The Transfer of Space Objects

One of the Issues of Commercial Significance Arising out of the 50th Session of UNCOPUOS 2011

Introduction - UNCOPUOS 2011

The fiftieth session of the Legal Subcommittee of the United Nations Committee on the Peaceful Uses of Outer Space was held from 28 March to 8 April 2011.

Several issues of interest to commercial operators were discussed, such as developments concerning the “Draft Protocol on Matters Specific to Space Assets to the Convention on International Interests in Mobile Equipment”, or “Unidroit (1)” as many refer to it.(i)(ii)
There was a general exchange of information on national mechanisms relating to space debris mitigation measures and a proposal for a binding Resolution, rather than the currently voluntary measures.

There was also some debate about the transfer of space objects, in particular the transfer of satellites by commercial entities, and issues related to the registration of space objects. This bulletin will briefly discuss this issue.

Transfer of space objects

With an increasing number of private operators in the satellite area, and due to industry consolidation and the need to access spectrum, satellites are increasingly being transferred in orbit between entities and often entities residing in different countries.

The “launching State”(2) of a satellite must provide basic information (such as the date and territory or location of the launch, and basic orbital parameters) to the UN in relation to each space object launched. These provisions are set out in the Registration Convention 1974.

The State on whose national register a satellite is listed will retain “jurisdiction and control” over the satellite (or other space object including any personnel who may be on it)(3). Ownership of the satellite is not affected by it being in outer space.

However, there is no express legal provision in the existing international legal framework which would permit the transfer of the registration of a satellite from one State to another during its operation in orbit. There is also currently no international mechanism by which a satellite owned by a company domiciled in the State of registry can be transferred, during its operation in orbit, to a company domiciled in a foreign State. This is currently carried out informally between States without any binding internationally agreed provisions.

There are now several cases where a State which has jurisdiction and control over a space object is not the “launching State”, for example where the ownership of a satellite has been transferred from an entity in one State to an entity in another State. This may be due to a change of shareholding structure or simply through the acquisition of a satellite.

Occasionally this transfer may be to an entity (which purchases a satellite or which otherwise assumes ownership) in a State which is not a “launching State” pursuant to the international treaties. In such a scenario, it is unclear as to whether that State is obliged to register the satellite, or what other mechanism should be adopted. This is important as that State may have to assume jurisdiction and control for the satellite and bear international responsibility for its new national activities (4). It is also unclear as to whether international liability is to remain with the “launching State” in accordance with Article VII of the Outer Space Treaty; although this would seem odd.

The legal feasibility of the transfer of a satellite in orbit and the registration by States, and thus which State will assume “jurisdiction and control” over the satellite, was discussed in the 2011 UNCOPUOS Legal-Subcommittee session. States are tasked, however, to consider these issues for detailed discussion in the meetings in 2012.

As we all know, the Legal Subcommittee will not resolve this issue in 2012, but it is one that requires careful consideration and an understanding of commercial practicalities.

The feasibility of transfer and the laws that any acquiring entity will need to comply with should be issues raised in due diligence undertaken in corporate and finance transactions involving the disposal or acquisition of satellites, and other space objects, from or to an entity in another State. This may result in the need to assess the national provisions (if any) in those States, and make an assessment of the current uncertainty in the international framework.

I would suggest that if any commercial operator does have any comments on this issue that it contact its national Government or relevant regulator to discuss these prior to next year’s meetings of the Legal Subcommittee.

Joanne Wheeler attended the meetings of the Legal Subcommittee from 29 March to 2 April 2011 as an expert representative for the UK Government.
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[1] The Convention was initiated by the International Institute for the Unification of Private Law (Unidroit).

[2] Defined as: (a) a State which launches or procures the launching of a space object; or (b) a State from whose territory or facility a space object is launched.

[3] Article VIII of the Outer Space Treaty.

[4] Article VI Outer Space Treaty.
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(i) While many States, such as Canada, Germany and Italy, expressed their support of the Protocol other States remained concerned as to the economic and commercial benefits of the Protocol. Several States continue to consult with the space industry to assess the affect of the Protocol. Those States which have not yet reached a position on the Protocol include Brazil, China and the Czech Republic. The UK, the US and Japan neither agreed to support nor oppose the Protocol.

(ii) The Czech Republic made a proposal that “legal aspects of space debris” be included on the agenda for future meetings (not a new proposal) and for a UN General Assembly Resolution on the issue of space debris, rather than the voluntary measures that may currently be implemented by national means. Some States already implement space debris mitigation measures through their licensing process and conditions. Many States, however, believed that more scientific and technical information was required before binding measures could be imposed and that this task should be led by the UNCOPUOS Scientific and Technical Subcommittee.