Introduction

Demand in telecommunication services is growing both in terms of network capacity and higher speed networks. This growing demand is being addressed not only through additional fibre and wireless deployments but also by satellite internet providers. Satellite internet is provided through communication satellites. While traditionally it had been reserved to geostationary satellites, recently, companies such as Starlink and OneWeb have started launching new satellite internet constellations in the low-Earth orbit that enable low-latency internet from space. With this development anticipated to expand, the satellite industry can be expected to become an increasingly important player in the global telecommunications industry.

Broadly, artificial satellites are objects launched into space to orbit the Earth in order to collect information or enable communications. According to the 2021 State of the Satellite Industry Report published by the Satellite Industry Association, the satellite industry produced global revenues of US$271 billion in 2020 (amounting to 74 per cent of the global revenues of the entire space economy). Of these revenues, 50 per cent were produced in the ground equipment sector, 44 per cent by satellite services, 5 per cent came from satellite manufacturing and 2 per cent from the launch industry. Within the satellite services, the most important use of satellites still corresponded to television, followed by radio, broadband, fixed and mobile communications, and finally remote sensing (used for agriculture, change detection, disaster mitigation, meteorology, Earth science, space science, and national security). In other terms, 84 per cent of satellites launched in 2020 were destined for commercial communications, 11 per cent for remote sensing missions, and the remaining 5 per cent for military surveillance, civil or military communications, scientific purposes, navigation and satellite servicing. The ground equipment in turn comprised consumer equipment (satellite TV dishes, etc.), GNSS equipment and network equipment.

The satellite industry is growing at a very fast pace, driven mainly by a recent reduction in launch prices accompanied by increased launch activity and thus more launch choices for satellite operators. Another growth factor of the satellite industry is the improvement of satellites in the geostationary orbits and the increasing use of smaller satellites (smallsats). Finally, the expansion of satellite services can also be explained by the increase in telecommunication capacity, an increase in the resolution of commercially available imagery and the development of new satellite applications. As a result of these factors, according to the 2021 State of the Satellite Industry Report published by the Satellite Industry Association, the number of operational satellites in space has grown by 252 per cent from 958 in 2010 to 3,371 in 2020. This number is likely to further increase in the coming years with the launches of thousands of new satellites by companies such as Starlink, OneWeb and Kuiper, which plan to provide satellite internet through large satellite constellations in LEO (the lower Earth orbits).

Until recently, the space industry had been characterised by the presence of only a few large market participants that were conscious of their interdependence and corresponding need to collaborate. This is why the space industry has traditionally preferred mechanisms such as cross-waivers of liability and insurance over formal dispute resolution mechanisms. However, the recent multiplication of activities and the entry of a large number of new actors into the satellite market is likely to change this dynamic, and brings about the risk of an increasing number of disputes. Those disputes will mainly arise out of the contractual relationships between the different public and private actors of the satellite industry. However, disputes are also likely to arise out of the growing congestion of the lower Earth orbits. Indeed, the launch of thousands of new satellites in a short amount of time is likely to significantly increase both the risk of physical collisions between operational satellites (or with entire or parts of defunct satellites called space debris). Additionally, the increase in active satellites is causing a growing risk of harmful frequency interference between them. Finally, even in the absence of actual collisions, the costly avoidance measures and manoeuvres that the increasing space congestion will require, are likely to also result in disputes between satellite operators.

Satellite activities, like all space activities, are governed mainly by four international space treaties developed in the context of the United Nations Committee on the Peaceful Uses of Outer Space: the 1967 Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies (the Outer Space Treaty), the 1968 Agreement on the Rescue of Astronauts, the Return of Astronauts and the Return of Objects Launched into Outer Space (the Rescue Agreement), the 1972 Convention on International Liability for Damage Caused by Space Objects (the Liability Convention), and the 1976 Convention on Registration of Objects Launched into Outer Space (the Registration Convention). A fifth treaty, the 1979 Agreement Governing the Activities of States on the Moon and Other Celestial Bodies (the Moon Agreement), has failed to gain sufficient support and can be safely ignored for the purposes of this chapter.

The Outer Space Treaty, sometimes referred to as the Magna Carta of international space law, is the most comprehensive of the five treaties and sets out the main principles governing activities in Outer Space. According to Article I of the Outer Space Treaty, the exploration and use of outer space shall be carried out for the benefit and in the interest of all countries . . . and shall be the province of all mankind. Article II of the Outer Space Treaty clarifies that outer space, including the moon and other celestial bodies, is not subject to national appropriation by claim of sovereignty, by means of use of occupation, or by any other means. Article III further states that the exploration of outer space shall be carried out in accordance with international law, including the Charter of the United Nations, in the interest of maintaining international peace and security and promoting international cooperation and understanding. In turn, Article IV bans the placement of weapons of mass destruction in orbit or on celestial bodies, and Article XI promotes international cooperation in space exploration.

