The crucial role that lawyers will play in the space industry – By John Caruso

WATCH THIS SPACE: THE CRUCIAL ROLE THAT LAWYERS WILL PLAY IN THE SPACE INDUSTRY

JOHN CARUSO, PARTNER, TINDALL GASK BENTLEY

Space, it has been said, is infinite, and the opportunities for South Australia – and its lawyers - in the rapidly-growing space industry are much the same.

Our State is open for business as evidenced by the fact the South Australian space industry has grown substantially in the 12 months since it was announced that the Australian Space Agency (ASA) would be headquartered in Adelaide at the old Royal Adelaide Hospital site located on North Terrace named Lot 14.

This article will look at the role lawyers will play in the rapidly developing space industry and will also provide some background to the space industry and the enormous opportunity we have for growth in South Australia if we can channel our rich resources of highly skilled, innovative and motivated leaders of tomorrow to embrace the broad opportunities the space industry offers.

The role for lawyers in the space industry was neatly described by Deputy Premier and Attorney-General of South Australia, Vickie Chapman, who has also recently completed a one-week intensive Strategic Space Law course at the University of Adelaide by stating:

“We’re going to be the centre of space, so space law needs an army of people who are going to know about contract law in space, the rules of engagement in the defence world, the surveillance rules, and the launching and permit processes for satellites,” she said. “Every new industry comes with an army of

THE BULLETIN March 2020 regulation and rules, we need to be prepared for it and I want South Australians in the legal world to provide that service.” 1

President of the Law Society of South Australia, Tim White recently made the following similar comments on the topic:

“While the space industry has the potential to be a key employer for South Australia in the not too distant future, there are legal issues around this evolving industry and we need to keep ahead of it to ensure growth.” 2

include, but not be limited to, commercial contract negotiations, insurance, mergers and acquisitions, corporations’ law, intellectual property and business transactional law.

To understand the role that current and future lawyers will play in the developing space industry, we must first have some background to the structure of the industry and the global space economy.

STRUCTURE OF THE SPACE INDUSTRY – THE GLOBAL SPACE ECONOMY

WHAT TYPE OF WORK WILL THE SPACE LAWYERS OF TOMORROW FOCUS ON? I expect the three main areas for lawyers to become involved in the space industry to be: • the commercial space industry; • alternative dispute resolution for commercial disputes in the space industry; and • implementation and interpretation of Australian space laws and international treaties, government advisor roles and Australian Defence Force space capabilities.

COMMERCIAL SPACE INDUSTRY

The largest of the three areas in terms of size and volume of work will be for corporate and commercial lawyers working in the commercial space sector. This is a very broad category which encapsulates any commercial law requirements concerning the space industry. This would The world relies on a wide variety of space-related technologies which are used in virtually every sector of the global economy. We are witnessing a real transformation in the global space economy. Space technology is getting smaller, access to space is becoming cheaper and innovation cycles are becoming shorter.

The space industry has become a fast-growing and fiercely competitive commercial sector. The falling costs associated with satellite launches together with the unprecedented levels of private funding flowing into the industry have pushed the market entry price lower than ever.

The space industry is no longer restricted to government agencies with enormous government budgets. This means companies ranging in size from global multi-nationals to medium-size national companies including SMEs, all the way down to small start-ups, have

the opportunity to make significant contributions to the space economy and the space industry.

The key driving force behind the recent global resurgence in the space industry is mainly due to the private sector. According to recent statistics, three-quarters of the US $345 billion dollars spent globally on the space industry in 2016 was contributed by private enterprise. 3 According to the latest figures, by 2040 the global space economy is expected to have tripled in size to at least US $1.1 trillion dollars as demand for services escalates and disruptive technologies such as reusable rockets and mass-produced satellites force costs down significantly. 4 In Australia alone, the space sector is growing strongly and outperforming the broader economy. According to recent figures, the Australian space industry was worth AU $3.94 billion dollars in the 2015–16 financial year with 88% of that dollar figure contributed to by the private sector. 5 Currently, in Australia, approximately 10,000 people are working in the space industry, and the Australian Government has set an ambitious target to increase that number to 30,000 by 2030. 6 Australia follows the international trend in that a significant proportion of the space industry is dominated by satellite TV, broadband, and communication services. However, space-enhanced products and services can improve the productivity and competitiveness of virtually every sector of our economy, from telecommunications, transport, logistics and communications, to mining and agriculture. 7

ALTERNATIVE DISPUTE RESOLUTION (ADR) According to an article written by Mark Giddings in the SA Law Society Bulletin in December, 2019 titled Watch this space: Attorney General identifies the need for ADR in the states emerging commercial space industry, Deputy Premier and Attorney-General of South Australia, Vickie Chapman emphasised that:

“the space industry requires commercial solutions to disputes that would avoid parties getting bogged down in litigation in the courts where matters may take several years to be resolved” and hinted that the State Government may take steps to promote forms of alternative dispute resolution in the sector. 8

