Outer Space Does Not Need Sector-Specific Arbitration Rules

Does outer space need sector-specific arbitration rules? On 6 December 2011, the Permanent Court of Arbitration (PCA) published its Optional Rules for Arbitration of Disputes Relating to Outer Space Activities (Optional Rules). They were created to provide a voluntary and binding dispute resolution mechanism specifically tailored to outer space activities (see Fausto Pocar, An Introduction to the PCA’s Optional Rules for Arbitration of Disputes Relating to Outer Space Activities, Journal of Space Law, Vol. 38, No. 1, p. 171). Since then, both the PCA (see CC/Devas (Mauritius) Ltd., Devas Employees Mauritius Private Limited and Telecom Devas Mauritius Limited v. India, PCA Case No. 2013-09; Deutsche Telekom v. India, PCA Case No. 2014-10) and other arbitration institutions (see Viva Dadwal and Madeleine Macdonald, Arbitration of Space-Related Disputes: Case Trends and Analysis, https://www.mcgill.ca/iasl/files/iasl/arbitration_of_space-related_disputes.pdf, p. 6) have administered space-related disputes. None of them was arbitrated under the Optional Rules, though. This inevitably raises the question of whether outer space activities actually require specific arbitration rules. Or could it be that other arbitration institutions such as the International Chamber of Commerce (ICC) or the London Court of International Arbitration (LCIA) are just as well-positioned to manage space-related disputes? A closer look at some of the characteristics of outer space activities which led the PCA to adopt the Optional Rules should provide valuable insights into these questions.

Technical Expertise

Launching objects into outer space is highly complex. It requires a lot of technical expertise to operate in this unique environment. Accordingly, it also requires technical expertise to resolve space-related disputes. This is why parties involved in such a dispute often choose arbitration instead of adjudication by state courts. In arbitration, they are free to choose arbitrators who offer both the legal and technical expertise (see Fausto Pocar, An Introduction to the PCA’s Optional Rules for Arbitration of Disputes Relating to Outer Space Activities, Journal of Space Law, Vol. 38, No. 1, pp. 178 et seq.).

The Optional Rules aid the parties in finding suitable arbitrators. Under Article 10(4) of the Optional Rules, the Secretary-General of the PCA shall compile a list of competent arbitrators. While there is no denial that such a list will help the parties find competent arbitrators, it does not necessarily explain the need for a sector-specific set of arbitration rules. After all, there is no inherent correlation between the choice of arbitrators and the applicable arbitration rules. Rather, arbitrators will most likely offer their services irrespective of the arbitration rules. In light of this, one may argue that compiling a list of arbitrators could have sufficed.

Confidentiality

Apart from involving complex technical issues, the space industry is also highly competitive, especially when it comes to the costs involved. By radically decreasing the costs of launching rockets into outer space, the space industry has overcome the major limitation to outer space activities, giving states and private actors alike equitable access to outer space (see Wendy Whitman Cobb, How SpaceX lowered costs and reduced barriers to space, 1 March 2019, https://theconversation.com/how-spacex-lowered-costs-and-reduced-barriers-to-space-12586). As the costs involved remain crucial, companies have an understandable interest in keeping their approaches to cost reduction (e.g. modifications and reuse of rocket parts) a secret.

The Optional Rules aid the parties in their need for confidentiality. Under Article 17(6) of the Optional Rules, a party may apply to have information classified as confidential. Moreover, under Article 17(8) of the Optional Rules, the arbitral tribunal may appoint a confidentiality adviser who will report to the arbitral tribunal on issues designated as confidential.

As was the case before with respect to finding suitable arbitrators, here too, the need for a sector-specific set of arbitration rules does not become readily apparent. There is no apparent difference between companies in the space industry and companies in other areas of business when it comes to their desire of keeping certain information a secret. This is why companies generally choose arbitration (see Fausto Pocar, An Introduction to the PCA’s Optional Rules for Arbitration of Disputes Relating to Outer Space Activities, Journal of Space Law, Vol. 38, No. 1, p. 179). This is also why other arbitration rules contain very similar provisions (see e.g. Article 22(3) of the 2021 ICC Arbitration Rules according to which the arbitral tribunal, upon the request of any party, may take measures for the protection of trade secrets and confidential information).

Involvement of States

Finally, outer space activities  involve states. This has not only been true for the better part of the last 65 years (it all started in 1957 when the Soviets successfully launched Sputnik 1). It still holds true. After all, the activities of private entities in outer space continue to require authorization and continuing supervision by the appropriate state party to the 1967 Outer Space Treaty.

There are various articles in the Optional Rules concerning the possibility that states might be involved in a space-related dispute:

• Article 1(2) stipulates that the agreement to arbitrate under the Optional Rules constitutes a waiver of immunity to jurisdiction. While it might certainly be helpful to have such an explicit declaration, it merely is a declaratory statement. As Fausto Pocar correctly points out, consent to arbitration generally constitutes a waiver of immunity to jurisdiction (see Fausto Pocar, An Introduction to the PCA’s Optional Rules for Arbitration of Disputes Relating to Outer Space Activities, Journal of Space Law, Vol. 38, No. 1, p. 182).

