21 May 2015

30 Seconds to Mars: An Investor’s Guide to the Galaxy

This article was written by Max Bonnell.

On 16 February 2015, the Mars One mission announced the first 100 finalists, the “Mars 100”, from the Astronaut Selection Process. These 100 hopefuls have been shortlisted for a mission to Mars to establish a permanent human settlement by 2025. Amidst the buzz surrounding the announcement of these inspiring pioneers one pivotal question arises: who will own Mars?

In a field that is regulated by public international law and a handful of treaties, it is doubtful that anyone ever truly contemplated that the colonisation of Mars would be attempted by a private not-for-profit entity funded, in part, by Indiegogo crowd funding and a reality television series. Space travel costs billions of dollars for a single mission and it requires a wealth of knowledge, expertise and specialist equipment. The Mars One mission also requires 50 human volunteers for a one-way journey to a desolate planet. And yet, against all the odds, Mars One has achieved this critical milestone. A Martian colony no longer feels light-years away, giving rise to all sorts of interesting questions: Can a private company claim ownership of Mars? Will the first Martians be subject to the laws of Earth? Who will have the rights to mine on Mars? Will Mars be legally recognised as a separate state?

Mars One: The Mission to Mars

Mars One is a not-for-profit foundation based in the Netherlands that intends to establish a human settlement on Mars. Initially, a series of pre-settlement cargo and unmanned missions will create a habitable outpost for the human crew. Successful members selected from the Mars 100 will then be sent to establish the first human colony on Mars. Mars One believes that The first footprint on Mars and lives of the crew thereon will captivate and inspire generations; it is this public interest that will help finance this human mission to Mars’ with funding for the mission to be raised through a range of sources including: partnerships, sponsorship, sale of broadcasting rights, involvement with high net worth individuals and crowd funding.[1]

Although Mars One is not-for-profit, it is reported to be the controlling shareholder of a profit-earning company, the Interplanetary Media Group (IMG). IMG will create the reality television series documenting the lives of the Mars 100.[2] The company is also intended to provide a portion of the funds that will be used to finance the mission.

Mars One is not the only Mars mission hopeful. Due to a relaxation in government control and an increase in the potential commercial uses of outer space, there are now over 30 countries possessing significant space industries,[3] a number of whom have declared their intention to send a human mission to Mars. In September 2014, India’s Mangalayann craft reached Mars after a 10 month journey, becoming the first nation to achieve such success on the first attempt.[4] In December 2014, the United States’ space agency, NASA, launched the Orion spacecraft as part of its deep space exploration program, one of the key steps in its own mission to colonise Mars.[5] Other Mars program hopefuls include: Russia, the European Space Agency and the China National Space Administration.

Mars One is also not the only private entity acting in the space exploration sector. In 2013, the Inspiration Mars Foundation, a space tourism company, announced its plans to fly a human mission over Mars by 2018.[6]

Space Law: the Final Frontier

While technology has advanced to the point where such missions are feasible, space law requires further development before it will be able to adequately regulate the activities envisioned in private space missions such as Mars One. This is of particular importance for areas of space that are subject to exploration by competing entities, giving rise to complex questions of ownership and jurisdiction. In the absence of such clarity, investors are placed in a difficult position when assessing the likely benefits of potential investments in space exploration such as Mars One.

There are five treaties regulating space:

  • Treaty on Principles Governing the Activities of States in the Exploration of Outer Space including the Moon and Other Celestial Bodies (1967) (Outer Space Treaty);
  • Agreement on the Rescue of Astronauts, the Return of Astronauts and the Return of Objects Launched into Outer Space (1968);
  • Convention on International Liability for Damage Caused by Space Objects (1972);
  • Convention on the Registration of Objects Launched into Outer Space (1974); and
  • Agreement Governing the Activities of States on the Moon and Other Celestial Bodies (1979) (Moon Agreement).

Only two of these treaties attempt to regulate territorial sovereignty over outer space: the Outer Space Treaty and the Moon Agreement.

