Investor-State Space Arbitration Rules

As foreshadowed in previous blog posts here and here, the development of international space law has not entirely kept pace with the increasing commercialization and privatization of outer space activities. As a result, several stakeholders in the space sector have called for a specialized arbitral institution to address the lack of recourse for private entities.

According to a recent survey of space arbitrations presented at the International Astronautical Congress, most commercial arbitrations in the space sector were administered under the ICC Rules, the ICDR Rules or the LCIA Rules. But no such data is available for investor-State claims. The survey concludes that while existing international arbitration infrastructure appears to be adequate, “there exists an opportunity for players in the arbitration market […] to develop a reputation for comparative expertise in space-related dispute resolution”.

In this piece, we look at the existing options for space actors to pursue sector-specific investment treaty claims, including under the PCA Optional Rules for Arbitration of Disputes Relating to Outer Space Activities (the “PCA Outer Space Rules”). We briefly examine the broad arguments in favor of and against the need for a specialised institution for space cases and its implications for the space sector.

The Current Landscape

Apart from urging their home States to use mechanisms for inter-State dispute settlement such as the International Court of Justice or the Claims Commission under the Liability Convention, there are scant opportunities for private space actors to pursue claims either against States or private parties with which they lack a contractual relationship. Whilst industry-specific dispute resolution mechanisms exist (including the International Telecommunications Satellite Organisation Agreement, the European Telecommunications Satellite Organisation Convention, the International Mobile Satellite Organisation Convention, and the Constitution of the International Telecommunications Union), these apply only at the inter-governmental level. Over the last few decades, however, several arbitral institutions have stepped in to fill this gap.

International Court of Air and Space Arbitration (ICASA)

The ICASA was set up by the Société Française de Droit Aérien et Spatial in 1994 and is in Paris. The ICASA Rules provide that any proceedings thereunder would be subject to “absolute secrecy”. As a result, no case information is publicly available. Although institutions like the Shanghai International Aviation Court of Arbitration and the Hague Court of Arbitration for Aviation support aviation arbitrations, it appears that the ICASA is the first (and only) arbitral institution specifically designed to administer space disputes.

Draft Convention on the Settlement of Space Law Disputes

In 1998, the Space Law Committee of the International Law Association adopted the final draft of the Draft Convention on the Settlement of Space Law Disputes (the “Draft Convention”). The Draft Convention provided for three options for dispute settlement: (a) the International Court of Justice; (b) an International Tribunal for Space Law to be created by the Draft Convention; or (c) an arbitral tribunal. Notably, both States and private parties could initiate claims under the Draft Convention.

However, there was no consensus between States for the Draft Convention to be adopted into a binding treaty and resultingly, the International Tribunal for Space Law was never set up. In any case, there are several provisions of the Draft Convention that are out of step with contemporary arbitral practice such as lack of annulment provisions. Even though the Draft Convention has not been adopted by countries as a treaty, it provides useful background into the structure and function of any future institution administering investor-State space cases.

PCA Outer Space Rules

The PCA Outer Space Rules 2011 were formulated by the Permanent Court of Arbitration as industry-tailored rules that may apply to disputes between States as well as private actors. The PCA Outer Space Rules are based on the 2010 UNCITRAL Arbitration Rules and reflect “the particular characteristics of disputes having an outer space component involving the use of outer space by States, international organizations and private entities”. For instance, the PCA Outer Space Rules provide for an automatic waiver of sovereign or other immunity considering that inter-governmental and State actors may be party to arbitral proceedings. It also provides for a specialized panel of arbitrators (including lawyers and non-lawyers) and scientific and technical experts.

Recognizing the technical nature of the space industry, the PCA Outer Space Rules specifically empowers the arbitral tribunal to request “a non-technical document summarizing and explaining the background to any scientific, technical or other specialized information” from the parties and to appoint a “confidentiality adviser” to review the confidentiality of any information provided by the parties. Notably, the PCA Outer Space Rules may be used by parties for an investor-State proceeding as well.

Although there are no publicly available arbitrations under the PCA Outer Space Rules, the PCA noted that the “feedback they had received on the Rules was overall very positive”. Importantly, the PCA Outer Space Rules provide a framework for any future arbitral institutions including the degree to which any procedural rules would need to be tailored to fit the needs of the space industry.

DIFC Courts of Space

The latest specialized dispute resolution body in outer space is the DIFC Courts of Space.  The Courts of Space is a collaboration between the Dubai International Financial Centre Courts and the Dubai Future Foundation. It launched a Space Disputes Guide detailing the types of space disputes that can be brought before it and maps some broad dispute scenarios and the applicable procedure.

Specialized Arbitral Institution for Investor-State Space Arbitration

Proponents of the need for an institution administering outer space disputes often cite the lack of specialized knowledge and expertise in existing dispute settlement mechanisms to support the space industry. Indeed, there have been various calls to establish an arbitral institution on the lines of the ICSID to administer investor-State space cases and an International Court of Air and Space Law. Whether States will be able to gather consensus at a multilateral level remains to be seen. However, recent attempts on a bilateral or plurilateral basis such as the Artemis Accords might be used as a template for approaching the establishment of any such specialized institution.

