Space Arbitration: Could Investor-State Dispute Settlement Help Mitigate the Creation of Space Debris?

In recent years, activities in outer space have increased and diversified, thereby causing a multiplication of objects being launched into outer space. This has rendered outer space increasingly crowded and has led to a growing amount of space debris. While technological advances provide hope for cleaning up our orbits, such efforts still face regulatory and financing issues. One way to address the problem is to create a new treaty. However, this faces the obvious difficulties of international cooperation and the reluctance of States to enter into new binding obligations. These complications make it interesting to analyze whether there is an existing legal framework that could address this issue. This post analyzes the potential for Investor-State Dispute Settlement (“ISDS”) to mitigate the accumulation of space debris in outer space.

The growth of the international space industry and the creation of space debris

In the past, the use of space was scarce and activities in space were limited to governments. In recent years, however, space has witnessed an increasing diversification, commercialization and democratization: space actors now increasingly attempt to open up new fields such as space tourism and mining, as well as to use space for enhanced military uses including anti-satellite weapons and surveillance capabilities. Having long been active in the operation of satellites, commercial operators are now venturing further into surveillance activities as well as space flights and 5G satellite internet services. Finally, the miniaturization of satellites has rendered their launch and operation more widely available and is also contributing to the multiplication of objects in space (see for example the OneWeb or Starlink constellations).

This increase in the use of space (in particular, of the low Earth orbit) is expected to further “clutter” it with objects ranging from entire defunct satellites to very small pieces of former satellites or rockets for example. Their growing presence in space increases the risk of collisions that would, in turn, break up space objects into more and smaller pieces, thereby contributing even further to the accumulation of space debris orbiting the Earth. In the worst-case scenario, collisions could lead to chain reactions – the Kessler syndrome – that could render certain orbits unusable. Yet, even without the materialization of this worst scenario, the risks related to space debris alone are costly, as satellite operators increasingly have to factor satellite protection, their possible replacement, and debris tracking into their financial projections.

The difficulties of reducing space debris

Given these potentially disastrous consequences of space debris and the corresponding costs to space actors, it is unsurprising that growing efforts are being directed towards finding a solution. There are several technological undertakings focusing on the removal of debris from space such as special spacecraft to deorbit redundant satellites and rocket stages, a graveyard for defunct space objects in an orbit far away from Earth, and a salvage-type mission to recover space debris (Astroscale, for example, is currently preparing to launch a space junk tracker that would dock and retrieve space debris). Meanwhile, space operators track pieces of space debris and move their satellites accordingly to avoid costly collisions.

Over time, some of the above-mentioned technological advances might have the potential to make serious contributions towards solving the problems created by space debris. However, all of them focus on debris objects that are already in space and do not attack the problem at its root, and many are facing financial hurdles that might prove unsurmountable. This is why, in addition, legal rules are needed to prevent the accumulation of additional debris.

Several organizations and committees are working on solving this (United Nations’ Committee on the Peaceful Uses of Outer Space, Inter-Agency Space Debris Coordination Committee), and there already are best practices and guidelines at the national and international level such as the Space Debris Mitigation Guidelines of the UN Committee on the Peaceful Uses of Outer Space. Still, they are not yet widespread and binding on enough States to bring the creation of space debris under control. According to the OECD, compliance with mitigation measures is still insufficient and “[i]mproving compliance behaviour [particularly at national levels] among satellite operators is an indispensable step to contribute to long-term sustainability of orbits.”

So how to increase compliance? The 1967 Outer Space Treaty and its corresponding Agreements, including the Liability Convention, assign responsibility for objects in orbit to the country which launches them. In other words, in theory, launching States can be held liable for harm caused by objects they have launched into space, and consequently, should have an interest in limiting the creation of debris from any objects launched from their territories. This interpretation does not take into account, however, that States have a strong incentive not to burden commercial space operators with new requirements that would increase their costs and cause them to move their operations to a different country. States instead prefer to rely on contractual indemnities imposed on private operators hoping to limit their exposure to any liability that could result from debris instead of avoiding its creation in the first place.

A role for Investor-State arbitration?

