Meeting of the New Steering Committee on the Space Protocol to the 2001 Cape Town Convention on International Interests in Mobile Equipment.

Hosted by the Government of Germany, a new UNIDROIT Steering Committee met in Berlin, Germany between 7-9 May 2008. The meeting was well attended by governments and industry (satellite manufacturers, satellite operators, insurers, financiers and banks). The Berlin meeting was chaired by the Italian delegate, Prof. Marchisio.

The draft and related discussion from the New York 2007 meeting hosted by the Milbank law firm was the basis the Steering Committee expanded upon. Much of the discussion focused on proposals by Germany, the German Space Agency, Finmeccanica and further analysis by the UK delegate Sir Roy Goode.

The discussion was significantly balanced by strong, virtually unanimous space industry explanations of actual satellite finance practices. The Steering Committee discussed issues in principle but left the actual formulation to the delegates of Canada and the UK who co-chair the drafting committee. Drafts will be repeatedly circulated before submission to the UNIDROIT Committee of Governmental Experts. The focus of the Steering Committee was on the following issues:

  1. Sphere of application. Definition of Space Assets: Germany proposed that the draft Protocol should not apply to debtor’s rights and related rights. The Steering Committee determined that these rights could be recorded in the future International Registry but only as they are linked to the physical space asset. If the rights are separated from the physical space asset, then the Protocol would cease to apply to that particular asset.
  2. Identification of Space Assets for Purposes of Registration. The Steering Committee agreed on inclusion of only those assets which can be uniquely identified and be independently operated.
  3. Priority of Competing Rights Assignments. Germany proposed that creditors should only exercise their default remedies if such exercise would not affect the use of other space assets physically or functionally linked to the secured space assets. There was strong industry objection to changes in creditors’ priorities. This issue was referred to a Sub-committee for further discussion and resolution.
  4. Public Service Exemption from Default Remedies. The Steering Committee discussed government’s demands that satellite services be continued regardless of creditors’ exercise of default remedies. On the other hand, creditors require protection of their investments. The Steering Committee concluded that this is ultimately a political issue to be resolved by governments and formed a Sub-committee to formulate additional options for dealing with the public service issue to be presented at the next Committee of Governmental Experts.
  5. Salvage Interests in Space Assets: Major insurance companies asked for recognition in the Space Protocol of their needs for protection of their salvage interests in space assets. An outside Sub-committee was established to consider this request and bring a proposal to the next Committee of Governmental Experts.

No further meetings of the Steering Committee are scheduled. Its work will be done by e-mail and conference telephone calls. Working groups will submit reports to the drafting committee co-chairmen by the end of June. The co-chairmen will formulate drafts, and circulate them for comments three times. The Steering Committee recommendations will be submitted to the Committee of Governmental Experts who will meet in 2009.

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