On the other hand, while specialized arbitral institutions could be helpful, the adaptability of current procedural rules cannot be ignored and is a more straight-forward platform for the resolution of international commercial space disputes, at least in the near term. Given the track record of leading arbitral institutions such as the ICC, LCIA, ICDR, and SIAC (among others) at effectively administering arbitrations in multiple sectors including highly technical ones such as finance and technology, there is no reason that these institutions cannot meet the needs of the space industry, as many examples of space-related cases under traditional arbitration rules have shown.

In the case of investor-State disputes, as most investment treaties provide for ICSID or UNCITRAL arbitration (newer treaties include institutional arbitration as well), the utility of a new arbitral institution is questionable. Even if the need for a specialized institution is perceived by some as the number of space disputes grow, there will be a need for a broad-based survey of space actors before any such action is taken. Apart from developing a specialized institution like the ICSID for investor-State space cases, which seems unlikely in the near term, States would also need to examine their investment treaties to ensure that any such institution is suitably referenced in the relevant investor-State arbitration clause.

For those interested to explore this topic further, the Space Arbitration Association held a panel discussion on “Is There a Need for an Institution Specialized in Space Disputes?” on Thursday, 10 February 2022. You can view the panel discussion online here and read the conference report here.

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Inter-State Space Arbitration

On 26 April 2022, the Space Arbitration Association (‘SAA’) hosted its fourth event, a discussion surrounding the question of whether we should expect inter-state space arbitration. The panel was moderated by Laura Yvonne Zielinski, Founder of the SAA, and featured Daniel Müller (FAR Avocats), Prof. Irmgard Marboe (University of Vienna, Austria), Natalie Reid (Debevoise & Plimpton), and Alexander Soucek (European Space Agency). It was the fourth of eight sessions of the 2022 conference series of the recently founded SAA, which has set as its mission to provide a forum for discussion between the space and the arbitration communities.

The General Framework Governing States’ Space Activities

Daniel Müller started his presentation by recalling that space law is inherently inter-state law, both by its object and its sources. (1) Space activities were originally conducted exclusively by States with scientific and military objectives. Private actors emerged only later, when the commercial interest of space activities appeared.  (2) the sources of international space law are mainly inter-state legal instruments. 

The launch of the first artificial Earth satellite Sputnik, in October 1957 marked the beginning of states’ interest in the regulation of space activities. A month after the launch, in the course of discussions around a UN General Assembly resolution on disarmament, discussions were opened for the first time on the possibility of banning the military use of outer space. In the two decades that followed, the UN General Assembly adopted several resolutions setting the framework for space activities.

Daniel Müller drew several conclusions from these texts. First, all of them, except the “Moon Treaty” of 1979, (United Nations, General Assembly, Resolution 34/68, Agreement Governing the Activities of States on the Moon and Other Celestial Bodies, 5 December 1979) have been ratified by a significant number of states. However, they remain essentially a patchwork of rules laying down broad principles that have been accumulated over the years. This fragmentation of space law is reinforced by the large number of regional and bilateral cooperation agreements. 

As part of international law, space law should be subject to the established principles of inter-state dispute resolution. Yet, there is no obligation under international law to resolve disputes by recourse to courts and tribunals. Article 2 of the United Nations Charter merely imposes a general duty to settle disputes between UN members “by peaceful means”, but does not compel the parties to use a specific dispute resolution process.

Daniel Müller noted that, to a large extent, states have not committed to any dispute resolution mechanism through UN resolutions. During the negotiations of the Moon Treaty, the United States tried to insert a provision for the resolution of disputes before the ICJ. It was however rejected by the other member states, due to mistrust of the ICJ at that time. Instead, Article 15 of the Moon Treaty provides for mandatory consultation in the event that a state fails to comply with its treaty obligations. In case of failure of the consultation, the Moon Treaty invites states to resolve their dispute by other peaceful means. Daniel Müller, though, noticed that states tend to accept arbitration agreements more readily in regional agreements (e.g., see below for the European Space Agency Convention).

The International Law Association (“ILA”) has been studying the question of settlement of space law disputes since 1978. In 1984 and 1998, it published a draft convention on the settlement of space law disputes (ILA Draft Convention on the Settlement of Space Law Disputes, Report of the 68th Conference of the ILA 1998, p. 241.), which proposes both binding and non-binding dispute resolution procedures. Among the binding mechanisms, states would be able to choose between an international tribunal for space (yet to be created), the ICJ, and arbitration. 

The Liability Convention and the Claims Commission

Professor Irmgard Marboe focused on the unique state liability regime created by the Convention on International Liability for Damage Caused by Space Objects (the “Liability Convention”) of 1972 (United Nations, General Assembly, Resolution 2777 (XXVI), Convention on International Liability for Damage Caused by Space Objects, 29 November 1971). Under general international law, state liability usually arises from an act of a state violating international law and causing a damage. Under the Liability Convention, however, state liability only arises from the launching of the object that has caused a damage, and only concerns the “launching state”. A “launching state” may designate (i) a state which launches or procures the launching of a space object (ii) a state from whose territory or facility a space object is launched. 

