ABSTRACT

The Outer Space, once the exclusive preserve of the state, has become an arena of rigorous private activity due to activities like satellite launches, space tourism, telecommunications etc   and has the potential to build a trillion-dollar industry within the next ten years. The change from state-driven industry to privately owned enterprise, popularly referred to as the ‘privatisation of space’ has been occurring at afaster pace than the legal framework developed during an age where only states travel beyond Earth. As private entities increasingly bear the operational and financial risks which was once taken care of by the states, issues related to ownership, exploitation and risk allocation have become more relevant, hence the need to come up with legal frameworks which address these risks. In this context, indemnity clauses have been seen as the best contractual method of dealing with high risks involved in launch failures, damages to satellites and the third-party claims. Yet, the rules regarding the indemnity, under Section 124 & 125 of the Indian Contract Act, 1872, have been drafted keeping in mind the traditional forms of commercial dealings and neither do they take into account the specific liabilities arising in space activity. Thus, there is an essential research question being raised in this paper, whether the current framework for indemnity in India is enough to regulate contractual liability in private space business, or does it require specific reforms.

Using doctrinal and comparative research methods, the paper will compare legal provisions, judicial interpretations and practice regarding indemnity in India with those in US, Japan and Luxembourg which are some of the countries having more developed regulatory frameworks in this area.

Key words:  Space commerce, privatisation of space, Indemnity Clause, Indian Contract Act

1872.

Introduction

This research paper aims to study the effectiveness of indemnity clauses as a tool for allocating risks in private space commerce agreements in India, starting with the doctrinal background of the use of indemnity clauses in The Indian Contract Act 1872, then analysing their applicability to specific risks in space and comparing India’s systems to that of US, Japan and Luxembourg.

Research objectives

• To examine the legal framework governing contracts of indemnity under the Indian Contract Act, 1872 and its significance as a risk allocation mechanism
• To analyse the nature of contractual risks in private space commerce and the role of indemnity.
• To compare te contractual approaches to indemnity and liability management in India to that of The U.S, Japan and Luxembourg in commercial space activities
• To asses the adequacy and gaps of The Indian Contract Act 1872 in addressing contractual liability in private space commerce.