Regulating the final frontier

New arbitration rules have been drawn up for space law disputes

Gerry Oberst, partner, <a class=Hogan Lovells” src=”Pictures/web/u/w/e/Oberst_Gerald.jpg” />

Gerry Oberst, partner, Hogan Lovells

New arbitration rules for outer space disputes have been launched recently by the Permanent Court of ­Arbitration (PCA) in The Hague. This is part of a growing trend by arbitration institutions to establish rules ­tailored to the needs of particular sectors in an increasingly competitive market for arbitration services.

The PCA’s optional rules for the ­arbitration of disputes relating to outer space activities were drafted by an advisory group of leading space law experts, based on the widely used and respected UN Commission on International Trade Law rules.

The new rules recognise the importance and growth of the global space industry, which is estimated to be worth in excess of $275bn (£178.07bn). With growth comes potential new entrants and increased competition, which will inevitably lead to disputes. Engaging in space activities involves substantial investment and a complex network of contracts. Constructing and launching a communications satellite typically requires an investment of hundreds of millions of pounds, so it is important for parties to have the protection of an effective dispute resolution mechanism should things go wrong.

States, international organisations and private entities are all significant investors in the space sector, often working jointly with each other, and the advisory group was conscious of this when drafting the new rules.

A key feature of the rules is the ­establishment of a list of space law experts that the PCA and parties can draw on to select arbitrators or experts. However, the challenge with such lists is to ensure that they are updated regularly, otherwise they lose their value. In practice, it is easy to put someone’s name down on a list but difficult to take it off.

The list of experts approach has been used by the PCA before in its ­optional rules for the arbitration of disputes relating to natural resources and the environment. These were partly targeted at the emerging ­climate change sector and have been included in industry-standard contracts for carbon credit purchases. The London Court of International Arbitration India rules, tailored to disputes involving India or Indian parties, are another example of specialist arbitration rules. There is also an initiative to develop arbitration rules for the finance market through the Panel of Recognised International Experts in Market Finance.

The emerging popularity of specialist arbitration rules can be seen in the large increase in the caseload of the World Intellectual Property Organisation’s arbitration and mediation centre over the past five years.
There has also been an increase in the number of international arbitration institutions. Established institutions have revamped their rules and expanded into new locations, leading to increased competition. To attract arbitration users and differentiate themselves from competitors, some institutions are moving away from the ’one-stop-shop’ approach to their rules and developing bespoke rules for different groups of users.

The PCA no doubt hopes that its new space rules will meet the needs of a whole new universe of users.

Senior associate Nathan Searle assisted with this article