Under the Liability Convention, launching states may be held liable under absolute or fault liability, depending on where the damage occurred. The Liability Convention holds a launching state absolutely liable to pay compensation for damage caused by its space objects “on the surface of the Earth or to aircraft in flight”, regardless of whether it committed a wrongful act. For damages caused “elsewhere than on the surface of the earth” (e.g., a damage caused to a person in outer space), a launching state may be held liable “only if the damage is due to its fault or the fault of persons for whom it is responsible”. Professor Marboe stressed that this fault liability regime derives from the idea that, contrary to what happens on the surface of the Earth or to an aircraft in flight, victims here are not necessarily innocent bystanders.

The Liability Convention also provides for a state-centered dispute settlement mechanism, as an alternative to proceedings before national courts, administrative tribunals or agencies. Hence, victims must choose whether they want to rely on the Liability Convention mechanism, or pursue a claim before courts, tribunals or agencies. These two types of proceedings cannot be cumulated.

The claim is brought by the state which suffers the damage, or whose nationals or permanent residents suffered the damage, not later than one year after the occurrence of the damage. It is first brought through diplomatic channels and, in case of absence of diplomatic relations between the relevant countries, through the United Nations Secretary General. If no settlement is reached after one year of negotiations, the parties shall establish a Claims Commission at the request of either party. In many aspects, the Claims Commission is similar to an arbitration tribunal. The Commission is composed of three members. Two of them are appointed by the parties, and jointly designate the chairman.

The Claims Commission shall determine the “merits of the claim” for compensation, and determine the amount of compensation payable. Professor Marboe stressed that the Liability Convention has the particularity of providing clear guidance for determining the amount of compensation. According to Article XII of the Liability Convention, the compensation “shall be determined in accordance with international law and the principles of justice and equity” and “restore the person, natural or judicial, State or international organization on whose beheld the claim is presented to the condition which would have existed if the damage had not occurred”.  Professor Marboe stressed that, with Article XII of the Liability Convention, states have agreed that equity could be taken into account. The same article also provides for a principle of full reparation, with a wording similar to the Factory at Chorzów decision (Factory at Chorzów (Merits), PCIJ Series A. No 17).

The decision of the Commission will be (1) a final and binding award if the parties have so agreed, or (2) a recommendatory award which parties shall consider in good faith. Any state, on becoming a party to the Convention, may declare that it will recognize as binding, in relation to any other state accepting the same obligation, the decision of the Claims Commissions concerning any dispute to which it may become a party (United States General Assembly, Resolution 2777 (XXVI), Convention on International Liability for Damage Caused by Space Objects). On April 2022, only eight states had made such declaration: Austria (1980), Canada (1975), Denmark (1977), Ireland (1975), New Zealand (1974), Norway (1995), Sweden (1976), and the Netherlands (1981) 

In order to improve the Liability Convention, Professor Marboe suggested that a new United Nations General Assembly (“UNGA”) Resolution could allow and encourage states parties to the Convention to make binding declarations ex-post. Also, the UNGA should allow international organizations parties to the Convention (e.g. ESA, EUMETSAT) to make binding declarations. 

No Claims Commission has ever been established on the basis of the Liability Convention yet. In 1978, following the scattering of radioactive debris over northern Canada by the defunct Soviet satellite Kosmos 954, Canada issued a claim against the Soviet Union, based among others on the Liability Convention. Although the dispute was finally resolved diplomatically, this remains the only time the Liability Convention has been invoked so far.

Alongside the Liability Convention, article 33 of the United Nations Charter provides for the resolution of interstate disputes by “negotiation, enquiry, mediation, conciliation, arbitration, judicial settlement, resort to regional agencies or arrangements, or other peaceful means of their own choice.”

Property Rights and Ownership of Space Resources

Natalie Reid stressed that a potential area of dispute between states concerns property rights and ownership of space resources. These issues will gain momentum with the development of space mining activities conducted by both state and non-state actors, i.e., the recovering, excavating or extracting of space resources, including the extraction of minerals or water from asteroids or other space objects. 

However, these issues suffer from a lack of legal clarity, and sometimes even a lack of law. The Outer Space Treaty (United Nations, General Assembly, Resolution 2222 (XXI), Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies, 19 December 1966) and the Moon Treaty, according to Natalie Reid, have crystallized the competing views of states on these issues.

The principle of non-appropriation has been adopted, in the Outer Space Treaty, through the prism of inter-state relations. Therefore, the Treaty does not include any express provision regarding property rights. The Moon Treaty, on the other hand, states that the moon and its natural resources are the “common heritage of mankind”. Therefore, the Treaty prohibits the appropriation of the moon or its natural resources by any state, international or national organization, or any natural person. However, while 112 states had ratified the Outer Space Treaty on 1 January 2022, only 18 had ratified the Moon Treaty.