• Article 6(1) stipulates that the Secretary-General of the PCA shall serve as appointing authority. The PCA argued that, as an intergovernmental institution, it would be better positioned to manage space-related disputes than other private institutions (see Fausto Pocar, An Introduction to the PCA’s Optional Rules for Arbitration of Disputes Relating to Outer Space Activities, Journal of Space Law, Vol. 38, No. 1, p. 184). So far, states and state entities do not seem to concur. Although they have been involved in space-related disputes (see Viva Dadwal and Madeleine Macdonald, Arbitration of Space-Related Disputes: Case Trends and Analysis, https://www.mcgill.ca/iasl/files/iasl/arbitration_of_space-related_disputes.pdf, p. 5), they have not chosen the Optional Rules.

The possibility of constituting an arbitral tribunal constituted of five instead of three or arbitrators is another concession to issues of state sovereignty that might be involved.

Low Level of Awareness Among Private Entities

Charles Rosenberg and Viva Dadwal have attributed the limited success of the Optional Rules among others to the fact that the PCA enjoys little awareness among private entities (Charles Rosenberg and Viva Dadwal, The 10 Year Anniversary of the PCA Outer Space Rules: A Failed Mission or The Next Generation?, 16 February 2021, http://arbitrationblog.kluwerarbitration.com/2021/02/16/the-10-year-anniversary-of-the-pca-outer-space-rules-a-failed-mission-or-the-next-generation/). Even if this were true, though, one might still argue that the low level of awareness stems from the fact that other institutions are just as competent to manage space-related disputes. This should particularly be true given that so far most space-related disputes have been commercial in nature (see Viva Dadwal and Madeleine Macdonald, Arbitration of Space-Related Disputes: Case Trends and Analysis, https://www.mcgill.ca/iasl/files/iasl/arbitration_of_space-related_disputes.pdf, p. 5). After all, other institutions such as the ICC or LCIA have a great deal of experience in managing these kinds of disputes. 

Outer Space Does Not Need Sector-Specific Arbitration Rules

Surely, there are various reasons why the Optional Rules have not been applied in an actual space-related dispute. When examining the characteristics of outer space activities, one cannot help but notice that arbitrating under the Optional Rules does not become readily apparent. Especially with a view to commercial disputes, other institutions (such as the ICC or LCIA) seem just as capable of accounting for the characteristics of outer space activities. They also provide for the requisite technical expertise, confidentiality and waiver of immunity. What is more: They benefit from a high level of awareness among private entities. Against this background, one may doubt whether we will see a significant increase in cases arbitrated under the Optional Rules.

As for any future prospects of the Optional Rules: Much will likely depend on the subject-matter of future arbitrations. Its vast experience in dealing with disputes involving states and state entities could prove to be more beneficial if, and when, space-related arbitrations leave the sphere of predominantly commercial matters.

The topic of sector-specific arbitration rules and institutions for the space industry has been further addressed here. 

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Space Law and Arbitration?

New Horizons

On 29 September 2022, the World Arbitration Update hosted a topical discussion in a realm that is, a priori, intrinsically decentralized: the interconnection between space law and international arbitration. The panel was moderated by Viva Dadwal (King & Spalding), and featured Prof. Irmgard Marboe (University of Vienna, Austria), Werner Eyskens (Crowell Moring LLP, Partner), Dr. Jan Frohloff (Space Arbitration Association), Nick Storrs (Taylor Wessing, Partner) and Maximilian Trautinger (Schonherr). 

Laying Down the Space Law Framework

Prof. Irmgard Marboe first introduced the Outer Space Treaty of 1967 (“OST”), which set the general principles governing human activities in outer-space. Based on this first foundational Treaty, four other specialized agreements followed: the Rescue Agreement of 1968 on assistance in the rescue of astronauts (which builds upon OST’s articles 5 and 8), the Liability Convention of 1972 (“LIAB”) concerning damage caused by a State’s space objects on the surface of the Earth or to aircraft, the Registration Convention of 1974(“REG”) which builds upon the previous instruments and aims at identifying space objects, and finally, the Moon Agreement of 1979, which notably provides for the peaceful use of the Moon and “other celestial bodies”.

Prof. Irmgard Marboe stressed that these Treaties lay down four principles relevant to international disputes: responsibility, liability, registration, and the definition of a “launching State“.

The principle of responsibility in space law provides that States are internationally responsible for their national activities, conducted both by national governmental and non-governmental entities, in case of violations of international law (“unlawful acts“). The corollary is that the activities of non-governmental entities in outer space, including the moon and other celestial bodies, shall require authorization and continuing supervision by the appropriate State Party to the Treaty.

The principle of liability in space law provides that States are internationally liable for damages caused by space objects for which they are the “launching State“. Liability is absolute for damage on Earth and aircraft in flight, and based on fault for damage caused in outer space.

