Protocol for Space Assets Teed Up for Approval This Week
BERLIN -- Governments at a diplomatic conference Tuesday drew close to a decision on the financial obligations of satellite companies. Representatives cleared the last substantive hurdles before final consideration of a proposal to the Convention on International Interests in Mobile Equipment that could lead to the ITU overseeing an international register that would be used to establish priority for creditors in space investments, participants told us. Talks will continue Wednesday to work out remaining kinks for formal consideration later this week, official said.
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The international register would determine the priority of creditors when there are financial claims over spacecraft, transponders and other gear, said an adviser participating in the conference. It is “fairly well recognized” that “everyone” will end up registering interests in space assets to cover investments, he said. One open question is how many countries need to ratify the agreement for it to take effect, officials said. Canada said 20 signatories are needed, an official said. The U.S. will press for not more than 10, another official said.
A company in a country that’s not party to the protocol may think it doesn’t have to register, the adviser said. However, a future lender will likely register to get priority for its financial interests in case, for instance, a subsequent borrower leasing transponder capacity is from a country that has ratified the protocol, he said. Determining whether and what assets to register under the aircraft protocol has been “quite expensive” for operators, he said, referring to legal fees.
The discussion over the three- or six-month period was about the priority for enforcing rights over a space asset when a “public service” is involved, the adviser said (CD March 6 p7). Delegates preliminarily agreed Tuesday to limit the creditor’s right to “take possession and terminate that service” to a time period of up to six months following an adverse credit situation, he said. The protocol doesn’t change the underlying rules for missed payments, default or bankruptcy, he said. Countries that ratify the protocol will decide what that time period is, he said. The fact that “public service” isn’t defined puts more pressure on registering, he said.
A preparatory commission on the registration system and other matters will be set up after the protocol is agreed to, said Martin Stanford, the Unidroit deputy secretary general. The commission will be made up of participants with experience in the field from government and other organizations, he said, referring to ITU, the International Civil Aviation Organization, the private sector, and the company that manages the aircraft registry, he said.
Unidroit has not asked organizations other than ITU to be the supervisory authority, said a developing country satellite expert who is active in the intergovernmental organization. International organizations other than ITU should have been invited to the diplomatic conference, the expert said. He referred to the general registration of space objects in the legal subcommittee in the U.N. Office for Outer Space Affairs. There wasn’t consensus in the legal subcommittee when the idea was discussed, an official said.
The registration of interests in space assets has nothing to do with the ITU, participants said. The ITU satellite network list has to do with interference, not the financial interests in the underlying assets, the expert said. The task of supervisory authority is beyond ITU’s core work and mandate, participants said. The 2012 ITU Council and possibly a 2014 policy-setting conference may consider whether the organization should agree to be the supervisory authority, the expert said. The Unidroit General Assembly will appoint a supervisory authority if the ITU declines the role, Stanford said.