Space Law and Arbitration: An introduction to Space Law in the UK

This is the third article in Clyde & Co’s international arbitration series covering the topic of Space Law & Arbitration. In this piece, Legal Director Tim Fox and Knowledge Lawyer Aron Dindol consider in overview the UK’s approach to space regulation and whether arbitration is a suitable dispute resolution option in the UK, for space related disputes.

The general suitability of arbitration as a mechanism for dealing with space related disputes has been discussed elsewhere in this series.¹ This discussion is timely given the fact that the private commercial use of space continues to increase and thus so will the need to resolve disputes between those private actors more effectively than is presently the case.

The UK Space Law Framework

The UK’s international space obligations arise out of the principal 5 UN based treaties it has ratified that regulate the exploration and use of space, the most important of which for this article are: 

1. the Outer Space Treaty 1967, which can be seen as the “Magna Carta” of outer space, providing the basic framework on international space law; and 
2. the Liability Convention 1972, which provides for both strict and absolute liability on the part of a launching state to pay compensation for damage caused by its space objects depending on if the damage was caused in space or on the surface of the Earth or to aircraft in flight.² 

At a national level, The Space Industry Act 2018 (SIA) created the high-level framework to enable launches to take place from the UK from the early 2020s. Prior to the enactment of the Space Industry Act 2018, space activities carried out in the UK or by UK entities overseas were governed by its predecessor, the Outer Space Act 1986 (OSA). Consistent with its international treaty obligations (Article VI of the Outer Space Treaty) the UK is responsible for the activities of its nationals (governmental and non-governmental) and accordingly required such entities to obtain a licence before they could procure a launch and/or operate a satellite. In short, the applicable regulation now depends on whether the space activity is to be carried out from UK soil or not. Overseas activities being governed by the OSA and domestic activities by the SIA. 

The SIA sets out a high-level enabling framework for commercial spaceflight operations, regulating activities carried out in the UK, including launch (space or sub-orbital) and return, the procurement of a UK launch (space or sub-orbital), the operation of a satellite in orbit, the operation of a spaceport and the provision of range control services.³ The regime applies to anyone intending to carry out space activities, sub-orbital activities, and associated activities in the UK.⁴ The UK Space Agency is the body designed to play a major role in delivering the Government’s National Space Strategy. The UK’s membership of the European Space Agency (ESA) was not affected by Brexit as the ESA is not an EU organisation.

In July 2021 the UK Civil Aviation Authority (CAA) was given new powers as the UK’s space regulator with responsibility for issuing UK space licences. The licensing process will require applicants to provide a detailed assessment of safety and security considerations, including a comprehensive safety case, an environmental assessment, financial resources, security and cyber risk mitigation.

Arbitration in the United Kingdom

The UK does not have a specialized court dedicated solely to handling legal matters related to space or technical issues related to space. Legal matters pertaining to space and technology would typically be handled within the existing legal framework, often by specialized judges or courts with expertise in relevant fields with technical experience of the subject matter in dispute. 

Does the United Kingdom have an arbitration law? 

The principal statute governing arbitration in the UK is the Arbitration Act 1996 (the “Act”).⁵ The Act is broadly based on the Model Law,⁶ although it does not incorporate all the Model Law’s provisions.
The Act is based on three broad principles: 

(i)    fairness; 
(ii)    party autonomy; and 
(iii)    limited intervention by the courts.

The Act contains certain mandatory provisions that will apply when the seat of the arbitration is in England, Wales or Northern Ireland. Parties can agree to exclude the right of appeal on a point of law. Arbitrations seated in England, Wales or Northern Ireland will be subject to the supervisory jurisdiction of the English courts.

Does the UK have a specialised institute to manage arbitration?

The London Court of International Arbitration (the “LCIA”) is a leading arbitral institution based in London.

An LCIA arbitration is governed by the LCIA Arbitration Rules. Standard wording for arbitration agreements governed by the LCIA Rules is published by the LCIA. The LCIA has its headquarters in London and comprises the company, the LCIA Court and the Secretariat. The LCIA Court appoints arbitral tribunals, determines challenges to arbitrators and controls costs.

The latest version of the LCIA Rules came into force in 2020 and the new rules include provisions relating to: 

(i)    expedition of proceedings, including the possibility of early dismissal determination;
(ii)    virtual hearings; 
(iii)    the role of tribunal secretaries;
(iv)    power to order consolidation and concurrent conduct of arbitrations; and
(v)    explicit reference to data protection and regulatory issues.

Procedurally how does the United Kingdom deal with confidentiality, challenges to jurisdiction, awards and emergency arbitration?

Whilst the Act does not address confidentiality specifically, English law recognises the confidentiality of arbitration. Parties to arbitration, as well as the tribunal, are under an implied duty to maintain the confidentiality of the proceedings, including documents produced during the proceedings. Different arbitral institutions have differing rules on confidentiality. The LCIA Rules set out express confidentiality obligations, for example, whereas the ICC⁷ Rules empower tribunals to make orders concerning the confidentiality of the arbitration proceedings. 

Procedural orders made by the tribunal during the arbitration may set out obligations as to confidentiality, whether expressly or by reference to confidentiality obligations in other rules, such as the IBA⁸ Rules on the Taking of Evidence in International Arbitration. It is likely that a tribunal seated in the UK would accept, for example, confidentiality restrictions to limit transfer of technology if requested by the parties. 

