The short answer is that the laws of many countries may apply on the moon. And I only say “may” because no one is there yet, and that matters.
Living and working here in Maryland I know that the laws of the United States and Maryland apply to my activities. In general, so long as I stay out of and have no contact with the state of Connecticut, its laws do not apply to my Maryland-based activities. In the main, U.S. and Maryland law apply to me and my activities because of my location. A Virginian driving on Maryland roads has to obey Maryland speed limits because she’s in Maryland. Again, the person’s location determines the law’s applicability.
Looking at the outer space treaties, it would be hard to say that location is what determines which country’s law applies in outer space. Countries may apply their laws in outer space but for reasons other than location. Although article II of the Outer Space Treaty rules out national appropriation by claim of sovereignty, the treaty does not rule out any exercise of sovereignty at all. Instead, Article VIII of the OST says that the state of registry retains jurisdiction and control over a space object. Article VI tells the treaty’s signatories to authorize and supervise their nationals’ activities in outer space. Laws will follow us into space, but they will do so attached on the basis of the citizenship of a person or entity or the ownership or launching state of an object.
We already have examples in U.S. law. A U.S. entity requires federal licenses for satellite transmissions to the United States, launching or reentering space vehicles, and remote sensing of Earth from space. The U.S. claims criminal jurisdiction under Title 18 of the U.S. Code over crimes committed against or by Americans when the crime takes place outside of any other country’s jurisdiction.
If we look at how the law would work inside a lunar habitat operated by a private U.S. entity, we must first acknowledge that no U.S. law yet applies to lunar habitats. And Article VI is not self-executing, so the regulatory agencies shouldn’t try to prevent someone from building and operating one.
But let’s make up some law for habitats. First, let’s make it a big habitat so that Canadians and Mexicans may visit the habitat, too. Let’s say that Congress assigned the regulation of lunar habitats to the Department of Housing and Urban Development, and required U.S. habitat operators to get a HUD license much like launch operators need to get an FAA license to launch now.
HUD might promulgate a rule about how licensed habitat operators have to provide sufficient air for all the habitat occupants to keep breathing and stay alive. Also, HUD might prohibit smoking anywhere inside the habitat. The U.S. operator would have to comply with these requirements in order to keep its license. But what about the chain-smoking Canadian visitor to the habitat? Does he?
We might argue that Article VIII of the OST recognizes a country’s jurisdiction over the habitat’s inhabitants; and thus U.S. law applies to that Canadian’s activity. Article VIII says “A State Party to the treaty on whose registry an object launched into outer space is carried shall retain jurisdiction and control over such object, and over any personnel thereof, while in outer space or on a celestial body.” We would need to understand what Article VIII means by personnel. Must personnel be employees of the habitat operator? The Canadian is a paying customer. Those are not usually counted as personnel. Shopping at Nordstrom doesn’t make someone Nordstrom personnel.
But do we need to analyze Article VIII and the meaning of personnel? There are ways for HUD’s regulations to apply to all visitors, but it’s not necessarily because they’re inside a U.S. registered habitat. If a U.S. licensed habitat operator couldn’t rely on Article VIII, the U.S. licensee would likely ensure its own regulatory compliance by contract. It might require the Canadian to agree to abide by all HUD regulations, including the one prohibiting smoking, as a condition of letting the Canadian stay in the habitat. The U.S licensee might even impose a contractual term requiring any visitors to pay a penalty if they put the licensee in breach of its license terms.
Other nations might and do apply their laws to their citizens and registered objects. So their laws apply to those entities and objects. But we don’t say they apply to portions of outer space.