I note that the distinction must be made between “disputes in outer space” involving space law as defined in this context as the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and other Celestial Bodies of 1967 (Outer Space Treaty) and its accompanying agreement and conventions 9

as listed in the footnotes. 10 Although not formally concerning space law as defined above, disputes can and do arise in the space industry, which comprises manufacturers and operators of satellites, launch service providers who bring satellites into orbit, telecommunications companies and their insurers. These players conclude contracts for the planning of satellite constellations, the manufacturing of satellites, insurance, the delivery into orbit and for the operation of satellite constellations. These contracts usually contain arbitration clauses. If something goes wrong and a dispute cannot be settled amicably, the dispute may escalate to (commercial) arbitration. 11 Looking particularly at the commercial arbitrations in the satellite and launch services industries the range of commercial arbitrations in space disputes follows the whole lifecycle of a satellite including the order and (possibly late) delivery of satellites, their total or partially failed launch into orbit and in the sale or lease of satellites already in orbit. 12 Lawyers who would look to being involved in arbitration and alternate dispute resolution in the space industry need to have a solid understanding of the rules at play in these types of disputes including but not limited to arbitral rules, such as the UNCITRAL Arbitration Rules or those published by institutions such as the Australian Centre for International Commercial Arbitration (‘ACICA’), which provide ready-made procedures for dealing with commercial disputes which may be adopted by parties with or without modifications. 13

Prime Minister Scott Morrison and SA Premier Steven Marshall sign a Memorandum of Understanding to establish a national space agency in Adelaide

IMPLEMENTATION AND INTERPRETATION OF AUSTRALIAN SPACE LAWS

Another sub-area of space law that will have a greater need for lawyers to become involved in the industry is the implementation and interpretation of Australian space laws. For example in recent changes on 31 August, 2019 updated and streamlined the regulatory framework for space launches and returns. The Space (Launches and Returns) Act 2018 replaces the existing Space Activities Act 1998. The intention of the new Act is to make it more attainable for smaller businesses, start-ups and universities to participate in the space ecosystem. The Act and regulatory framework has been designed to reduce barriers, streamline the approval process and significantly reduce the insurance premiums for launches and returns. This aims to foster innovation and collaboration in Australia’s growing space sector.

The Act now incorporates three new rules covering general provisions for: • launches and returns; • special provisions for high powered rockets; and • insurance requirements. These measures streamline the approvals process and adjust the insurance requirements to appropriate risk levels for launches and returns.

As well as having a strong understanding of space laws, including the Act and new regulations outlined above, space lawyers may also be required to interpret international treaties and advise lawmakers about good policy, which will also require a good understanding of some of the science involved to give their clients the educated advice required.

These areas of space law will also branch out to Government advisor roles and in particular Australian Defence Force space capabilities. For example, the announcement by Prime Minister, Scott Morrison in September, 2019 for a $150 million investment by the Federal Government into Australian businesses and new technologies that will support NASA in an ambitious project to return to the Moon and travel to Mars.

John Caruso is an active member of the International Bar Association (IBA) Space Law Committee which provides a forum for space lawyers to address the increasing number of practical legal issues arising in commercial and regulatory activities in this specialised area of domestic and international law. B

Endnotes 1 Adelaide.edu.au. (2020). Leading lady Alumni University of Adelaide. [online] Available at: https://www.adelaide.edu.au/alumni/news/ list/2019/12/04/leading-lady. 2 Tindall Gask Bentley Lawyers. (2020). TGB partner Tim White starts Law Society SA presidency - Tindall Gask Bentley Lawyers. [online] Available at: https://tgb.com.au/ news-features/tgb-partner-tim-white-starts-lawsociety-sa-presidency/. 3 Review of Australia’s Space Industry Capability - Report from the Expert Reference Group, (2018) Industry.gov.au.[online] Available at: https://www.industry.gov.au/sites/default/ files/June%202018/document/pdf/review_of_ australias_space_industry_capability_-_report_ from_the_expert_reference_group.pdf?acsf_ files_redirect 4 Morgan Stanley. (2020). Space: Investing in the Final Frontier | Morgan Stanley. [online] Available at: https://www.morganstanley.com/ ideas/investing-in-space. 5 Australian Space Agency (2019) Advancing Space Australian Civil Space Strategy 2019 – 2028 [online] Available at:https://publications. industry.gov.au/publications/advancing-spaceaustralian-civil-space-strategy-2019-2028.pdf 6 Ibid. 7 Ibid. 8 (2020). The Law Society Bulletin - December 2019 edition. Mark Giddings Watch this space: Attorney General identifies the need for ADR in the states emerging commercial space industry [online] Available at: https://issuu.com/ lawsocietysa/docs/lsb_december_2019_digital_h 9 Jan Frohloff, Arbitration in space disputes, Arbitration International, Volume 35, Issue 3, September 2019, Pages 309–329, https://doi. org/10.1093/arbint/aiz015 10 Namely the Convention on International Liability for Damage Caused by Space Objects 1972 (‘Liability Convention’), the Convention on Registration of Objects Launched into Outer Space 1976 (‘Registration Convention’), the Agreement on the Rescue of Astronauts, the Return of Astronauts and the Return of Objects Launched into Outer Space 1968 (‘Rescue Agreement’) and the Agreement Governing the Activities of States on the Moon and Other Celestial Bodies 1979 (‘Moon Agreement’). 11 Jan Frohloff, Arbitration in space disputes, Arbitration International, Volume 35, Issue 3, September 2019, Pages 309–329, https://doi. org/10.1093/arbint/aiz015 12 Jan Frohloff, Arbitration in space disputes, Arbitration International, Volume 35, Issue 3, September 2019, Pages 309–329, https://doi. org/10.1093/arbint/aiz015 13 (2020). The Law Society Bulletin - December 2019 edition. Mark Giddings Watch this space: Attorney General identifies the need for ADR in the states emerging commercial space industry [online] Available at: https://issuu.com/ lawsocietysa/docs/lsb_december_2019_digital_h