Published in Global Arbitration Review (GAR) on February 27th, this article reviews the GAR Live panel discussion on the future of space disputes.
The rise of space disputes: what next?
A GAR Live panel discussed the future of space disputes – including misconceptions about the industry, complexities of liability beyond Earth, and whether arbitration or mediation is more attractive.
The conversation was held last week as part of GAR Live Technology Disputes in New York, and was moderated by King & Spalding associate Viva Dadwal.
Disputes in the space sector are differentiated from other industries by the “scale and energy” of the projects from a legal and engineering perspective, according to Adam Dershowitz, an expert at Exponent who previously worked in NASA’s Mission Control Center.
He said that the rockets we see today were developed as intercontinental ballistic missiles designed to carry nuclear weapons, meaning the sector has been both “international and high risk” from its inception.
Now, private space launches are creating new kinds of disputes invoking different kinds of protections. SpaceX, for example, “has launched more things than everyone else combined,” and the explosion last month of its Starship rocket forced airlines to reroute, exposed companies to risk and caused potential environmental damage.
But even successful launches can cause disputes, according to Dershowitz.
Laura Zielinski, the founder of the Space Arbitration Association, said that people who think space disputes are “futuristic” do not understand “the scope” of today’s space sector.
Space tourism and Elon Musk’s high-profile plans to colonise Mars are only “a very small part” of the industry, around 90% of which is comprised of projects relating to satellites, whether for telecommunications or Earth observation purposes. Disputes may also arise over the infrastructure around satellites, such as launch services, space ports, and orbit servicing.
There are also “credible plans” to create a permanent lunar base, as well as commercial space stations to be used for tourism and manufacturing that can only be conducted in microgravity – such as the production of human organs.
These activities are “most likely” to spawn commercial disputes, Zielinski predicted, especially as “tight launch windows” mean manufacturing issues can “completely frustrate” very expensive projects.
However, she said she was aware of at least three satellite-related investment treaty claims – including the high-profile Devas v India case. Zielinski said investor-state disputes could arise from the high amount of regulation in the industry, which she attributed to the miliary applications of space assets.
Others may relate to the frequencies used by satellites, for which there is stiff competition. Dershowitz explained that these also pose a regulatory challenge to satellites in low Earth orbit (which extends to around 12,000 miles above the planet) that rotate around the globe around every 90 minutes and therefore encounter new jurisdictions on a “second to second basis.”
Just space for mediation?
Les Schiefelbein, a San Francisco-based arbitrator and former in-house counsel at Lockheed Martin Space Systems, recalled that when he worked in the sector and states were “launching school buses into the sky for national security purposes,” arbitration lawyers “[did] not really have a part” in the resulting disputes.
He attributed this, in the US at least, to the political incentive to prevent disputes from interrupting public-private partnerships. As a result, disputes were not referred to the courts or ADR, and instead went before a special administrative body that would only hear cases after projects’ conclusions, meaning the disputes “pretty much” resolved themselves.
But now that private companies are launching satellites “the size of a shoebox” with shelf lives closer to five years than 20, disputes lawyers find themselves “front and centre”. However, it is mediation – rather than arbitration – that is already “very, very popular,” and which Schiefelbein predicted will continue to “take off.” This is because many disputes pertain to cost-reimbursable and fixed-price contracts that incentivise businesses to resolve disputes “as quickly as possible.”
Zimmerman disagreed on this point. She acknowledged that the space industry has previously been “notoriously non-litigious” but argued that this is changing due to an influx of new entrants into the market.
She explained that in Europe, “almost all” space contracts have ICC clauses, mostly providing for Paris seats and French law, or New York seats for agreements that include US companies.
Dershowitz agreed that space arbitrations will grow, in part because “more and more data” is becoming available about disputes – meaning it is no longer the case that there are “no witnesses in space.”
Liability in infinity
The conversation turned next to the question of liability provisions governing objects in space.
Zielinski noted that space cannot be appropriated by any country under international law – which also affects IP rights for inventions made in space. States including the US are developing domestic legislation to make up for a lack of international regulation governing this area.
Liability issues also arise from cross-border partnerships, she explained. Although the state that launches a space object is liable for the damages the object causes, the definition of a launching state remains “very broad”. It may mean where the launch happened – or it could mean the nationality of the operator. Germany, for example, has agreed to be responsible for launches by German companies in Norway.
Similarly, there are a “whole bunch of fun questions” about criminal law in space, continued Dershowitz – who, while at NASA, heard “on good authority” that one astronaut in orbit would have punched another had they not been in low gravity.
Finally, GAR Live co-chair Sophie Nappert asked whether there is any appetite for a tribunal like the International Tribunal for the Law of the Sea, which could provide “a lot friendlier” procedures for space disputes.
Zielinski recalled that the PCA proposed rules for space disputes in 2011 but that they have never been used to her knowledge; nor has the DIFC’s Courts of Space since its introduction in 2021.
She suggested this may be due to the prevalence of Paris-seated ICC clauses in these contracts, which means there is “no need” for another institution to take the reins over space dispute.
But Schiefelbein said Nappert’s proposal was “the best idea of the day,” especially given the expectation for the sector to become a trillion-dollar business in 10 years.
GAR Live Technology Disputes took place on 20 February at @Ease 1345 in New York. It was sponsored by gold sponsor Docket Navigator and silver sponsors Alston & Bird, Exponent, Hughes Hubbard & Reed, JAMS, Willkie Farr & Gallagher and Withers, and supported by the American Arbitration Association, ArbTech, Lexology, the Chatered Institute of Arbitration, the New York International Arbitration Centre, Racial Equality for Arbitration Lawyers and the Silicon Valley Arbitration & Mediation Center.
