I. Introduction
A. Space Technology and Law
Have you ever thought about who owns the satellite when you listen to the satellite radio, or watch satellite television? While society benefits from the satellite technology such as satellite television, radio, navigation, phone and so on, international organizations, governments and space industry are disputing over the ownership of the satellites, what space assets are, and how to get financing. Likewise, defining space assets and the protection of financiers to space assets is very new and critical for the entertainment and space industries. This is because of the tremendous capital and interest of investors is related to space assets and they have great potential to be developed more.
Although the space technology contributes to the entertainment industry only with the satellite technology for now, it is being developed and improved. A lot of investors are willing to involve the space technology and industry because they can see the potential of the space technology and space assets. Also, commercial space means business to entrepreneurs.
However, it also has a big risk, for example, when the satellite or spaceship explodes before or after launching or it loses its orbit, investors lose their money and efforts. Also, as the space assets are mobile and cannot stay in a certain jurisdiction, it makes defining the ownership of space assets more difficult. Therefore, investors and governments want to be secure and try to set a legal protection. Representatively, the UNIDROIT, International Institute for the Unification of Private Law,[1] makes a great effort to gather all people involved the space industry and they discuss to legislate a uniform international space law for the private sector.
B. UNIDROIT – Preliminary Draft Protocol on Matters Specific to Space Property to the Convention on International Interests in Mobile Equipment (Space Protocol)
The UNIDROIT Convention on International Interests in Mobile Equipment [2] was adopted in Cape Town in 2001 and has expanded its scope to aircraft, railway, and space assets with protocols.[3] There has been the Convention on Registration of Objects Launched into Outer Space[4] which provides the Registry of Space objects in the Context of International Space Law. The Convention requires all States Parties obligatory register space objects. The purpose of this Convention is “to notify to other States where a launching State’s space objects are located in order to prevent collision” and to make “identifiable the potentially liable launching State for damage cause by a space object.”[5] However, The Space Protocol has a different perspective. It “aims at facilitating the private[z]ation and commerciali[z]ation of outer space by protecting private investment in that sector.”[6]
According to the UNIDROIT, the purpose of the protocol related to space assets (the Space Protocol) is;
to address the difficult task of applying the benefits of the Convention to space assets, which are increasingly being financed by private-sector investors rather than central governments, which are subject to a myriad of existing regulations under international treaties, and which are often physically located beyond terrestrial jurisdictions. [7]
The primary goal of the Cape Town Convention is to reduce the costs, and increase the availability, of credit to the affected industries.[8] In other words, drafters created the Protocol with “four objectives in mind: (1) to provide international protection to security interests in high-value, uniquely identifiable mobile equipment; (2) to give holders of such interests a set of default remedies they can expeditiously exercise; (3) to create a system of public registration to perfect such interests so as to give notice to others; and (4) to establish rules ordering the priority of those interests.”[9] The Convention does so by reducing the risk than an extension of credit will not be repaid.[10] The proposals seek to increase the security that the Space Protocol would provide.
The Protocol is currently under consideration by an inter-governmental negotiation process which includes representatives from private-sector financiers and the space industry. Several groups are involved in improving the preliminary Protocol such as the Space Working Group, “the core membership of which was provided by manufacturers, financiers and users/operators of space property,” the United Nations Office for Outer Space Affairs, the European Space Agency/European Centre for Space Law, and the International Bar Association at the invitation of the UNIDROIT.[11]
This article will introduce how the international community is trying to have a unified space law, especially, the definition of space assets and the treatment of debtor’s rights and related rights cooperating with the UNIDROIT. It will also introduce different views on this matter amongst the international organization, governments and space industry, especially Boeing involved in the Convention very much. This article will examine how the Convention will affect the private financing community as well as commercial satellite business with plenty of their lawyers.