The principle of registration in space law provides that States have the obligation to register space objects for which they are the “launching State“. Registration creates a link between a space object and the liable State.

The “launching State” refers to a State which: (1) launches or procures the launching of a space object; or (2) from whose territory or facility a space object is launched.

In terms of procedural aspects, the LIAB includes specific rules on outer-space dispute settlement. These rules provide for the establishment of a Claims Commission. The Claims Commission issues recommendatory awards, which will be final and binding if the parties have so agreed. Outer-space disputes may also be resolved through arbitration. In 2011, the Permanent Court of Arbitration published optional rules for arbitrating disputes relating to outer space activities, based on the UNCITRAL Arbitration Rules.

Arbitration as an Efficient Mean to Settle Space Disputes

Werner Eyskens recalled that space is an expanding market, increasingly dominated by private players, and subject to significant constraints. Werner Eyskens contends that, for three reasons, such a market will generate numerous disputes.

First, the scarcity of resources and the multiplication of incidents. Second, the multiplication of private players with short-term economic objectives, which will resort to arbitration to translate potential losses in financial compensation. Third, space activities cover many technical areas that can generate disputes regarding frequency spectrum, environment, tourism, etc.

Werner Eyskens observed that arbitration may be the most appropriate way to settle these disputes, because of the advantages it offers over State courts:

• an independent forum;
• the possibility to choose the language of the proceedings and to designate specialized arbitrators;
• confidentiality;
• a controlled document production process; and
• the opportunity for parties to bring forward their own experts.

The Specific Features of Space Arbitration

Dr. Jan Frohloff, editor-in-chief of the Space Arbitration Blog, stressed that space arbitration presents three features. First, space disputes can become political, since satellites and rockets are dual-use goods, and because some of the key players in the industry are still space agencies. An example can be found in the Antrix v. Devas saga, where the Indian state-owned company Antrix had leased S-band satellite spectrum to Devas. Five years after the deal was signed, the Devas-Antrix agreement had become mired in controversy, with allegations of corruption, and the government rescinded the contract with Devas.

Second, space activities largely involve public law issues: the selling of satellites abroad requires export-control permits, and the operating of a satellite in orbit requires the right to use the frequency in the relevant orbit. These public law issues regularly find their way to space arbitration. For example, in ABSH v. KT and KTSAT, the arbitral tribunal had to decide whether title to a geostationary satellite had passed from the Korean seller of the satellite (KT) to the foreign buyer (ABS); after Korea’s Ministry of Science issued an order that declared the purchase agreement “null and void” and since KT had allegedly failed to obtain a Korean export permit.

Third, Dr. Jan Frohloff recalled that due to the nature of this industry, space arbitrations are most often confidential: there are therefore few sentences publicly available in this area.

The Impact of Space Debris in the Industry

Nick Storrs observed that “space debris” represent a near-term existential threat to the space industry itself, which therefore has a strong interest in ensuring that this matter is managed. He recalled that damages caused by objects in outer space are principally governed by the LIAB. This liability regime requires to identify (1) to which State the particular debris belong and (2) whether there is a fault. Both of these elements are difficult to determine in practice.

For now, the issue of space debris is largely managed through inter-agency cooperation, like the Inter-Agency Space Debris Coordination Committee, whose Guidelines on Space Debris Mitigation provide a cooperation framework by setting basic standards and objectives.

Space debris management is therefore self-regulated, without an enforcement mechanism. Nick Storrs anticipated that enforceable commitments will become necessary as the industry grows and space debris multiply. Arbitration may have a role in such commitments. Nick Storrs drew a parallel with environmental issues where, in spite of the difficulty of attributing liability, international agreements have defined common standards and have included arbitration as a means of dispute resolution.

The Allocation of Space Resources

Maximilian Trautinger highlighted the issue of the allocation of space resources. In particular, geostationary orbital positions (“GEO”) are a limited resource, and were first allocated through a first come first served approach. In 1977, the International Telecommunication Union (“ITU”) adopted an allotment plan for GEO. For other orbital positions than GEOs, such as the Low Earth Orbit (“LEO”), the first come first served approach still prevails.

The same applies to the use of the radio frequencies, which are also limited resources. While the allotment of radio frequencies in GEOs is managed by the ITU, radio frequencies in other orbits are allocated on a first come first served basis.

The question of resource ownership will therefore become even more pressing in the future. Maximilian Trautinger recalled that the principle of non-appropriation set out in the Outer Space Treaty and the Moon Treaty provides that outer space and celestial bodies are not subject to appropriation.

However, in 2015, the U.S. adopted the SPACE Act allowing US citizens and industries to engage in the commercial exploration and exploitation of space resources. Similar regulations were passed in Luxembourg and Japan, suggesting that the issue of space resources ownership will become an important source of disputes in the future.

