Luxembourg may have taken its first step to passing the final frontier, this with the increasing likelihood that at some point in the not-to-distant future companies may engage in salvage and mining missions in space.  With the advent of increasing numbers of private commercial interests in space exploration, the protection of commercial interests could represent a gap in international law.  As such, with the law of 20 July 2017 on Exploration and Utilization of Space Resources (the “Space Law”), Luxembourg has been the first European Country to implement procedures through which businesses can protect their investments.

The uptake of the Space Law is relevant to the wider SpaceResources.lu initiative, which seeks to develop a unique regulatory framework to capitalise on the recent revolutions in space technology.  Luxembourg has an established record with regard to leadership in the satellite communications industry, and aims to continue this role with regard to exploration and utilization of space resources.

Whereas this could be seen as extraordinarily pre-emptive, there are in fact several established companies that are already receiving investment for the purposes of pursuing deep-space prospecting. The rapid increase in business development in this sector could be seen as naturally in line with the recent success of private enterprises exploring opportunities in space.

The Space Law therefore seeks to provide a sense of legal certainty with regard to the rights of prospecting agencies seeking to mine Near Earth Objects (“NEO”s), such as asteroids.  Article 1 of the Space Law allows that ‘Space resources are susceptible to appropriation’.

We should expect future legal discourse to further evolve laws and liability with regard to private missions and partnered expenditure between private companies and States. Expensive undertakings such as launches – and supervision of launches – are not covered by the Space Law, with registration with the appropriate State authority and supervision of such being the sole aspect covered.  Authorisation for specific operations will be approved on a case-by-case basis, thus allowing for monitoring of particular businesses and their respective capacities to safely carry out the responsibilities they’ve assumed.

A notable separation between the US and Luxembourg follows this argument, in that private companies obtaining authorization in Luxembourg are left in charge of liability with regard to prospective missions.

While space mining missions themselves may still be a few years off, the complexity of this legal field would necessitate the development of robust legal mechanisms now to protect business interests in this regard.  As of November 2016, Luxembourg announced that ‘negotiations are underway to formalize relationships with around twenty companies and entrepreneurs originating both from Europe and from outside of Europe’.  It is clear that Luxembourg has done well to anticipate global changes by passing business-focused space legislation prior to other Western States.  With this level of interest in private space exploration already at the State level, it seems a good idea to start preparing for the future now.

For any questions / comments, please contact the author Cédric SCHIRRER at cschirrer [at] schirrerwalster [dot] lu

Law of 20 July 2017 on Exploration and Utilization of Space Resources (Non-official and non-binding English translation)

Art. 1. Space resources are susceptible to appropriation.

Art. 2. (1) No one can explore or use space resources without being in possession of a written mission authorization from the minister or ministers responsible for the economy and space activities (hereinafter referred to as “ministers”).

• No one may be authorized to carry on the activity referred to in paragraph (1) either on behalf of another person or as an intermediary for the exercise of that activity.
• The authorized operator may carry out the activity referred to in paragraph (1) only in accordance with the conditions of its authorization and Luxembourg’s international obligations.
• The present law does not apply to satellite communications, orbital positions or the use of frequency bands.

Art. 3. Authorization is granted to an operator for a mission to explore and use space resources for commercial purposes upon written request addressed to the Ministers.

Art. 4. Authorization for a mission may be granted only if the applicant is a public limited liability company (société anonyme), a partnership limited by shares (société en commandite par actions) or a private limited liability company (société à responsabilité limitée) incorporated under the laws of Luxembourg or a European company having its corporate seat in Luxembourg.

Art. 5. The authorization is personal and non-transferable.

Art. 6. The application for authorization must be accompanied by all information relevant to its assessment and a program of the mission.

Art. 7. (1) Authorization is subject to proof of the existence, in Luxembourg, of the central administration and the corporate seat of the operator seeking authorization, including the administrative and accounting structure.

(2) The operator seeking authorization must have a solid system of financial, technical and legal procedures and modalities by which the exploration und utilization mission, including the commercialization of space resources are planned and implemented. The operator also needs to have a strong internal governance system, including a clear organizational structure with transparent, coherent and well defined shared responsibilities, effective processes for detecting, managing, controlling and reporting risks to which the operator seeking authorization may be exposed, adequate internal control mechanisms, including sound administrative and accounting procedures and control and security mechanisms for its technical systems and applications.

(3) The measures, processes, procedures and mechanisms foreseen by this article are exhaustive and adjusted to the nature, the scale and the complexity of the risks inherent to the operator’s business model to be approved, as well as the mission for which the authorization is requested.

Art. 8. (1) The authorization is subject to the communication to the ministers of the identity of the direct or indirect shareholders or partners, of natural or legal persons, who hold a direct or indirect holding of at least 10 per cent of the capital or voting rights of the operator, or, if the 10 per cent threshold is not reached, the identity of the 20 largest shareholders or partners.