II. Definition of Space Assets
A. Definition
The Cape Town Convention states that it will enter into force “only as regards a category of objects to which a Protocol applies.”[12] Also, the Convention requires the registration of space assets which protects creditors who invest in the space assets, the trustees in bankruptcy, and creditors in the obligor’s insolvency.[13] Therefore, it is very important to clarify the definition and scope of space assets.
“Space assets[14] ” mean;
(i) any identifiable asset that is intended to be launched and placed in space or
that is in space;
(ii) any identifiable asset assembled or manufactured in space;
(iii) any identifiable launch vehicle that is expendable or can be reused to
transport persons or goods to and from space; and
(iv) any separately identifiable component forming a part of an asset referred to in the preceding sub-paragraphs or attached to or contained within such asset.
As used in this definition, the term “space” means outer space, including the moon and other celestial bodies.[15]
The phrase “space assets” have been used in the Cape Town Convention but have not been defined in the international space law before such as the space treaties which uses the term space property or space objects.[16] Space assets “would not only cover satellites used for telecommunications but would cover satellites used for any purpose, including satellites used for remote sensing, and would also cover the component parts of satellites, such as transponders.[17]”
The definition includes “space assets on Earth intended for launch into outer space, intangible rights to control satellites, contractual rights, proceeds and revenues, and other rights yet to be established” as well as “debtor’s rights to payment or performance under agreements secured by or associated with space assets.”[18] Associated rights[19] include permits, licenses, authorizations or equivalent instruments granted or issued by governmental bodies, and authorizations to use space any kinds of assets.[20]
It is very broad and encompasses any separately identifiable component since it reflects the possibility of travel to the space and other future development related to the space technology. Thus, it can cause tremendous numbers of “registrations of international interests[21] by component providers whose contribution to a satellite may be relatively small.”[22]
B. Current Dispute on the Issue
First of all, there is a concern whether the Protocol’s definition of “space assets” should be consistent with the international space law’s definition of “space object.”[23] However, it seems that majority agrees with that consistency is necessary since the purposes of each law are different. Likewise, the Protocol focuses on private law and “protection of financiers who enter into private law contracts” while the space law focuses on public law.[24]
As mentioned above, there is a conflict on the definition of space assets regarding the broad applicability of the Protocol. Some delegations pointed that the word “component” in sub-section (iv) was too abstract.[25] A component can include even a camera on a satellite or space probe which is not specifically created for a space asset.
The definition also causes a conflict between common law jurisdiction countries and civil law jurisdiction countries. Since each jurisdiction has different legal concepts on property rights, it is an indispensable debate. The U.S., Canada, and England agree with the broad definition of space assets.[26] Because in these countries components are sold, purchased, and financed separately, they urge those components should be included in the definition of space assets. However, civil law jurisdiction countries, such as Germany, Greece, Russia, and Senegal, are against this opinion because a component is merely an accessory which does not have any independent right.[27]
Professor Robert Goode has proposed to solve this problem in his Explanatory Memorandum. He suggests a two-tier approach;
(1) to provide a list of items that should clearly be included in the definition such as satellites, transponders, space stations, space vehicles, launch vehicles and reusable space capsules, and (2) regarding other identifiable objects, to cover these only if there is agreement with the satellite owner that these are to retain their separate identity after affixation.[28]
Most members of the Space Working Group seem to agree with this proposal but they are still working on it to seek consent. This Proposal limits the broad definition of the original draft which includes almost everything related to the space technology and rights and gives discretion to parties of the agreement on the space assets.
Another commentator suggests providing one detailed definition, with a comprehensive and conclusive list of space assets and components to be included.[29] However, this proposal might cause unavoidable problems with novel space assets which no one can even imagine would exist in the future. Another proposal regarding flexibility is to provide for a simplified quick procedure for covering additional categories of space assets, without the need for convening a full diplomatic Conference to amend the definition.[30]
C. Conclusion
Although these proposals have at least minimal problems, it would work out if the draft keeps Professor Goode’s proposal and harmonizes it with the simplified procedure for additional space assets. It also will cause trouble since it is very flexible and each agreement would include different space assets. However, it has to be considered case by case and opened to new space assets which cannot be expected from the current space technology and knowledge. There is not yet a set definition of space assets but another plenary session will take place in Rome in 2008.
