Among space enthusiasts, much time is spent debating how to advance humanity’s engagement with space. Oftentimes, these conversations focus on promising technologies – space robotics, reusable rockets, terraforming, or artificial human habitats. But of equal importance, particularly if business is to play a leading role, are legal frameworks that facilitate investment in space. We spoke with Hamza Hameed, a lawyer at the International Institute for the Unification of Private Law (UNIDROIT) who works on secured transactions law for the space sector. We asked his thoughts on how law can facilitate investment in space, as well as what he thinks are some promising areas for aspiring lawyers who wish to enter the space sector.
What is the treaty you are working on and what would its economic benefits be for activities in the space sector?
The 2012 Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Space Assets, also known as the Space Protocol to the Cape Town Convention, is an international regime of secured transactions law designed specifically for the space industry. It introduces a uniform and transparent scheme of asset-based financing to improve creditors’ rights and hence facilitate the flow of capital into the space sector.
The Space Protocol creates a uniform regulatory regime for the recognition and protection of security interests in space assets. This ensures that issues such as conflict of laws or differing insolvency remedies, that are normally encountered in asset-based financing, are surpassed.
It provides uniform rules for the creation, registration, and priority of legal interests in space assets, as well as facilitating expeditious and efficient enforcement of remedies in the event of a default or insolvency of the debtor. At the same time, it ensures that adequate protection is given to public services that are offered through space assets, and that the same are not interrupted due to an immediate exercise of the creditor’s rights.
The entering into force of the Space Protocol will result in the creation of an international registry for rights and interests in space assets, which will offer greater certainty to debtors and creditors. It will allow for the creation of a global system of international enforceable security interests in space assets and the provision of an ecosystem where financiers and investors can confidently give their money to companies in the space industry. Lastly, it will also result in the availability of an international regime onto which domestic laws can be based on in order to provide secured lending for the space industry.
Such anticipated benefits result in reducing risk associated with investing in space, thereby bringing down the cost of acquiring finance for companies in the sector and promoting greater business.
What precedents have informed your current efforts on this treaty?
The Space Protocol is an extension of a successful international treaty already in operation: the Convention on International Interests in Mobile Equipment and its Protocol relating to Aircraft Equipment, commonly known as the Aircraft Protocol to the Cape Town Convention. The Cape Town Convention establishes an international legal regime for the creation, enforcement, registration, and priority of international interests in various categories of high-value, uniquely identifiable mobile equipment.
At present, the Cape Town Convention has 79 State Parties – with the international registry for the Aircraft Protocol having recently celebrated its one millionth registration. The entering into force of the Aircraft Protocol has reduced the cost of financing aircraft equipment by at least 30%. Moreover, one study showed that the adoption of the Aircraft Protocol by an average country could save it between $7.6 billion and $11.1 billion over a twenty-year period.
The Cape Town Convention system operates by reducing a creditor’s risk and by enhancing legal predictability in the transactions covered under it, thereby enabling more secured transactions of high-value assets to take place with reduced costs. Its Protocols are tailored to address the specific financing needs of individual industries, and as such, the Space Protocol is designed to enable more secured transactions in space assets.
The Cape Town Convention system functions through the creation of different international registries under each Protocol to enable the creation, registration, and enforcement in Contracting States of priority rights in high-value assets of a registrable nature. This improves predictability of asset-based financing and leasing within these industries allowing financiers to lend with confidence and at lower rates.
What drew you into space law and policy, and what are some opportunities for individuals who would like to work in this area?
My interest in space law and policy developed as a result of a general affinity towards all things space. Growing up, I was passionate about the space sector, and I was also generally a very vocal and expressive person. I had always set my sights on a career where I could actively be involved in macroeconomic decision making – this is largely why I studied law at both the undergraduate and postgraduate level.
At UNIDROIT, I work as part of a Secretariat committed towards developing methods for modernizing, harmonizing, and coordinating international private and commercial law and to formulating uniform law instruments, principles, and rules. Our work facilitates trade, contributes to international sustainable development, promotes education, advances international cooperation and exchange, and closes cultural gaps.
My work on space law and policy is one part of my wider role in generally working towards creating a better commercial environment for large cross-border financial transactions to occur in an efficient manner. Nevertheless, for anyone seeking to build a career in space law and policy – the future is bright. The space sector is presently growing at an exponential rate and many international organizations are focused on developing law and policy to improve the governance of the NewSpace economy. There are many opportunities in both the private and the public sector, especially with regards to financing, commercialization, and regulation. I am confident that this area will only continue to grow in relevance as time progresses!
For anyone interested in learning more about the Space Protocol, a set of useful documents can be found here. Please feel free to contact the UNIDROIT Secretariat for further information: [email protected]