THE AUTHORS:
Laura Denise Jaroslavsky Consoli, Deputy Counsel for the Swiss-Italian team in the International Chamber of Commerce (ICC)
Panagiotis Chalkias, Associate at White & Case
This article was written as part of the Switzerland VYAP Mentoring Program
Why Space?
Recent scientific developments modified the relationship humankind has with outer space. There is an undisputed increase in the presence of commercial actors in space. Until recently, extra-terrestrial activity was almost exclusively limited to the actions of States and their specialized entities. However, in recent years, this situation has drastically changed.
Currently, States’ activities coexist with the increasingly growing activity of private companies, which develop and apply state-of-the-art technology. For instance, SpaceX, an American spacecraft manufacturer, became the first company to successfully achieve re-entry to earth of a repurposed rocket, and will bring back to Earth two strained NASA astronauts in February 2025. In turn, Blue Origin, another American aerospace manufacturer, managed to send Star Trek star actor William Shatner into space, opening the door for space-tourism.
Moreover, States are showing their interest in private exploration of space, as the number of signatories to the Artemis Accords (which were put in place, under NASA’s initiative, to promote civil exploration of space) keeps increasing. In April 2024, Switzerland joined as signatory, followed by Sweden and Slovenia, among others, raising the number of signatories to 48.
In fact, States continue to allocate a significant amount of their budget to space activities. Currently, the US allocate approximately 0.4% of the government’s overall budget to NASA. Although NASA’s budget was slightly reduced from US$ 25.4 billion in 2023 to US$ 24.9 billion in 2024, the US maintain their position as the main governmental investor in space, with an overall budget of US$ 73 billion dedicated to space activities in 2023. It is followed by China with US$ 14.1 billion in 2023. India successfully landed the Chandrayaan-3 in the Moon’s south pole, even though it is allocating only 0,04% of its budget to space. The increased interest of States is equally demonstrated by the growth of the industry overall, which was valued at US$ 630 billion in 2023, and it is estimated to increase up to US$ 1.8 trillion by 2035.
The increase in private space activity, coupled with the arrival of new companies in the commercial space industry, will inevitably lead to the conclusion of additional contracts, giving rise to potential disputes. However, resolving private space-related disputes is still at its infancy (a study reported 38 commercial space-related cases, Dadwal & Macdonald).
This post considers all disputes with a space-related component. However, defining where space starts and what constitutes a space-related activity is not simple and has been the topic of lengthy debates (Gangale). In fact, no space treaty defines the limits of space.
The Current Landscape of Space-Related Disputes
Existing Legal Framework
In the 1960’s and 1970’s, the main five treaties constituting the space-related international legal framework were concluded (often called ‘Corpus Iuris Spatialis’).
However, they contain no compulsory dispute settlement mechanism. Only the Convention on International Liability for Damage Caused by Space Objects (1971) (Convention on Liability) provides for dispute resolution through diplomatic channels (Art. IX), which is constrained by considerations of a political nature and does not guarantee an adequate and efficient resolution of claims.
As regards arbitral institutions, in 2011, the Permanent Court of Arbitration (PCA) adopted the PCA (Permanent Court of Arbitration) Optional Rules For Arbitration of Disputes Relating to Outer Space Activities (2011), based on the UNCITRAL (The United Nations Commission on International Trade Law) Arbitration Rules (2010), but including specific adjusted provisions. As the name implies, they only apply if the parties conclude an opt in agreement. A broad reference in the arbitration clause to the PCA arbitration rules does not suffice (PCA provides a specific model clause to opt in).
Their purpose was to have a modern mechanism for resolving space disputes (Jan Frohloff, ‘Per arbitrum ad astra’, (2020), 37, Journal of International Arbitration, Issue 6, pp. 721-730) that “reflect the particular characteristics of disputes having an outer space component involving the use of outer space by States, international organizations and private entities” (point (i), Introduction, PCA Optional Rules). Thus, the rationale was to take into consideration the “public international law element that pertains to disputes that may involve States and the use of outer space” (point (ii), Introduction, PCA Optional Rules). Although, to the authors’ knowledge, the rules have not yet been used, they are based on the 2010 UNCITRAL Rules, which governed space-related cases administered by the PCA (CC/Devas v. India (I) and Deutsche Telekom v. India).
