Player vs. Player (PvP): Upon death, your gear remains on your body for 10 minutes. This window allows for a recovery attempt or for the victor to loot. After 10 minutes, the gear is "claimed" by the nearest AI or the AI that spawned in that sector or map.
Player vs. Environment (PvE): If killed by an AI, your equipment is immediately transferred to that AI (or the nearest one), forcing you to hunt down the specific unit to get your gear back.