Companies like Planetary Resources, developing the Arkyd series of spacecraft (above) to ultimate support asteroid mining, are interested in clarity in space property rights. Does that require a major change in international treaties? (credit: Planetary Resources, Inc.)

Encouraging private investment in space: does the current space law regime have to be changed? (part 2)

by Jonathan Babcock
Monday, January 12, 2015

[ Part 1 of this essay was published last week. ]

Proposals for a clearer legal regime to encourage private investment in space

Clearly, due to the current confusion regarding space law, something can be done to encourage investment in space by clarifying, amending, or replacing the existing legal regime in space. But what would this change have to accomplish to further encourage private investment? One idea that could provide a clearer legal structure is to establish a positive legal regime, not just one that may or may not prohibit appropriation in space.¹ This would serve to provide investors with clarity regarding what can and cannot they can claim. It could also make sure that any actions it allows in space be constantly in accordance with international consensus.² This would serve to prevent, as much as possible, conflicts arising between space actors over claims they made. Lastly, a new regime would have to encourage private industry while not losing sight of one of the current priorities in existing space law: preserving equitable sharing in space.³

Several proposals exist for creating a new legal regime more amenable to private interests in space based on these principles. For the purposes of this essay, three will be addressed here. First, the most straightforward of these proposals is for states that are in favor of protecting investors in space to work to remove or amend the sections in Article II that prohibit national appropriation, or replace the Outer Space Treaty altogether. The logic here, argued by scholars including Ty S. Twibell, is simple: the current legal structure is toxic to innovative private investment in space, so why not change it or get rid of it?⁴

There are several serious issues with this approach. First of all, its central logic is flawed.⁵ The Outer Space Treaty and Moon Agreement do not prohibit all types of appropriation in space, just national appropriation. This approach is conflating ambiguity with prohibition. A second problem is that this proposal would cast aside one of the most fundamental and important doctrines of space law: that space must be protected from unilateral exploitation. One would be hard-pressed to argue that the reasons justifying the prohibition on appropriation in the 1967 Outer Space Treaty are not valid today. Human history is littered with conflicts arising from territorial claims. This phenomenon has not disappeared in the last several decades. No, to permit unilateral claims to property in space, whether individual or national, would only serve to spark conflict.⁶ Changing current space law by amending, removing, or replacing the Outer Space Treaty would in no way create a favorable climate for private commercial investment in space. On the contrary, conflicts over competing territorial would discourage investment.

Private investors do not need an explicit guarantee of the right to appropriate space materials to be encouraged to invest. Instead, there are alternative measures that approximate the same type of safeguard to investors. The key requirement for these proposals is that they make investors confident that they have the ability to gain profits from the capital they invested. Investors do not need full property rights entailing title of celestial bodies to do this. All they need is a legal structure that allows them to use and extract space resources to gain a profit. This can be done within the existing legal regime for space. The second and third proposals offered here fit into this category of working within existing space law.

Second, the idea of appropriation authorized by “mankind” (an international consensus) stated in the Moon Agreement can be built upon. One way to do this would be for states to establish a regime in the form of a “space district” that alone would be able to authorize acts of appropriation in space.⁷ Once the regime materializes, it would be independent of any particular state, thus only drawing on international consensus for its formation.

This seems to be what the Moon Agreement had in mind when it offered an exception for appropriation authorized by some type of international governing entity grounded in consensus. Independence could be one of the greatest advantages of this proposal, however, as such a space district could potentially resolve conflicts between nations. This type of independence could be accomplished by creating an administration for the space district that is independent from the influence of the states involved.⁸ For instance, members in the board of representatives of the space district could be given a different type of “international citizenship” that removes them from allegiances to certain states.

This independence comes with a cost as well, and it makes such a regime unlikely to materialize. Developed nations, who are the predominant actors in space, are likely to resent the fact that they will lose control over the ability to dictate the terms under which they operate in space.⁹ For this reason, it is extremely unlikely that such a regime, however attractive in theory, will ever be able to come to fruition to help actors in space (both national and private) gain clarity in appropriating space materials.