Articles V to VII of the Outer Space Treaty contain principles that were further developed in the subsequent agreements mentioned above. Thus, Article V sets out the principle of providing assistance to any astronaut in need, a principle further expanded on in the Rescue Agreement. Similarly, as the basis for the Registration Convention, Article VI provides that State Parties to the Outer Space Treaty shall bear international responsibility for national activities in outer space . . . whether such activities are carried on by governmental agencies or by non-governmental entities, for assuring that national activities are carried out in conformity with the provisions [of the Outer Space Treaty], and that the activities of non-governmental entities in outer space shall require authorization and continuing supervision by the appropriate State Party to the Treaty. To ensure compliance with this obligation of supervision, the Registration Convention provides for the registration of space objects. Finally, Article VII states that [e]ach State Party to the Treaty that launches or procures the launching of an object into outer space . . . and each State Party from whose territory or facility an object is launched, is internationally liable for damage to another State Party to the Treaty or to its natural or juridical persons by such object or its component parts on the Earth [or in space], a principle further developed in the Liability Convention.

In addition to these treaties, several Resolutions of the United Nations General Assembly, although in theory non-binding, have widely been followed and as such are said to amount to customary international law with regard to international space activities. Notably, a 1961 Resolution recommends that States register their space objects with the United Nations as part of an international registry. Other Resolutions are the 1986 UN Resolution on Principles Relating to Remote Sensing of the Earth from Outer Space, which constitutes the main legal document applicable to Earth observation activities; the 1982 Principles Governing the Use by States of Artificial Earth Satellites for International Direct Television Broadcasting; the 1992 Principles Relevant to the Use of Nuclear Power Sources in Outer Space; and the 1996 Declaration on International Cooperation in the Exploration and Use of Outer Space for the Benefit and in the Interest of All States, Taking into Particular Account the Needs of Developing Countries.

International space law dates back to the Cold War era in which the exploration of outer space was very costly and limited to a few state actors. It therefore fails to specifically address several recent issues such as the accumulation of both active satellites and space debris in the lower Earth orbits that is already presenting serious risks, and will only continue to grow with the current multiplication of space activities and the planned large satellite constellations to be launched in the coming years.

In view of the political impossibility to agree on a new binding treaty able to address this new issue, in 2002, the Inter-Agency Debris Coordination Committee (IADC), comprising the major national space agencies, published the IADC Space Debris Mitigation Guidelines that served as a baseline for the 2007 United Nations Space Debris Mitigation Guidelines. While these instruments remain non-binding, they serve as an indication of best practices for satellite operators conscious of mitigating their creation of additional space debris.

The existing practice of private space actors reflects the acceptance of recommendations to limit the generation of space debris and minimise the negative impact on current and future space missions. Manufacturers try to reduce debris from launch vehicles and launched spacecraft by carefully designing them to prevent malfunctions and explosions and by ensuring that a reserved amount of fuel is available when a spacecrafts mission is over to enter or move them to disposal orbits.

In addition, there are currently efforts being undertaken to agree on rules of space traffic management to decrease the risk of physical collisions in outer space.

Not only is the risk of physical collisions between active satellites or satellites and space debris becoming a growing issue, but the increase of active satellites in space is also presenting a challenge for frequency allocation and coordination.

It is the International Telecommunication Union (ITU), a specialised agency of the United Nations headquartered in Geneva, Switzerland, that offers the main international legal framework for addressing the technical and operational aspects of satellite communications. The ITU is managing all radio frequencies and also the use of the Earths geostationary orbit. It ensures that the available radio frequency spectrum and associated satellite orbits are used equitably, efficiently, and economically, and is tasked with preventing frequency interference between satellites. The applicable sources of law are the ITU Constitution and Convention, and the ITU Radio Regulations, all three inter-government treaties and binding as international law.

In practice, before a new satellite or system can be launched and used, it must be coordinated with neighbouring satellite networks. The result of this coordination process is set out in coordination agreements. Compliance with these coordination agreements is crucial as harmful interference can prevent satellites from operating normally and thus cause significant financial damages to its operators.

Under Article VI of the Outer Space Treaty, states are internationally responsible for any private activities in outer space that qualify as their national activities, and obliged to authorise and continuously supervise such activities. As a consequence, states have a strong incentive to regulate their domestic space activities in order to ensure compliance with international space law, while at the same time offering private parties incentives and the legal security they need to pursue space activities.

