Exploring Disputes in Outer Space – The Final Frontier

This article was published in the ICC Dispute Resolution Bulletin (issue 2025-2), also available in the ICC Dispute Resolution Library. Reproduced with permission of the International Chamber of Commerce (ICC).

Myfanwy Wood

Myfanwy is a Partner in the international arbitration team at Ashurst LLP, London with particular expertise in global energy and resources disputes and experience in technology and financial disputes. She advises in relation to international arbitration, other cross border disputes and public international law. Myfanwy holds a master’s degree in International Law from the University of Cambridge where she was a Davis McCaughey scholar and is listed as a Global Elite Thought Leader in Arbitration in the Lexology Index (formally WhosWhoLegal).

Aled McNeile

Aled is an Associate in the international arbitration team at Ashurst LLP, London. His work includes advising on international commercial arbitration, investor state disputes, and disputes arising out of construction projects (including litigation). He is qualified in England and Wales.

The authors would like to thank Charlotte Cattaneo and Freddie Freeman for their assistance with this article.

The exploration and utilisation of outer space has significantly advanced over the past few decades, leading to unprecedented opportunities and challenges. As States and private entities increasingly engage in space activities, the potential for disputes has grown, including over the use of space resources and the environmental impacts of space activities. This article examines how the current legal framework addresses these issues, and the adjustments that will be required to keep pace with the future increase in disputes arising from operations in space.

1. Setting the scene

The commercial space race has well and truly begun, and outer space – once the exclusive domain of States – is increasingly becoming a playground for private actors. Space has never been more accessible: the cost of launches and satellites has decreased, and constant advances in technology make the possibilities of what can be achieved infinite. One only has to follow the news to see the latest foray into space by a new company or billionaire. As opportunities in space increase, so too does the scope for potential disputes.

In this article, we explore the legal framework governing disputes in space, the types of disputes we expect to see in the future, and whether the existing legal framework is sufficient to address those disputes. We also consider what steps parties might take to best protect their positions when drafting agreements for their activities in space.

2. Current legal framework

The foundations of international space law are contained in a series of five United Nations treaties (“UN Treaties”), which were drafted predominantly with the rights and obligations of States in mind.¹ On top of this international framework, there also exists soft law,² other multilateral agreements, and domestic laws.

i) United Nations Treaties

Arguably the most significant and widely ratified treaty (currently ratified by 116 States), is the 1967 Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and other Celestial Bodies (the “Outer Space Treaty”).³ With its foundational principles considered customary international law,⁴ the Outer Space Treaty establishes that outer space is “the province of all mankind”;⁵ that any space activities must be carried out “in accordance with international law”;⁶ the principle of non-appropriation in outer space;⁷ and that States agree to bear “international responsibility” for their “national activities” in space.⁸ States will also be “internationally liable” for any damage their space activities cause to another State or any “natural or juridical persons” in another State.⁹

Notably, however, no provision is made for how disputes are to be resolved, or how a cause of action might be established between, for example, a State and a private entity.

Also significant is the 1972 Convention on International Liability for Damage Caused by Space Objects (the “Liability Convention”)¹⁰ which is ratified by 100 States. The key principles of this Convention form part of customary international law and set out the liability that a “launching State” owes foreign States or their nationals.¹¹ The Convention also establishes strict liability for damage caused by a State’s space objects on Earth¹² and “fault” based liability where that damage is caused in outer space.¹³

The Liability Convention is, however, far from comprehensive. Despite being the only treaty to make provision for dispute resolution, by way of a Claims Commission, the decisions made by that Commission are not binding unless the parties agree otherwise.¹⁴

Furthermore, the definition of “damage” is limited¹⁵ and does not appear to include economic harm. The Convention also offers no definition of “fault”, which presents inevitable difficulties in the international context where certain jurisdictions approach concepts like fault and negligence differently.

