New commercial space activities will trigger disputes that will present new legal challenges. (credit: Bryan Versteeg/Deep Space Industries)

Advancing the jurisdiction of the US federal court system to address disputes between private space actors

by Michael J. Listner
Monday, July 22, 2019

Not a day goes by without headlines about commercial space, including the vaunted value of the present space economy and the speculative value of resources within celestial bodies, including the Moon. Interspersed within these headlines and in academia is thought about the legal and political issues that will manifest themselves as private space activities increase to include how they will be regulated.

Amidst the consideration of what the issues of a future space economy will arise and calls to pre-regulate an industry that has yet to substantively manifest itself, there is little discussion how disputes between private space actors, which will unquestionably appear concurrently with advances in private space activities, will be addressed. The default thought on the subject of dispute resolution tends to default to top-down solutions utilizing international bodies or regimes but gives little thought to the utility of domestic, bottom-up solutions. This essay will briefly examine the current international bodies focused on dispute resolution and offer an approach using domestic judicial forums as a means to address future dispute resolution between private space actors.

International dispute resolution

The Claims Commission

One of the progenitors of dispute resolutions in outer space is a little-known construct found in Article XIV to Article XX of the Liability Convention called the Claims Commission. The Claims Commissions is a last-ditch attempt for two or more states who have a dispute with regards to damage caused by a space object that has otherwise has faced a diplomatic impasse.[1] The Commission can be formed at the request of either party and would consist of three members: one appointed by the claimant state, one appointed by the launching state, and the third member, the chairman, to be chosen by both parties jointly.[2] The Claims Commission has to duty to decide the merits of a claim for compensation and determine whether compensation is due and if so in what amount.[3] The Claims Commission has yet to be invoked and, if and when it does, it will only apply to states; private entities cannot find relief under the Liability Convention or the Claims Commission.

The Permanent Court of Arbitration

The Permanent Court of Arbitration (PCA) recognized a perceived need for specialized rules of arbitration for matters relating to space and initiated a project in 2009 to create a set of rules of arbitration that would meet the specific needs of disputes arising from outer space activities. This led to the Optional Rules for Arbitration of Disputes Relating to Outer Space Activities (the Rules), which were adopted by the PCA on December 6, 2011. The Rules adopted by the PCA recognize that the scope of outer space activities involve not only the potential for dispute among nations in outer space activities, but disputes among private parties whose activities involve a component of or otherwise involve outer space activities. (See “A new paradigm for arbitrating disputes in outer space”, The Space Review, January 9, 2012.) While the PCA rules for disputes in outer space provide a viable forum for future disputes between private space actors, the question of whether the binding nature of a ruling can be enforced is salient. In other words, it is one thing to receive an arbitral award; it’s another to enforce it. The question is whether a party will abide by the decision and whether it can be enforced if a party chooses not to. This is further complicated by the Article VI reach of states, which could potentially shelter private actors from adverse rulings as part of a larger policy to protect their own national interests.

International Court of Justice

Another potential venue for resolving future disputes between private actors could be the International Court of Justice (ICJ), which is the venue for scenarios in the annual Manfred Lachs Moot Court competition. Like the Claims Commission in the Liability Convention, the ICJ’s jurisdiction is for disputes between states. However, the ICJ could hypothetically entertain disputes between private space actors from different states through Article VI and Article VIII of Outer Space Treaty, i.e. the dispute between private space actors would implicate their sponsoring states, making a private dispute a dispute between states. Aside from the ambiguous jurisdictional questions, another drawback to using the ICJ is concern the court could leverage geopolitical animus to cloud a judgment. Couple this with no appeal process and the lack of enforcement, and the potential that a state who also resides on the UN Security Council could effectively nullify any attempt to enforce the ICJ’s ruling in order to protect not only its citizens’ interests but its own as well, makes the ICJ an impracticable venue.