Maximilian Trautinger also pointed out the potential conflicts that could arise from (1) the delivery of critical materials based on complex supply chains and (2) the growth of private investments in space, increasingly exposing investors to the risks of this industry.

New Horizons

According to Maximilian Trautinger’s words, we are entering a period of growing frictions in a frictionless space. The principles set out in the existing international legal instruments, established at a time when States were the main players in space exploration, are effectively being challenged. These frictions concern, first of all, the rise of private actors, with their own interests, alongside the States. These frictions are also caused by some States themselves, when they grant their nationals certain rights in contradiction with the principle of non-appropriation. Lastly, these frictions are also due to the intensification of space activities and their consequences, e.g., the multiplication of debris.

These frictions will inexorably give rise to disputes, between different actors, and regarding various issues.  Because of its flexibility and efficiency, arbitration appears perfectly suited to the resolution of these disputes. If it already plays a role today, its wider use will however depend on the adoption of binding international agreements.

This contribution was first published by Jus Mundi on 2 November 2022.

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Investment Protection of Space Assets

The first major international space treaty, the 1966 Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies (the “Outer Space Treaty”) recognizes that “the exploration and use of outer space… shall be the province of all mankind” (Article I). In the decades following the Outer Space Treaty, international investment arbitration has emerged as a powerful tool to check State conduct towards foreign investors in industries such as infrastructure, energy, financial services, and technology.

More than half a century later, the increasing involvement of private commercial parties in outer space activities is testing the boundaries of investment arbitration and international space law. Today, private actors are investing significant financial and technical resources in the space sector, including telecommunications satellite services, space tourism, and resource exploration and mining. 

Although the traditional methods of inter-State dispute settlement remain cumbersome, foreign investors in the space sector may be able to seek investment protections under bilateral investment treaties (“BITs”) and other international investment protection agreements. The application of investment protections in their current form to space assets raises issues of first impression, but arbitral practice has shown that investment arbitration may be used by countries to incentivise and regulate investor behaviour and may find application in commercial space activities. 

With this in mind, we will explore various themes on the challenges and opportunities for investment arbitration in the space sector over three blog posts. In the first blog post of this series, we look at the application of the investment protection regime in relation to space assets and recent investment treaty practice in the space sector.

Are Space Assets “Investments”?

To exercise jurisdiction over a claim, an investor-State tribunal must determine whether there is a protected “investment” made by a foreign “investor”. Most investment treaties contain an “asset-based definition” of “investment” which includes a non-exhaustive list of protected assets. These often include movable and immovable property, shares and financial instruments, intellectual property rights, claims to money, licenses, and concessions, among other types of assets. Tribunals have also sometimes held that investments need to satisfy certain other characteristics such as duration, assumption of risk, commitment of capital, and contribution to the economic development of the host State.

Given the highly complex nature of commercial space activities, significant contribution of capital and risk is typically involved. Further, commercial space activities such as satellite telecommunications are often long-term projects requiring investment over a considerable period. Commercial space activity also often furthers the host State’s own objectives and goals of economic development. Key types of space assets that might qualify as “investments” include satellites and other equipment, contractual rights and licences, and participation in licensed entities operating in the host State.

Territoriality of Space-Based Assets

Investment treaties often require investors to demonstrate that there is an “investment” in the “territory of the host State.” The analysis for tangible assets is usually straightforward with territoriality being determined by the situs of that asset. In investor-State space arbitrations, however, with physical assets such as mining equipment or satellites operating in outer space, challenges with satisfying that territoriality requirement are not unexpected. 

An added layer of complexity is the international space law regime. Notwithstanding that outer space “is not subject to national appropriation by claim of sovereignty” (Article II, Outer Space Treaty), States retain “jurisdiction and control” over any object launched into outer space on their registry (Article VIII, Outer Space Treaty). If outer space is not subject to sovereignty and territoriality claims, respondent States may take the position that the space activities are outside of the territory of the host State (even if such activities are within the host States’ control). Whilst the interpretation of the treaty text is likely to turn on the wording of the specific treaty, investors may in turn attempt to advance the argument that “territory” for the purposes of BITs would include any physical space within the host State’s jurisdiction or control. How a tribunal would receive such an argument remains to be seen. 

Investors may seek to rely on intangible assets (such as licences and contractual rights for commercial space activities obtained under the host States’ licensing regimes) as qualifying investments. In doing so, the mandate of the 1974 Convention on Registration of Objects Launched into Outer Space (the “Registration Convention”) requiring member States to set up registries of space objects might offer some guidance.

An added challenge for investor-State space arbitration is that whilst the Registration Convention requires the “launching State” to register a space object launched from its territory, most space projects involve multiple jurisdictions – for instance, in the telecommunications sector, a satellite may be launched, controlled, and provide services to three different countries. Given this feature of modern space investment, the assessment of territoriality would appear to require a case-specific assessment to determine the degree of territorial nexus with the relevant State. 

