area was and is still typically occupied by government departments seeking to install communication and internet systems. Parties engaged with the various Commonwealth bodies involved in these systems should be alive to the possible variations that may occur during the life of a contract – changes which could lead to a dispute if appropriate variation mechanisms are not built into the contract. 

Ultimately, a Space Law dispute, despite occasionally involving issues at play in the vacuum of space, typically involves common domestic legal concepts and regulatory engagement. Although the area is regulated internationally, parties will typically be more concerned with disputes arising from general contract, supply and regulatory issues. Despite this down-to-earth assessment, the emergent nature of Australian Space Law still presents complicated issues, including risks that routinely cross international borders. Because of this, disputes are often resolved through arbitration as opposed to the typical court process.  

Arbitration – dispute resolution suitable for the final frontier  

While Space Law disputes may traverse well-established areas of domestic law, the technical and cross-border nature of the commercial area often leads many parties to opt for arbitration in the event a dispute arises. 

Arbitration typically offers more flexibility than domestic court processes, enabling parties across the globe to have a say in the applicable rules and forum for a contractual dispute. 

Parties may choose an arbitral seat and arbitrator suited to the contract’s jurisdiction, and select rules tailored to address any space-related issues that may occur during the life of the contract. These advantages address the fragmented nature of Space Law as it currently stands, enabling parties to navigate cross-border complications effectively. Similarly, an arbitration clause will enable the parties to select an arbitrator with sufficient industry knowledge and technical experience, assisting parties in reaching a resolution in a timely manner. 

Arbitration is particularly suited to Space Law disputes involving confidential or sensitive information, allowing the parties to resolve contractual issues in a non-public forum. With commercial space ventures often involving sensitive, proprietary technology or elements concerning national security, the private nature of arbitration affords an added layer of protection for contracting parties. Arbitral awards are also generally enforceable across borders under the New York Convention. Parties investing in foreign space infrastructure should consider whether their investments are structured to benefit from investment treaty protections against adverse government action. The benefits of arbitration depend, however, on a well-drafted dispute resolution clause agreed at the outset.r

Managing dispute risks in space

Looking ahead, it is incumbent upon parties looking to enter commercial space to actively consider the typical risks associated with a commercial space venture. Whilst the area is likely to see significant growth in the near future, this also presents real risks to those unaware of the common issues and dispute areas. Areas to consider in commercial space ventures include structuring, contracting and export control compliance, drafting dispute resolution clauses and resolving disputes. Although the private space frontier is yet to be fully explored, informed parties are better equipped to brave this burgeoning industry confidently.