The 1976 Convention on Registration of Objects Launched into Outer Space (the “Registration Convention”)¹⁶ requires “launching States” to register the details of a space object launched into orbit both onto its own register¹⁷ and with the United Nations.¹⁸

The 1984 Agreement Governing the Activities of States on the Moon and Other Celestial Bodies (the “Moon Convention”)¹⁹ establishes that the Moon (and specifically its natural resources) is the “common heritage of mankind”,²⁰ and not subject to national appropriation.²¹

Finally, the 1968 Agreement on the Rescue of Astronauts, the Return of Astronauts and the Return of Objects Launched into Outer Space (the “Rescue Agreement”)²² addresses the rescue of astronauts in outer space. It is of limited relevance to this article.

ii) Multilateral agreements

The most significant²³ multilateral agreements are the 2020 Artemis Accords (the “Accords”) with 56 State signatories including the USA, the UK, Australia and Canada. The Accords establish a set of principles to regulate activities in space and also support NASA’s Artemis programme. The Accords are said to be built on international law, including the Outer Space Treaty, which provides for the principle of non-appropriation.²⁴ Controversially, however, the Accords have taken a very liberal interpretation of that principle and provide that:

“The extraction of space resources does not inherently constitute national appropriation”.²⁵

It is important to note, however, that the Accords are “political commitments”²⁶ and not binding on signatory nations or on private actors. They also do not make provision for dispute resolution.

iii) Domestic legislation

Several countries have enacted domestic laws and regulations to govern space activities.²⁷ By way of example, the Space Industry Act 2018 and associated Space Industry Regulations in the United Kingdom impose a licensing regime with strict requirements as to safety,²⁸ qualifications, and training²⁹ for those who seek to conduct space activities from the United Kingdom.

Similar requirements are found in other domestic legislation³⁰ and reflect the growing preference for States to regulate the activities of their space actors to ensure suitable protections (for which the State will ultimately be liable under international law). Similarly, in France the domestic space law regime relating to space operations imposes an obligation to be covered by insurance or have an approved financial guarantee which must cover the risk of having to indemnify any damage caused to third parties.³¹

3. What disputes are we currently seeing?

Currently, space is predominantly being used for telecommunications (primarily via satellites), exploration, energy, science, and tourism. The disputes reported to date reflect this and include contractual disputes concerning, for example, payments due under satellite leasing agreements,³² and claims for delays and defects in respect of satellite delivery agreements.³³ We have also seen a handful of claims brought against States by foreign investors seeking protection for their space-related investments under investment treaties.³⁴

The increase in space launches³⁵ has also seen disputes arising out of damage caused by space debris, including on Earth.³⁶ A notable example saw Canada and the Soviet Union negotiate a Memorandum of Understanding to cover the clean-up costs of a nuclear-powered Soviet satellite which crashed in Canadian territory.³⁷ We also expect further disputes where debris causes damage to other space objects, particularly where the treaties are silent on space debris specifically but impose liability on States where damage is caused by an object which a State launches into outer space.³⁸

4. What disputes are likely to arise and are we prepared for them?

In the future, it is not difficult to envisage space being used for many other exploits (e.g. entertainment, the exploitation of natural resources, war, art, medicine – the list is potentially endless). The disputes will no longer be restricted to State vs. State disputes; they will also be State vs. private entities, private entities vs. State, multiple States vs. private entities and vice versa, and private entities vs. private entities. Further, these disputes might not be based on contract or treaty. They could be non-contractual disputes such as tort, criminal liability, regulatory or security breaches, human rights issues and, of course, environmental disputes.

This article does not address all potential scenarios; however, we discuss below a few of the key issues we envisage may arise within the current legal framework.

i) Disputes between private entities and States

An obvious issue with the existing legal framework is the ability of private entities to claim against States in the light of sovereign immunity challenges, and also that the existing international law framework focuses on interstate liability.

The position private entities therefore find themselves in is similar to the situation faced by foreign investors before the rise of bilateral investment treaties (“BITs”), multilateral investment treaties (“MITs”) and the advent of the ICSID Convention.³⁹

Commentary on the point has suggested that a potential solution to this gap in the space law regime is either:

• to shoehorn such disputes into the existing investor-State dispute framework, or
• to create a framework that is similar to ICSID but that applies to disputes in space, for example a new International Centre for the Settlement of Outer-Space Disputes.⁴⁰

There is merit in both of these suggestions. For example, space-related claims have already been brought against States by private actors under the ICSID Convention. These claims have ultimately, however, been in circumstances where the investor already has a connection with the State (e.g. by way of a qualifying “investment” in that territory on Earth) and where the State’s actions have interfered with that investment.⁴¹

A key issue in shoehorning these disputes into the existing ICSID framework more generally is that not all disputes between private parties and States will qualify as “investment disputes” for the purposes of the existing investment treaty framework. To qualify as an investor-State dispute, the dispute must fall within the jurisdictional scope of the treaty or agreement. Disputes in space, however, might fail to meet the threshold for jurisdiction on a number of grounds, including the nationality of the “investor”, the definition of “investment” and, more relevantly to outer space, the territorial jurisdiction of said “investment”. As such, although adjudicating these disputes in the existing investment treaty framework might provide a solution in some cases, it is a far from universal solution for all potential disputes in outer space.