The space industry is familiar with the advantages of arbitration. There has been a trend in commercial space contracts from companies such as Space X, Avanti, Boeing, Airbus and Arianespace to include arbitration clauses (Laura Yvonne Zielinski, ‘The Rise of Satellite Arbitrations’). The preferred arbitral institution for administering space-related cases is the ICC (31.5%), followed by the American Arbitration Association – International Centre for Dispute Resolution (AAA-ICDR) (15.7%), and the London Court of International Arbitration (LCIA) (10.5%) (Dadwal & Macdonald).
Typology of Space-Related Disputes
There are three main categories of disputes where a space-related component may be involved:
- Commercial disputes, involving two (or more) private companies or subjects;
- Investor-State dispute settlement (ISDS), where a private party and a host State are involved in a dispute relating to an investment agreement; and
- State-to State disputes.
Commercial Disputes
Only the Artemis Accords deal with the commercial use of space but contain no dispute resolution mechanism (van Traa-Engelman) and they have been heavily criticised for that reason (Loschi & Erhart).
Dadwal and Mcdonald’s study shows that an overwhelming number of space-related disputes resolved through arbitration are related to commercial disagreements in the satellite industry (89.4%). In fact, only two of such disputes did not involve satellites: one related to the seizure of assets under space transactions and the other related to a partnership agreement for the launch of a spacecraft. The subject matter of the remaining disputes is unknown.
Other commercial relationships occurring in space (insurance, advertising agreements or space tourism), may also give rise to disputes.
Investor-State Disputes
As private parties are investing in space, they may seek foreign investment protection included in bilateral or multilateral treaties against the State’s potential breaches of the standards of protection included therein.
Investors active in the space sector may be considered as an investor thus complying with the requirement of most of the investment treaties and also with Article 25 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) (ICSID Convention), should the applicable dispute resolution clause refer to the ICSID Convention and Arbitration Rules. Once this requirement is met, it is likely that investments in the space sector would fall within the definition of protected investment under most of the investment treaties, since investments in that sector tend to be long, expensive and entail a high risk (Salini v. Morocco).
To date, four known space-related cases have been settled by the ISDS mechanism (CC/ Devas v. India (I); CC/Devas v. India (II), Deutsche Telekom v. India; Eutelsat v. Mexico).
The two cases involving Devas (a Mauritian company) and India dealt with the same set of facts. The first one pertained to the cancellation of a leased S-band spectrum on two geostationary satellites to the respective investors. Devas claimed violation of the expropriation and Fair and Equitable Treatment (FET) standards included in the Mauritius – India BIT (1998). India claimed that the cancellation of the license was necessary to protect its essential security interests. Both proceedings were conducted under the UNCITRAL (United Nations Commission on International Trade Law) Arbitration Rules (1976) administered by the PCA.
As suggested by Frohloff, such cases may trigger the application of the Outer Space Treaty (OTS), as cases involving the appropriation of space resources may be incompatible with its Article II. This Article provides that the outer space, the moon and other celestial bodies are not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means. Consequently, it could be argued that such a prohibition is a jurisdiction/admissibility hurdle for the investment on the basis of the investment being non-compliant with Article II of the OTS and thus illegal (on the difference consequences of a plea of illegality see Douglas).
The third case, Deutsche Telekom v. India, involved claims under the Germany – India BIT (1995) arising out of India’s cancellation of a contract concluded with Devas concerning the provision of broadband services to Indian consumers.
The case was also conducted under the 1976 UNCITRAL Rules, administered by the PCA. The arbitral tribunal found that India breached the FET standard and awarded the investor US$ 93.3 million in damages.
As regards Eutelsat v. Mexico, Award, 15 September 2021, only certain parts were published in Spanish. The case concerned violations under the France–Mexico BIT relating to three concessions for the occupation of a geostationary orbit of Mexico.
