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Professor Dr. Lesley Jane Smith Leuphana University Lüneburg Weber- Steinhaus & Smith

Luxembourg Satellites Symposium June 4th-5th 2015 University of Luxembourg IMPACT OF UNIDROIT SPACE ASSETS PROTOCOL ?. Professor Dr. Lesley Jane Smith Leuphana University Lüneburg Weber- Steinhaus & Smith. Overview. 1 . Background to Space Protocol. 2 . Genesis of UNIDROIT CTC+ SP.

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Professor Dr. Lesley Jane Smith Leuphana University Lüneburg Weber- Steinhaus & Smith

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  1. Luxembourg Satellites SymposiumJune 4th-5th 2015University of LuxembourgIMPACT OF UNIDROIT SPACE ASSETS PROTOCOL ? Professor Dr. Lesley Jane Smith Leuphana University Lüneburg Weber-Steinhaus & Smith

  2. Overview

  3. 1. Background to Space Protocol

  4. 2. Genesis of UNIDROIT CTC+ SP

  5. 3. CAPE TOWN CONVENTION 2001 (D)evolution in Space industry • (D)evolution from government-funded to flourishing private (aero)space industry • Security rights in context of key international transport and satellite service operations • Aviation Protocol (2001; 2006) • Cheaper finance; possible benefit to space community • Prediction of positive economic impact on aviation sector correct • Ergo potential for satellite community

  6. 4. Two document approach to Space Protocol (2012) • Only for signatories to CTC, not a stand-alone • Art 2(1)-(2) CTC = registration of ‘international interest’ in mobile equipment • Default remedies over mobile equipment (~ space assets = only constructive repossession) • Combat deficiencies of lex situ = security interest over property only recognisable in jurisdiction located where security interest validly created • Encourage financial support /lift legal/financial impediments on funding new satellite markets

  7. CTC Legal concepts

  8. Some detail, some procedure • Art V SP: written contract for registration of interest; Art 20 CTC- parties’ consent to register • Art V.3. registration of contract of sale ‘indefinite’ • *added value for ITU: Art 7(c) CTC and VII SP - Identification of space assets’ • Art IX: rights or prospective interestcan also be assigned (incl. subrogation), subject to govt policy • IX.(c) Value of loan need not be stated in Register

  9. Summary • Cape Town contracting state, signatory to Space Protocol • Art 4 CTC: Provisions applicable to contracting state where debtor ‘situated’ (incorporated/ registered office/ place of business/centre of administration) • Interpretation subject to international character + need to promote uniformity and predictability • Various opt-out Declarations, incl. registration of non-consensual rights • Public policy restrictions/ transfer of technology

  10. Default definitions and remedies 10

  11. Register does not impact on applicable law or forum for dispute • Art VIII SP: parties have freedom of choice of law to govern contractual rights and obligations • Art 12 CTC: Additional remedies allowed where available by applicable law • Art 42 CTC: Parties have exclusive choice of forum; no connection to contract or parties required, except in insolvency, Art 45. • Art 5(3) CTC: applicable law is the domestic law applicable by virtue of collision rules of forum

  12. Satellite financing models

  13. Possible Financing Structures • ECA - Export credit agencies: EX-IM Bank (US); ECGD (UK); COFACE (France) • Financing of satellite projects • (Cash-flows, Risk analysis) • Capital Markets – new possibilities include crowdfunding

  14. Manufacturer support • Finance/ business plans can include various forms of financial support • Vendor financing • Payment deferrals • – Guarantees • – Equity • Often full payment before launch required

  15. Collateral and contract • Collateral Security Package: • mortgage on the financed satellite • Ground facilities and segments • IP rights • Vendors may be asked to give guarantees • Assignment of the lease (if project on lease basis) • Insurance: Launch and in-orbit • Licensing and authorization required

  16. Possible default-related situations • To be regulated in contract • Unable to meet required authorization and licensing compliance standards • Termination of project agreements for various financial reasons • Failure to enter satellite on ITU Master registry

  17. Further deliberations • Goal is debt management/securing rights in rem; not frequency assignment, but security interests • Higher number of ratifications required than for aviation (10, not 3), currently 4 (since 2012) • State opt-outs (Declarations) could lead to lack of consistency in application • Impact of non-consensual interest registration may be useful; depends on national law • Impact of ownership and transfer of interests on public international regime? Win-win situation? • Next possible step: Supervisory Authority

  18. Important limitations

  19. Conclusions: Registry at ITU

  20. Further Information Contacts: Prof. Dr. Lesley Jane Smith smith@leuphana.de smith@weber-steinhaus.com

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