US federal courts as a forum for dispute resolution

Dispute resolution will be a critical facet of future commercial space activities whether a quarrel arises between private actors operating under the authority and jurisdiction of different states or between parties operating under the authority and jurisdiction of the same state. Indeed, the question is not only how the dispute will be resolved but, more so, how a decision will be enforced, i.e., what body will hear these matters and be able to enforce its decision? The solution to this quandary rests not in an international body or construct but in domestic courts, including the US federal court system.

The federal court system currently has subject matter jurisdiction over some matters involving private space actors.[4] The Commercial Space Launch and Competiveness Act of 2015 endowed the federal district courts with exclusive subject matter jurisdiction over legal claims arising out of a commercial launch or reentry license issued under Title 51, Chapter 509 (see “Jurisdiction of the Federal Courts: An under-appreciated provision of the Commercial Space Launch and Competiveness Act”, The Space Review, January 4, 2016.) Congress granted the federal courts authority over these matters to the extent they implicate a dispute between private actors pertaining to activities in the course of a launch and reentry license, but they do not address disputes that occur during the period between launch and reentry.[5] Congress did not extend the federal court’s jurisdiction to “on-orbit” activities or activities between launch and reentry or those within the res communis environment of outer space. This is consistent with the current authority Congress has given the FAA to authorize and supervise private space activities pursuant to international law.[6] This brings into question, absent specific authorization from Congress, whether the federal courts can extend their subject matter jurisdiction to private disputes arising out of activities between a launch license and reentry license? The question is germane and has been tacitly addressed by the federal courts already.

The United States Court of Appeals for the District Court for the District of Columbia and, subsequently, the Circuit Court of Appeals, District of Columbia, had to decide whether it had subject matter jurisdiction to hear a claim under the Federal Torts Claim Act (FTCA) for a tort that occurred in Antarctica, which is a res communis environment analogous to outer space.[7] The Court rationalized in Beattie v. United States it had jurisdiction to adjudicate the applicability of the FTCA to Antarctica. In doing so it referred to Article VIII of the Outer Space Treaty:[8]

“The legal status of Antarctica has been most frequently analogized to outer space. United States spokesmen suggested the 1959 Antarctic Treaty as a possible model for an outer space treaty during initial formulation discussions in 1965 and 1966. Obviously, the provisions of a treaty relating to outer space are only relevant to the present case by analogy. However, they are instructive as to the way in which the United States has acted with reference to sovereign immunity and liability for acts of its agents in a context very similar to Antarctica.”[9]

The Court further observed:

“The [Outer] Space Treaty is obviously not couched in terms of tort claims. However, the basic principle is that in the sovereignless reaches of outer space, each state party to the treaty will retain jurisdiction over its own objects and persons.”[10]

Beattie was overruled in Smith v. United States, which was heard by the Supreme Court in 1993 and decided the FTCA does not apply to claims arising in Antarctica.[11] However, Smith did not invalidate the Beattie court’s analysis of subject matter jurisdiction, including its comparative analysis of Antarctica to outer space and the Outer Space Treaty, and may have indirectly affirmed the lower court’s analysis vis-à-vis subject matter jurisdiction.

Notwithstanding the finding of subject matter jurisdiction suggested by Beattie, Section 2 of the US Constitution has the elements to give the federal courts exclusive subject matter jurisdiction over future matters that will arise between private space actors. The drafters of the Constitution did not anticipate outer space activities or even private space actors, but their forethought in elucidating the scope of the subject matter jurisdiction for the Judiciary in Section 2 provides the rudiments to create a blueprint for litigators to contend and for the courts to establish subject matter jurisdiction over actions between private space actors involved in a dispute arising out of an activity in-between launch and reentry.[12] The requisite Section 2 of the US Constitution reads as follows:

“The judicial power shall extend to all cases, in law and equity, arising under this Constitution, the laws of the United States, and treaties made, or which shall be made, under their authority;--to all cases affecting ambassadors, other public ministers and consuls;--to all cases of admiralty and maritime jurisdiction;--to controversies to which the United States shall be a party;--to controversies between two or more states;--between a state and citizens of another state;-- between citizens of different states;--between citizens of the same state claiming lands under grants of different states, and between a state, or the citizens thereof, and foreign states, citizens or subjects.”

