Plans to keep Britain at the "forefront of the evolving space scene" could be jeopardised by legal restrictions, according to a specialist in outer space law. Launching a four-year space strategy in February, the Government stressed the importance of satellite systems to Britain's quality of life, commercial competitiveness and security - "connecting us into a global network of information, communication and navigation systems". Space currently contributes about £7 billion a year to the British economy and the Government wants to increase our share of "this growing international sector".

A paper published by the British National Space Centre on behalf of 10 Government departments and research councils suggested it was not too soon to get ready for holidays in space.

"A suitable regulatory regime is needed to attract the emerging sectors such as commercial sub-orbital and orbital tourism," the space centre said.

But a suitable regulatory regime is precisely what we do not have in Britain, according to Tony Ballard, a partner in Harbottle & Lewis.

The solicitor, who also chairs the UK branch of the European Centre for Space Law, says that legislation passed more than 20 years ago still has a "chilling effect" on investment in space.

Section 10 of the Outer Space Act 1986 says that British nationals and companies must indemnify the Government against any claims brought against it for loss or damage arising from the launch or operation of satellites and other space objects.

Responsibility for compensating the Government extends to anyone who causes space activity to occur or is responsible for its continuing. That wording seems wide enough to cover bankers and other investors. It may even cover communications regulators.

At first sight, it may seem reasonable for companies to pay the price of their own negligence. But the legislation was not designed with ordinary civil claims in mind. Instead, says Ballard, it covers claims brought against Britain by other "space-faring" governments under international treaties signed in 1967 and 1972.

Ballard is very concerned with the problem of space debris "smearing itself round the orbital path". This can be anything from paint chips or shards of metal from the explosive bolts that are shot off when a satellite opens its solar panels to entire spacecraft dumped in perpetual orbit.

Anything smaller than 10cm (4 inches) cannot be picked up on radar. And yet even a few grams of debris at a typical velocity of 7km per second is enough to take out a satellite or kill an astronaut.

So the costs could be huge. And normal indemnity safeguards do not apply in treaty claims. The Government has promised to consider all the circumstances before deciding whether to rely on the indemnity in an individual case. But Ballard says ministers have no such choice.

"It is not discretionary but mandatory. It provides that the person concerned 'shall indemnify' the Government - whatever the circumstances and however unmeritorious the international claim."

Britain has one of the most stringent regimes, he says. Companies cannot insure against unlimited liability for space collisions. In the US, liability is capped at a certain level.

So where should I go if I am looking to launch a satellite without this financial risk? "The French don't have anything equivalent to this," Ballard replies.

"There is a commercial cost for those embarking on a space venture. I have advised clients about the consequences of operating under UK jurisdiction and it has been quite clear that the clients have chosen the jurisdiction under which they operate having regard to the operation of the Act."

They have gone abroad? That would be the sensible thing to do, he concedes. Along with Terminal Five, then, outer space is just another thing we can't get right.

CONTACT joshua@rozenberg.net