[Feature: Questioning Japan's Space Strategy] Space Business and Corporate Legal Affairs

I wanted to study space even as a humanities student. I was drawn to the words "Space Law" in the university brochure and enrolled in the Keio University Faculty of Policy Management. During my student days, I sought guidance from Professor Setsuko Aoki, and since graduation, I have been involved in corporate legal affairs for about 10 years at a company engaged in space business. In this article, I would like to introduce the rapidly changing space business and the laws and legal issues surrounding it.

What kind of image do you have when you hear the term "space business"? Is it space travel? While space travel is likely to become a reality in a few years, businesses using space are surprisingly close to us today. For example, satellite broadcasting. As the name suggests, this is broadcasting using satellites in space, and some may be familiar with BS broadcasting or the SKY PerfecTV! service. Additionally, it has become possible to use the internet even inside airplanes, which is also realized through communication services via satellites. Furthermore, recently there are venture companies that create artificial shooting stars, and companies are emerging that seek to use space as a venue for providing entertainment.

Telecommunications business in Japan was also once conducted as a state-owned enterprise, but like the privatization of other businesses such as railways, it was liberalized in the 1980s, making new entry possible. Our company, SKY Perfect JSAT, also entered the telecommunications business following that liberalization and currently provides satellite communication services by owning 17 satellites. Satellite communication services are less susceptible to ground disasters compared to communication services using ground lines, enabling stable service provision. By leveraging these advantages, we are contributing to the realization of a safe and secure society.

The market size of the global space business is said to be approximately 30 trillion yen, and the average annual growth rate from 2009 to 2016 is said to be approximately 5%. New businesses are being born as the market size expands, but the majority of space businesses currently being conducted are realized by using satellites for communication, taking images of the Earth, or identifying locations. Therefore, I would like to look at an overview of the procurement, launch, and operation of satellites, which are commonly required for these businesses.

First is the procurement of satellites. There are multiple companies in the world called satellite manufacturers, and satellites are purchased from these manufacturers. Japanese manufacturers include Mitsubishi Electric and others. Next, it is necessary to procure a rocket to place the satellite in the desired location in outer space. There are several operators in the world that manufacture rockets and provide satellite launch services. In Japan, there is Mitsubishi Heavy Industries, which provides services using the H-IIA rocket (there are also several Japanese venture companies trying to enter the launch service business).

Once the satellite is delivered from the satellite manufacturer and can be successfully placed in the desired outer space using a rocket service, the operation of the satellite begins. Simply put, satellite operation consists of (1) checking the health of the satellite and (2) maintaining the satellite in the correct position. Our company's satellites are placed in outer space approximately 36,000 km above the ground (the altitude at which airplanes fly is approximately 10 km, and the distance from the Earth to the Moon is approximately 380,000 km). Once a satellite is launched, it is difficult with current technology to go into outer space and repair broken parts, so it is important to constantly check the health of the satellite and take necessary measures in advance to prevent it from breaking. Also, although outer space is said to be zero gravity, satellites gradually move from their original positions due to the influence of the gravity of the sun and the moon. If a satellite is not in a fixed location, it causes inconvenience for communication, so it is necessary to keep the satellite in the correct position by gradually injecting fuel with small engines mounted on the satellite called "thrusters."

Diverse space businesses are born depending on how these procured and operated satellites are applied.

If you want to start a space business, what kind of rules must you follow? In Japan, it is necessary to comply with the Space Activities Act (official name: Act on Launching of Artificial Satellites and Management of Artificial Satellites), which came into effect in November 2018. This law makes the launch and management (operation) of satellites subject to a permit system, and also determines who bears what responsibility if damage is caused to a third party in connection with the launch or management of a satellite.

Why did the launch and management of satellites have to be subject to a permit system? One of the reasons is the existence of International Space Law. International Space Law refers to treaties created by various countries regarding the development and use of space, namely the "Outer Space Treaty," the "Rescue Agreement," the "Liability Convention," the "Registration Convention," and the "Moon Agreement." Let's briefly look at the main principles of these treaties within the scope related to the background of Japan's enactment of the Space Activities Act.

