THE AUTHORS: Tatiana Sainati, Partner at Wiley Rein LLP and Joshua B. Simmons, Of Counsel at Wiley Rein LLP
Since the launch of the first commercial communications satellite in 1965, the growth of the satellite industry has been astronomical. Recent estimates suggest that nearly 5,000 satellites orbit Earth, and commercial parties play an increasingly dominant role in this growth. SpaceX reportedly owns more than one-third of the satellites in orbit, having set the record in 2021 for launching 143 satellites on a single rocket. Entrance to the industry is more accessible than ever, with several established commercial parties offering to transport other companies’ satellites to orbit for a fee. And space tourism, once the stuff of sci-fi movies, is now a reality.
Nor is the final frontier the exclusive territory of the major world powers. Today, parties from seventy-five different countries own satellites in orbit — and the industry shows no sign of slowing down. In this context, the increase of space-related disputes is inevitable, from launch failures to collisions and beyond. The latest dispute to grab headlines involved Devas’ worldwide enforcement effort to recover over $1 billion from its award against India’s state-owned Antrix for cancellation of a satellite deal. Unsurprisingly, the international legal field has raced to accommodate such disputes.
In 2011, the Permanent Court of Arbitration (“PCA”) published its Optional Rules for Arbitration of Disputes Relating to Outer Space Activities (“PCA Outer Space Rules”). In February 2021, Dubai created the “Courts of Space” based at the Dubai International Financial Centre (“DIFC”). Both developments garnered praise for their bold vision to meet the need for specialized dispute resolution procedures adapted to space commerce.
Yet, as of today, there are no reported cases under either the PCA Outer Space Rules or the DIFC Courts of Space. Some have argued that it is only a matter of time before such a case will arise. Although that is possible, the more important lesson is that existing arbitration institutions are already well-equipped to handle space and satellite disputes. As long as the parties to international arbitration remain earthbound, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (“New York Convention”) can reach them and their extra-terrestrial activities.
This article explains how existing international arbitration regimes, with their flexibility and autonomy, can effectively resolve private space and satellite disputes. The greater challenge remains in the public, non-contractual sphere, and promising developments such as the Artemis Accords show that international law is ready to move into that frontier and beyond.[1]
[1] Disclosure: Joshua B. Simmons previously worked on the Artemis Accords as a Senior Adviser at the U.S. Department of State. The views expressed in this article do not necessarily reflect those of the U.S. government or its officials.
International Arbitration of Space and Satellite Disputes
International arbitration provides a forum that can readily accommodate parties from different jurisdictions, highly technical subject matter, and confidentiality requirements. In most international arbitration cases, the result is an award that is binding and enforceable around the world pursuant to the New York Convention. For example, a June 2022 Hong Kong Court of Appeal decision confronted an award in a satellite dispute resolved under the Hong Kong International Arbitration Centre (“HKIAC”). The dispute involved video broadcasts from a satellite in an orbital slot held by Thailand and China. Neither the complexities of the case nor the extra-terrestrial activities prevented the tribunal from issuing a binding award or the Hong Kong courts from upholding that award pursuant to the New York Convention.
Similarly, the authors represented Intelsat S.A., a leading satellite service provider, in a dispute with the International Telecommunications Satellite Organization (“ITSO”) pursuant to the International Chamber of Commerce (“ICC”) Arbitration Rules. While the dispute ultimately settled, on terms favorable to Intelsat, the ICC offered a sophisticated, neutral, and efficient forum for resolution of disputes, both celestial and terrestrial.
Based on the successful track record of such dispute resolution, parties might wonder what advantages could be gained by utilizing new, space-specific procedures — and with good reason. The existing arbitral system already achieves much of what the PCA Outer Space Rules and the DIFC Courts of Space claim to accomplish.
Different Legal Systems
Parties are best served by including a choice of law provision in their space and satellite contracts. Although that is common practice, there are regulatory regimes and other contractual considerations that present complexities in the space and satellite industry. In many cases, these legal issues could prove more difficult to resolve than the underlying technical aspects of the dispute. Notable examples include:
- Export controls: satellite related disputes will likely include parties from different countries and necessitate the exchange of technical information. When an arbitration includes a U.S. company and the technical information being shared reaches the threshold of “technical data,” the U.S. International Traffic in Arms Regulations (“ITAR”) may apply to the data transfer. This means that the parties exchanging data must first secure export clearances before beginning discovery. For example, a U.S. satellite manufacturer must obtain clearance by the U.S. State Department, which could take more than sixty days.
- Waivers: the U.S. Commercial Space Launch Act of 1984 (“CSLA”) requires that any U.S.-licensed launch provider issue a waiver of liability for its satellite customers and participants involved in the launch. The waiver absolves each participant from liability and prevents each party from bringing claims regarding financial loss, injury, or death arising from the launch.
- Warranties: many parties include disclaimers to shield manufacturers of satellites and related equipment from liability.
- Insurance: satellite operators often seek to cover the possibility of loss during launch or while the satellite is in orbit. Because satellites cannot be inspected after launch, insurance companies impose strict conditions and operators can be held to a high standard of care that will be material in an arbitration.
Both the PCA Outer Space Rules and the DIFC Courts of Space assert that they offer special expertise in such legal technicalities that arise from disputes in outer space. That is well and good, but existing international arbitration institutions provide the same services and can address the same needs. Arbitral tribunals routinely address thorny choice-of-law issues; well-informed parties consistently clarify what rules apply to their disputes; and savvy party representatives select arbitrators who are adept at tackling these legal questions.
