Asset-Based Lending in Space: Berlin Protocol to the Convention on International Interests in Space Assets

International disputes and Private International Law go hand in hand. So you will be pleased to learn that, finally, the protection of property rights has moved to outer space! At an Diplomatic Conference held under the auspices of UNIDROIT that took place from February 27 to March 9, 2012 in Berlin, a Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Space Assets was adopted. UNIDROIT has built on its previous work for aircraft finance; the protocol creates an international register for security rights in space assets. My first reaction was that probably it would have been better to focus everyone’s efforts to design rules under which a plain vanilla retention of title clause survives a cross-border sale between, say, Germany and Italy and can be enforced with some degree of certainty. Then I though that this attitude was perhaps only testimony to my total ignorance for the pressing needs of the international space and satellite community. So I was really surprised to learn that the European Satellite Operators Association (ESOA) is highly critical of the project and had hoped that the Conference would not adopt the protocol. That sentiment was apparently shared by many in the industry:

“It is disappointing that the Berlin Conference moved ahead with a Protocol on space asset financing, over the clear and unified opposition of those involved in the actual business of constructing, launching, operating, insuring and financing communications satellites,” said Patricia Cooper, President of SIA, the US Satellite Industry Association.

The German government, on the other hand, praises the protocol and the benefits it will create for borrowers, lenders and manufacturers. The protocol will enter into force as soon as ten states have ratified it and the register has become operational.

Just for the record: The signatories are Brazil, Burkina Faso, Canada, the People’s Republic of China, the Czech Republic, France, Germany, Ghana, India, Iraq, Ireland, Italy, Japan, Luxembourg, Madagascar, Pakistan, the Republic of Korea, the Russian Federation, Saudi Arabia, Senegal, South Africa, Spain, Turkey, the United States of America and Zimbabwe, as well as the European Union.

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