The Outer Space Treaty entered into force in 1967[7] and there are currently 102 parties to the treaty. Article 1 of the Outer Space Treaty provides that the exploration and use of outer space shall be the “province of mankind”. Article 2 prohibits States from claiming territorial sovereignty over outer space, including Mars. It is generally accepted under international law that space, like the high seas, is res communis being “the province of all mankind”.[8] This regime is based on a system of free use by all states combined with a prohibition on any claims for individual sovereignty. While the principle provides for harmonious use of resources, it should not be mistaken with the notion that space is the “common heritage of mankind”.[9] The important question, therefore, is not necessarily ‘who owns Mars’, but who has the right to capitalise on any valuable resources that may be discovered there.

Addressing this gap, the Moon Agreement goes a step further and extends the protection offered under the Outer Space Treaty by providing that the Moon and its natural resources are the “common heritage of mankind”.[10] The Moon Agreement was adopted by the United Nations General Assembly in 1979 by resolution 34/68 and entered into force in 1984. It applies to the Moon and other celestial bodies within the solar system, other than Earth, ‘except in so far as specific legal norms enter into force with respect to any of these celestial bodies’.

Article 11 of the Moon Agreement prohibits any State, organisation, entity or natural person from claiming ownership over any surface or subsurface materials.[11] It provides that in the event that any natural resources of value are discovered, an international regime should be established to govern the exploitation of such resources.[12] While the Moon Agreement provides that special consideration should be given to an equitable sharing arrangement where the interests and needs of developing countries are balanced against the efforts of States involved in obtaining those benefits, the treaty is otherwise silent on how such benefits should be distributed.[13] However, this is not the only problem with the Moon Agreement regime.

In the event that valuable resources are indeed discovered on Mars, there is little incentive for State parties who have invested in the venture to then abide by the treaty provisions and share the benefits of exploitation. Neither the Outer Space Treaty nor the Moon Agreement includes a mechanism of enforcement or penalties for breach and, as such, State parties face limited repercussions in the event of a breach of a treaty obligation. Normally, fundamental breach of a treaty obligation would give rise to a right to suspend the operation of the treaty as between the affected parties.[14] While this may work for multilateral treaties governing trade and investment, where the parties have offered each other corresponding opportunities and concessions, the suspension of the Outer Space Treaty or the Moon Agreement would have insignificant adverse consequences for the State in breach. States may be able to rely on diplomatic negotiation or, in certain cases, adjudication before the International Court of Justice (ICJ), however the ICJ will only have jurisdiction to hear those disputes if the States both consent.[15]

A further issue is that the Outer Space Treaty and the Moon Agreement do not bind States who have not signed and ratified the treaties. It may be argued that, as the Outer Space Treaty and the Moon Agreement were unopposed and are so widely accepted, many of their articles may be deemed international customary law.[16] Even so, this would only result in an empiric victory as their remains no sufficient mechanism of enforcing the treaty provisions.

The central question that arises from the Mars One mission is whether these treaties regulate the acts of private entities or a natural person. As international law instruments, neither the Outer Space Treaty nor the Moon Agreement bind private entities or natural persons directly. However both treaties attempt to address this gap by making State parties responsible for their conduct in outer space. Article 6 of the Outer Space Treaty provides that State Parties ‘shall bear international responsibility for national activities in outer space… whether such activities are carried on by government agencies or by non-governmental entities…’ The treaty also states that the activities of non-governmental entities shall require authorisation and continuing supervision by the State Party. A mirror provision is provided in Article 14 of the Moon Agreement. In order to give effect to these provisions, State Parties would be required to enact national legislation regulating those private entities in their place of registration. While it is beyond the scope of this article to examine the national laws of each State, it is highly probable that opportunistic investors could structure their programs through State parties that have failed to enact such legislation, or States who are not a party to the respective treaties. Based on the current landscape of international law, national laws and enforcement measures, it seems quite possible that a private entity could effectively claim title to Mars, and derive profit from natural resources discovered on the planet.

There is also the risk that, in the absence of regulation to the contrary, private entities such as Mars One may attempt to establish a new State, or a new system of intergalactic law, placing Mars beyond the jurisdiction of international law altogether. Whether such system would be recognised under international law of Earth remains to be seen, but if the Mars Colony only requires interaction with private entities on Earth then they may be willing to recognise its jurisdiction.