Specialized Arbitrators and Experts
The PCA Outer Space Rules provide for a panel of arbitrators who have expertise in space and satellite issues. They also empower an arbitral tribunal to appoint experts from an indicative list to advise on scientific or technical matters. The DIFC Courts of Space includes an initiative to create a “Space Dispute Guide” and to train judges to become space-related dispute experts.
While such provisions appear promising, they add little to the existing procedures of most arbitral rules and institutions. Parties have great flexibility in appointing arbitrators who possess the expertise needed to understand the case. Over time, lawyers with particular knowledge of space and satellite issues will develop organically and become known in the field. History proves that possibility: the London Maritime Arbitrators Association was founded in 1960, only after lawyers had accumulated experience and networks over centuries. Creating a panel of space and satellite arbitrators is, at this stage, putting the proverbial cart before the horse.
Tribunals also typically have discretion to appoint their own expert on any issues, including scientific matters, with the parties’ consent. The practice is rare in other areas such as finance, but there is no legal impediment to its use. It is possible that the PCA’s creation of an indicative list would facilitate the involvement of experts. But, as with arbitrators, the community of experts with relevant knowledge will form organically as more parties resolve their space and satellite disputes through international arbitration.
Confidentiality
The PCA Outer Space Rules include specific provisions regarding confidentiality, but they do not deviate materially from other leading institutional rules in protecting the confidentiality of an arbitration. The DIFC Courts of Space have not yet provided guidance on confidentiality.
In most cases, the greatest challenge to confidentiality comes from enforcement of an award. If the losing party does not pay willingly, the winning party may seek enforcement of the award under the New York Convention. In doing so, the submission of the arbitration award to courts of the appropriate jurisdiction often causes the award to become public. As the recent enforcement saga involving Devas and Antrix shows, that is no less true of arbitration awards related to space and satellite contracts.
The Next Frontier
The current international arbitration framework has proven flexible and sufficient to handle space and satellite-related contract disputes, but private companies continue to experience difficulties resolving disputes when no contract exists. Unlike incidents within a country’s jurisdiction, there will often be no territorial basis for bringing a dispute before any particular court. What happens when there is an accident? Or when one satellite crashes into another? As in any type of international dispute, it becomes highly unlikely that the parties will agree to arbitration after the dispute has arisen.
Public international law provides few easy solutions. One well-known case involves the collision of Russian satellite Cosmos 2251 into the privately-owned Iridium 33 satellite. The parties to the dispute were unable to resolve it through international law—namely, the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and other Celestial Bodies (1967) (“Outer Space Treaty”) and the Convention on International Liability for Damage Caused by Space Objects (1972) (“Liability Convention”)—and no material advances for resolving collision disputes have developed since then.
Private companies retain the option to ask a State for diplomatic protection under the Liability Convention, but the process is long and burdensome without any guarantee of a binding outcome. The International Telecommunication Union similarly provides for only optional arbitration provisions for member States to resolve satellite communications disputes.
Another possibility is investor-State arbitration, but that will be available only to certain private entities with treaty or contractual protection. For example, in 2021, Mexico reportedly defeated an investment treaty claim for more than $120 million brought by France’s Eutelsat arising out of concessions to occupy geostationary orbital positions. And, as noted above, Devas not only continues to pursue enforcement of its award against India’s state-owned Antrix, but it has also reportedly brought a new treaty claim against India related to the same dispute. For such disputes, the International Centre for the Settlement of Investment Disputes (“ICSID”) has proven capable of administering investor-State cases arising out of space activities.
In sum, the flexibility of existing arbitral institutions and conventions—including the New York Convention and ICSID—have allowed parties to customize their proceedings to new frontiers in space and satellite arbitration. More recent developments, while admirable for their vision, have not significantly affected dispute resolution. Some have offered even grander proposals for a single, multilateral institution to resolve space disputes. Those attempts, such as an “International Tribunal for Space Law,” have not gained traction, nor are they likely to, given the challenges of negotiating multilateral agreements in today’s world. The better approach is incremental. The Artemis Accords, while not directly addressing dispute resolution, offer a promising example. The Accords have found success in part because they are advancing on a bilateral basis to address pressing issues such as the extraction and utilization of space resources. Much like the space race itself, the future of space and satellite arbitration will remain grounded in terrestrial realities while offering unexpected innovations to adapt to the next frontier.
ABOUT THE AUTHORS
Tatiana Sainati, Partner at Wiley Rein LLP, represents clients in litigation and arbitration proceedings seated in common and civil law jurisdictions around the world as well as in the U.S. courts across a range of industries, including satellite communications, real estate, oil and gas, shipping, and mining. Ms. Sainati teaches international arbitration at Northeastern University Law School and is also a member of the ABA Litigation Journal’s editorial board.
Joshua B. Simmons, Of Counsel at Wiley Rein LLP, has extensive experience in treaty and commercial arbitration proceedings around the world. He has represented foreign sovereigns and international investors across a broad range of industries, including energy, natural resources, technology, and financial services. He also advises companies on national security law, public international law, and transnational litigation in U.S. courts. He teaches international arbitration as an Adjunct Professor at the University of Virginia School of Law. Prior to joining Wiley, Josh served as the Senior Adviser in the Office of the Legal Adviser at the U.S. Department of State.