National space laws address issues such as approval processes for space launches, insurance requirements, liability limitations, space debris mitigation, national security requirements and environmental protection but the different domestic approaches can vary significantly from one state to another. In 2012, in order to increase harmonisation and reduce the fragmentation of domestic space law, the International Law Association proposed the Sofia Guidelines for a Model Law on National Space Legislation. The United Nations Office for Outer Space Affairs keeps an online database of states with national space legislation.

Finally, it should be mentioned that, as space technology and hardware are considered dual-use technology (meaning that even commercial satellites can, for example, be used for military purposes if necessary), states want to protect their technological advances. As a consequence, satellite technology and hardware is often subject to export controls that need to be considered in any transaction regarding satellites.

As discussed above, the satellite industry comprises very different aspects, ranging from upstream activities, such as the manufacturing and launch of satellites, to midstream activities, such as the production, sale and distribution of satellite data, and downstream activities in the form of satellite applications for use on Earth or satellite broadcasting. Many of these activities involve contracts between various actors often based in different jurisdictions. The subject matter of these contracts is often highly technical and any satellite agreement can be subject to specific insurance requirements, heightened confidentiality and often export controls as a result of the dual-use nature of satellite technology. All of these aspects can and are likely to result in a growing number of contractual commercial disputes to the extent that the satellite industry is expanding in both scope and complexity.

As Professor Karl-Heinz Boeckstiegel said in 1993:

In the past, several of these contractual space disputes have been resolved through international commercial arbitration and it is likely that this trend will continue, as, for example, the European Space Agency provides for arbitration in Clause 35(2) of its General Clauses and Conditions for ESA Contracts and arbitration clauses also seem to be routinely included into commercial space contracts by SpaceX, Avanti, Boeing, Airbus and Arianespace. In fact, a study undertaken by Vivasat Dadwal and Madeleine Mcdonald confirmed that international arbitration is used by both state and non-state actors in the resolution of publicly-known space-related disputes, especially in the satellite industry.

In the past, satellite disputes that gave rise to international arbitrations have for example arisen out of the late delivery of satellites, the insertion of a satellite into a wrong orbit, defective satellites already in orbit, the lease of satellite capacity, the right to orbital positions and frequency bands, export control and the cancellation of space contracts.

While international arbitration in general is well suited to adapt to the specific needs of the satellite industry, in 2011, the Permanent Court of Arbitration published its specifically-tailored Optional Rules for Arbitration of Disputes Relating to Outer Space Activities (the PCA Outer Space Rules). These Rules are based on the well-known UNCITRAL Rules but contain various adaptations to better suit the requirements of the space industry. For example, under Articles 10(4) and 29(7), the Secretary-General of the Permanent Court of Arbitration maintains a list respectively of arbitrators and experts with specialised knowledge of the subject matter at issue. Article 17(6) allows the parties to a dispute to apply to have certain information classified as confidential and Article 17(8) provides for the possibility of appointing a confidentiality adviser to report to the tribunal on specific issues without disclosing the confidential information on which his or her report is based. Finally, according to Article 27(4), the tribunal may request the parties to provide a non-technical document summarising and explaining the background to any scientific, technical or other specialised information that the arbitral tribunal considers to be necessary. At the time of writing, the PCA Outer Space Rules have not yet been used in practice. However, [a]s the size and sophistication of the market develops, it seems likely that users will gravitate toward the [PCA Outer Space Rules], which were prepared with their specific needs in mind.

As mentioned above, disputes in the satellite industry are likely to arise not only out of contracts but might also result from space collisions or costly collision avoidance manoeuvres. A first example of such a scenario was the 2009 collision between the active commercial satellite Iridium 33 and the defunct military satellite Kosmos 2251. While no formal dispute resolution proceedings are known to have taken place following this particular collision, an increase of collisions can be expected to lead satellite operators to explore available forums to recover the damages they are likely to suffer.

The Liability Convention, the treaty setting out the rules of liability for damage caused by space objects, contains a dispute settlement mechanism that can be qualified as quasi-arbitration: the Claims Commission. While indeed similar to arbitration, the Claims Commission presents two main drawbacks: its decisions are only recommendatory unless all parties to a dispute agree to render them binding, and equally importantly for private satellite operators, the Liability Convention, being an international treaty, only applies to states, and is therefore not available to them other than through diplomatic protection.

It follows that in the absence of a contractual link between the parties involved in a collision and the corresponding lack of prior consent to arbitration unless they can agree to refer their dispute to arbitration once it has arisen the parties then have to turn to domestic courts. However, in domestic court litigation, satellite operators are likely to face well-known obstacles such as language-barriers, bias, sovereign immunity and, in addition, uncertainty over the competent court and the applicable law, and a lack of expert knowledge of the satellite industry among domestic judges.

