Rise of the drones: Opportunity and liability for businesses

Publication October 2016


Introduction

In April 2016 CNN reported that a drone hit a British Airways aircraft as it was preparing to land at Heathrow Airport. A quick search of the internet will reveal that incidents involving the risky use of drones occur almost daily. It is no surprise then, that the use of drones is regulated around the world. Australia was the first country to regulate the use of Unmanned Aerial Vehicles (UAVs), now referred to as Remotely Piloted Aircraft (RPAs) or more commonly, drones in 2002. The use of drones is now overseen by legislatures around the world, and there is some regulation at an international level. This article is written from an Australian perspective, however the basic principles – regulation by a state safety authority and overlapping liability under the general law – are in place in many jurisdictions.

Opportunity

Since 2002, the technological development of drones has rapidly accelerated and businesses continuously find new innovative ways for their use. Drones are used in various industries for many purposes, such as monitoring, the inspection of infrastructure, delivery of goods and photography. The possibility of unmanned cargo freighters is also being explored, with the online Platform Unmanned Cargo Aircraft founded in 2011 and currently chaired by Dr. Hans Heerkens of the University of Twente, Netherlands. Legalflyer has also reported on the potential in this space. Recent Goldman Sachs research has valued global drone sales for commercial purposes at $20 billion per year. Legislating for the regulation of drones is far from simple and it has been suggested by Lev Grossman in Time that UAVs are evolving faster than “our ability to understand how, legally and ethically, to use them”.

Recent amendments in Australia and the United States

That being said, the issue for aviation regulators around the world is becoming the balance between ensuring safety and preventing overregulation of an industry that is so full of commercial potential. For example, in Australia amendments have just commenced that significantly deregulate the use of RPAs commercially. The use of drones under 2 kilograms for hire or reward no longer requires any licence – notice must simply be given to the regulator of that use. Further, drones weighing from 2 kilograms to 25 kilograms can now be used by or on behalf of the owner of the drone, on land owned by the drone’s owner without any qualification or license. This use is restricted to purposes listed in the legislation – or those similar – which include aerial spotting, aerial photography, agricultural operations, aerial communications retransmission and the carriage of cargo. Underlying the legislative regime in Australia are standards of operations which apply to all usage of drones, including operating the drone within the visual line of sight of the operator, operating height and not flying within 30 meters of a person. Prior to the new amendments, operating drones up to 25 kilograms in such circumstances – and using any sized drone for hire or reward – required certifications similar to that of a pilot’s licence. This creates immense opportunity for businesses in Australia to use drones as part of their everyday operations. More information concerning the regulation of drones in Australia can be found in Part 101 of the Civil Aviation Safety Regulations 1998 or the Civil Aviation Safety Authority’s (CASA) website.

The United States Federal Aviation Administration (FAA) has also recently introduced regulatory amendments for the operation of drones weighing up to 25 kilograms (55 pounds) for commercial purposes. The ‘Small Unmanned Aircraft Rule’ contemplates commercial use beyond private property, but the Rule requires the pilot to hold a ‘remote pilot airman certificate’ or be under the direct supervision of someone who does. Acquiring a licence requires a knowledge test or holding another type of pilot certificate for a certain amount of time, along with other requirements and obligations to the FAA. Please see the FAA’s website for further information. Underlying these recent amendments and the regulation of the use of RPAs around the world is the work of the International Civil Aviation Organization (ICAO). ICAO’s role in this space is to provide strategic guidance to countries globally and serve as a focal point for global harmonization. ICAO has issued two guidance documents and in 2012, amended Annex 2 through introducing Standards and Recommended Practices (SARPs) relating to the use of drones. Further, and more extensive, SARPs regarding drones are expected in 2018. These SARPs are intended to guide member states in setting their own regulations on a national level.

Other sources of regulation and liability

While regulators around the world may be reducing the obligations and restrictions they impose on drone operators, the fact is that businesses choosing to utilise drones will face statutory duties that mandate the safe operation of any RPA, far broader than any that could be imposed by a national regulator. Many legislative regimes and common law principles step in to regulate operation of RPAs – the communications and media regulatory framework, manufacturing standards, operational health and safety legislation, privacy law, and a considerable potential for damage to person and property. The consequences of failing to comply include significant terms of imprisonment, large fines and a successful claim for damages. There is also potential for directors of a company to be held personally liable. An example of how liability might arise is that the remote operation of drones is effected through the radio frequency spectrum. Radio frequency spectrums are regulated by governments around the world and operating the drone in the correct frequency is imperative, as failing to do so may attract heavy penalties and interfere with vital services. Adding another layer of complexity is the process and consideration of obtaining insurance coverage for the use of drones.

Protecting your interests

With the rapid increase in the use of drones, another cause for consideration is the rights of individuals and business against drones intruding upon property or privacy are uncertain and indeed, limited. While an act of trespass is not restricted to the surface of the land, it does not ‘extend to the heavens’. For example in the United Kingdom case of Bernstein v Skyviews & General Ltd [1978] QB 479, an aircraft flying over a property and taking a photograph was not trespass. In Australia, there is limited legislative recourse, with the privacy legislation having restricted application and the tort of invasion of privacy having not developed. The vulnerability of drones to cyber-attacks must also be considered.

Conclusion

While there may be less red tape, which certainly presents an opportunity, those looking to establish the use of drones within their own businesses are still subject to many important responsibilities. Legal expertise in navigating this emerging space and mitigating risk requires experience across broad practice areas and is essential for any business looking to take advantage of this new technology. In this field, with opportunity comes liability.


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