Why Are Lawyers Looking at the Moon? — What Space Debris Means for Regulation, Liability, and Risk Management

Authors: Kadri Vatman and Pauli Takki, Read time: 7 min

Space debris is becoming an increasingly significant legal and business issue. While often viewed as a technical or environmental challenge, it also affects licensing, insurance, contractual risk allocation, and regulatory compliance. A recent collision between a discarded rocket component and the Moon illustrates how responsibility for managing debris remains fragmented, even as commercial space activities continue to expand. This blog post is part of Hannes Snellman’s space law blog series.

A discarded SpaceX Falcon 9 upper stage struck the Moon’s surface on 5 August 2026. The component had been in orbit for a year and a half after launching two commercial lunar landers in January 2025. This is only the second known unintentional collision of rocket debris with the Moon, with the first occurring in 2022.

NASA and SpaceX stated that the incident had no impact on Earth. One detail, however, received less attention. The orbit of the drifting upper stage passed close to South Korea’s Danuri probe, and a probable close conjunction was only avoided because Danuri happened to perform an unrelated scheduled manoeuvre in mid-July. No one was responsible for steering the upper stage away from the high-risk route; risk management was left to another operator.

This is, on a small scale, precisely the problem that affects space debris more broadly. The creation of debris is not under the control of any single entity, and the management of consequences is fragmented amongst individual operators.

The Scale of the Debris Problem

Space debris refers to non-functional satellites, spent rocket stages, and fragments resulting from collisions. According to the latest review by the European Space Agency (ESA), around 47,000 objects are being tracked and catalogued in orbit, of which only around 16,000 are still operational satellites. The vast majority is therefore space debris, which is not a new phenomenon: according to ESA, there has been more space debris than operational satellites throughout the history of space exploration.

To see this in real time, LeoLabs’ Low Earth Orbit Visualization offers an interactive view of every tracked object currently in orbit.

The number being tracked is only part of the problem. It is estimated that there are actually over 68,000 objects larger than 10 centimetres — large enough to completely destroy a satellite — and around 1.5 million objects between 1 and 10 centimetres in orbit. Such small fragments cannot be tracked individually, nor can their trajectories be predicted in advance, even though they can still be large enough to destroy an operational satellite if they were to collide.

One figure illustrates well why current regulations are insufficient: of the very largest satellites, weighing over 1,000 kilograms, only 54 per cent are scheduled to be deorbited within 25 years of the end of their operational life. This is an internationally agreed minimum requirement, and it is precisely the largest objects that pose the greatest risk if they remain in orbit beyond this period.

The underlying cause is the rapid commercialisation of the sector. More satellites have been launched in the last two years than in the previous six decades combined, with commercial mega-constellations filling low Earth orbit. This leads to what is known as the Kessler syndrome: a single collision creates debris that increases the likelihood of subsequent collisions, which in turn generates more debris.

According to ESA’s modelling, not even an immediate halt to all new launches would stop this chain reaction; collisions between existing objects would increase the amount of debris in any case.

Liability Under International Law

No treaty currently limits the amount of space debris that a state or company is permitted to generate in practice. Instead, two treaties from the 1960s and 1970s regulate who is liable when a space object causes damage.

The 1967 Outer Space Treaty imposes international responsibility on states for all national space activities, regardless of whether they are carried out by the state itself or by a private company. The activities of private operators always require state authorisation and continuing supervision.

The 1972 Liability Convention clarifies this framework on two levels. If a space object causes damage on the Earth’s surface or to an aircraft, the launching state is directly liable for compensation, without the injured party having to prove fault. If, on the other hand, the damage occurs in space, for example when two satellites collide, the launching state responsible for the satellite that caused the damage is liable only where fault can be shown.

This creates a practical challenge. ‘Fault’ is not precisely defined in the Liability Convention, nor has a generally accepted standard of care been established for satellite operators. Because many debris fragments, particularly the smaller, untracked ones that account for most collision risk, cannot be reliably linked to a specific launching state, proving fault is often impossible in practice. Formal claims brought under the Liability Convention have therefore been rare, and disputes are ultimately resolved through diplomatic channels rather than binding court proceedings.

