New Arbitration Rules to Resolve Satellite Disputes

By | February 1, 2012 | Government, Telecom, Via Satellite

New arbitration rules have recently been launched for resolution of disputes relating to outer space activities. The Optional Rules for Arbitration of Disputes Relating to Outer Space Activities was developed by the Permanent Court of Arbitration (PCA), based in The Hague. The PCA adopted the new rules last December, and soon after posted them on the PCA website at http://www.pca-cpa.org.

The PCA traces its history back to 1899 as an intergovernmental organization providing dispute resolution services to the international community. These services can be used by governments embroiled in international disputes or private contract parties trying to avoid litigation of a disagreement.

A special PCA advisory group comprised of space law experts from across the globe developed the new rules. They are based on the well-respected and widely used UNCITRAL Arbitration Rules with a number of modifications designed “to reflect the particular characteristics of disputes having an outer space component involving the use of outer space by States, international organizations and private entities.”

The Rules consist of 43 articles and a model arbitration clause that parties may insert into contracts, treaties or other agreements for arbitration of future disputes. Some of the key benefits for satellite industry users include:

• Knowledge: The PCA has established a list of space law experts that the parties and the PCA can draw on to select arbitrators or experts. In light of the highly technical nature of some satellite disputes, the rules provide that the arbitral tribunal may request the parties to provide a document explaining the background to any scientific or technical information in order to facilitate the tribunal’s understanding of the matters in dispute.

• Flexibility: The PCA recognizes that States, international organizations and private entities are all significant investors in the satellite sector, often working jointly with each other. Accordingly, the new rules are capable of applying to disputes between these different types of entities.

• Assistance: The PCA serves as registry and provides secretariat services for proceedings under the Rules, assisting the parties in selecting arbitrators and performing other legal and administrative functions.

• Confidentiality: In recognition of the confidential and commercially sensitive nature of many aspects of satellite technology, the rules provide for enhanced measures to protect confidential information provided by the parties in the course of arbitration.

• Speed: The PCA will appoint arbitrators and can decide challenges to appointments when necessary, without first requiring the parties to attempt to designate an appointing authority of their own choice. The arbitral tribunal also has powers to continue the arbitration notwithstanding any failure of one arbitrator to participate in the proceedings once appointed, which may also prove a useful tool for preventing undue delay to the proceedings. 

These new rules recognize the importance of having an effective dispute resolution mechanism to protect rights and minimize risk in the satellite community. Arbitration could be particularly well suited to resolve disputes relating to satellite activities for the following reasons:

• Neutrality: Satellite disputes almost always involve international parties and arbitration allows a venue to be selected that is outside the “home” courts of any party.

• Enforceability: Under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), arbitral awards are enforceable in 146 States, subject only to a very limited list of exceptions.

• Confidentiality: As mentioned above, the arbitral process is confidential to the parties, which can be of significant importance where disputes involve technical, scientific or commercially sensitive issues.

• Party autonomy: Arbitration provides users with a great deal of choice to tailor the arbitration process to meet their needs. These choices include, for example, determining the rules to apply, the arbitration venue, the number of arbitrators and how they are to be appointed. Where it is important that a tribunal have specific knowledge or qualifications to resolve a dispute, the parties can build this into their arbitration agreement. 

Arbitration is a flexible process and not a one-size-fits-all solution. The tailored approach of the new PCA rules is a positive step in the development of an effective dispute resolution mechanism for the industry.

Gerry Oberst is a partner in the Hogan Lovells Brussels office.

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