The authorization shall be refused if, in view of the need to ensure sound and prudent utilization, the quality of such shareholders or partners is not satisfactory.

(2) The concept of sound and prudent utilization is assessed in the light of the following criteria:

a) The professional integrity of the operator seeking approval and that of the shareholders and partners referred to in paragraph (1);

b) The integrity, knowledge, skills and experience of any member of the shareholders’ or partners’ management body referred to in paragraph (1);

c) The financial soundness of the shareholders and partners referred to in paragraph 1;

d) The existence of reasonable grounds to suspect that an operation or attempt to launder money or to finance terrorism is in progress or has taken place in connection with the proposed exploration mission or the intended use of the resources for this exploration could increase such a risk.

The integrity of the shareholders’ or partners’ management body or members referred to in paragraph (1) shall be assessed in accordance with the second sentence of Article 9 (1).

Art. 9. (1) Authorization is subject to the condition that the members of the management board of the operator have, at all times a sufficient sense of integrity, the knowledge, skills and experience required for the performance of their duties. Integrity is assessed on the basis of a judicial record and any evidence that such persons have a good reputation and present all guarantees for an irreproachable activity.

(2) The persons responsible for managing the operator must be at least two and must be empowered to effectively determine the direction of the activity. They must have adequate professional experience demonstrated by having carried out similar activities in the past, with a high level of responsibility and autonomy in the space sector or a related sector.

(3) Any amendments to the persons referred to in paragraph (1) shall be communicated to the ministers in advance.

Ministers may request any necessary information on persons likely to meet the legal requirements of good integrity or professional experience. Ministers can oppose the proposed change if the applicants do not have adequate professional integrity, adequate professional experience, or if there are objective and demonstrable reasons to believe that the proposed change would jeopardize a safe and prudent operation.

(4) The granting of the authorization implies, for the members of the management body, an obligation to notify the ministers, spontaneously in writing and in a complete, coherent and understandable form, of any change regarding the substantive information relied upon by the ministers to process the application for authorization.

Art. 10. (1) The application for approval must be accompanied by a risk assessment of the mission. It specifies the coverage of these risks by means of its own financial means, by an insurance policy from an insurance undertaking not belonging to the same group as the operator seeking approval or by a guarantee from a credit institution that does not belong to the same group as the operator seeking authorization.

(2) The authorization is subject to the existence of an appropriate financial base for the risks associated with the mission.

Art. 11. (1) Authorization is subject to the condition that the operator seeking approval entrusts the audit of his annual accounting documents to one or more approved statutory auditors (réviseurs d’entreprises agréés) who have appropriate professional experience.

(2) Any modification of the approved statutory auditors must be authorized in advance by the ministers.

(3) The institution of commissaires who can form a supervisory board, provided for in the law of 10 August 1915 on commercial companies as amended, applies to operators only in cases where the law on commercial companies mandatorily prescribes so, even if the company has designated an approved statutory auditor.

Art. 12. The approval describes how the operator seeking authorization meets the requirements of Articles 6 to 11 (1). It may also contain provisions on:

a) the activities to be carried out in or from the territory of the Grand Duchy of Luxembourg;

b) The limits imposed on the mission;
c) The methods of surveillance of the mission;

d) The conditions for ensuring compliance of the operator with his obligations.

Art. 13. For every application for authorization, a fee is set by the ministers to cover the administrative costs incurred in processing the application. This fee varies between 5,000 and 500,000 euros depending on the complexity of the application and the associated volume of work.

A Grand-Ducal Regulation shall determine the procedure applicable to the collection of the fee.

Art. 14. (1) The authorization shall be withdrawn if the conditions for its grant are no longer fulfilled.

(2) The approval shall be withdrawn if the applicant does not make use of it within 36 months of its grant, renounces to its use or has ceased to carry on its business within the last six months.

(3) The approval shall also be withdrawn if it has been obtained by means of false declarations or by any other irregular means.

Art. 15. The ministers are in charge of the continuous surveillance of the missions for which an authorization has been granted.

Art. 16. An operator who has obtained an authorization for a mission is fully responsible for any damage caused during the mission, including during any work and obligations of preparation.

Art. 17. Obtaining authorization for a mission does not exempt one of the obligation to obtain additional required approvals or authorizations.

Art. 18. (1) A penalty of imprisonment of eight days to five years and a fine between 5,000 and 1,250,000 euros or one of these penalties only shall be imposed on a person who has contravened or attempted to contravene Article 2.

(2) A penalty of imprisonment of eight days to one year and a fine between 1,250 and 500,000 euros or one of these penalties only shall be imposed on a person who has contravened or attempted to contravene to the provisions of Articles 5, 9 (3) paragraph 1, 11 (1) or (2) or the terms of the authorization.

(3) Without prejudice to paragraphs (1) and (2), the jurisdiction the case has been referred to may order the termination of the operation which violates the provisions of this law, under periodic penalty payment (astreinte), the maximum of which cannot exceed 1,000,000 euros per day of assessed infringement.