Because the retrospective attribution of liability remains limited, regulatory attention has increasingly shifted towards prevention. The Inter-Agency Space Debris Coordination Committee (IADC) published voluntary guidelines in 2002, and the United Nations Committee on the Peaceful Uses of Outer Space (COPUOS) followed with its own guidelines in 2007.

Although these guidelines are not legally binding, they recommend limiting debris generation during normal operations and removing spacecraft from orbit once their missions have been completed.

ESA has gone further: its 2023 requirements reduced the maximum period for removing spacecraft from orbit from 25 years to five years, requiring a probability of more than 90 per cent for successful removal. Through its broader Zero Debris initiative, ESA is also seeking to ensure that commercial debris-removal services become operational by 2030.

Technical feasibility, however, is only half of the challenge. Because Article VIII of the Outer Space Treaty gives the launching state permanent jurisdiction and control over its space objects, no third party may lawfully remove another state’s debris without that state’s consent.

Finland’s Regulatory Framework

Finland has incorporated international debris-mitigation principles into binding national legislation. The Space Activities Act obliges operators to endeavour to ensure that space activities do not generate space debris. In particular, operators must limit debris generation during normal operations, minimise the risk of break-up and collision, and endeavour to remove objects that have completed their mission from orbit.

A decree issued by the Ministry of Economic Affairs and Employment sets a specific benchmark: operators must endeavour to ensure that a space object is removed from orbit within 25 years of the end of its operational life.

The wording is significant. This is an obligation to endeavour, not an absolute guarantee of results. Compliance nevertheless remains one of the conditions that may be imposed before a space activity licence is granted.

The Act also requires operators to obtain insurance against damage caused to third parties. At minimum, the insurance must cover the launch phase until the space object has settled into its intended orbit.

Finland’s 25-year benchmark is notably more lenient than ESA’s current five-year standard. As commercial space activities continue to expand, the practical significance of this difference may become increasingly apparent. The broader international regulatory trend is, in any event, moving towards stricter requirements.

Practical Implications for Operators

For Finnish and Finland-based space companies, there are three practical takeaways.

1. Licensing and Mission Planning

A deorbiting plan at the end of a mission is not merely a technical consideration but a licensing requirement. The capability to deorbit, together with the necessary fuel margin, should be built into mission planning from the outset.

Operators should also be aware that meeting Finland’s current 25-year benchmark may not always be sufficient from a commercial perspective. International partners, customers, and future regulatory frameworks may increasingly expect compliance with stricter standards.

2. Liability and Insurance

The international liability regime extends to individual operators even though it is formally structured as an arrangement between states. If a space object registered in Finland causes damage on land, in airspace, or, where negligence can be established, in space, Finland may be internationally liable to the injured state.

Under the Space Activities Act, Finland may in turn seek recourse against the operator. This highlights the importance of assessing both the adequacy of insurance coverage and the allocation of liability in contractual arrangements.

3. Contractual Risk Allocation

The difficulties associated with proving negligence in a debris-filled orbital environment are equally relevant where a company’s own satellite suffers damage. If the responsible party cannot be identified or negligence cannot be demonstrated, international liability mechanisms may offer little practical recovery.

Operators should therefore evaluate insurance arrangements, contractual protections, and other risk-management mechanisms well before launch.

Looking Ahead

Space debris is no longer solely an environmental or technical concern. It is increasingly a matter of regulation, liability, and commercial risk management, directly affecting licensing, insurance arrangements, contractual structures, and mission planning.

As space activities continue to commercialise, operators are likely to face growing expectations regarding debris mitigation, end-of-life planning, and risk allocation. What is currently considered good practice may not remain voluntary for long. Finland’s current 25-year benchmark may therefore prove to be only a transitional stage in a regulatory environment that is steadily becoming more demanding. At EU level, the European Commission’s proposal for an EU Space Act is set to impose binding rules covering, among other things, collision avoidance, spacecraft trackability and manoeuvrability, space debris mitigation plans, and end-of-life disposal. Its extraterritorial reach means Finnish operators would need to comply regardless of where they are established. A domestic reform of the Finnish Act on Space Activities is also in preparation, with a government proposal expected during the end of 2026.