To address this lack of efficient dispute resolution provisions available to private space actors, in 1998, the International Law Association published its Final Draft of the Revised Convention on the Settlement of Disputes related to Space Activities, establishing arbitration as the default dispute resolution mechanism. This proposal failed, however, to gain sufficient political support and has never entered into force. More recently and to circumvent the necessity of agreeing on a new international treaty, it has been suggested that states amend their domestic laws to condition launching licences for space objects on the mandatory consent to arbitration for any dispute involving the object in question.

Until such efforts progress further, it is unlikely that there will be many international arbitration cases over satellite collision cases. Litigation over these issues should, however, be expected.

Satellites are expensive assets and the manufacturing, launching and operating of a satellite require significant economic resources. As a consequence, companies involved in the satellite industry have a strong incentive to make sure their satellites benefit from international investment protection.

Because of the high financial costs related to the launch of a satellite, the corresponding risk, and the arguable economic and reputational contribution to the host state of the satellite, satellite launches are likely to comply with the required characteristics for an investment under both the majority of bilateral investment treaties and Article 25 of the Convention of the International Centre for Settlement of Investment Disputes (ICSID). It follows that, as long as they are accepted to be investments made in the territory of the host State as routinely required under bilateral investment treaties, satellite-related investments could be protected by international investment protection treaties.

Interestingly, in past investorstate proceedings involving satellites, no jurisdictional objections over the territorial requirement seem to have been raised, as the link between the host state and the investment had been clearly established through the rights of the respective host states over the frequency spectrum and orbital positions at issue. On the merits, past investment treaty cases have dealt with alleged conventional treaty breaches of expropriation and the violation of the fair and equitable treatment standard.

In practice, the cases Devas v. India and Deutsche Telekom v. India arose out of Indias revocation of leased S-band frequency spectrum, and Eutelsat v. Mexico related to a provision contained in the concession contracts for the use of Mexican geostationary orbital positions allowing for the free reservation of satellite capacity for the Mexican government.

As mentioned above, any newly launched satellites need to be coordinated with neighbouring satellites a process the results of which are set out in coordination agreements. It has also been mentioned above that the violation of a coordination agreement can cause harmful interference resulting in significant financial damage to satellite operators.

When a case of harmful interference occurs, the parties can bring it to the attention of the ITU, and following an investigation, the ITU Radio Regulations Board can formulate recommendations. Its powers are limited, however, by its inability to review the confidential provisions of the coordination agreement at issue, its inability to award damages and, among other drawbacks such as the length and the public nature of its proceedings, the non-binding nature of its decisions. As a consequence, to recover damages caused by the breach of a coordination agreement, parties need to resort to alternative dispute settlement mechanisms.

As with collision cases, recourse to domestic courts is likely to face obstacles such as language barriers, bias, arguments over the competent court and the applicable law, and the absence of industry knowledge of the decision-makers. Unlike in the case of a physical collision between satellites, the parties to a dispute arising out of the violation of a coordination agreement are, however, connected exactly through this agreement. Unfortunately, coordination agreements are commonly drafted by technical experts and therefore rarely contain arbitration clauses. This can, however, change in the future and, like with collision cases, in the meantime, the parties have the possibility to refer a dispute to arbitration once it has already arisen.

The dispute that arose in 2012 between Eutelsat S.A. and SES S.A. related to the non-compliance with a coordination agreement, and was resolved through international arbitration administered by the Court of Arbitration of the International Chamber of Commerce. It is not public whether the coordination agreement contained an arbitration clause or whether the parties agreed to refer their dispute to arbitration after the event. Either way, this arbitration serves as an example that future disputes arising out of coordination agreements are likely to end up before arbitral tribunals.

In conclusion, the satellite industry is growing quickly, and with this growth comes an increasing risk of satellite disputes ranging from commercial contractual disputes to investment disputes, and disputes over satellite collisions or harmful frequency interference. The resolution of these disputes will benefit both from decision-makers and counsel who are familiar not only with the commercial and technical characteristics of the satellite industry but who are also well acquainted with international and domestic space law and the specific legal rules applicable to satellite activities. It is international arbitration that can best guarantee access to both while being able to cater to the international and confidential nature of the satellite industry. It is therefore unsurprising that many satellite disputes both contractual and investment disputes have already been resolved through arbitration. We should expect the number of satellite arbitrations to grow in the years to come.

Read more:
The Guide to Telecoms Arbitrations - GAR