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  • Diya Dave

New Trends in Outer-Space Commercial Dispute Resolution

Introduction

In the past, outer-space activities have been limited to states and nations as the key players in the field. However, the same does not hold true in the current scenario, we can observe a number of private and non-state actors like SpaceX or Blue Origin in outer space. Established in 1980, the French company Arianespace was the world’s first commercial launch service provider and was the largest stakeholder of the industry till 2007. This has been followed by many private companies such as Google Lunar X Prize which became the first company to land a privately funded, unmanned spacecraft on the moon in 2017, and Virgin Galactic which targets creating the world’s first “commercial space line”. SpaceX is renowned for being the only private company to ever return from the low-Earth Orbit and is a major commercial manufacturer and launcher for advanced rockets now. In fact, there are predictions that the space industry has the potential to be a trillion-dollar industry by 2040. These developments in outer space inevitably pave a way for commercial disputes to arise, which in turn, calls for mechanisms for commercial dispute resolution in the field of international space law.


Need for a Commercial Dispute Resolution Mechanism

Space law has predominantly been governed by five main treaties, none of which have a binding effect when it comes to dispute settlement. This lacuna has been intentional because of the unpredictable nature of the space industry and the risks involved in it. The following treaties have been the foundation of all extraterrestrial human activities in the past.

  1. 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”),

  2. The Agreement on the Rescue of Astronauts, the Return of Astronauts and the Return of Objects Launched into Outer Space, 1968,

  3. The Convention on International Liability for Damage Caused by Space Objects, 1972 (“Liability Convention”),

  4. The Convention of Registration of Objects Launched Into Outer Space, 1976 (“Registration Convention”) and

  5. The Agreement Governing the Activities of States on the Moon and Other Celestial Bodies, 1984 (Moon Agreement).

These treaties are only functional to grant some sort of relief in inter-state space-related disputes in the form of adjudication and arbitration. It is paramount to note that these treaties provide no recourse for private parties and non-state actors as they are not one of the subjects of international law. The fact that these commercial entities have not been legally recognized, does not take away their entitlement to rights and obligations in international law. This is one of the reasons why international space law needs to be flexible in terms of hitting a perfect balance between private and public law. Verily, even states have accepted the fact that the most optimal developments in outer space cannot be done by them alone, the requirement of assistance from the private sector is inevitable. Hence, in the coming century, an increasing number of complex and high-profile disputes between private parties in outer space can be predicted.


Dubai’s Space Court


The foremost step in the direction of commercial dispute resolution has been taken by Dubai International Financial Centre (“DIFC”) courts by establishing the “Court of Space” in collaboration with Dubai Future Foundation (DFF) as a part of their “Courts of the Future” initiative. In 2020, the United Arab Emirates (“UAE”) launched the Hope orbiter as a part of the Emirates Mars Mission. This was a momentous event for the UAE as it embarked on the country’s success in outer space. The UAE has now become one of the most prominent players in space exploration and wishes to stand at a leading position as a center for business, innovation and technology.


The Space Court was established with the aim of resolving commercial disputes in outer space. In furtherance of that, DIFC has also formed a “working group” of people to look at the legal aspects of space explorations and to create a set of guidelines to foster the settlement of space-related disputes. It will also conduct parallel training of judges to grant them expertise in such matters through courses conducted by international bodies and regional agencies. The court will entertain the grievances of parties from the UAE and abroad to grant them appropriate reliefs. As an implication, private contracts might specify the jurisdiction of the Space Court in case of a dispute. This development has the potential to incentivize more space-related commercial activities by providing a recourse.


Ineffectiveness of the Existing Methods of Dispute Resolution


International Adjudication

There are multiple methods of dispute resolution that international law provides for; two of the most prominent ones being, adjudication and arbitration. International adjudication is a form of international dispute resolution where the parties are subject to the binding decisions of an impartial third party, usually in the form of tribunals or international courts. Since all the parties to the United Nations (UN) Charter are subject to a compulsory jurisdiction of the International Court of Justice (“ICJ”), and the ICJ only allows claims of the state parties, the only way by which the claims of private parties can be brought before the court is through diplomatic protection. However, diplomatic protection is not a lucrative option due to several reasons such as the unlikeliness of all non-state actors in the space industry getting that protection from their governments or just a general decrease in the popularity of these claims before the ICJ. Moreover, none of the five treaties mentioned above provides for the ICJ as a dispute resolution mechanism. These factors rule out the possibility of international adjudication as a form of dispute settlement in space law.


Compensatory ADR

Another mechanism of dispute settlement could be the methods of Alternative Dispute Resolution (“ADR”). Various techniques of ADR are preferred over international adjudication when it comes to space law. For example, Article VII of the Liability Convention adopts the method of compensatory ADR by the way of diplomatic channels. This means that the parties will have to pay appropriate compensation decided by the diplomatic channels in case any damages arise through their outer space activities. However, there are certain limitations to these mechanisms, the most noteworthy of them is that these treaties are not binding and only refer to the claims of the states. Thus, how much ever fruitful these methods of dispute resolution sound, they are found to be ineffective in today’s commercialized space sector.