The final proposal to be addressed here is the most practical and would best serve to safeguard investor interests while satisfying concerns over claims to sovereignty by leaving the prohibition in Article II intact. This proposal is to establish a regime of functional property rights within the existing legal structure governing space.¹⁰ Under such a regime, the prohibition on sovereign claims in space would remain. This is because conferral of title would not depend upon a government having sovereign claims over a specific area (as is required under common law), but instead title would be based on functional control over space objects and personnel in that location, thus drawing on the jurisdiction given to states in space under Article VIII of the Outer Space Treaty.¹¹ Conferral of these rights is the difficult part for an actor in space: once they are conferred, they are almost identical to property rights on Earth.¹²

These rights would be limited by the parameters already in place under Article VIII jurisdiction. Therefore, they would be temporary, ceasing when a space object was abandoned or had returned to Earth.¹³ Moreover, they would be limited to the area of functionality—the area occupied by the space object and a safety area around the facility. Under this proposal, states would have the ability to structure their preferred property rights regime in the territory they functionally control in space. States could enact property rights at any time to allocate areas of space under their functional control to private actors, without having to first gain approval from other states.¹⁴ However, it may be better for to states negotiate a “mini-treaty” to coordinate national property legislation under Article VIII.¹⁵ Such a treaty would be helpful in creating a uniform definition of “space object,” “personnel,” the physical extent of safety zones around space facilities, and in denoting the temporal duration of jurisdiction.¹⁶

This proposal of a regime of limited property rights in space has several benefits. For one, it would provide a greater sense of legal certainty for investors, who will be able to look at terrestrial property rights laws as precedents to be followed in space.¹⁷ Second, it would allow for competition between national legal systems as private individuals and companies venue-shop for the most amenable legal system.¹⁸ Third, it leaves intact the existing prohibition on territorial sovereignty, which remains a great concern today. Spacefaring nations are better off not having to defend territorial claims in space, which they undoubtedly would have to do if absolute territorial claims were allowed.¹⁹ This also serves to satisfy developing states, who fear that territorial claims in space would leave them on the outside looking in.

Taken together, these benefits outweigh what some will still claim as a shortcoming in this proposal: that it still falls short of awarding full property rights in space. Again, however, language alone does not spark investment. What sparks investment, in this case in outer space, is a legal regime that provides an opportunity for profit. A legal regime incorporating limited property rights within the existing legal structure is practical, efficient, and serves to accomplish the goal of protecting private commercial investments in space by allowing them a means through which to gain functional property rights in a clearly denoted legal system.

Conclusion

Private actors are increasingly taking on important roles in space activities. Yet, the existing legal regime governing space, characterized by ambiguity and uncertainty, is not particularly welcoming to such private investment. This essay has explored the aspects of international law that private actors claim hinder their activities, and offered a solution to overcome that problem. The most practical and useful solution would be to work within the existing legal structure to create a clearly demarcated regime of limited real property rights in space under Article VIII jurisdiction. Importantly, this would leave the prohibition on sovereign claims intact, which is still needed today.

The current legal regime in space does not need to be discarded and replaced with a new one providing for absolute property rights to encourage private investment in space. Instead, what is needed is clarity in how the current regime can be used to allow for limited property rights without sovereign claims. A proposal of limited real property rights under Article VIII jurisdiction does just that.

Endnotes

1. Risley, “Examination of the Need to Amend Space Law,” p. 69.
2. Meyer, “Private Commercialization of Space in an International Regime,” p. 253.
3. Ibid., p. 255.
4. Ibid., p. 256.
5. Reynolds, “The Moon Treaty,” p. 4.
6. White, “Implications of a Proposal for Real Property Rights in Outer Space,” p. 366.
7. Meyer, “Private Commercialization of Space in an International Regime,” p. 258.
8. Ibid., p. 259.
9. Ibid.
10. White, “Real Property Rights in Outer Space,” p. 370.
11. Ibid.
12. Ibid.
13. Ibid.
14. White, “Implications of a Proposal for Real Property Rights in Outer Space,” p. 366.
15. White, “Real Property Rights in Outer Space,” p. 370.
16. Ibid.
17. White, “Implications of a Proposal for Real Property Rights in Outer Space,” p. 366.
18. Ibid.
19. Ibid.

Jonathan Babcock is currently a senior at The George Washington University's Elliott School of International Affairs in Washington, DC, where he is an International Affairs major with a concentration in International Politics. He spent his junior academic year at The London School of Economics and Political Science, studying International Relations and Law. He will be attending law school after graduation, and is particularly interested in international law.

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