Data Centers in Space: The Next Frontier for Construction Disputes

Orbital infrastructure is reshaping risk, contracts, and dispute resolution

Key Takeaways

• Space-based data centers quickly are becoming a reality as technology and aerospace organizations look to harness solar energy and radiative cooling.
• Orbital data centers create challenges at the intersection of construction engineering, aerospace integration, and rapidly evolving digital infrastructure.
• New construction disputes will arise as these data centers get underway, underscoring the need for developers, sponsors, and legal teams to borrow important lessons from aerospace and terrestrial construction projects.

When data center infrastructure leaves Earth, will disputes follow?

What once seemed like science fiction is becoming a commercial reality. Over the last few months—in a galaxy not so far, far away—multiple technology and aerospace players signaled their intent to build computing infrastructure in space to harness near-continuous solar energy and radiative cooling.

A private aerospace company revealed plans for solar-powered satellite data centers to support artificial intelligence (AI). China launched a five-year roadmap to develop space-based data centers.

On the commercial frontier, startups like Starcloud are placing data center-class graphic processing units into orbit with strategic backing from leading hardware providers including NVIDIA.

Yet skepticism tempers enthusiasm. The CEO of Amazon Web Services, for example, recently described the notion of operational orbital data centers as “pretty far from reality,” citing immense technical and logistical hurdles before such infrastructure can be scaled commercially.

In any case, one aspect is clear as projects advance: these roadblocks, coupled with myriad challenges (and stakeholders) associated with any physical infrastructure project, will likely lead to new construction-related disputes.

Here’s what prospective developers, builders, engineers, business leaders, and their counsel should keep an eye on as the data center space race picks up.

New Space-Based Infrastructure, New Challenges

Compelling technical and economic realities underpin the commercial drive toward space-based data centers. On Earth, data centers consume massive amounts of energy, generate substantial heat, and pose cooling challenges in regions facing water scarcity or rising electricity costs. Further, data centers are increasingly important critical strategic assets requiring physical security and defense.

Satellites in certain low-Earth orbits, on the other hand, can exploit near-constant solar power and leverage the vacuum of space for radiative cooling. Proponents argue that orbital data centers could limit dependence on terrestrial energy grids, cut carbon footprints associated with water-intensive cooling infrastructure, and offer enhanced security against physical threats arising from conflicts.

Despite the futuristic imagery, space-based data centers are ultimately physical infrastructure projects with the same fundamental characteristics as terrestrial constructions: they require complex engineering, multistage manufacturing, rigorous integration, and coordinated execution across multiple parties. New complexities arise, however, because these projects sit at the intersection of construction engineering, aerospace integration, and rapidly evolving digital infrastructure.

Key Construction Dispute Risks for Space-Based Data Centers

A single party likely will not maintain end-to-end control of every element—and with supply chains spanning multiple countries and legal jurisdictions, disputes are not a question of if but when.

Because of the international nature of the participants, the likely forum for resolution will be international (or intergalactic) arbitration rather than any single national court system, allowing parties to select governing laws and neutral venues to adjudicate complex technical disputes.

Key potential construction dispute areas that could emerge include:

1. Supply chain complexity. Conflicts could occur related to costs associated with losses of productivity due to complex engineering, multistage manufacturing, integration, and coordinated execution across parties.
2. Failure to launch. Launch windows are sensitive to weather conditions. Failed or aborted launches introduce delays that may trigger disputes over force majeure, liquidated damages, and rescheduling costs.
3. Variation claims due to advances in technology. The underlying technologies for computer hardware and communications evolve rapidly. Contracts that lock in specifications in year one may find those specs outdated by launch time in years three or four. Requests to incorporate newer generations of processors, communications links, and other advanced technologies can lead to variation claims, scope disputes, and battles over change-order costs.
4. Defects, performance failures, and testing limitations. Orbital data centers are constructed on Earth but tested only once in orbit. Unlike terrestrial data centers—where systems can be stress-tested, debugged, and adjusted prior to declaring operational status—orbital infrastructure must rely on pre-launch validation. Defects—whether mechanical, structural, thermal, or software-related—are extremely difficult to rectify after a satellite has launched.

Additionally, known hazards include the risk of collision with space debris and generation of debris from a malfunctioning satellite. Disputes may arise over liability for damage, allocation of responsibility for debris mitigation, and what constitutes acceptable levels of residual risk.

What Developers and Legal Teams Should Do Now

Data center infrastructure may leave our planet, but associated disputes will not.

Legal teams, project sponsors, and (Jedi) negotiators in this burgeoning industry would be well served to borrow lessons from decades of terrestrial construction and aerospace projects: clarify risk allocation, anticipate interface issues, build robust testing and acceptance protocols, and prepare for international dispute resolution—long before the launch.