Given the ambiguity that exists in this area of law, it is incredibly difficult for investors to discern what exactly they are investing in when they enter the space exploration industry. In light of the recent developments in space exploration and international law, perhaps the time has come for lawyers to go where no lawyers have gone before.

Space Arbitration: A Space Odyssey

In 2009, the Permanent Court of Arbitration (PCA) took on this challenge. Recognising the need for a forum in which to resolve outer space disputes, the PCA charged an Advisory Group of space law experts to design a an arbitration procedure for the settlement of outer space disputes. As a result of this process, in 2011 the PCA adopted the Optional Rules for Arbitration of Disputes Relating to Outer Space Activities (PCA Space Rules). Based on the UNCITRAL Arbitration Rules 2010, the PCA Space Rules have been developed to accommodate disputes between States, State controlled entities, intergovernmental organisations and non-State entities. In drafting the rules, the Advisory Group gave consideration to the nature of outer space disputes including, technicality, confidentiality, time sensitivity and the need for a specialist list of arbitrators.

Through the PCA Space Rules, the PCA has effectively created a neutral environment in which laws and treaties relating to outer space can be negotiated and developed between States and private entities. There is no doubt that international arbitration lawyers who specialise in the intersection between private and public international law, are well equipped to deal with the complexities arising out of developments in space law. International investment law has developed significantly since the inception of the Outer Space Treaty and the Moon Agreement. Given the developing need that has been fuelled by the increase in private entities investing in space exploration, the PCA is likely to be the most appropriate forum for space lawyers, States and private entities in an attempt to close the gap between private and public international law in relation to space activities.

Guardians of the Galaxy

As long as States struggle to manage sovereign debt, space exploration will remain low on the list of priorities for government spending. This places the immediate future of space travel in the hands of private investors. While the altruistic ideal of “common heritage” underpinning the Moon Agreement is socially desirable, it does not reflect the economic reality of investing in high risk pioneering fields. Any pitch for an investment with zero return will be a short conversation. While Mars One has creatively attempted to side step this all-or-nothing-debate by seeking to capitalise on interests in a reality television series and sponsorship deals, doubt has been expressed about whether this interest is sufficient to fund the project in the long term.[17] Mars One would be able to attract greater interest from investors if it were able to clarify with certainty the legal benefits they would obtain from a successful mission. Stakeholders in space exploration need to strike a balance between international solidarity and the right to benefit from investment in the field, in order to ensure humans continue to explore the galaxy.

[1] http://www.mars-one.com/mission/roadmap

[2] http://www.nytimes.com/2013/03/09/business/global/reality-tv-for-the-red-planet.html?pagewanted=all&_r=0

[3] Pocar F, An Introduction to the PCA’s Optional Rules for Arbitration of Disputes Relating to Outer Space Activities, Journal of Space Law, 2012 at p 175.

[4] http://isro.gov.in/pslv-c25-mars-orbiter-mission; http://edition.cnn.com/2014/09/23/world/asia/mars-india-orbiter/index.html

[5] http://www.nasa.gov/press/2014/december/nasa-s-new-orion-spacecraft-completes-first-spaceflight-test/

[6] http://inspirationmars.org/

[7] United Nations, Treaty Series.

[8] Outer Space Treaty, Article 1 and Moon Agreement, Article 4.

[9] Cassese A, International Law, 2nd edn, Oxford University Press, 2005, at page 96.

[10] Moon Agreement, Article 11(1).

[11] Moon Agreement, Article 11(3) and (5) to (7).

[12] Moon Agreement, Article 11.

[13] Moon Agreement, Articles 4(1), 11(1) and 11(7); Cassese A, International Law, 2nd edn, Oxford University Press, 2005, at page 96.

[14] Article 60, Vienna Convention on the Law of Treaties 1969.

[15] Article 35 PCA.

[16] Cassese A, International Law, 2nd edn, Oxford University Press, 2005, at page 95.

[17] http://news.discovery.com/space/private-spaceflight/the-biggest-flaw-in-mars-ones-business-model-130425.htm

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