1. Freedom of Space Activities: Article 1 of the Outer Space Treaty stipulates that outer space is a field of activity recognized for all mankind and can be freely explored and used. However, activities that violate international law are not permitted.

2. Authorization and Continuing Supervision by States: As mentioned above, space activities can be conducted freely, but at the same time, they are said to require the authorization and continuing supervision of the relevant states parties to the treaty. To fulfill this treaty obligation, each country has enacted domestic laws regarding space activities. Japan has been conducting space activities since before the Space Activities Act was enacted, but because the active entities were centered on the state and because the government supervised space activities conducted by private companies based on other laws such as the Radio Act, no special law had been enacted. However, with the increase in new entrants into the space business, rules specialized for space activities were established.

3. Launching State Liability: As can be imagined from rocket launches, space activities involve danger. If a launch fails and a rocket falls into a city area, the damage would be enormous. Naturally, multiple measures are taken to prevent such damage, but a relief rule is necessary in the unlikely event of such a situation. This is what is called "launching state liability."

For damage caused to a third party by space activities, countries falling into the category of "launching state" bear responsibility under international law. In the treaty, a "launching state" is defined as (1) a state which launches, (2) a state which procures the launching, and (3) a state from whose facility or territory a launch is conducted. Furthermore, regarding space activities, even for activities conducted by private enterprises, the state to which the enterprise belongs is held responsible.

For example, if the Japanese government launches a Japanese satellite with a Russian rocket from a Russian launch site in Kazakhstan, Russia becomes the state that launches from its facility, Kazakhstan becomes the state from whose territory the launch is conducted, and Japan becomes the state that procures the launch, making all three countries—Russia, Kazakhstan, and Japan—launching states. These launching states are held jointly and severally liable.

A recent keyword in the space business industry is "New Space." This often refers to space business conducted by new players, such as venture companies and entrants from different industries, compared to traditional government-led space activities. Our company is also planning to develop businesses that utilize data such as images taken from space, in addition to traditional satellite communication businesses. Since there are many articles circulating about New Space, I would like to introduce new initiatives being undertaken by traditional satellite communication operators like us.

Recently, the buying and selling of used goods and the sharing economy have been active, and in fact, similar things are happening in space. In terms of buying and selling used goods, this involves purchasing satellites that have been operated in outer space for a certain period from other companies at a low price. Also, while international space projects between nations like the International Space Station have been conducted for a long time, joint ventures between private companies are also becoming popular. In other words, a satellite is launched not by one company, but as a joint project by multiple companies. This can reduce the procurement costs for each company. While these have great advantages from the perspective of project budgets, issues of international space law, particularly launching state liability, arise.

The overview of launching state liability is as stated earlier, but the definitions of "launching state" are all related to the launch. So, if a satellite already in outer space is bought or sold and an accident occurs afterwards causing damage, which country bears responsibility? Normally, one would think that the company that bought the satellite and caused the accident (the country to which that company belongs) would be responsible, but under current international space law, it leads to the strange conclusion that the original owner (the country to which that person belongs) bears responsibility. This is because the person who bought the satellite in outer space was not involved in the launch at all and does not fit the definition of a "launching state."

International space law consists of rules created about 60 years ago, and changing them is extremely difficult because there are too many interested countries. As seen in launching state liability, some international rules regarding the use and development of space have not caught up with current business. Therefore, in contracts for space business, it is necessary to consider the contents of the contract with the consequences of international space law in mind, in terms of risk sharing between the parties.

The space business will continue to change more and more. When private companies conduct business, they must consider the balance between profit and risk in any field. To realize new space business, analyzing risks and considering countermeasures based on international space law and the special nature of outer space is the true pleasure of space business and the corporate legal professionals involved in it. I hope to continue contributing to the development of space business in Japan and the world by utilizing the knowledge of international space law that I was able to study by enrolling in Keio University.