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Entering into Force: Promoting Unidroit’s Space Protocol Among Emerging Space Actors

Daniel A. Porras

The Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Space Assets (hereinafter referred to as the Space Protocol) is, at heart, an instrument intended to facilitate the growth of space activities. With the ever-growing importance of space capabilities to modern society, it is not surprising that a new framework has emerged that proposes an additional method for the financing of very expensive space assets. As such, the Space Protocol sets out the rules by which public and private actors will be able to secure financing for tools such as satellites through asset-based financing, a practice not unlike getting a loan for a car and using the car as collateral. This type of financing is, of course, not new but the nature of space assets (i.e. the fact that they are bound for orbit) creates numerous technical complexities that requires a wholly new regimen to govern such loans. The International Institute for the Unification of Private Law (Unidroit), the institution under whose auspices the Space Protocol was developed and adopted, came across many of these complications during the development process. One such issue that demonstrates the nuanced difficulties of this project was simply finding a way for a creditor to “take possession” of an asset that is already in orbit.[1]

Given such challenges, some doubted whether establishing asset-based financing for space assets was feasible at all, or even desirable. The Space Protocol came under heavy criticism, particularly from certain established space powers and some major actors in the commercial sector who felt that this instrument would create more problems than it would solve.[2] However, the Space Protocol generated significant interest from one very important part of the space community that over?came lingering doubts: States with emerging economies.[3] These countries, many from the Latin American, African and South Asian regions, are currently the fastest growing States in terms of space capabilities, searching for the means to obtain critical technology that many in established countries take for granted. They are, therefore, the actors that have the most to gain from the establishment of an instrument such as the Space Protocol. Bolstered by that interest, the Space Protocol was finalised by bringing together members from all across the space community, including over 60 governments (including established space powers) and numerous private actors. The Space Protocol was adopted and opened for signature in Berlin on 9 March 2012.

For Unidroit and the States that actively supported the Space Protocol, this Instrument represents a tremendous achievement. However, there is still a long way to go. Under its own provisions, the Protocol will not come into force until ten States have ratified it and a Supervisory Authority has confirmed that an International Registry is fully functional.[4] Both of these tasks are considerable, particularly the former. In comparison to other international instruments of its like, ten ratifications is a high number, agreed to as a compromise in order to ensure that there will be enough transactions taking place under the Space Protocol for the effective operation of the International Registry.[5] However high this might seem, it has already been demonstrated that there is significant international will to see this regimen come into fruition, notably from emerging economies. States in rapidly developing regions of the world could once again prove to be a tremendous source of support for the Space Protocol, producing not only more than enough ratifications needed for its entry into force but also for the successful implementation of the Cape Town Convention in outer space, even if the Space Protocol is not adopted by wealthier States with established space capabilities.

The framework of the Cape Town Convention makes this possible by its very own provisions. Under Article 3(1), the Cape Town Convention applies “when, at the time of the conclusion of the agreement creating or providing for the international interest, the debtor is situated in a Contracting State”. Article 3(2) goes on to specify that the location of the creditor does not affect the applicability of the Convention. Under these terms, a creditor located, for example, in Canada would be able to enforce the Space Protocol against a debtor located in Burkina Faso so long as Burkina Faso is a Contracting State. In this case, Canada would not need to be a Contracting State in order for the creditor to be able to enforce its interest. Financial institutions, such as banks, wishing to extend loans for such assets could be based anywhere in the world and have clients in numerous countries, all falling under distinct jurisdictions. So long as the debtors are located in Contracting States, the financial institution would only have to deal with a single set of regulations, namely the Space Protocol. This arrangement provides significantly more predictability and transparency than having to deal with a myriad of laws from jurisdictions that the creditor may or may not be familiar with. The list of Contracting States for the Space Protocol could, therefore, be made up entirely of States whose sole interest is to take on the role of debtor.