Compliance with space debris mitigation at the national level is said to be low because even though countries are responsible for rocket debris caused by launches from their territory, there is no effective international mechanism for private companies to enforce liability. A solution needs to provide incentives, and this is where Investor-State Dispute Resolution could play a role.

Reflections on ISDS and outer space are not new. In 2011, the Permanent Court of Arbitration has presented its Optional Rules for Arbitration of Disputes Relating to Outer Space Activities that are based on the tested UNCITRAL Rules; there has been a call for an International Centre for the Settlement of Outer State Disputes; and again others have analyzed the possibility of solving space disputes within the existing framework of Investor-State arbitration and concluded this to be a viable option – a conclusion that seems to have been confirmed by the three ISDS cases that have arisen so far in the space sector (Devas v India, PCA Case No. 2013-09; Deutsche Telecom v India, PCA Case No. 2014-10; Eutelsat v Mexico, ICSID Case No. ARB(AF)/17/2).

Indeed, ISDS tribunals are likely to have jurisdiction over most disputes arising out of outer space operations. To have jurisdiction, there must be both a covered investment under the applicable treaty and a foreign investor that has invested in the territory of the host State. Most bilateral and multilateral investment treaties define investments broadly as “every kind of asset”, a definition that would usually include satellites. Even under the more restrictive interpretation of the ICSID Convention requiring additional characteristics such as an economic contribution, risk, a certain duration or even a contribution to the development of the host State, space operations are likely to qualify as they are usually long-term and high-value projects that are always facing the high level of risk inherent in outer space ventures.

As regards the investment into the host State’s territory, it has been admitted that this goes beyond an actual physical connection with the territory, and satellite operations always have a natural link with at least one State. Any object launched into outer space must be registered on the national registry of a State, and satellite operators often also obtain licenses from, or sign concession agreements with, the State whose frequency band or orbital position they are using. Consequently, operators with satellites on-orbit can be argued to have invested in the territory of the State whose orbital slot or frequency bands they are using or on whose national registry the satellite in question is registered.

It follows from the above that a satellite operator from country A, launching a satellite registered by country B, or using the orbital slot or frequency bands of country B, would qualify as a foreign investor from country A having invested in country B. This would then provide the satellite operator and his investment in country B with the investment protections offered by any treaty in force between both States, and if available under the applicable treaty, provide the satellite operator with the right to initiate ISDS proceedings against the host State (country B) over any alleged treaty violations.

But how could this apply to space debris mitigation? Most bilateral and multilateral investment protection treaties oblige host States to provide Full Protection and Security (“FPS”) to covered foreign investors and their investments. In the outer space context, this could be construed to amount to the obligation for host States to protect satellites of covered investors from harm. The FPS obligation is not an absolute obligation but rather an obligation of means to apply due diligence to protect an investment from harm. In other words, host States could be obliged to exercise due diligence to protect satellites from covered investors from harm that could be caused to them by space debris.

In 2018, Stephan Hobe, Julian Scheu et alia concluded that because of the impossibility for States to avoid harm to satellites from debris, even by exercising due diligence, it “appears that international investment law is not capable of efficiently compensating the lacunae of the liability regime under international space law in the context of space debris.” But is this still true today? Or could it be argued that today’s rapidly increasing possibilities of tracking certain pieces of space debris, appropriate warning systems allowing to move a satellite out of harm’s way, and even the possibility of requiring operators to have a plan on how to dispose of space debris before any launches, could in certain cases, when a State fails to apply them, lead to liability under international investment treaties?

Conclusion

Space operations are inherently dangerous and characterized by a high risk of failure, which is why judging the content of a due diligence obligation to be employed in outer space is necessarily complex and will not always be possible. However, ensuring the sustainability of outer space is one of the most pressing issues we are facing today and therefore deserves the exploration of all possible avenues. And it seems that in the absence of a proven technological solution to the space debris issue or a binding international treaty establishing rules directed at avoiding the creation of debris, the ISDS regime could constitute a tool, which, through the risk of liability, provides an incentive for States to further reinforce their national measures and thus contribute to the mitigation of space debris.