This lacuna in the international treaty framework was invested by some states which recognized property rights over space resources under their national laws. Countries like the UAE, the United States, Luxembourg and Japan have passed domestic legislations governing private entities and individuals’ rights to explore, exploit and utilize space resources. On 13 October 2020, the Artemis Accords were signed between 20 countries participating in the Artemis Program, an U.S.-led effort to return humans to the Moon by 2025 (The Artemis Accords: Principles For Cooperation In The Civil Exploration And Use Of The Moon, Mars, Comets, And Asteroids For Peaceful Purposes, 13 October 2020). The Accords express the view that recognizing property rights of private entities for space resources is not incompatible with the non-appropriation principle set out in the Outer-space Treaty. 

Some organization, like the Working Group on Space Resources and the Hague International Space Resources Working Group, seek to conciliate the willingness of some states to promote private property rights in space, with the view promoted in the Moon Treaty. Despite these initiatives, the potential for disputes remains strong in this area. 

The Permanent Court of Arbitration published optional rules for arbitrating disputes relating to outer space activities, based on the UNCITRAL Arbitration Rules. According to Natalie Reid, such pre-drafted rules administrated by a known institution facilitate the resolution of disputes by arbitration.

However, it appears from publicly available information that these optional rules have not been applied in any inter-state dispute since they have been issued by the PCA in 2011 (although confidential arbitrations may have taken place under these rules). Natalie Reid stressed that states have arbitrated disputes related to outer space through other institutions, and even through the PCA under the older version of the UNCITRAL rules. The lack of uptake of the optional rules may be explained by two reasons: (1) numerous disputes related to outer space arise from contracts or treaties concluded before the optional rules were published in 2011; (2) while most of the actors who have been involved in space related arbitrations are private actors, the PCA optional rules are best known among states and international organizations. 

With the development of space mining disputes, which will involve states, Natalie Reid identifies three key issues. First, whether states will become comfortable with the resolution of disputes by a binding arbitration. Second, whether states will accept public arbitration, permitting commentators to follow the development of the law. Third, the success of outer-space dispute arbitrations will be conditioned to a lessening of the political attention, and a focus on clarifying some of the continuing legal questions that remain.

The Perspective of the European Space Agency on Inter-State Space Agency

The European Space Agency (“ESA”) is an international intergovernmental organization with legal personality. It is composed by an executive organ, the Director General, and a plenary organ, the Council, where the member states of ESA can express their will. The founding Treaty of ESA was signed in 1975 and entered into force in 1985 (Convention for the establishment of a European Space Agency, CSE/CS(73)19, rev.7, 30 May 1975). ESA counts 22 member states and 3 associate members. 

Alexander Soucek explained that ESA was involved in three different types of disputes. First, disputes between two or more member states, or between ESA and its member states. Article 17 of the ESA Convention states that, when these disputes cannot be settled amicably through the council, they shall be submitted to arbitration. To complete this article, the Council adopted Additional Rules on Arbitration (ESA, Additional Rules on Arbitration, ESA/REG/006, 13 December 1984). In practice, Article 17 of the ESA Convention has never been used. According to Alexander Soucek, this has to do with the fact that, since international space cooperation requires to maintain existing relationship, state actors are incentivized to resolve their disputes through consultation and negotiation.

Second, the disputes related to ESA procurement contracts with the European industry. Annex I of the ESA Convention states the ESA, when concluding such written contracts, shall include an arbitration clause specifying the law applicable and the country where the arbitrators sit. The dispute resolution clause included in the General Clauses and Conditions for ESA Contracts  provides for a two-step procedure: if a first conciliation procedure fails, the dispute will be submitted to arbitration and settled in accordance with the rules of arbitration of the International Chamber of Commerce (ESA, General Clauses and Conditions for ESA Contracts, ESA/REG/002, 17 june 2010).

Finally, ESA is involved in disputes based on international agreements. Since 1985, ESA has entered into more than 500 international agreements with intergovernmental organizations, international institutions, and governments of member and non-member states. These go from general agreements, setting up the framework of the cooperation between ESA and a country, to more specific agreements covering, for example, cooperative space missions. 

Most of these agreements contain dispute resolution provisions. These provisions largely contemplate international arbitration as a last resort, after consultation and negotiation, with a level of details varying between agreements. (a) Some agreements provide for the possibility, in case negotiations failed, of resorting to a dispute resolution mechanism as mutually agreed by the parties. (b) The vast majority of the agreements however, provide for the conditions under which arbitrators are chosen and the binding nature of the award, but leave the determination of both the seat and the procedure to the arbitrators. (c) Other agreements even provide for additional conditions with respect to the arbitrators.

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Private Parties in Space Law

There needs to be room for private parties in international space law. On 24 March 2022, the Space Arbitration Association (‘SAA’) hosted a discussion on whether there is room for private parties in international space law. The panel was moderated by Laura Yvonne Zielinski, Founder of the SAA, and featured Daniela María Rojas Garcia (Legal Counsel, Colombian Civil Aviation Authority), Dr. Grace Nacimiento (Partner, Graf von Westphalen), Rada Popova (Legal Counsel, Isar Aerospace) and Rachael O’Grady (Partner, Mayer Brown). It was the third of a 2022 series of conferences organized by the recently founded SAA, which has set as its mission to provide a forum of discussion between the space and the arbitration communities.