Investor-State Cases in the Space Sector

Notwithstanding the scant number of investment arbitrations in the space sector, there are important lessons that emerge from recent practice. Perhaps unsurprisingly, the publicly available decisions thus far concern claims by satellite companies operating in the telecommunications industry.

The Devas-Antrix saga which began in 2011 and yielded multiple arbitration and litigation proceedings across jurisdictions, gave rise to one of the first investor-State space cases. The shareholders of Devas Multimedia Private Limited (“Devas”) brought claims against India under the India-Germany BIT (Deutsche Telekom AG v. The Republic of India, PCA Case No. 2014-10) and the India-Mauritius BIT (CC/Devas (Mauritius) Ltd., and others v. The Republic of India, PCA Case No. 2013-09) for the alleged expropriation of their investments and breach of other treaty standards.

The underlying contractual breach alleged in both cases arose from the same contract: Devas entered into an agreement for the lease of space segment capacity on two Indian satellites with a state-owned company, Antrix Corporation Ltd. (“Antrix”) in 2005. Following the decision of India’s Cabinet Committee on Security to reserve the S-band capacity for defence and other strategic use, Antrix terminated the lease agreement. This termination gave rise to an ICC international commercial arbitration and multiple BIT arbitrations. Notably, the ICC award which required Antrix to pay Devas over US$500 million in damages was recently set aside by the Delhi High Court on grounds of patent illegality and violation of Indian public policy.

The BIT cases from the Devas-Antrix saga addressed the following issues of note:

• Indirect investments: Both tribunals interpreted the unqualified definition in the BITs to include indirect investments. Resultingly, the Claimants’ “shares in, stock and debentures of” and “any other form of participation” in Devas and their indirect partial ownership of Devas’ business assets were “investments”.
• Essential Security Interest (“ESI”): Even though both arbitrations arose from the same set of facts, the tribunals reached opposite conclusions on India’s ESI defence. The CC/Devas tribunal accepted India’s ESI defence holding the termination of the lease agreement to be “absolutely necessary” and “unavoidable” as India was in “genuine need” of the spectrum. The Deutsche Telekom tribunal, by contrast, concluded that there was no connection between India’s ESI and Antrix’s decision to cancel the lease agreement. 

The most recent investor-State decision in the space sector stems from an ICSID arbitration between the French satellite operator Eutelsat (formerly an intergovernmental organisation) and Mexico (Eutelsat S.A. v. United Mexican States, ICSID Case No. ARB/AF/17/2). The Eutelsat arbitration, filed under the France-Mexico BIT, concerned claims arising out of alleged discriminatory regulations requiring spectrum allocation for government use. Whilst foreign licensees were required to allocate 8MHz of their capacity for government use, Eutelsat’s Mexican subsidiary was required to allocate 362MHz, which put it at a disadvantage according to Eutelsat. The Eutelsat award is not public. In 2021, however, it was reported that the tribunal had dismissed Eutelsat’s claim for breach of the BIT’s fair and equitable treatment standard.

It has been  argued that international investment arbitration can be used to incentivize commercial space activities, and even be used to address space collisions and space debris. Whilst this remains an open question, foreign investors in the space sector may still consider turning to investment treaties to protect their investments.

In the next blog post, we will examine applicable law issues in space arbitration proceedings. Given the overlap between public international law instruments such as the Outer Space Treaty, soft law instruments including UN General Assembly resolutions, national legal regimes, and private contracts, choice of law and applicable law issues in these disputes are not always straightforward.

For those interested in investor-State space arbitration, the Space Arbitration Association held a panel discussion on “Can Space Arbitration Protect Space Investments?” on Friday, 2 September 2022. You can view the panel discussion online here.

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Outer Space Needs Sector-Specific Dispute Resolution

On 10 February 2022, the Space Arbitration Association (‘SAA’) hosted a discussion, surrounding the need for an institution specialized in space disputes. It concluded that outer space needs sector-specific dispute resolution. The panel was moderated by Laura Yvonne Zielinski, Founder of the SAA, and featured Alexis Mourre (Past President, ICC Court), Gunjan Sharma (Partner, Volterra Fietta), Evgeniya Goriatcheva (Senior Legal Counsel, Permanent Court of Arbitration), and Amna Al Owais (Chief Registrar, DIFC Courts). It was the second of a 2022 conference series organized by the recently founded SAA, which has set as its mission to provide a forum for discussion between the space and the arbitration communities.

Special Characteristics of Space Contracts and Disputes

The conference kicked off with the first speaker, Alexis Mourre, who introduced the audience to some of the special characteristics inherent in space contracts and space disputes. He started by setting out the circumstances that can give rise to space disputes in the first place. They can range from accidents in the final stages of testing and commissioning of a satellite or total launch failures, to the incorrect positioning of a satellite, the interruption of transmissions or the loss of power, once a satellite is already in orbit. The disputes that arise could therefore be based on a wide range of contracts, including procurement, launch, and/or insurance contracts.