Parsing this outtake of Section 2 reveals three elements to rationalize the federal court exercising subject matter jurisdiction over private space activities: “…in all treaties made…” as a dispute between private actors would involve the Outer Space Treaty; “…to controversies to which the United States shall be a party…” as the US per the rights, duties, and jurisdiction in Article VI and Article VIII of the Outer Space Treaty would be a party to any private action; and “…and between a state, or the citizens thereof, and foreign states, citizens or subjects…” in the event the dispute involves a non-US private space actor, which would also implicate its authorizing state per Article VI and Article VIII.

Establishing subject matter jurisdiction is one thing and could certainly compel parties operating under the auspice of the US to bring their dispute to federal court and establish jurisdiction in personum, or personal jurisdiction over the parties.[13] However, when one of the parties is operating under the Article VI authority and Article VIII jurisdiction of another state, not only would that party have to consent to the jurisdiction of the federal court but the state sponsoring that party would have to first permit the private space actor to do so, and the state itself would have to consent to be a party to the jurisdiction of the federal court even though its status would be implied.[14] Two hypotheticals illustrate the issue of the court exercising its jurisdiction over parties in two differing instances.

Hypothetical 1: Party A and Party B are both citizens of the US.[15] Both Parties are performing space resource activities on the same celestial body and have a dispute over the space resources extracted at this point as well as who has rights to the resources remaining in situ. Two things could happen: Either Party A or Party B could file suit as plaintiff in federal court, or the US government, per its rights under Article VI and Article VIII of the Outer Space Treaty, files suit in federal court as plaintiff to resolve the matter. In either case, the court can exercise personal jurisdiction over both Parties because they are US citizens under 51 U.S. C § 50902 (1).

Hypothetical 2: This hypothetical applies the same scenario in Hypothetical 1 except where Party A is a citizen of the US, Party B is operating under the Article VI authority and Article VIII jurisdiction of another state. Party A decides to file suit in federal court to hear the matter and resolve the dispute, but the federal court does not have personal jurisdiction over Party B nor can it establish in rem jurisdiction over the space resources that are in dispute.[16] Party B, the state who authorizes and retains jurisdiction over Party B, or both could challenge personal jurisdiction.[17] Unless personal jurisdiction can be established, Party B would not be subject to the federal court to hear Party A’s matter and it would be dismissed. Alternatively, Party B might choose to initiate a suit or file a counter-claim in federal court and submit itself to the court’s jurisdiction providing the state who has Article VI authority and Article VIII jurisdiction over Party B agrees and also submits itself to the jurisdiction of the federal court.[18]

Additional to the matters of subject matter jurisdiction and personal jurisdiction is the question of rules of procedure to be followed as well as substantive law to be applied. 51 U.S.C. § 50914(g), which accords subject matter jurisdiction to the federal district court for the state where the transaction originated, would use the Federal Rules of Civil Procedure but apply the law of the state where the parties reside and where the transaction at issue originated. However, in a matter involving outer space, where little formal rules exist, leaves into question whether the Federal Rules of Civil Procedure should be used or new rules of procedure created. The question of substantive law is also an unknown but would likely be based on common law concepts of contracts, torts, property, etc. The body of Federal Space Law[19] could also be used and expanded not just through legislation but also through legal precedent gleaned from existing treaties and custom, but what is assured is that any decision would be binding on both parties and would be a candidate for bottom-up customary international law.[20]

