Under the 1972 Liability Convention the launching state pays: always for damage on Earth or to aircraft, and for damage in space only if it was at fault.
Rockets drop stages, and satellites eventually fall back. The UN Liability Convention says who pays when something goes wrong. It was agreed at the General Assembly in 1971 and came into force on 1 September 1972. By 1 January 2025, 100 states had ratified it, India among them.
The convention defines a launching state in two ways: a state that launches a space object or pays for (procures) its launch, and a state from whose territory or facility it is launched. A space object includes its parts and its rocket.
A claim must normally be made within one year of the damage, or of finding out which state is liable.
In January 1978 the Soviet satellite Cosmos 954 broke up over Canadian territory. Canada made a claim. On 2 April 1981 the two governments signed a protocol in Moscow under which the Soviet Union paid three million Canadian dollars in full and final settlement.
The Space Policy 2023 asks IN-SPACe to set guidelines on liability for damage from space activities. It also asks the Department of Space to follow international space debris guidelines.
Worked example: a PSLV launches a satellite for a foreign customer from Sriharikota. India is a launching state because the launch is from its territory. The state that procured the launch is also a launching state. If a piece of that satellite later fell on a farm in a third country, both could be asked to pay in full, with no need to prove anyone was careless.
Every launch from Sriharikota makes India a launching state for its payloads, including foreign customers' satellites. See upcoming launches from India
Two kinds of liability. Article II of the convention sets absolute liability for damage on the surface of the Earth or to aircraft in flight: the victim does not have to prove fault. Article III sets fault-based liability when one state's space object damages another state's space object away from Earth's surface. So the same piece of debris can create two different legal tests depending on where it does damage.
Three-party collisions. Article IV covers a collision in space between two states' objects that then harms a third state. If the third state is harmed on Earth or in the air, the first two are jointly and severally liable, with absolute liability. Between themselves, they split the bill according to their share of fault, or equally if fault cannot be worked out.
Compensation. Article XII says compensation should restore the victim to the condition that would have existed if the damage had not happened, under international law and the principles of justice and equity.
Time limits. Article X: claims within one year of the damage, or of identifying the liable state. If the victim did not know about the damage, the one year runs from when it learned of it, as long as that is reasonable.
Scale. The Cosmos 954 protocol settled the Canadian claim for C$3,000,000, paid by the Soviet government in full and final settlement of all matters connected with the satellite's break-up.
A state which launches or procures the launching of a space object, or a state from whose territory or facility a space object is launched.
Yes. Liability for damage on the Earth's surface or to aircraft in flight is absolute; fault matters only for damage in space.
The Soviet Union paid Canada C$3 million under a protocol signed on 2 April 1981, in full and final settlement of matters linked to the satellite's 1978 break-up over Canada.