Alexis Mourre noted that whatever the cause of the problem, space contracts and disputes tend to share common characteristics. The first one is the allocation of risk, a result of the technologically intensive nature of conducting operations in outer space. This often results in practice in clauses excluding or limiting liability. For example, in procurement contracts, this typically takes the form of penalty clauses, which in the case of delayed delivery operate as a cap on a manufacturer’s liability. He emphasized that one key consideration for space contracts must be the choice of the legal regime as this determines whether clauses that exclude liability can, for example, be set aside in cases of gross negligence, and whether a limitation of liability can be increased on an equitable basis when certain conditions are met.

Another very common feature of procurement contracts that Alexis Mourre pointed out are provisions of cooperation between the manufacturer and the seller, as well as the purchaser’s access to information. Typically, procurement contracts allow for the presence of representatives of the purchaser in the manufacturing plant; the organization of joint meetings; regular reporting requirements; and joint decision-making on key issues. These considerations are critical from a purchaser’s perspective since in case of an accident, clauses excluding or limiting the liability of the manufacturer may apply, and the manufacturer would typically rely on an internal investigation, the records of which may not be shared with the purchaser. Any level of control during the manufacturing process is thus key for the purchaser. Further, in Alexis Mourre’s experience, the choice of dispute resolution can also be very important. Arbitration usually only permits disclosure of a narrow category of documents, whereas American court litigation may permit access to court discovery, resulting in much broader access to information. Overall, Alexis Mourre still considered that arbitration was more suited to space disputes than litigation for the main reason that it allows the parties to a dispute to select arbitrators with the necessary technical knowledge of space activities. In his view both, the ICC and arbitration under the Optional Rules for Space Disputes of the Permanent Court of Arbitration (“PCA”), are an excellent choice for institutional space arbitration.

Laura Yvonne Zielinski then asked the panelist several related questions. First, why arbitration is particularly well suited to space disputes, Alexis Mourre provided three reasons: (1) in arbitration, once a matter is decided, that decision is final and can be enforced relying on the New York Convention; (2) in arbitration, the parties will have the advantage of being able to choose specialized arbitrators with experience in the field; and (3) in arbitration, the parties will have greater control over, and thus greater proximity to, the process as a whole. Second, whether mainstream arbitral institutions are well placed to administer space arbitration proceedings. Alexis Mourre replied that in his view what is important is to have space experts as decision-makers and the administering institution should have the necessary experience and resources to appoint such arbitrators if required. Third, whether mediation might have a place in resolving space disputes. Alexis Mourre noted that this would in principle be very desirable since many litigated issues are technical in nature – if only to see whether positions on such issues can be reconciled, or to go to arbitration in a more balanced and informed way. Nonetheless, in his view it is crucial for the mediator to have knowledge of the industry, and the importance of drafting a clear mediation clause cannot be underestimated.

Special Considerations When Pleading Space Evidence to Arbitral Tribunals

Gunjan Sharma continued the discussion by setting out considerations for pleading evidence in space related disputes to arbitral tribunals. In his opinion, there have only been three space arbitrations in excess of USD 100 million: Eutelsat v Mexico; Devas/Deutsche Telekom v India; and Al Jazeera v Egypt. He highlighted that, when pleading such cases to arbitral tribunals, there exist two unique aspects. First, an important source of law in space disputes is public international law, such as the Outer Space Treaty and related instruments, and international investment law. The second unique aspect is the recurring technical evidence, which relates to two aspects of space operations: (1) getting the satellite into outer space, and (2) after the launch, the scientific basis on which that satellite can be used for commercial purposes. Currently satellites are used for two main purposes: Earth imaging and telecommunications. The science, such as the usability of orbital spectrum, the orbital slot, or the terrestrial components of the system, are mere ingredients determining how much money can be pulled out of the system and, relatedly, how much damage one can claim in a dispute. As a result, scientific evidence really becomes the core of space disputes.

Since “lawyers make bad engineers”, Gunjan Sharma therefore recommended to take a five-step approach to pleading space-related scientific evidence before arbitral tribunals: (1) Advise client(s) to prepare for a dispute as early as possible: a lawyer should have plans and procedures in place, such as those concerning evidence collection and making sure that documents are at all times retained; (2) Find the right, neutral expert: a lawyer should know someone who can refer him/her to the right experts for the case (from the International Telecommunications Union, regulators, companies, etc.). An arbitral institution’s list is a good start but the best method is to rely on referrals; (3) Make comprehensive submissions on every aspect of the case (including public international law); (4) Find the right way to cross-examine the other side’s expert: a lawyer should start early to frustrate the other expert’s credibility before the hearing, given the unique challenge of the engineer’s expertise and the tribunal’s likely non-comprehension of the issues; (5) Close well: a lawyer should close in an accurate, concise, and commonsensical way, since tribunal members are not space experts after all.

In response to the question formulated by Laura Yvonne Zielinski on what the best strategy was to explain space law to the arbitral panel, Gunjan Sharma noted that it is necessary to link it to what the tribunal knows, such as public international law. Moreover, on the so-called “name and shame” method to litigation (which involves telling the world who did the damage and hope they stop), he observed that he does not recommend it, since: (1) often there is a lack of evidence to prove the allegations; and (2) if you are wrong, this could possibly result in a defamation suit.

