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Impact of UNIDROIT Space Assets Protocol: Satellite Financing Models and Legal Concepts

This symposium on June 4th-5th, 2015 at the University of Luxembourg will delve into the impact of the UNIDROIT Space Assets Protocol on satellite financing models and legal concepts. Professor Dr. Lesley Jane Smith from Leuphana University will provide an overview covering the background to the Space Protocol, the Genesis of UNIDROIT CTC+SP, the evolution in the space industry, the two-document approach to Space Protocol, legal concepts, satellite financing models, default-related situations, and possible future steps. Discussions will focus on promoting uniformity, predictability, and debt management in the satellite industry.

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Impact of UNIDROIT Space Assets Protocol: Satellite Financing Models and Legal Concepts

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  1. Luxembourg Satellites SymposiumJune 4th-5th 2015University of LuxembourgIMPACT OF UNIDROIT SPACE ASSETS PROTOCOL ? Professor Dr. Lesley Jane Smith Leuphana University Lüneburg Weber-Steinhaus & Smith

  2. Overview

  3. 1. Background to Space Protocol

  4. 2. Genesis of UNIDROIT CTC+ SP

  5. 3. CAPE TOWN CONVENTION 2001 (D)evolution in Space industry • (D)evolution from government-funded to flourishing private (aero)space industry • Security rights in context of key international transport and satellite service operations • Aviation Protocol (2001; 2006) • Cheaper finance; possible benefit to space community • Prediction of positive economic impact on aviation sector correct • Ergo potential for satellite community

  6. 4. Two document approach to Space Protocol (2012) • Only for signatories to CTC, not a stand-alone • Art 2(1)-(2) CTC = registration of ‘international interest’ in mobile equipment • Default remedies over mobile equipment (~ space assets = only constructive repossession) • Combat deficiencies of lex situ = security interest over property only recognisable in jurisdiction located where security interest validly created • Encourage financial support /lift legal/financial impediments on funding new satellite markets

  7. CTC Legal concepts

  8. Some detail, some procedure • Art V SP: written contract for registration of interest; Art 20 CTC- parties’ consent to register • Art V.3. registration of contract of sale ‘indefinite’ • *added value for ITU: Art 7(c) CTC and VII SP - Identification of space assets’ • Art IX: rights or prospective interestcan also be assigned (incl. subrogation), subject to govt policy • IX.(c) Value of loan need not be stated in Register

  9. Summary • Cape Town contracting state, signatory to Space Protocol • Art 4 CTC: Provisions applicable to contracting state where debtor ‘situated’ (incorporated/ registered office/ place of business/centre of administration) • Interpretation subject to international character + need to promote uniformity and predictability • Various opt-out Declarations, incl. registration of non-consensual rights • Public policy restrictions/ transfer of technology

  10. Default definitions and remedies 10

  11. Register does not impact on applicable law or forum for dispute • Art VIII SP: parties have freedom of choice of law to govern contractual rights and obligations • Art 12 CTC: Additional remedies allowed where available by applicable law • Art 42 CTC: Parties have exclusive choice of forum; no connection to contract or parties required, except in insolvency, Art 45. • Art 5(3) CTC: applicable law is the domestic law applicable by virtue of collision rules of forum

  12. Satellite financing models

  13. Possible Financing Structures • ECA - Export credit agencies: EX-IM Bank (US); ECGD (UK); COFACE (France) • Financing of satellite projects • (Cash-flows, Risk analysis) • Capital Markets – new possibilities include crowdfunding

  14. Manufacturer support • Finance/ business plans can include various forms of financial support • Vendor financing • Payment deferrals • – Guarantees • – Equity • Often full payment before launch required

  15. Collateral and contract • Collateral Security Package: • mortgage on the financed satellite • Ground facilities and segments • IP rights • Vendors may be asked to give guarantees • Assignment of the lease (if project on lease basis) • Insurance: Launch and in-orbit • Licensing and authorization required

  16. Possible default-related situations • To be regulated in contract • Unable to meet required authorization and licensing compliance standards • Termination of project agreements for various financial reasons • Failure to enter satellite on ITU Master registry

  17. Further deliberations • Goal is debt management/securing rights in rem; not frequency assignment, but security interests • Higher number of ratifications required than for aviation (10, not 3), currently 4 (since 2012) • State opt-outs (Declarations) could lead to lack of consistency in application • Impact of non-consensual interest registration may be useful; depends on national law • Impact of ownership and transfer of interests on public international regime? Win-win situation? • Next possible step: Supervisory Authority

  18. Important limitations

  19. Conclusions: Registry at ITU

  20. Further Information Contacts: Prof. Dr. Lesley Jane Smith smith@leuphana.de smith@weber-steinhaus.com

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