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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