An Introduction to a Mechanism of Space Arbitration: The PCA’s Optional Rules for Arbitration of Disputes Relating to Outer Space Activities

Evgeniya Goriatcheva then proceeded to introduce one of the available specialized instruments for dispute resolution in the space sector: the Permanent Court of Arbitration’s Outer Space Rules (the “Rules”). She highlighted that the Rules were adopted in 2011, the idea having first surfaced in 2009 as a result of: (1) the growing potential for disputes from the commercialization of space, involving a variety of actors; (2) the existence of gaps in existing dispute resolution mechanisms, especially for private actors; and (3) the lack of appetite by States to ratify a treaty, which became clear after the failure of the International Law Association’s 1998 Draft Convention for the Resolution of Space Disputes. The Permanent Court of Arbitration thus envisaged that a way to move forward was to make available a different set of arbitration rules, the use of which would depend on the consent of the parties to any given dispute. Evgeniya Goriatcheva noted that this involved collaboration with an expert group of 13 leading experts in aerospace law, who considered that the instrument would have to be international, accessible to both public and private actors, and should be able to deal with very high demand. They also thought that arbitration was the right mechanism to go for, since: (1) arbitration is available to all parties that are active in the space sector: (2) arbitration is a voluntary mechanism: (3) arbitration results in final and binding decisions: (4) arbitration allows parties to choose their own decision-makers: and (5) arbitration ensures confidentiality of sensitive information.

Evgeniya Goriatcheva set out key aspects of the content of the PCA’s Outer Space Rules, noting that they are based on the 2010 UNCITRAL Rules, with some departures to address the peculiarities of space disputes. First, she noted that the Rules alert the parties that by agreeing on an arbitration under the Rules, parties waive their immunity from jurisdiction (but not from execution). Second, to address some of the technical and scientific complexities, the Secretary General of the PCA has been empowered to create a list of arbitrators and experts proposed by Member States, the use of which is optional. Moreover, whenever the tribunal thinks its own knowledge is insufficient, it can appoint a technical expert, and/or request the parties to provide non-technical explanations. Third, she observed that the Rules also suggests several mechanisms for the protection of confidential information. Evgeniya Goriatcheva then addressed the PCA’s role under the Rules themselves, noting for example that the International Bureau of the PCA would be administering the cases, and that the Secretary General of the PCA is the appointing authority, which gives him the responsibility of, upon request, appointing, replacing, and deciding challenges against, arbitrators.

In reply to Laura Yvonne Zielinski’s question of whether the PCA’s Rules are available to all or just to States, Evgeniya Goriatcheva emphasized that all kind of actors have access to the rules: the dispute can be between private parties, between private parties and a State, or even between two States. Moreover, she noted that the feedback they had received on the Rules was overall very positive, and that they receive regular inquiries, with some actors having already included the Rules in their contracts, although there has been no dispute under the Rules yet. Finally, on whether it would be desirable to establish an international space tribunal, Evgeniya Goriatcheva responded that it could provide a more effective remedy for private parties against States than the PCA, which requires parties’ consent. But the problem here is one of political will, or rather the current lack thereof.

An Introduction to a New Mechanism of Space Litigation: The DIFC Courts

Finally, Amna Al Owais introduced viewers to the DIFC Courts, in particular the Dubai Space Courts’ Initiative. She first provided an introduction to the Courts, highlighting that they form part of the Dubai International Financial Centre and were created with the underlying rationale of creating confidence in the domestic legal system, thus inviting companies to come to the United Arab Emirates. The Courts are international in nature working in English and following the common law approach, although based in a civil law country. They handle civil and commercial cases, and since 2011, they are a “forum of choice” and are thus open to any party, and can apply any (common) law the parties have chosen in their contracts. The Courts are moreover based on four primary pillars: (1) judicial excellence; (2) service excellence; (3) connectivity; and (4) innovation. Amna Al Owais emphasized that the DIFC Courts are one of the most connected courts in the world, with all common law jurisdictions honoring their judgments, and the added benefit of being able to enforce all the treaties the United Arab Emirates (“UAE”) have entered into internationally.

Amna Al Owais then turned to the Courts of Space Initiative, which officially commenced in 2021, and forms part of the broader Courts of the Future Initiative the Centre had started in 2017. She set out the three-step strategy that the Centre pursues to become the new and best forum of choice for future space disputes: (1), they are attracting thought leaders in space from various career paths, such as lawyers; representatives of space agencies; and observers from the UN Space Office; (2), they are thinking about what types of disputes could occur in the future, moving away from more traditional ones, such as satellite collisions. Amna Al Owais highlighted that they created a special disputes’ guide, the first edition of which sets out the types of procedures that one must follow in filing a case with the DIFC Courts, and the second edition of which will look at what is likely to happen in outer space and the disputes this will likely give rise to (such as, those arising from future Moon and Mars explorations); (3), they are providing a training series for registry staff and judges on the subject matter of outer space, including on the existing international space treaties.

