Satellite launch contract

Let us have a look at the satellite launch contract. With the commercial exploitation of space, the contractual aspects relating to the construction, launching or even the exploitation of a space object take on their full significance. More generally, aspects of private law become predominant, even if they are, of course, part of a framework of public, national and international law, stemming from national space legislation, community instruments and international treaties.

Space contracts are not completely new contracts: they borrow pre-existing molds. However, contractual practice is innovating in order to respond to new needs generated by new techniques: innovation is reflected here in the very fine adaptation to the subject of the contract. Let us have a look at the satellite launch contract.

How does the satellite launch contract works? How is it created? In this area, we can really speak of the launch market. The last few years have in fact seen the European company Arianespace, long in a situation of quasi-monopoly in matters of commercial launches, widely challenged by companies not only American and Russian, but also Chinese, Japanese, Indian, and Brazilian.

Arianespace launches the Ariane 5 rocket from the Guiana Space Center (CSG). The small European launcher Vega and the Russian launcher Soyuz are now also launched from the CSG (see the declaration by certain European governments relating to the operating phase of the Ariane, Vega and Soyuz launchers at the Guiana Space Center, adopted in Paris on March 30, 2007 and French law n° 2009-434, April 21, 2009 authorising the approval of this declaration).

The market for launches is undoubtedly deeply upset since the arrival of the private company SpaceX. This formidable competition explains the deep reorganisation of the European launch industry, in progress, with the takeover of Arianespace by Airbus Safran Launchers. In 2015, the joint venture reached an agreement with the French State and CNES concerning the transfer of the shares held by CNES in the capital of Arianespace. It is within this framework that the new Ariane rocket (Ariane 6) will be developed.

This competition is organised through different forms of cooperation. Thus, Arianespace is part of a joint venture, Starsem, with, among others, the Russian Space Agency, whose objective is to have satellites placed in low or medium orbit by the Soyuz launcher. International Launch Services (ILS) is a joint venture formed by Lockheed Martin and the two manufacturers of the Russian Proton rocket, intended to market the American launch vehicles Proton and Atlas.

The Sea Launch consortium used to launch the Zenit rocket from a reconverted offshore platform installed off the coast of California. Finally, in terms of launches, the American companies Boeing and Lockheed Martin have formed the joint venture United Launch Alliance, authorised by the Federal Trade Commission and by the European Commission (Case N° COMP / M.3856 – Regulation (EC) N° 139 / 2004 Merger Procedure, August 9, 2005). The cooperation also takes the form of back-up agreements put in place between certain launch companies, such as the agreement between Arianespace, Boeing Launch Services and Mitsubishi Heavy Industries, making it possible to guarantee customers the availability of an Ariane 5 rocket , or Sea Launch or H-2 in Japan.

Collaboration can also take place between the public and private sectors, as in the NASA COTS program, which has given rise to the development of contract models (COTS Model for NASA Public-Private Partnerships) and the conclusion of contracts between NASA and industry (SpaceX and Orbital).

Launch is the cornerstone of space activities. The object of the launch contract is the “provision of services for the launch” of a satellite (single launch) or of several satellites (double launch). Before the launch, the launch company undertakes to prepare for the launch (preparation of the launch site, payload, integration of the satellite on the launcher, manufacture of the launch vehicle, the launch assembly, etc.), to put the satellite supplied by the customer into orbit, and to provide certain documents to the customer.

The customer undertakes to deliver the satellite, in accordance with the contractual specifications, within the deadlines provided for in the contract, to pay the price of the satellite according to a very precise payment schedule, to comply with the rules relating to the export of sensitive goods, or to respect the confidentiality agreement…

The launch contract is a service contract since the main obligation of the launch company is to provide the launch, a concept defined in the contract. Launching is “the event from which operations become irreversible”, but the exact definition may vary depending on the technical specifications of each rocket.

It should be asked whether the launch contract is a particular form of service provision, namely whether it corresponds to the criteria of the transport contract, as is sometimes put forward, since it meets the criteria of the transport contract , i.e. transport from one place to another, control of the movement conferred on the transporter (during launch, the satellite has no autonomy, it is placed in the cover of the launch vehicle and is completely passive) and the professional nature of the operation.

Nevertheless, insofar as launching is not the only obligation weighing on the launching company, French case law leans in this case, for other contracts than the launching contract with which one can make the parallel, for the qualification of service contract.

The satellite launch contract is international in nature, as it takes place in an international space (outer space) and involves design and construction operations taking place in several countries. Moreover, in a judgement of the Paris Court of Appeal of May 10, 2007, “Caisse centrale de réassurance contre Arianespace”, it was clarified that the dispute is international if the transaction to which it relates does not involve a single State.

The reinsurance contract related to the launch of satellites by Arianespace, launches whose technical characteristics, dates, amounts were transmitted by S3R to the Central Reinsurance Fund, and the dispute submitted to the arbitrators related to the determination the ceiling for the relaunch counter-guarantee following the failure to launch the Eutelsat Hot Bird 7 satellite. This activity covered by the reinsurance contract was not exclusively French, but at least European, so that arbitration was international.