An Overview of Existing International Space Law and its Characteristics

The conference kicked off with the first speaker, Daniela María Rojas Garcia, who provided a summary of existing international space law and its characteristics. Firstly, there is the Outer Space Treaty, which establishes the principles applicable to space activities. Secondly, there is the Rescue Agreement, which establishes that astronauts are regarded as envoys of mankind in outer space. Thirdly, there is the Liability Convention, which establishes fault-based liability for damage caused in outer space, and absolute liability for damage caused on the surface of the Earth, resulting from a State’s own space activities or those carried out by private entities under their jurisdiction. Fourthly, there is the Registration Convention, which promotes the registration of all objects launched into space. Finally, there is the Moon Agreement, which addresses commercial exploitation of outer space for the first time. It establishes that space activities are to be developed in a way that guarantees the peaceful nature of outer space and celestial bodies, considering them the common heritage of mankind. It is the least ratified amongst the space treaties, but Daniela María Rojas Garcia noted that the existence of this treaty itself shows the importance of the development of sustainable legal rules for the space sector. 

This treaty framework is supplemented by general international law, and States have developed “soft law” principles, including on issues related to the use of artificial satellites for international broadcasting. One key feature of all these regulations is that it continues to focus entirely on States. This is the reason why States continue to be held responsible and liable, and why they need to authorize and continuously supervise private parties’ space activities. However, due to private ventures into outer space, Daniela María Rojas Garcia highlighted the need for regulation tailored specifically to private parties. She believes that the current framework is flexible enough to enable States to develop harmonic domestic laws to promote space activities and noted that international bodies have already aimed at creating soft law, including on financing, insurance, regional and bilateral relations, private liability, and dispute resolution mechanisms for both public and private parties. The aim should be that States implement international commitments into domestic law in the most harmonized manner possible.

Finally, Daniela María Rojas Garcia noted that to address concerns related to outer space, it is essential that the public and private sectors work jointly. For example, in the context of space debris, the United Nations Committee on the Peaceful Uses of Outer Space (UNCOPUOS) has evaluated the possibility for private parties to perform clean-up activities in space under an agreement for the provision of services, but it has also looked into who is responsible for performing these activities, how often the services need to be performed, and what exactly would trigger the obligation of States to ensure the provision of such services. 

Laura Yvonne Zielinski then asked the panelist several questions. Firstly, on the space industry in Latin America, Daniela María Rojas Garcia highlighted that due to economic and territorial disparity space activities have been relatively modest to date. To address this, space activities should be more focused on private parties, and noted that the injection of private capital through foreign investment will facilitate the creation of more space projects in the region. Secondly, on whether States will continue to play an important role in space activities, she answered that States will continue to have the responsibility to ensure that the exploration and exploitation of outer space benefits all mankind. However, private actors have achieved such financial autonomy that space activities can be performed directly by them, especially since States themselves are not experts in technological advancements. Hence, there will likely be an increase of private parties developing space activities, with States continuing to supervise them. 

The Need for Developing Domestic Space Laws

Dr. Grace Nacimiento continued the discussion by highlighting the necessity for States to develop their own domestic legal framework applicable to space activities. She started by pointing out the various business models that are being developed by the private space industry, which create the need for a legal framework that provides legal certainty to private parties. The driver behind this development is technology: technologies to access and explore space, and to build space-based business models. The business models include: space tourism; space traffic management (the development of software-based solutions to monitor and track space traffic); wildfire detection by satellite-based technologies; access to outer space itself; space exploration (planned expeditions to other planets to extract resources, such as minerals or water); space debris removal; satellite communication networks; and Earth observation and satellite imaging.

In order to adequately regulate this wide variety of space activities in which private parties are now engaging, Dr. Grace Nacimiento noted that, on the one hand, it is important that international law is transposed into domestic law. While most space treaties are addressed to States, in the area of spectrum management, which has its legal basis in the International Telecommunications Union, this step of transposition is crucial. On the other hand, however, there is also a pressing need for legal regulation outside these international treaties through the independent development of domestic space laws, to provide a reliable framework within which private parties can develop their business. This applies to approval processes, insurance requirements, liability limitations, space debris measures, national security requirements, environmental protection, penalties for non-compliance with provisions in domestic legislation, as well as dispute resolution mechanisms. The main risk that exists when it comes to national legislation is the risk of fragmentation if each State develops its own domestic law based on its own individual circumstances. Dr. Grace Nacimiento thus emphasized the importance of finding ways at the international level to harmonize national space legislations. 

