REUTERS | Amir Cohen

Space mining: the final frontier in international arbitration?

Mining of natural resources such as water, minerals and precious metals in space is close to becoming a reality. With it comes a potential new field of disputes ideally suited for resolution by international arbitration.

Since 1967, the Outer Space Treaty, which has been signed and ratified by 107 countries (including the most important space-faring nations), has provided the framework for space activities. Building on that international legal architecture, subsequent domestic legislation has sought to regulate activities ranging from rocket launches to the operation of satellites. However, it is only very recently that national legislation has sought expressly to legalise the appropriation of natural resources in space.

The US was the first to pass such a law, the Space Resource Exploration and Utilization Act of 2015 (US Space Mining Act), partly in order to catch up with its rapidly developing domestic space mining industry.

On 1 August 2017, Luxembourg became the second (and the first country in Europe), with the coming into force of its Law on the Exploration and Use of Space Resources (Luxembourg Space Mining Act). The Luxembourg Space Mining Act, which is the centrepiece of a wider effort by Luxembourg to become a European hub for companies focused on the exploration and extraction of space resources, takes as its opening premise that “[s]pace resources are capable of being appropriated”.

In doing so, Luxembourg, like the US, seeks to provide the legal certainty needed to incentivise private companies to make the huge upfront investments required to turn space mining into a profitable venture.

Ownership rights in space

Article I of the Outer Space Treaty provides that “[o]uter space… shall be free for exploration and use by all States”, provided that such exploration and use shall be “the province of all mankind”. Article II subjects any such activity to the further proviso that:

“… [o]uter space… is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means”.

The Deputy Prime Minister of Luxembourg has stated that the Luxembourg Space Mining Act is entirely in line with the Outer Space Treaty. Luxembourg’s position is that the law is in compliance with the Outer Space Treaty’s basic principle of non-appropriation because, while it allows for the appropriation of resources by private parties, it does not make any territorial claims or attempt to establish sovereignty in space. The US has adopted broadly the same view in respect of the US Space Mining Act, stating it to be the “sense of Congress” that the law does not imply an assertion of sovereignty over any celestial body.

However, the legal uncertainties do not end there. There continues to be debate over the meaning of the term “use” in Article I of the Outer Space Treaty and whether it should be interpreted to encompass extraction of resources and, in any case, whether the sale of space resources for profit could ever be considered for “the province of all mankind”.

It therefore remains unclear whether domestic law alone can provide the legal certainty needed to secure the sustainability of the space mining industry. Luxembourg appears to have recognised this tension. In a press statement relating to the Luxembourg Space Mining Act, it stated its intention to continue “to promote… a global regulatory framework of space resources utilization”.

In the meantime, however, the international legal framework is being surpassed by technological advancements. Planetary Resources, a US-based space technology company, is planning its first prospecting mission by 2020, while one of its competitors, Deep Space Industries, is testing key technologies for the same purpose. Both companies have recently established subsidiaries in Luxembourg.

Arbitration as a means of resolving disputes in space

Although the international legal framework is a work in progress, the space mining industry has the potential to grow exponentially. And just as international arbitration is well placed for the resolution of cross-border disputes, so it is for disputes which cross the galaxy.

Not only does international arbitration offer a neutral alternative to domestic courts and result in an award that is enforceable in 157 countries under the New York Convention, it also allows space companies to choose expert decision-makers equipped to deal with technically complex disputes, as well as protecting the confidentiality of sensitive proprietary information.

Indeed, arbitral rules can be specifically tailored to suit the peculiarities of space disputes. In 2011, in anticipation of an increase in international disputes arising from the space industry, the Permanent Court of Arbitration in The Hague became the first arbitral institution to introduce a specialised set of procedural rules for the “arbitration of disputes relating to outer space activities”. These, for example, allow an arbitral tribunal to appoint a “confidentiality adviser”, who can report to the tribunal on specific issues without disclosing confidential information to the tribunal or the other party (Article 17(8)). They also provide for the creation of a list of specialist arbitrators able to handle the unique questions generated by space-related disputes (Article 10(4)). These might include complex conflicts of law issues, arising from the tension between international law, domestic space-mining laws and the governing law of any relevant contractual agreement(s).

The next frontier in international arbitration could therefore very well lie in outer space.

Three Crowns LLP Simon Maynard Katherine Jonckheere

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