The federal courts as a forum to adjudicate private space disputes provides advantages over international bodies, including the right to appeal adverse decisions to the appellate court system and even request certiorari before the US Supreme Court. Yet, the most significant aspect of adjudicating a claim in federal court is the ability to enforce a judgment. Unlike international judicial or quasi-judicial forums, the decision of the federal courts can be effectively enforced, which means a ruling on the merits or final appeal will be binding on the parties, including the states, which would be required to impose the judgment through its Article VI rights and duties. The question of enforceability is salient and, given the complex subject posed by outer space activities in a res communis environment, may even require the use of a special master versed in the area of space law and policy to assist the court not only to enforce the court’s judgment but also to help adjudicate the matter.[21]

The drawback of the federal court as the intermediary for these disputes lies in what authority the court will have when it decrees its decision. The question is this: does the court, by rendering a decision in a dispute between private space actors, assume the authority and obligations under Article VI of the Outer Space Treaty to “authorize and supervise” the activities of non-governmental actors in place of the state? That is to say, will the court substitute itself for the state through its decision and assume both Article VI and Article VIII authority over non-governmental entities and, to an extent, over the states who will also be parties to the litigation, especially if the state(s) do not extend their Article VI authority to activities in outer space itself or so-called “on-orbit” activities?

There is no definitive understanding of what the rights and duties of Article VI entail, including what it means to “authorize and supervise” in the US, and the uncertainty over supervision in particular has turned into a specter for existing and future private space actors. The lack of a coherent interpretation of Article VI rights and duties has led to legislative indulgence in Congress and could permit a court unhampered by a definitive interpretation of Article VI to create its own legal interpretation of what it means to authorize and supervise. In turn, the court could use this uncertainty to transform itself into a judicial-state to enforce judgements against both private space actors and states before it. In other words, the court could substitute itself as both legislature for defining Article VI rights and duties and executive for implementing them. Conversely, Congress could blunt this potential scenario by applying its Constitutional authority through Article III over the judiciary to explicitly invalidate any assumption of Article VI and Article VIII rights and authorities, which would remove the potential of the court becoming a super-State for purposes of adjudicating disputes between private space actors.

Conclusion

This essay’s proposition to advance the federal court system is simplified but offers an alternative to the tired proposals for international solutions to dispute resolution. Absent Congressional action, the question of whether the federal courts can assert subject matter jurisdiction over disputes between private space actors in the res communis environment of outer space is not ripe for litigation and must wait for an actual dispute to be brought before the court by parties having standing to do so. Otherwise, the issue of the court’s subject matter jurisdiction is not yet ripe for adjudication.[22] Indeed, what issues and disputes will in arise in the course of private space activities remains murky and will not fully manifest themselves until those activities begin in earnest. What is certain is the issues and disputes will arise and preparing a forum to address those issues is prudent.