The investor alleged that Mexico breached several investment protection provisions of the France-Mexico BIT. The tribunal decided it had jurisdiction to hear the dispute but rejected the investor’s claims. On the FET allegations, the tribunal found that there were no specific commitments by Mexico giving rise to legitimate expectations. Eutelsat’s remaining treaty claims were also dismissed by the tribunal.
While there is a limited pool of ISDS cases dealing with space activity, there could be an increase of space disputes in the future, especially in the telecommunications sector. In fact, satellite launching and operation would be covered by most definitions of the term “investment” included in free trade agreements or investment treaties.
One potential hurdle an investor may face in a space-related claim may be the fulfilment of the territorial requirement, i.e., that the investment needs to have taken place in the territory of the host state, which is generally included in most investment treaties. This is because an argument may be put forward that the satellite in orbit, constituting the investment, is not made in the territory of the host state, but is rather in outer space.
However, the researched cases did not include a jurisdictional argument of this sort. In fact, the territorial link could be established on the basis of various connecting factors, such as the lease of frequency band rights granted by a State or the use of satellite controlling stations located in one or many States (Atkins).
State-to-State Disputes
On a State-to-State level, a dispute may relate to:
- The re-entry into Earth of a space vehicle (or its parts) triggering a dispute regarding damages caused to the territory of one State or disputes pertaining to a violation of the United Nations Convention on the Law of the Sea (1982) provisions if they occur in high seas;
- Trade restrictions of satellites or their components in the context of WTO covered agreements;
- Violations stemming from the militarization of space; and
- The diplomatic protection of subjects.
However, there are few cases dealing with such scenarios.
An interesting topic is the re-entry of satellites, since ideally objects in space are supposed to be burnt up during re-entry so none of their parts can hit the earth, but 10% to 40% of the larger objects can survive and impact the surface (Stubbe).
A good example of such a dispute is the settled case between Canada and the URSS regarding the Kosmos 954 satellite. This case was about a Soviet military satellite powered by a nuclear reactor fuelled with enriched uranium that had a malfunction which prevented the safe separation of the engine, and that in 1978 re-entered the Earth’s atmosphere spreading parts of its components – which included radioactive material – over northern Canadian soil. In that case, the parties finally reached an agreement, so although the claim was raised, the case did not move forward.
In addition, trade restrictions in materials required for the manufacturing of satellites or in the provision of services related to the operation of satellites in orbit may give rise to State-to-State disputes. However, it appears that only one case was brought before the WTO dispute settlement mechanism in 1997 by the European Commission (“EC”) regarding the procurement tender to purchase a multi-functional Japanese satellite for air traffic management. The EC claimed, among others, that European bidders had no effective possibility of participating in the tender and were treated less favorably than suppliers of other Parties to participate in the tender, which was against the Non-discrimination provisions under Article III of the Government Procurement Agreement. In such a multilateral context, the US asked to join the consultation process (Japan — Procurement of a Navigation Satellite WT/DS73, Request to Join Consultations – Communication from the United States, 29 April 1997), certainly a great tool in complex State-to-State disputes involving space-related activities. While it would have been interesting to see the outcome of this case, the parties arrived at a mutually agreed solution (Notification of Mutually-Agreed Solution, 3 March 1998).
ABOUT THE AUTHORS
Laura Denise Jaroslavsky Consoli is currently a Deputy Counsel for the Swiss-Italian team in the International Chamber of Commerce. She is an Argentinian qualified lawyer (Universidad de Buenos Aires) and a graduate of the Geneva LL.M. in International Dispute Settlement. She also holds a specialization in International Contracts and Judicial Litigation (Universidad Austral) and a postgraduate course in Energy Law (Universidad Católica Argentina).
Panagiotis Chalkias is an associate in White & Case’s International Arbitration Practice and is based in Geneva, Switzerland. He is a Greek qualified lawyer and registered with the Geneva Bar (foreign lawyers’ section). His practice includes advising and representing clients in complex, high-value cross-border disputes in a variety of industries under all major arbitration rules and governed by various substantive laws, both common law and civil law. Panagiotis is currently co-chair of Young AFSA (Arbitration Foundation of Southern Africa) and has been recognized as Future Arbitration Leader by Lexology (formerly Who’s Who Legal) 2021-2025.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