Laura Yvonne Zielinski then followed up with several questions. Firstly, on examples of when the fragmentation of domestic laws has caused her clients problems in practice, she referred to the authorization of satellite communication networks, where almost every European State has a different procedure, with different requirements and guarantees, which makes it very burdensome for an operator to establish its network. Secondly, on whether there are any examples of domestic law contradicting international space law, Dr. Grace Nacimiento referred to Luxembourg’s national law on the Exploration and Use of Space Resources, which states that space resources are capable of being owned by private parties, despite the rule contained in the Outer Space Treaty, that outer space is not subject to national appropriation. Finally, on the state of German space law, she highlighted that there exists no German Space Act to this date, which might be seen as both an advantage and a problem from a private entity’s perspective: on the one hand, for example, binding space debris mitigation rules could be financially or technically burdensome, but on the other hand, the absence of specific rules may also present considerable risks for private parties, especially in terms of liability.

Investment Protection of Outer Space Activities

Rada Popova then talked about the possibility of protecting space investments through bilateral investment treaties (BITs). She highlighted that, generally, space activities are very large-scale, long-term activities which require significant financial resources and, as a result, create a lot of risk. There currently exists, however, no satisfactory solution with regard to dispute settlement in international space law, which is still based on diplomatic protection, i.e., States as the main actors to engage in dispute settlement. A possible solution to this could be the application of investment treaties, which allow private parties to fight themselves for the protection of their rights against interference by States instead of having to rely on the diplomatic protection of their home State.

Rada Popova then proceeded to set out the requirements that would need to be met for investment protection to be applicable to investments made in space projects. Firstly, there must be an “investment” under the BIT and possibly under the Convention establishing the International Centre for Settlement of Investment Disputes (the ICSID Convention). Although there exists no universal definition of the term investment, the US Model BIT from 2012 defines it as every asset that an investor owns or controls, directly or indirectly, that has the characteristics of an investment. Investments in space activities clearly satisfy this requirement because they are costly undertakings, usually involving the acquisition of fixed infrastructure. They will also, in most cases, satisfy the three criteria of contribution, duration and risk in the ICSID Convention: they are inherently long-term activities, involve significant risks both on the ground, such as related to licensing requirements, and in orbit, such as resulting from the danger caused by space debris, and normally benefit the States both economically and for reasons of prestige.

Secondly, there must be a “host state”, which Rada Popova highlighted to be the more problematic requirement since space activities are inherently multinational. Since it will often be impossible to identify a single host State for the entire space project, she suggested determining the host State for each phase of a project. On the one hand, in the pre-launch and launch phase, there will be a close territorial connection to the State in which the infrastructure of the company is based and from where the space object is launched. On the other hand, in the on-orbit phase, one way to establish the necessary connection may be through Article VIII of the Outer Space Treaty, which establishes that the State of registry has and maintains exclusive jurisdiction over the registered space object. 

Finally, Rada Popova summarized the main risks from an investment law perspective during each one of the phases of a space project. Firstly, in the pre-launch phase, the main risks stem from regulatory uncertainty, which may result in frustrated costs for the investor. Secondly, during the launch phase, the main risk concerns the physical security of the space object itself. Finally, in the on-orbit phase, the risks may stem from collisions, etc. To sum up, she opined that the investment law regime has huge potential for allowing investments to be much better protected, and their risks being more controlled than they currently are. 

Laura Yvonne Zielinski then asked Rada about how the fact that satellites often have a dual use function, meaning that even though they are made for commercial purposes, they can also be used for military activities, fits into the regime of investment protection. In response to this, Rada Popova highlighted that dual use technology involves national security concerns, which may thus serve as a reason for a host State to put some limitations or barriers on commercial investments.

The Possibility of a Development of a Future “ICSOD”: an International Convention for the Settlement of Outer Space Disputes

Finally, Rachael O’Grady addressed how private parties might be able to resolve their space-related disputes. She recalled that there are various legal orders that may apply to space activities: on the one hand, the international legal framework, and, on the other hand, the various domestic legal orders. This distinction is important because the way in which space-related disputes are resolved will depend on which of these legal orders is applicable. 

Rachael O’Grady then set out four categories of space-related disputes. Firstly, there are purely State-to-State disputes, which can for example be resolved by diplomacy, the International Court of Justice, the Claims Commission foreseen by the Liability Convention. Secondly, there are disputes between two private parties (or between a private party and a State acting in a commercial capacity), usually in relation to a commercial venture, which can be resolved by domestic courts, arbitral institutions, or other mechanisms such as the Dubai Space Courts. Thirdly, there are those disputes between private parties and a State (acting in a sovereign capacity) to which an investment treaty can be applied, for which again there are adequate mechanisms in place to resolve such disputes. However, the fourth category are those disputes between private parties and a State which do not fall within the parameters of an international investment treaty. For such disputes, currently no adequate dispute resolution mechanism exists.

Not only are the substantive rules missing to resolve such disputes, but there is also a serious procedural gap, since there is actually no forum at all before which private parties in such scenarios could bring claims directly against potentially liable States. This, Rachael O’Grady noted, mirrors the situation that existed in the 1960s with respect to foreign investment disputes more generally, before the ICSID Convention had come into force. Private parties had to rely on their own governments to take on and pursue claims on their behalf through diplomacy. She opined that a similar facility should now be created with respect to space disputes. This was something Karl Heinz Böckstiegel had already thought about 25 years ago when he led a task force to produce a Convention on the Settlement of Disputes related to Outer Space Activities, to which States at the time however did not sign up to. She thought however that the time has now come for an “ICSOD”: an International Convention on the Settlement of Outer Space Disputes.

