New ITU Role in the UNIDROIT Space Asset Protocol

By | September 1, 2012 | Telecom, Via Satellite

A little more than a year ago, in our September 2011 column, we asked what is UNIDROIT and why were satellite operators saying such bad things about it? The question now is what role should the International Telecommunication Union (ITU) have in overseeing a space asset registry that was adopted in UNIDROIT over the strident opposition of the communications satellite industry?

As we wrote back then, “UNIDROIT” is the International Institute for the Unification of Private Law, based in Rome. Despite its name and acronym, UNIDROIT is a private institution and no part of the United Nations.

About 10 years ago, UNIDROIT focused on security interests for facilities used in outer space and commenced efforts to adopt a space assets protocol. Satellite operators became disenchanted with the results of the effort, but it was adopted anyway, at a diplomatic conference held in Berlin this year, from Feb. 27, 2012, to March 9, 2012.

Without getting into all the details, the protocol establishes a procedure for creditors to register their interests in space assets for international recognition. The intent is that this registry gives additional commercial certainty for investors, designed to aid the development of new space assets.

This international registry will be operated by a registrar, which in turn will be overseen by a Supervisory Authority. This authority is supposed to set up rules, set up a committee of experts to do whatever experts do and set fees for services. These provisions track and refer to the underlying UNIDROIT Convention on Mobile Equipment. Thus, for example, the Article 32(4) fees provision in the space assets protocol refers back to Article 17(2)(h) of the underlying Convention, and neither contains any special rules for oversight of the fee structure.

As for oversight in general, both the protocol and convention provide that the UNIDROIT organization and the Supervisory Authority should prepare annual reports for the member countries about how the system is working in practice. The member countries can only call for a review of operations, however, if at least a quarter of the countries request a meeting.

Certain officials in the ITU want to take on that supervisory role. Not everybody is convinced this is a good idea — some because they do not like the idea of the registry in the first place, others because they do not think it is an appropriate role for the ITU.

At the recently concluded ITU Council meeting, a series of questions were raised about this idea, by both the United States and India.

On June 25, the United States submitted a series of (tough) questions designed “to assess the financial, juridical, technical and regulatory implications” of the concept. The first question asked for confirmation that there is no conflict between current ITU responsibilities and the supervisory role. The penultimate question concerned, among other matters, fees, possible costs and safeguards to avoid any leakage of funds from ITU regular activities.

On July 6, India expressed apparent misgivings on the whole idea. India said that “these issues need elaborate discussion at this Council meeting with a view to finalize the position of ITU membership…. Also [this] Council 2012 meeting needs to debate whether it is advisable on the part of ITU to continue to express interest in becoming Supervisory authority when the issues are not clear and the ITU membership has not taken a decision on this matter.” India’s paper echoes some of questions raised by the United States, and pointedly says “it is not clear what purpose it would serve to ITU membership if ITU becomes the supervisory authority.”

The ITU Council meeting adjourned in mid-July and kicked the question down the road to the next council meeting in 2013 (around the beginning of next July). It seems the ITU secretary- general is authorized to continue to express interest in the role, but whether or not it will actually take the role “should not be prejudged at this stage…”

Meanwhile, the space assets protocol has not yet entered into force (as of the drafting of this column). The final text was not even slated to be available until June 2012 at the earliest, and then at least 10 countries must ratify the agreement. Even before that, however, a Preparatory Commission will be forging ahead as a provisional supervisory authority to set up the registry. Will the ITU be on board?

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

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