THE TERRITORIAL SCOPE OF INVESTMENT TREATIES: APPLICABILITY OF INTERNATIONAL INVESTMENT LAW TO SPACE MINING ACTIVITIES.

• Author: Waring, Sarah

I INTRODUCTION

The space mining industry is undergoing a wave of commercialisation that entails a 'tremendous amount of unpredictable risk' (1) including the possible loss of invested capital or that expected benefits, namely profits or return, fail to materialise. Whilst the legal framework governing the use of outer space lays down the main principles for space activities, (2) it does not address whether or how the investments of private actors in space ventures are protected. There is growing attention and literature on the protections afforded to investors in space activities, however, these have primarily focused on satellite and telecommunication activities. Space mining ventures are distinguished from telecommunication services by virtue of the fact that they involve the exclusive use of tangible space resources (celestial bodies) as opposed to the non-exclusive use of intangible and re-usable space resources (orbital positions)--a notable distinction due to the principle of space as 'global commons'. (3) Whilst space mining ventures have received increasing attention and investment due to the economic and social benefits of such ventures as discussed below, there has been little attention paid to the protections that might be afforded to private investors in such activities. The unique nature of space mining poses a variety of unique challenges in applying international investment law ('IIL') principles originally designed for terrestrial activities to operations that entail the use of resources in areas that under international space law are not subject to national appropriation or sovereignty. (4) This article therefore endeavours to examine whether the scope of a typical international investment agreement ('IIA') (5) is applicable to protect foreign investments in commercial mining activities in outer space. This is done by first providing an overview of the relevance of investment law to space mining, then examining the inadequacy of the law on the use of outer space and celestial bodies, including an overview of the general international law framework relevant for space mining activities. Thirdly, the article examines the general applicability of investment law primarily comprised from a large body of IIAs. Finally, the article briefly examines the application of some of the main IIL protections available when States do not honour their obligations. This article demonstrates that investment law can and should be applied to space activities and thus that investors may be able to avail themselves of the favourable protection standards in IIAs.

1. Relevance of International Investment Law to Space Mining - Commercialisation and Increased Investment in Space Mining

   The exploitation of asteroids through space mining is increasingly being seen as essential for the future of humankind. (6) Various concrete and immediate reasons underlie the growing desire to engage in space mining ventures including social and environmental benefit, scientific and industrial advancement, long-term national economic development and commercial profit. Economic incentives to invest in space mining are largely founded on the large financial returns anticipated upon harvesting the highly valuable minerals within asteroids. (8) For example, fragments of the asteroid-meteorite Chelyabinsk have been sold to American laboratories for up to USDS 10,000, (9) and an asteroid which came close to the Earth's orbit had an estimated worth of USD$195billion (if it could be harvested). (10) Additionally, NASA announced plans to launch mission 'Psyche', to explore and study a unique 225km-wide asteroid known as 'Psyche 16', which it estimates has a mineral wealth of USD$ 10,000 quadrillion." The returns for harvesting such asteroids could be significant for commercial entities. (12) A further benefit and incentive for investment is that many asteroids possess vast amounts of natural resources that are rapidly diminishing on Earth, (13) which could have a variety of applications on Earth or in space (such as construction, life support and propellant) and which it is estimated have the capability to solve the current energy crisis on Earth. (14)

   In light of the benefits derived from mining resources from celestial bodies and the apparent feasibility, it is no surprise that this has sparked a wave of commercialisation and consequently investment in the exploration and exploitation of space, particularly space mining, with private entities swift to invest. (15) Since 2000, the cumulative investment from private and government entities on space endeavours by start-up space ventures has amounted to over USDS 18.4 billion, with three-quarters of that occurring in the last six years. (16) For example, Planetary Resources, one of the leading commercial asteroid mining companies based in the United States and backed by Google Inc founders Larry Page and Eric Schmidt, received direct capital investment of [euro]12million and [euro] 13million from the Luxembourg Government and Societe Nationale de Credit et d'lnvestissement (SNCI) respectively, USDS21.1 million in Series A funding from a range of venture funds (17) and over US$1.5 million through online crowd funding. (18) More recently, NASA awarded USD$10million to 'Blue Origin', a space venture by Amazon CEO Jeff Bezos which plans to extract water from the Moon and could permit greater access to hydrogen, carbon, silicon, metals and other critical materials. (19) Such announcements have led many to refer to this immense economic opportunity as the 'next gold rush'. (20)

   Due to the high launch and transportation expense of space flight, and inaccurate identification of asteroids suitable for mining and in-situ ore extraction challenges, terrestrial mining is currently the only tangible means of raw mineral extraction. However, because of the constantly decreasing cost of launching rockets from Earth due to reusable rocket technologies developed by SpaceX, it is quickly becoming a commercial reality. (21)

2. Relevance of International Investment law to Space Mining -Risks Facing Investors

   In making foreign investments in space ventures, private investors are vulnerable to significant risks associated with the legal and regulatory framework under which they are operating. Space mining ventures are subject to particularly large commercial risks associated with business activities by virtue of the large-scale and long-term nature of the activities and investments, and their requirement of significant financial resources and extensive planning, often involving multiple stakeholders across the world. (22) International investments may also face so-called 'political risks' which generally arise from political developments in the host State that affect the foreign investment or, the focus of this article, negative interference with the relevant investment by the host government--which may amount to expropriation. (23) Such interferences can include a host State breaching a contract, unilaterally changing conditions granted to the investor or the national legal framework after the investment has been made, or not honouring sovereign financial obligations. (24)

   IIL could mitigate some of these political risks, (25) as they are addressed through the substantive standards of treatment to protect foreign investment and investors established through a broad network of IIAs that many States have entered over the past decades. (26) Such standards focus on the obligations owed by the host State, including non-discriminatory treatment, national treatment, fair and equitable treatment, most-favoured-nation treatment, full security and protection and compensation for expropriation of property. These are issues that the international legal regime governing space activities does not explicitly address and --despite adaption and adoption of national space laws in numerous countries (27)--for which there is no international consensus. (28) Furthermore, the existing legal regime on the exploration and exploitation of space does not explicitly cover private actors. This article therefore examines this gap in the law and whether IIL principles and treaties may be applicable to investors in space ventures.

   II INADEQUACY OF INTERNATIONAL SPACE LAW FOR INVESTORS IN PRIVATE SPACE ENTERPRISES

   It is widely established that the needs of private enterprise and the commercialisation of space activities are not sufficiently provided for under the current regime on the exploration and exploitation of space primarily contained within the five major multilateral treaties finalised by the United Nations. (29) The regime suffers from numerous regulatory inadequacies that produce a significant lack of legal certainty and predictability for private space mining companies, meaning that private space companies and their financiers cannot properly evaluate the political and business risks involved in private foreign investments and thus may hinder the likelihood of investment in and development of such activities. This is in part due to the fact that space law treaty-making 'long ago ground to a halt'. (30) States have been unable to agree to any revisions of the regime or new multilateral treaties since the conclusion of the last of the five major treaties--the Moon Agreement--which itself is considered to have 'failed' due to the low number of ratifications. (3) ' Instead, there have been piecemeal developments, primarily through the adoption of non-binding 'soft law' instruments. (32) The most relevant development of laws relating to outer space activities, including space mining, is arguably occurring through national space legislation. (33) However, this national legislation is disparate and highly criticised, as discussed below. (34)

   The central issue for companies in assessing the political risks in commercial space mining and resource exploitation is the ambiguity surrounding property rights in outer space and the...