Launch of Europe's largest telecoms satellite presents astronomical opportunities for space arbitration rules

The recent successful launch of the world's most advanced telecommunications satellite, Alphasat I-4A F4, from French Guiana represents a landmark moment for the European space industry and a quantum leap forward in telecommunications technology in the EMEA region. The transnational collaboration required to achieve this launch reflects the sophistication of satellite transactions around the world. It also highlights the potential complexity of disputes arising out of these transactions, in terms of the intricate web of interlinked agreements required to bring a satellite into operation, the international scope of these agreements and the jurisdictional challenges associated with operating in a - literally - supranational sphere.

The satellite, which is the largest ever produced in Europe, was the product of a network of partnerships, central to which was the public-private partnership between Inmarsat and the European Space Agency ("ESA"). The satellite will extend Inmarsat's global broadband and mobile network throughout Europe, the Middle East and Africa, significantly strengthening the competitive position of the European telecoms industry. It is also carrying several pieces of specialized sensor technology which will use the platform's position to collect and transmit data, as well as a laser-based communications system to be used by the ESA.

Other partners involved in the project include Thales Alenia Space and Astrium, responsible for the engineering and construction of the satellite, Arianespace, which operated the rocket that delivered the satellite into geostationary orbit and a partnership between the ESA and the Centre National d'Études Spatiales, the French space agency, which developed the satellite's platform, Alphabus.

But where do parties turn when disputes arise in this complex technical arena?

The Permanent Court of Arbitration – first to offer specialist space arbitration rules

The Permanent Court of Arbitration in The Hague (the "PCA"), an intergovernmental organisation offering dispute resolution services to states, state entities, intergovernmental organisations and private parties, has sought to address some of the complexity around dispute resolution associated with satellite transactions and other space-related activities. At the end of 2011, the PCA launched the Optional Rules for Arbitration of Disputes Relating to Outer Space Activities (the "Space Arbitration Rules"), the first formal dispute resolution mechanism dedicated to space-related disputes which accommodated private parties.

The Space Arbitration Rules, compiled by a special advisory group of space law experts, are based on the 2010 Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), with certain modifications to reflect the specific challenges associated with disputes having an outer space component. They are very broad in scope, being intended to be used in disputes involving states, international organisations and private entities where there is some connection with outer space activities. This includes disputes around the interpretation and application of multilateral treaties relating to the use of or access to outer space.

However, it is the application of the rules to contractual disputes that is of particular interest. The enormous increase in private commercial activity related to space in recent decades, particularly in the telecommunications arena, has created a need for dispute resolution mechanisms that extend beyond the diplomatic and governmental channels historically used by the primary actors in the space industry: state parties. Finding a mechanism to accommodate disputes involving the variety of non-state actors which are engaging with space has become of increasing concern.

International arbitration has always offered significant advantages to parties in international disputes, such as the possibility for the parties to select a neutral forum and tribunal, procedural flexibility and the international enforcement of awards. The Space Arbitration Rules seek to address some of the particular challenges presented by space-related disputes through the following features:

• Recommended list of specialists for appointment as arbitrators or experts: The PCA maintains a list of industry specialists with space-related expertise who may be selected by the parties or tribunal as experts or arbitrators, although use of the list is optional.
• Designated appointing authority: The Secretary General of the PCA will act as appointing authority under the rules, avoiding the potential for delay if the parties are unable to agree on the constitution of the tribunal. The International Bureau of the PCA will provide secretariat services to administer arbitral proceedings.
• Possibility to provide for larger, five member tribunals: Arbitrations are normally determined by a sole arbitrator or a three member tribunal. The possibility for parties to provide for disputes to be heard by larger tribunals of five arbitrators recognises the technically complex and politically sensitive nature of the disputes which might arise in this field, in particular as such disputes are likely to involve state interests and very high value claims.
• Enhanced confidentiality: The rules include a broad power for the tribunal to implement specific confidentiality mechanisms to protect the commercially sensitive proprietary information related to the technology in the sector. This includes the power to appoint a confidentiality adviser as a technical expert to report to the tribunal about the basis of information claimed by a party to be confidential without disclosing the actual information to either the other party or the tribunal.
• Additional scientific / technical assistance: Provision for the tribunal to request that the parties provide a non-technical document summarizing and explaining the background to any scientific or technical information which the tribunal needs to understand the dispute. The parties and the tribunal may also appoint experts where necessary.
• Discretion for tribunal to continue where one arbitrator fails to participate: The rules grant the tribunal a discretion to continue the arbitration in the event that one of the arbitrators (in a three or five person tribunal) fails to participate in the arbitration. Under other arbitration rules, it is typical for the arbitration to be stayed while a substitute arbitrator is selected, a process which can lead to significant delay and cost.

The rules also contain a model arbitration clause which can be inserted into contracts or other agreements.

A copy of the Space Arbitration Rules is available on the PCA's website here.

With many significant developments in the satellite technology field on the horizon, it will be interesting to see whether the Space Arbitration Rules will become a feature of satellite-related transactions in the years to come.

For further information, please contact Nick Peacock, Partner, Deborah Wilkie, Senior Associate, Louise Barber, Associate, or your usual Herbert Smith Freehills contact.