For additional protection, the drafters of the Space Protocol have included provisions that further ensure that a creditor will be able to enforce their interest in the event of default. One of the major concerns raised during the development of the Space Protocol was how a creditor would take control of a satellite that was already in orbit, not least of all since physical repossession of the satellite would be all but impractical. Under Article XIX of the Space Protocol, the parties to an agreement may place command codes and related data with a third party, thereby giving the creditor further assurance that they will be able to take control of the space asset and enforce their interest, even if it is already in orbit. The third party would also not need to be located within a Contracting State for the Space Protocol to apply.

In this context, one can see that for any given transaction conducted under the Space Protocol, there will likely be three parties: the creditor, the debtor and a third party who holds the command codes. Of these three, only the debtor must be located within a Contracting State. It is not, therefore, imperative for States with lingering doubts about the Space Protocol to ratify. Rather, it will be critical for the States wishing to avail themselves of the Cape Town regimen as debtors to ratify. This matches the entire raison d’etre of the Space Protocol, which is to provide a new means of financing for those who need additional options for the acquisition of space assets.

Already, one can see that there is a greater willingness from States with developing economies to adopt this new financial regimen. At present, only four countries have signed the Space Protocol, with no ratifications: Burkina Faso, Germany, Saudi Arabia and Zimbabwe. Of these four, only Germany is an established space power. The list of countries that regularly expressed their support for the Space Protocol from Africa, Latin America and South Asia is extensive, with many of them also holding the titles of emerging space actors. This list includes Brazil, Colombia, Ghana, Indonesia, Iran, Mexico, Nigeria, Pakistan, Senegal, Turkey and Yemen. These are all countries who are looking to purchase space technology that is widely available all over the world. The Space Protocol will offer them a new financial option to do that very thing. By harnessing the willingness of these States to open up a new avenue for access to space assets, Unidroit will not only be able to achieve the necessary ratifications to bring the Space Protocol into force but, because these countries are also presently those that are looking to purchase the most space technology, it will create the critical mass necessary to ensure the successful operation of the International Registry.

This is not to say that established space powers should not be courted. Indeed, many wealthy countries will be the base of the financial institutions that will one day be asked for loans under the Space Protocol and should, therefore, be brought into the sphere of the Cape Town regimen. However, a concerted effort should be made to seek out the support of those countries who stand to gain the most from this important new achievement, namely those countries with emerging economies who are seeking to take a bold new step with outer space technology. By bringing these countries together, Unidroit will be achieving the aim of the Space Protocol: continued growth for human space activities.

Daniel A. Porras Mr Porras served as an Associate Officer for the Unidroit Secretariat during the development and adoption of the Space Protocol. Since then he has gone on to work further in the international space law and policy field at the UN Institute for Disarmament Research (Geneva) and the Observer Research Foundation (New Delhi). He is currently working as a consultant for LMI Advisors (Washington, DC), providing legal guidance on international telecommunication regulations. Mr Porras has just received his LL.M. from the Georgetown University Law Centre in International Business and Economics Law.

  • [1] These challenges and their respective solutions are discussed at length in other parts of this publication and will not, therefore, be recounted herein.
  • [2] Unidroit 2011 - DCME-SP - Doc. 6, pp. 5-8. D.A. Porras (*) LMI Advisors, Washington, DC, USAe-mail: This email address is being protected from spam bots, you need Javascript enabled to view it © Springer International Publishing AG 2017 369 S. Kozuka (ed.), Implementing the Cape Town Convention and the DomesticLaws on Secured Transactions, Ius Comparatum - Global Studies inComparative Law 22, DOI 10.1007/978-3-319-46470-1_23
  • [3] Unidroit 2012 - DCME-SP - Report, pars. 18-22.
  • [4] Article XXXVIII(1) of the Space Protocol. The International Registry is a database where, underthe Cape Town Convention system, all interests are recorded and are available for viewing 24 h aday, seven days a week.
  • [5] The other two Protocols to the Convention on International Interests in Mobile Equipment (hereinafter referred to as the Cape Town Convention), the Aircraft Protocol and the Railway Protocol,require eight and four ratifications respectively. It should be further noted that the number ten wasa compromise between a proposal for twenty ratifications being required and another proposal thatonly five should be required.
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