When asked by Laura Yvonne Zielinski  why Dubai is the right place for space dispute resolution, Amna Al Owais responded that: (1) Dubai has recently focused a lot on outer space activities, with successes such as the first UAE astronaut and the first Mars mission, and the Courts are thus supporting the UAE indirectly, providing the certainty commercial parties need; and (2) the Dubai Courts operate in a unique manner, the primary objective being to provide for dispute settlement before going to trial. She concluded that its connectivity approach means that it can provide the best of two worlds, being a civil law country but operating in common law.

Concluding Remarks

At the end, Laura Yvonne Zielinski asked the panelists some of the questions that had been asked by members of the public throughout the event. The first question addressed the law that would be applicable to disputes arising out of space collisions. In response, Gunjan Sharma pointed out that, in principle, it would be the Liability Convention, which provides that the launching State is liable for damage caused to another State or its nationals, if at fault. The second question asked what made the PCA Rules so different from other arbitration rules. Evgeniya Goriatcheva responded that, to start with, the whole point of the Rules was to provide for consistency and predictability and hence they were never meant to be too different from existing arbitration rules. However, they were tweaked to respond to the heavy State involvement and very technical aspects of space disputes.

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The New Space Race:
Risks and Opportunities

On 31 March 2022, as part of Paris Arbitration Week 2022, Debevoise hosted a webinar entitled “The New Space Race: Risks and Opportunities.” Catherine Amirfar, Co-Chair of Debevoise’s International Dispute Resolution and Public International Law Groups, moderated the discussion.

The panelists were David Bertolotti, Director of Institutional & International Affairs at Eutelsat; Julien Cantegreil, Founder & CEO of SpaceAble; Chris Kunstadter, Global Head of Space at AXA XL; and Lynn Zoenen, Principal and Managing Director at Alpine Space Ventures. The panel discussed the 21^st century “new space race,” driven by private commercial development, and how the international legal landscape is adapting to this paradigm shift.

A recording of the session is available here, and key takeaways from the discussion are highlighted below. 

Key Role of National Legislation

Activities in space are regulated by both national and international laws. This legal framework is still evolving, however, with gaps at the international level leading to overlapping standards, or an absence of regulation altogether, at the national level. The foundational international instruments of space law were concluded in a bygone era of space exploration dominated by a small number of State actors. These foundational treaties primarily govern the activity of States, speaking little to the obligations of private entities in space. As private space activity has boomed since the beginning of the 21^st century, national laws have proliferated to regulate commercial space actors. The panel focused on the example of France’s national space law.

Quasi-Regulating Function of Insurance

Aside from national law obligations and industry-led norm generation, space insurance providers may incentivize behavior through their underwriting policies. The panel illustrated this through the example of insurers offering more attractive policy options and lower premiums to space operators utilizing propulsion mechanisms – technology that allows objects in orbit to better avoid collision – on their spacecraft. Insurers thereby encourage more space actors to mitigate risk and make space safer. Moreover, the existence of insurance promotes greater investment, further spurring technological progress. 

Technological Advancements

Private space activity is a rapidly growing field with enormous investment potential: at the same time that space-based activity has become more economically viable for private actors, technological developments are creating increasingly compelling business opportunities. For example, the panel highlighted increasing interest among venture capital and private equity institutions in start ups developing lightweight and reusable materials for launch systems and satellites, and those focused on increasing Internet connectivity outside of urban areas or enhancing Earth observation from space.

Process and Norm Creation

In the absence of binding and cohesive legal rules that take into account the growth of private-actor activity, practical questions are therefore often left to industry-specific norms, in a “bottom-up” process of norm creation. The panel discussed the example of industry players developing and testing new technologies and capabilities, and then creating their own guidelines for deploying those technologies and capabilities, which, as adopted across the industry, become industry standards. Those standards in turn often influence regulation at the national level. Over time as many national laws adopt the same standards, they may be formalized at the international level, as customary international law.

Risk Management

Counterbalancing the opportunities for increased investment in space are the growing risks of overcrowding, collision, and debris creation. These risks are compounded by increased military activity in space, including the targeting of space objects with signals jamming or cyberattacks. The panelists agreed that to effectively manage the most serious risks of space commercialization, binding, enforceable laws – developed through the cooperation of governments and commercial actors to ensure they are in touch with industry realities and avoid overregulation – are necessary.

Likely Increase in Space-Related Disputes

Recent years have seen an uptick in space-related disputes. The panel mentioned the examples of disputes between satellite manufacturers and operators and insurance disputes. As space continues to become more crowded, it can be expected that attribution of liability in cases of collision will be a central issue. Development of technology to precisely identify and chronicle the location and velocity of debris and other objects in orbit will become integral to the resolution of such disputes.

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