Endnotes

1. See Convention on International Liability for Damage Caused by Space Objects, 24 UST 2389, September 1, 1972, art. xiv.
2. Liability Convention art. xv(1).
3. See Liability Convention, art. VIII.
4. “Subject matter jurisdiction deals with the Court's competence "to hear and determine cases of the general class to which the proceedings in question belong; the power to deal with the general subject involved in the action." Standard Oil v. Montecatini, 342 F. Supp. 125, 129-130 (1972)
5. "Only Congress may determine a lower federal court's subject matter jurisdiction." Kontrick v. Ryan, 540 U.S. 443, 444 (2004), citing U. S. CONST., Art. III, §1.
6. “The activities of non-governmental entities in outer space, including the Moon and other celestial bodies, shall require authorization and continuing supervision by the appropriate State Party to the Treaty.” Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Including the Moon and Other Celestial Bodies, October 10, 1967, art. VI, 18 UST 2410.
7. The Antarctic and the Outer Space Treaty are the last of the great disarmament agreements, with the Antarctic Treaty being the model for the Outer Space Treaty, which makes them siblings.
8. A State Party to the Treaty on whose registry an object launched into outer space is carried shall retain jurisdiction and control over such object, and over any personnel thereof, while in outer space or on a celestial body. Ownership of objects launched into outer space, including objects landed or constructed on a celestial body, and of their component parts, is not affected by their presence in outer space or on a celestial body or by their return to the Earth. Such objects or component parts found beyond the limits of the State Party to the Treaty on whose registry they are carried shall be returned to that State Party, which shall, upon request, furnish identifying data prior to their return.
9. Beattie v. United States, 756 F.2d 91, 99 (D.C. Cir. 1984).
10. Id. at 100.
11. See generally, Smith v. United States, 507 U.S. 197, where the Court held the FTCA does not apply to tortious acts or omissions occurring in Antarctica. Interestingly, the dissent in Smith by Justice Stevens notes “[t]he question whether the United States should be held responsible for the tortious conduct of its agents in the vast "sovereignless region" of Antarctica…is profoundly important, not only because its answer identifies the character of our concern about ordinary justice, but also because Antarctica is just one of three vast sovereignless places where the negligence of federal agents may cause death or physical injury. The negligence that is alleged in this case will surely have its parallels in outer space as our astronauts continue their explorations of ungoverned regions far beyond the jurisdictional boundaries that were familiar to the Congress that enacted the Federal Tort Claims Act (FTCA) in 1946.” In other words, the Federal Torts Claims Act, which theoretically would apply to the tortious acts or omissions conducted by the federal government and incurred by government astronauts, would not apply during the activities between launch and reentry or when government astronauts are within a res communis environment.
12. On the other hand, the Supreme Court has said only Congress can determine the subject matter jurisdiction of a lower court. See " Kontrick v. Ryan, 540 U.S. 443, 444 (2004), citing US CONST., Art. III, §1. However, Section 2 may preempt Congress’ authority.
13. Some would contend an analysis of whether the court has personal jurisdiction is the first analysis to be made in determining whether the court can entertain a matter. This is a valid criticism but unless the court has the competence to hear the hear the action; it is nonsensical for it to address whether it has personal jurisdiction over one or more of the parties.
14. See Outer Space Treaty, art. vi and art. viii. See also, Beattie, at 100.
15. See 51 U.S. C § 50902 (1)
16. “The legal term in rem jurisdiction refers to whether or not the court has jurisdiction over the subject matter or item that is the subject of the legal action. Legal actions, such as civil lawsuits and injunctions must be heard by the court that has jurisdiction over the geographical area in which the item is located or action took place.” Legal Dictionary. If the Court tried to exercise jurisdiction over the space resources, the Court, which is acting as a branch of the US government, is extending sovereign control over not only the space resources but the celestial body that contains them. This would violate the non-appropriation principle in Article II of the Outer Space Treaty: “Outer space, including the moon and other celestial bodies, is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means.”
17. See FED. R. CIV. P. 12(b)(2)
18. These hypotheticals are simplified at best but illustrate a fundamental procedural impediment to using the federal courts. Ultimately, the decision for a non-US party to consent to the jurisdiction of the federal court can be accomplished through diplomatic channels or might be addressed through bilateral or multilateral agreements between states.
19. Federal Space Law in its present form would include Title 51 of the United States Code, spectrum rules, regulations promulgated in the Code of Federal Regulations and treaties the United States has ratified.
20. The federal courts operating under their jurisdiction over admiralty/maritime actions apply Federal Maritime Law, which is a combination of federal statutes and legal precedents governing legal disputes that originate on navigable waters. In some cases, state courts have concurrent jurisdiction with the federal courts in certain matters and apply state law despite Section 2 of the US Constitution. See An Act to Establish the Judicial Courts of the United States, 1 Stat. 73, Sec. 9, and September 24, 1789.
21. See FED R. CIV. P. 53. Masters
22. While the author has made the US federal courts the focal point it doesn’t exclude other states with commercial space laws from utilizing the domestic judicial systems in a similar manner.

Michael J. Listner is an attorney, the founder and principal of the legal and policy think-tank/consultation firm Space Law and Policy Solutions, and the author and editor of the subscription space law and policy briefing-letter, The Précis.

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