Laura Yvonne Zielinski then asked Rachael several questions. Firstly, on why the Convention by Böckstiegel did not have more success and why States should sign up to it now, she replied that it was because (1) it was before its time, when outer space was not yet as congested as it is now, and (2) some of its aspects were problematic, for example, the lack of any kind of a right to appeal. She emphasized that we have a very limited window to act now, because of the increasing congestion of the lower Earth orbits, and drew on the analogy with ICSID which was created preemptively with only 50 BITs in force. In her view, if there were some kind of forum like this, then just like ICSID clauses were included in BITs, similar clauses would also be included in the new generation of space treaties. Secondly, on whether customary international law can be created by private parties in space since they are supervised by States, she noted that customary international law will likely develop primarily through the creation of soft law, but that future jurisprudence concerning space disputes will also be shaping its form. 

There Needs to be Room for Private Parties in International Space Law

At the end, Laura Yvonne Zielinski asked the panelists a question that had been asked by members of the public throughout the event, concerning whether “Flag States of convenience” are creating conflicts and if and how they should be prevented. Rada Popova firstly noted that the International Law Commission has produced a model law, the so-called Sofia Model Law, which could help to harmonize national laws and also serve new space-faring countries that are aiming at creating their own national space legislation. In response, Dr. Grace Nacimiento pointed out that in Germany the reaction to the Sofia Model Law has been rather reluctant, there being critics that argue that Germany needs to take into account its specific national circumstances. But in the long run it would still be beneficial to have an orientation towards such a model, in the sense that it would provide private parties with reliable guidance on how to build their businesses not only in one specific jurisdiction, but also when thinking about extending to other jurisdictions.

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Applicable Law in Investor-State Space Arbitration

What is the applicable law in Investor-State space arbitration? Investor-State tribunals routinely determine the procedural and substantive laws applicable to an arbitration by reference to applicable law clauses in the relevant instrument of consent or, in the absence of an express choice of law, by reference to governing law provisions in the applicable arbitral regime. 

For instance, Article 42 of the ICSID Convention provides that “[t]he Tribunal shall decide a dispute in accordance with such rules of law as may be agreed by the parties. In the absence of such agreement, the Tribunal shall apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable.” (emphasis added)

Similarly, Article 35 of the PCA Optional Rules for Arbitration of Disputes Relating to Outer Space Activities provides that “[i]n resolving the dispute, the arbitral tribunal shall apply the law or rules of law designated by the parties as applicable to the substance of the dispute. Failing such designation by the parties, the arbitral tribunal shall apply the national and/or international law and rules of law it determines to be appropriate.” (emphasis added)

In investor-State space arbitration, as in investor-State arbitration more generally, the primary substantive law applicable to the merits of the dispute is international law (usually the applicable treaty), but other legal regimes may apply to discrete issues in dispute. In investor-State space disputes, international space law is an added normative source that tribunals may consider in interpreting an applicable treaty, but this integration is of course not without challenges. In this blog post, we identify the major sources of public international law that might be relevant to an investor-State space arbitration.

Further, we trace key legal developments in national law regimes on outer space activities. With the increasing private participation in commercial space activities, countries have regulated private actors by formulating national space laws concerning licensing and resource exploration and use. These laws form part of the basis on which investors rely to invest in host States in the space sector.

Finally, as with any other economic industry, investors in the space sector are free to enter into agreements with States and other private persons that can affect the applicable law to an investor-State space arbitration.

Public International Law

Article 38 of the Statute of the International Court of Justice identifies the sources of law that the ICJ must apply in determining disputes in accordance with international law, including: (a) international conventions; and (b) international custom. Notably, whilst international conventions are binding on States party to them, subject to discrete exceptions, customary international law is applicable to all States. In the context of outer space activities, there are several international law instruments that are relevant to consider in an applicable law inquiry.

International space treaties

International space treaties form the bulwark of the international law on outer space. Formulated in the backdrop of the Cold War with outer space being a preserve of governments, these treaties did not envisage the possibility of private commerce in outer space. For instance, in the context of commercial outer space activities, these treaties are silent as to the permissibility of ownership of natural materials in the course of exploration and use of celestial bodies. However, certain principles arising out of the treaties are instructive:

• Outer Space Treaty (1967): The Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies (the “OST”) forms the bedrock of international space law. It provides that: (a) the exploration and use of outer space shall be carried out for the benefit and in the interests of all countries and shall be the province of all mankind; (b) outer space is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means; (c) States shall be responsible for national space activities whether carried out by governmental or non-governmental entities; (d) States shall be liable for damage caused by their space objects; and (e) States shall avoid harmful contamination of space and celestial bodies.
• Liability Convention (1972): The Convention on International Liability for Damage Caused by Space Objects establishes the standards of liability for damage caused by space objects and provides for a claims commission to resolve disputes.
• Other treaties: The Rescue Agreement (1968), the Registration Convention (1975) and the Moon Agreement (1979) form the rest of the international space treaties covering rescue of astronauts, registration of space objects and application of the OST to the Moon and other celestial bodies respectively.