The proposal to create a new International Centre for the Settlement of Outer-Space Disputes could, in theory, be a workable solution to these challenges. The difficulty, however, is whether States would sign up to another legal regime that would arguably limit their sovereignty. This is particularly so given the recent trend of States becoming increasingly sceptical of investment treaties, evidenced by, for example, the EU, the UK and others breaking away from the Energy Charter Treaty,⁴² and numerous other treaty terminations and renegotiations globally.⁴³

In 2023, for the third consecutive year, treaty terminations exceeded new international investment agreements and, between 2013 and 2022, 404 international investment agreements had been terminated.⁴⁴

An alternative way in which private parties might be able to raise claims against States within the current framework is by utilising diplomatic avenues through “launching” or “registered” States. The principal UN Treaty addressing liability caused in space is drafted such that States bear ultimate responsibility for damage caused by space objects launched by private parties who use those States as “launching” States,⁴⁵ and those States therefore risk facing a claim for compensation for damage caused.⁴⁶ It might therefore be argued that the inverse responsibility ought to apply i.e. if a private actor registered in or launched from State A was damaged by a vehicle belonging to State B, that private party might require the government of State A to seek compensation from State B on its behalf.

Again, this solution is far from ideal and to provide comfort to the private entities, some robust domestic legal framework would need to be in place. For example, if it is required that the private entity must have adequate insurance cover (presumably, in part, to cover the scenario where they potentially cause some damage making their “launching” or “registered” State liable),⁴⁷ then there might be a reciprocal arrangement in place whereby the “launching” or “registered” State will pursue damages against the State that is liable for any loss or damage suffered by the private entity. The question is then whether a State would voluntarily enact such a requirement. An incentive, however, might be that enacting such requirements would help attract private actors to base their space operations in the State.

ii) Environmental impacts of space activities

Activities in space have the potential to impact Earth, the Earth’s atmosphere, and potentially its climate. This impact could potentially be felt by all of humankind, regardless of classes or groups of humans, and regardless of nationality or any other social or political lines.

There are a number of potential issues with prosecuting such cases. It could be difficult to establish the elements of fault and/or causation, or even to establish jurisdiction, if the causative action takes place in outer space. These concerns are potentially similar to those we currently see on Earth in respect of environmental disputes. Parallels could, for example, be drawn with the carbon emissions case brought against Shell in the Netherlands, which recognised that producers of carbon intensive fossil fuels are responsible for reducing their emissions in efforts to achieve the goals of the Paris Agreement on climate change,⁴⁸ or with direct challenges by individuals impacted by climate change against producers of carbon emissions.⁴⁹ Given the recent ICJ Opinion “Obligations of States in Respect of Climate Change”,⁵⁰ parties might also choose to base any claim in human rights law.

A potential answer might lie in class action regimes, but the same issues that are mentioned above in relation to disputes between private parties and States are likely to arise here. If the harm is caused by a State, how would a class of individuals file an action against a State with sovereign immunity? Where that harm is caused by a State, or group of States, the State from which the impacted private party is a national, will need to be willing to take up the cause. ⁵¹ It is difficult to envisage a State doing so in situations where there are numerous States impacted or where broader political considerations restrict its appetite to do so.

iii) Resource utilisation issues

As the race for precious minerals accelerates on Earth, it is easy to see the race stretch into space. Research has shown that planets, asteroids, and the Moon are rich in various precious metals, minerals, gases, and water,⁵² and it is only a matter of time before States and private actors seek to exploit these natural resources. Whilst the Outer Space Treaty protects space as “the province of all mankind”,⁵³ including through its principle of non-appropriation,⁵⁴ the 2020 Artemis Accords (see 2(ii) above) have interpreted this broadly as meaning that the exploitation of minerals and natural resources is not prohibited, whilst also maintaining that signatories cannot claim sovereignty over any celestial body or its resources.