International Arbitration

Arbitration is the most popular, credible and effective method of dispute resolution in space-related disputes. There have been prior attempts at creating arbitral institutions such as the International Court of Air and Space Arbitration(ICASA) or the adoption of Outer Space Rules by the Permanent Court of Arbitration (PCA) in 2011. However, these developments did not help much due to their considerations for secrecy and inability to deal with private parties.


The most progressive step in this regard was taken by the International Law Association (ILA) in the 86th ILA Conference in 1984. It adopted the Final Draft of the Revised Convention on the Settlement of Disputes Related to Outer Space Activities (“Draft Convention”). Its target was to accommodate the claims of both state and non-state actors by the way of establishing an arbitral tribunal for space law. However, there are further critiques that can be pointed out in the Draft Convention. Firstly, the Draft Convention does not address the possibility of jurisdictional issues. Article 35.1 mentions that any issue with the jurisdiction of the tribunal will be dealt by the tribunal itself. Moreover, a claim under the Draft Convention can only be brought for arbitration on the exhaustion of local remedies (Art. 12, Draft Convention). This makes it even more difficult for private and non-state parties by causing delays in the settlement of disputes. Due to these fallacies, the Draft Convention might turn out to be counterproductive in a practical sense. Lastly, the most notable fact here is that so far, no state has signed it.


The Space Court and Commercial Arbitration

The international community has been affected by the inefficacies of all the previously discussed ways of dispute settlement. In this light, the establishment of the Space Court is a portentous initiative in the sense that it tries to address most of the loopholes of the existing methods of dispute resolution. Since it was established very recently in February 2021, much cannot be commented on its effectiveness. Nonetheless, the success of the court can be anticipated considering the concrete maneuvers that have taken place since then.


Many scholars have commented on how a hypothetical arbitral institution must work in space law. For instance, in “Binding Arbitration as an Effective Means of Dispute Settlement for Accidents in Outer Space”, the authors, Hertzfeld and Nelson lay down the following requirements for a successful arbitral system:

  1. Stable body of rules and official administrators to supervise the arbitration.

  2. Parties necessarily cohere to the system of arbitration.

  3. Qualified practitioners to function as arbitrators.

  4. A binding legal framework for parties who agree to the jurisdiction of the court.


Though not much has been said about the Dubai Space Court, I believe, it does comply with these requirements up to a large extent. The formation of the International Working Group composed of leaders of renowned space agencies, attorneys and academicians is a noteworthy step. Its function would be to develop a set of rules and guidelines and best practices in the form of a Space Dispute Guide. Another objective of the Working Group would be to train judges and legal practitioners to help them become experts in space-related disputes. This will be done by way of courses offered by international and regional space organizations and agencies that judges will have to undertake over the coming years. These are fixed and concrete steps that make the possibility of the success of the Court of Space more plausible.


Conclusion: Functioning of the Space Court

DIFC Courts were established in 2004 to provide the services of dispute resolution in all commercial matters, including those related to international law. A cluster of courts, comprising of Courts of Appeal, Courts of First Instance and various tribunals established thereto, are collectively called the DIFC Courts. Matters coming to the Court of Space will be integrated into the DIFC legal environment and the resolution procedure will go on according to the Rules of the DIFC, 2014. Moreover, the issue of jurisdiction that was present in the Draft Convention does not exist in the Space Court because the DIFC Courts function in an independent manner where it all depends upon the consensus between the disputed parties. The jurisdiction of the DIFC Courts can be sought after with opt-in clauses in new and existing contracts both. While new contracts would have exclusive jurisdiction of the Space court before the disputes arise, parties in the existing contracts would have to negotiate for the same. Given other things, the DIFC judgments and orders are binding, can be pertinent to compensation, restitution or disgorgement and can be legally enforced anywhere in the world.


Thus, the Court of Space complies with all the four requirements for a successful arbitral system. The Working Group will ensure a stable set of rules and guidelines and will qualify practitioners for this particular field. Further, the norms of the DIFC Courts ensure that both the disputing parties adhere to the jurisdiction of the court and are bound by its judgments and orders. Therefore, it can be said that the UAE and its ambition to develop its judicial system might have given the world the kick-start that it needed in the commercialized and privatized space industry. The aims and goals of the Court of Space, despite it being in the nascent stage, appear to be far-sighted and suitable to the demands of the commercial space industry concerning “out-of-this-world” disputes.


Diya Dave is a fourth-year law student at NALSAR University of Law, Hyderabad. She is passionate about public international law and the intersection of private and commercial international law.


Image: Credit to Bold Business