Customary international law

Considering the limited scope and outdated nature of the outer space treaties, parties may seek to use international custom as an effective source of law for outer space in the following ways:

• Adaptation of existing CIL principles: there are several principles of customary international law (“CIL”) that are relevant to outer space. For instance, the CIL in other areas of international law such as salvage principles in international maritime law might be applied to international space law.
• Instant custom: it has been argued that given that only a miniscule number of countries engage in outer space activities, the twin CIL requirements of state practice and opinio juris can be satisfied “instantly” in the case of international space law. Under this view, instant rules of CIL in space law might emerge from unilateral acts of States or from international agreements, including United Nations General Assembly resolutions such as the Declaration of Legal Principles (1963), the Remote Sensing Principles (1986), the Nuclear Power Sources Principles (1992) and the Benefits Declaration (1996).

Bilateral and plurilateral agreements

There are plurilateral agreements between countries that impact the use and exploration of outer space including:

• The International Telecommunication Union Constitution, Convention and Radio Regulations governing the allocation of global radio spectrum and satellite orbits; and
• The Artemis Accords which set out the Principles for Cooperation in the Civil Exploration and Use of the Moon, Mars, Comets, and Asteroids for Peaceful Purposes. Originally signed by Australia, Canada, Italy, Japan, Luxembourg, the UAE, the UK, and the US, the Artemis Accords emphasize that space resource extraction and utilization should be conducted in a manner that complies with the OST.

Soft law instruments

Lastly, there are soft law instruments under international law such as Guidelines and Reports of the United Nations Committee on the Peaceful Uses of Outer Space (the “UNCOPUOS”). For instance, the UNCOPOUS formulated Guidelines for the Long-term Sustainability of Outer Space Activities in 2018 requiring States to, among other things, adopt, revise, and amend, as necessary, national regulatory frameworks for outer space activities to enhance sustainability and safety.

National Law

Several states have passed laws to regulate the exploration and extraction of space resources. These laws cover key issues such as licensing regimes, the right to prospect, explore and mine space resources and resulting property rights of such space resources. Some recent national laws on space resources are set out below:

• United States: The United States (the “US”) passed the Commercial Space Launch Competitiveness Act in 2015 (the “CSLCA 2015”) which grants American companies, ownership of the space resources that they extract. This is arguably in contravention of the OST’s non-appropriation principle. In Section 403 of the CSLCA 2015, the US contends that it does not assert sovereignty or exclusive rights or jurisdiction over, or ownership of, any celestial body.
• Luxembourg: To become a European hub for space resource exploration, Luxembourg adopted its Law on the Exploration and Use of Space Resources in 2017. Like the CSLCA 2015, it grants Luxembourg companies ownership of space resources that they extract.
• UAE: In 2019, the UAE passed its Federal Law No. 12 of 2019 on the Regulation of the Space Sector. Notably, one of the avowed goals of UAE’s space law is stimulating investment and encouraging private sector participation in the space sector activities.
• Japan: Japan passed its Law Concerning the Promotion of Business Activities Related to the Exploration and Development of Space Resources 2021 setting out a licensing regime for granting Japanese companies to prospect, extract and use space resources.

The extent to which these laws comply with the OST’s non-appropriation principle is unclear. It has been contended that the laws do not make any territorial claims or assert sovereignty over any celestial body. However, considering the absence of an express prohibition of use of space resources under the OST, national laws such as the CSLCA 2015 may inform both the ongoing interpretation of the OST and the content of customary international law.

Private Contracts

In line with the principle of party autonomy, parties to an investment or other agreement are free to choose the law governing the obligations contained in that agreement. In doing so, the parties must consider the implications of their choice. However, the choice of law in the parties’ agreement would be the clearest exposition of their intention in this regard, in particular if the parties also expressly designate that their choice of law would prevail in the context of an investor-State dispute.

So What is the Applicable Law to Investor-State Space Arbitration?

Considering the various sources of law that might be applicable in an investor-State space case, it will be important for tribunals to approach choice of law issues in a careful and consistent manner. This entails considering which legal norms are applicable to particular issues in a given dispute, as well as a search for harmonization a method for resolving any potential conflicts in legal norms. 

In performing this exercise, a recognized hierarchy of legal norms in international space law, based on the existing hierarchy of legal norms in general international law, is likely to emerge. The weighing of sources of law and their contents will need to be done on the particular facts of each case.

The first blog post of this series on investment protection of space assets is accessible here. The last blog post of this series examines the suitability of existing arbitral rules and courts specializing in dispute resolution in respect of commercial space activities including the PCA Optional Rules for Arbitration of Disputes relating to Outer Space Activities and the DIFC Courts of Space. It also considers whether a specialized institution will be ideal for investor-State arbitration in the space sector. It will be accessible here. 

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 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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