The scope for disputes is ripe, particularly given the tensions between the Outer Space Treaty and the Accords. What is more, the Accords make provision for its signatories to designate “deconfliction” safety zones to “avoid harmful interference” with their own activities.⁵⁵ The ambiguity this might present for signatories to attempt to assert control over certain areas⁵⁶ might present issues with territorial jurisdiction.

iv) Warfare/criminal concerns

Unfortunately, it is also likely that war and crime will continue to creep into space activities. Missiles launched from space, or criminal activity or assault taking place in space, do not feel too far from the the realms of possibility, or at least not to these authors. Although there might not be territorial jurisdiction in space, it is likely that States will be able to assume jurisdiction based on the nationality of any victim or even universal jurisdiction for crimes that breach Jus Cogens norms, and therefore any disputes can probably be dealt with using the existing legal infrastructure on Earth.

v) Rogue actors

As space becomes more accessible, a situation in which unregistered and unidentifiable private actors begin operating in space is conceivable. Without territorial jurisdiction in space, or an agreed supranational means to “police” space, it will be difficult to apportion fault or liability. It is likely, however, that in such cases States will have universal jurisdiction to prosecute for misconduct on the basis of law of piracy, for example.⁵⁷

5. The role of arbitration

There are a number of the shortcomings with how the current state of international space law addresses potential disputes and, particularly, its limited provision for dispute resolution mechanisms.⁵⁸ However, private actors and States can try to mitigate their exposure to these challenges by providing for arbitration as a dispute resolution mechanism when contracting with each other, or indeed by agreement after a dispute has arisen.

As arbitration is consent-based and flexible, it can be adapted to novel scenarios, cross-border disputes and also disputes between States and private entities – making it an attractive option in the context of space disputes. Parties in arbitration can also choose a neutral seat of arbitration and choose their arbitrators. Importantly, arbitration is also confidential (if the parties so choose) and awards can be enforced in the 173 contracting States that have signed the New York Convention.⁵⁹

Certain actors and inter-governmental bodies have already recognised this approach, with the European Space Agency⁶⁰ and Intelsat⁶¹ including provision for arbitration in their standard contracts and constitutional documents. Indeed, the conventions which establish a number of intergovernmental organisations operating in space already provide for mandatory or optional arbitration as a method of dispute resolution.⁶²

Arbitral institutions have also begun to recognise their future role in space disputes. The Permanent Court of Arbitration, for example, has developed the Optional Rules for Arbitration of Disputes Relating to Outer Space Activities (the “Space Rules”)⁶³ which are intended to be industry-specific and provide for an automatic waiver of sovereign or other immunity. Similarly, the Dubai International Financial Centre has recently established its Courts of Space in an attempt to establish itself as a hub to resolve space disputes.⁶⁴

As far as we are aware, neither of these have been used but provide useful case studies to watch as the area evolves.

6. Drafting for the space age: What can parties do to anticipate space disputes at the drafting stage?

Despite the challenges that may arise when operating in space, there are factors that parties can consider when setting up their legal relationships.

Parties should be aware of certain risks and may consider the following factors:

• the apportionment of liability;
• potential third-party claims or liabilities;
• insurance obligations;
• applicable licensing regimes and domestic laws of any potential launching or registering State;
• registration of space objects; and, more importantly,
• which law might be most suitable to apply any agreement – in this respect, and unless the circumstances require otherwise, there is probably merit in selecting a governing law with a sophisticated domestic space law legislation.

Beyond agreeing to arbitrate in the parties’ individual contracts, where the parties envisage performing multiple operations in space together, they might also want to consider whether an umbrella dispute resolution agreement should be put in place to apply to a suite of contracts with the same party/parties or provide for the consolidation of related disputes. Careful drafting would obviously require that the umbrella agreement adequately covers the scope of the parties’ intended operations, but there is clearly merit in parties with longer-term relationships agreeing an overarching mechanism for the resolution of disputes, particularly in circumstances as novel as those anticipated in space. And crucially, if contracting with a State or a State-owned entity, parties should ensure that issues around sovereign immunity are addressed in writing.

If considering an arbitration clause, parties should also consider carefully the seat of arbitration and also the institutional rules.⁶⁵ Particularly if contracting with States or State-owned entities, a good seat in an arbitration friendly jurisdiction is recommended.

7. Concluding remarks

With the rapid advancement of space related activities and in particular, exploitation and exploration from varied actors including from the private sector, the legal community will have to grapple swiftly with the current legal framework, particularly in relation to dispute resolution, in order to ensure the effective and fair management of space related disputes. For the time being, parties should be alive to the shortcomings of the current regime and seek to mitigate their exposure to the extent they can in their contracts and investment structures.

Other author: Aled McNeile, Associate