Endnotes:
[1] International Institute for the Unification of Private Law [hereinafter UNIDROIT], available at http://www.unidroit.org/english/home.htm (last visited Oct. 7, 2007).
[2] UNIDROIT, Convention on International Interests in Mobile Equipment, (Cape Town, 2001) [hereinafter Cape Town Convention]. See http://www.unidroit.org/english/conventions/mobile-equipment/main.htm (last visited Oct. 7, 2007).
[3] Protocol is “a treaty amending and supplementing another treaty. Black’s Law Dictionary (8th ed. 2004), protocol; Stacey A. Davis, Unifying the Final Frontier: Space Industry Financing Reform, 106 COM. L.J. 455, 460-61 (winter, 2001).
[4] United Nations Convention on Registration of Objects Launched into Outer Space (1976) [hereinafter Registration Convention], available at http://www.unoosa.org/oosa/en/SORegister/regist.html. (last visited Oct. 12, 2007).
[5] Stephan Hobe, UNIDROIT Registry of Space Assets, p.2 (June 2007).
[6] Id. at p.6.
[7] UNIDROIT, Preliminary Draft Protocol on Matter Specific to Space Assets, International Interests in Mobile Equipment – Study LXXIIJ, available at http://www.unidroit.org/english/workprogramme/study072/main.htm (last visited Oct. 7, 2007).
[8] Robert Goode, Proposal to Increase the Credit Value of the Space Protocol, p.1 (June 2007).
[9] Davis, supra note iii, at 462.
[10] Id.
[11] UNIDROIT Committee of Governmental Experts for the Preparation of a Draft Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Space Assets Second Session, C.G.E./Space Pr./2/Report, p. 2 (Oct. 2004), available at http://www.unidroit.org/english/publications/proceedings/2004/study/72j/cge-session2/cge-2-report-e.pdf.
[12] Hobe, supra note v, p.6.
[13] Id.
[14] It was agreed that assets in manufacture, transport or pre-launch stages may qualify as space assets.
[15] UNIDROIT, Preliminary Draft Protocol On Matter Specific To Space Assets [hereinafter Space Protocol], Art. I (2)(g), available at http://www.unidroit.org/english/publications/proceedings/2004/study/72j/s-72j-13rev-e.pdf.
[16] UNIDROIT Committee of Governmental Experts for the Preparation of a Draft Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Space Assets Second Session, supra note xi.
[17] Id.
[18] Paul B. Larsen, Future Protocol in Security Interests in Space Assets, 67 J. AIR L. & COM. 1071, 1087 (Fall 2002).
[19] Space Protocol, supra note xv, art. 1.
[20] Larsen, supra note xviii, at 1087.
[21] Cape Town Convention, art. 16 (1), prospective international interests and registrable non-consensual rights and interests.
[22] Hobe, supra note v, p.20.
[23] Larsen, supra note xviii, at 1088.
[24] Id.
[25] UNIDROIT Committee of Governmental Experts for the Preparation of a Draft Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Space Assets Second Session, supra note xi.
[26] Korean Ministry of Foreign Affair and Trade, Examining the Cape Town Convention Special Conference (June 2007).
[27] Id.
[28] Hobe, supra note v, p.20. See Goode, The Views of Industry and Government on How Best to Finalise and Expansion of the Cape Town Convention to Cover Space Assets, Explanatory Memorandum, p.2 (2007).
[29] Hobe, supra note v, p.20.
[30] See UNIDROIT Secretariat, Interim Report on the Criteria for the Identification of Space Assets to be Employed in the Preliminary Draft Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Space Assets, p.4.