Jurisdictional issues arise in various contexts: for example, where there is an issue of whether there is a valid arbitration agreement; whether the tribunal has been properly constituted and whether the matters referred to arbitration fall within the scope of the agreement to arbitrate. The Act enables pre-award determination of jurisdictional challenges by the tribunal itself as well as applications to court pre-award and post-award. 

Interim/emergency relief in support of arbitration proceedings is available under the Act. Unless otherwise agreed by the parties, the orders can relate to:

i.    the taking of witness evidence; 
ii.    the preservation of evidence; 
iii.    the use and control of property which is the subject of the arbitral proceedings;
iv.    the sale of any goods which are the subject of the arbitral proceedings;
v.    interim injunctions, such as freezing injunctions, anti-suit injunctions or other forms of interim relief; and
vi.    the appointment of a receiver. 

The courts may make ‘without notice’ orders to preserve evidence or assets in support of existing or proposed arbitral proceedings. An emergency arbitrator may be required where the arbitral tribunal has not yet been appointed and a party wants to obtain an interim award to prevent the other party from e.g. dissipating evidence or assets pending the final hearing. 

The appointment of an emergency arbitrator is available under the LCIA Rules 2020, prior to formation or expedited formation of the tribunal. The 2020 rules state that the ability to appoint an emergency arbitrator does not prevent parties from exercising the right to apply for interim relief from the courts.

Is there anything that might not be arbitrable, relevant to space disputes.

The Act does not define what is arbitrable. Generally speaking most commercial disputes, including commercial disputes relating to space activities or space assets, will be arbitrable under English law, although tribunals might be limited in some situations by the remedies they are capable of awarding. 

The United Kingdom is a signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), facilitating the enforcement of both domestic and international awards in the UK. There are currently 172 countries that have signed the New York Convention.⁹  

Suitability of UK for space related arbitration

The space industry comprises a relatively small group of players who value cooperation over conflict. Currently most space players agree to cross waivers of liability and in respect of insurance contracts for example there are no rights of subrogation. But as space activities increase, so will disputes and it may not always be possible to avoid litigation. 

As seen elsewhere in this series, arbitration is already being used by some in the space industry to resolve conflicts mainly in relation to launch and satellite related disputes. Arbitration in the UK, as the mechanism for resolving space disputes, is strengthened by the fact that the UK:
(i)    has an established Arbitration Act which for example limits rights of appeal in certain circumstances and provides a procedural framework;
(ii)    benefits from an established arbitration institution, capable of administering complex and sensitive international arbitrations; and 
(iii)    is a signatory to the New York Convention.

These are all the elements that in principle make a UK seated Space Arbitration a good choice. As discussed in the first article in this series, we expect an increasing number of space related disputes to be heard in arbitration.

This series will continue next week with a perspective from the UAE.

1 https://www.clydeco.com/en/insights/2024/03/overview-of-dispute-resolution-mechanisms-for-spac

² The other important UN treaties and conventions are: the Rescue Agreement 1968, obliging states to take all possible steps to rescue and assist astronauts in distress and promptly return them to the launching state; The Registration Convention 1975, laying down the rules applicable for the registration of space objects. The Moon Agreement 1984, which expands on the Outer Space Treaty specifically regarding the Moon and other celestial bodies. The moon agreement is the least successful treaty, and the United Kingdom has not signed it. In addition to these UN treaties, there are approximately 10 other important agreements relating to space and some of which to already have dispute resolution mechanism calling for arbitration built in [ https://www.unoosa.org/res/oosadoc/data/documents/2023]

³ A range is a zone or zones that are subject to restrictions, exclusions, or warnings. This is to make sure that they are clear of persons or things that might pose a hazard to spaceflight activities or be exposed to a hazard from the activity.

⁴ Several statutory instruments have been made under the SIA: The Space Industry Regulations 2021 which make provision to enable the licensing and regulation of spaceflight activities, spaceports, and range control services. The Spaceflight Activities (Investigations of Spaceflight Accidents) Regulations 2021 which establish a spaceflight accident investigation body and make provision about the conduct of accident investigations. The Space Industry (Appeals) Regulations 2021 which outline the decisions made by the regulator that may be appealed by a licence applicant or licence holder. They also create the decision-making body to hear appeals and, set the procedures and timescales for making and deciding appeals. The US-UK Technology Safeguards Agreement (TSA), which establishes the principles under which US spaceflight technology may be licensed for export by the US authorities to the UK for use in spaceflight activities, is also implementedthrough the Space Industry Regulations 2021. The Regulator's Licensing Rules which support the regulator’s power relating to the granting and renewal of launch operator, spaceport and range control licences under the SIA.

⁵ A Bill to amend and update the Act is currently before the UK parliament. It contains proposed reforms including clarifying the law applicable to agreements to arbitrate; codification of arbitrators’ duties of disclosure; and provisions regarding summary disposal and emergency arbitrators. 

⁶ UNCITRAL Model Law on International Commercial Arbitration (1985), with amendments as adopted in 2006

⁷ International Chamber of Commerce

⁸ International Bar Association

⁹ The recognition or enforcement of a New York Convention Award in the UK will not be refused except in certain limited cases as set out in the New York Convention and codified in the Act, including incapacity of a party; invalidity of the arbitration agreement; failure to give proper notice of the proceedings; where the award deals with a dispute not falling within the arbitration agreement; where the tribunal was not appointed in accordance with the arbitration agreement; if the award is not binding on the parties; where the award’s subject matter is not arbitrable; or if it would be contrary to public policy to enforce it.