22 November 2006

**NASA Notice of proposed rulemaking:**

**Cross-Waiver of Liability**

Considering the long-standing cooperation between ESA and NASA and in
view of future activities to be implemented, the European Space Agency
(ESA) would like to submit to NASA the following comments in response to
NASA notice of proposed rulemaking related to the cross-waiver of
liability (Federal register, Vol. 71, No. 204, pp. 62061-62065; RIN
2700-AB51). Those comments apply both to provisions under sections
1266.102 and 1266.104 of the proposed rule.

Those comments do not constitute an acceptance of any part of the
proposed rule. It is in ESA understanding that future agreements between
ESA and NASA will be tailored on a case by case basis in order to fit
the specificities of each cooperation.

**1°) Section (b)**

Considering that the proposed provision constitutes templates to be
included in an agreement, definitions under section (b) should apply to
the entire agreement, then to the entire cooperation between the
Parties, and not only to that section. For example, the terms "Party"
and "Related Entities" are usually already defined elsewhere in such
agreements.

In addition, the first article of agreements between ESA and NASA is
usually called "purpose" (singular).

As a consequence, we propose firstly to have a dedicated article related
to definitions and secondly to correct the title of section (b) as
follows:

"*For the purpose of this Agreement: \[...\]*"

**2°) Section (c)(1)**

ESA proposes to complement the last sentence of section (c)(1) as
follows:

"*The cross-waiver shall apply to any claims for damage[, except in the
case of wilful misconduct or gross negligence,]{.underline} against:
\[...\]*".

Exceptions related to wilful misconduct, and gross negligence, should be
provided in that section (c)(1) instead of section (c)(4) for the
reasons developed in ESA's third comment below.

Our main comment to NASA proposed rule concerns the fact that "gross
negligence" is not explicitly excluded from the cross-waiver.

Firstly, case law usually does not allow a limitation of liability in
case of gross negligence. Therefore, if the damage is caused by gross
negligence, the cross-waiver of liability should not apply. To avoid
ambiguity, ESA considers preferable to clearly state that the
cross-waiver will not apply in case of gross negligence (see wording
proposed by ESA above).

Secondly, to renounce to claim damage in all cases of gross negligence
of the other Party constitutes in our view a substantial limitation in
the legal construction of our cooperative activities. A gross negligence
constitutes an unacceptable behaviour and to waive claims in case of
gross negligence constitutes a risk which may not in some cases be
covered by the Parties' insurance policy, since it would considerably
increase its cost.

It may be argued that if "gross negligence" is included as an exception,
it may open conflicts between the Parties on the definition of "gross".
In ESA's opinion, the notion of gross negligence is sufficiently defined
with respect to our respective legal experience and therefore may be
solved by the mechanisms foreseen for settlement of disputes
(arbitration, consultation, mediation).

**3°) Section (c)(4)**

ESA comment related to Section (c)(4) is provided as to our preferred
language for a better construction and interpretation of the text. In
ESA's opinion, Section (c)4 should include only exceptions to the
cross-waiver of liability, namely situations that the Parties agree to
exclude from the scope of the cross-waiver, which are the following
sub-sections:

> "*(i) Claims between a Party and its own Related Entity or between its
> Related Entities;"*
>
> *"(ii) Claims made by a natural person, his/her estate, survivors, or
> subrogees (except when a subrogees is a Party to this Agreement or is
> otherwise bound by the terms of this cross-waiver) for bodily injury
> to, or other impairment of health of, or death of such natural
> person;"*
>
> *"(iv) Intellectual property claims".*
>
> The situations foreseen under the following sub-sections (iii), (v)
> and (vi) should be treated differently:
>
> *"(iii) Claims for damage caused by wilful misconduct";*
>
> *"(v) Claims for damages resulting from a failure of a Party to extend
> the cross-waiver of liability to its related entities, pursuant to
> paragraph (c)(2) of this section";* and
>
> *"(vi) Claims by or against a Party arising out of or relating to the
> other Party\'s failure to meet its contractual obligations set forth
> in the Agreement".*
>
> Those items (iii), (v) and (vi) constitute infringements of the
> Parties' obligations or unacceptable behaviour. In other words, the
> nature of those three situations is different from those under
> sub-sections (i), (ii) and (iv), and therefore should preferably not
> be treated together.
>
> For that reason, ESA suggests the following:
>
> \- deletion of sub-sections (iii), (v) and (vi) proposed under section
> (c)(4), and renumbering accordingly the remaining three exceptions;
>
> \- inclusion of "wilful misconduct" in section (c)(1) (see ESA's
> second comment above);
>
> \- provision of a new section (c)(5) for claims related to a failure
> to meet its contractual obligations, which could preferably be written
> as follows: "*This cross-waiver of liability shall not apply to
> performance of the Parties' obligations under this Agreement*".
>
> There is no need to replace the sub-section (c)(4)(v), which we
> proposed for deletion, because it is already covered by the ESA
> proposed new section (c)(5), since the extension of the cross-waiver
> constitutes a "Party's obligation under this Agreement".

**4°) Section (c)(6)**

For the seek of clarity, and in order to speed up the process of
negotiating agreements between ESA and NASA, we consider useful to
mention that the section (c)(6) is not applicable to ESA and therefore
should be deleted from agreements between ESA and NASA.