ECOSYSTEMS RELATING TO CELESTIAL MINING
SUBCONTRACTING CONTRACTS
J.M. HAZIZA
Corresponding Author: A.T.E.R at the University of Bordeaux, Researcher at the Institute of Criminal Sciences and Justice. (ISCJ). 4 rue du Maréchal Joffre, CS 61752, 33075 Bordeaux cedex, jean-michel.haziza@u-bordeaux.fr
Subcontracting: A way for French companies to play a global economic role
On May 3, 2024, the Chinese probe Chang’e 6 set off on a unique mission: to collect samples on the far side of the Moon and bring them back to Earth. ESA provided two measuring instruments and CNES contributed with DORn to provide an instrument dedicated to the study of lunar radon. This participation illustrates the finesse of European expertise, recognized even by the lunar program in China, although our collaboration remains limited on the international scene.
Inventory
According to the 1967 Outer Space Treaty, celestial bodies are not subject to appropriation. However, this principle cannot be applied to resources present or extracted from celestial bodies because the term «resources» does not appear in it. International space law is therefore silent on the possibility for private companies to obtain a right of ownership over celestial mineral resources. It is therefore not prohibited to appropriate outer resources, a right similar to that which exists in the High Seas. Thus, there would be a commercial tolerance in terms of resources. The exploitation of celestial mineral resources must be carried out under the supervision of the State in which the company’s registered office is located. Mineral resources would be legally considered res nullius, i.e. «things without masters» on which economic and commercial use would be tolerated. The lack of clarity at the international level has logically led States to legislate unilaterally in order to provide legal certainty to their industry. States that have already regulated space mining activities have opted for a system that imposes a burden on companies based on a system of exploitation licenses envisaged by national law. Faced with the current shortcomings of traditional and outdated space law, the industrial space market currently consists of a dual ecosystem: the «agency space» and the «new space». The agency space ecosystem is built on the basis of international interagency agreements initiated by a space agency (Artemis agreement) with a view to planning a space program over several years. The new space ecosystem is made up of individual entrepreneurs who aspire to open up the space market to new methods until the marketing of minerals is authorized.
Legal issues of minerals
However, other space powers, such as the European contributing states to the European Space Agency, including France, do not yet have a precise framework on the exploitation of mineral resources in outer space despite certain legal changes and the possible advent of a European space law. In order to overcome these difficulties, it is quite conceivable for a company, whose head office is located on the territory of a State with no legislation or with incomplete legislation, to consider being the subcontractor of a space program authorizing the exploitation of celestial mineral resources. The extraction activities of Selene and celestial mines will rarely be carried out by a single company, on an exclusive basis. It will always be necessary to use subcontractors. For example, drilling, operating, engineering, or construction companies suitable for mining asteroids, comets, seas, or celestial soils. Private companies will be able to call on subcontractors for various in situ activities (construction of underground tunnels, manufacture of fuel for rovers, ore handling, etc.) or ex situ activities (construction of a borehole adapted to the asteroid, transport of ore storage, etc.).
In technical terms, subcontracting consists of a contractor entrusting a subcontractor with the full or partial performance of the contract for services which it has concluded with the contracting authority. The main contract (owner and main contractor) and the subcontract (main contractor and subcontractor) are both lease agreements. A subcontract is a contract by which a company asks another company to carry out all or part of the work that the main company was to carry out. The work is carried out by the second company on behalf of the main contractor (principal) according to its needs and requirements. This allows the company that outsources its activities to better manage its resources and production costs . In the mining sector, the subcontract is related to the execution of the project, i.e. the activities during the research, construction and operation phases of the mine. The mining subcontract can cover both the on-site exploitation phase of the minerals and the extraction of the minerals with a view to marketing them. In space law, thanks to the exploitation of in situ mines (on celestial bodies) by a subcontracting company, this would limit the very high cost of sending equipment and energy to space bases for the main contractors : production of fuel, methane or hydrogen, by the subcontractor, on site. This is an interesting legal perspective for envisaging the sustainably use of celestial mining subcontracting contract.
Concept of in situ subcontract: closed ecosystem
On the one hand, subcontracting can be framed within an international agreement presenting the program of a space mission. This may concern the exploitation of celestial mineral resources in situ, i.e. the use and marketing of resources in a closed ecosystem between signatory partners, feasible in the field of the mission and on the celestial body object of the mission . The contract for the subcontracting of in-situ minerals could be applied according to the provisions of the emblematic Artemis Accords, which aim to establish a lunar base on a long-term basis. It would be possible to appropriate the Selene mineral resources between the signatories of the Artemis Accords. As such, the Agreements prefer to use the term extraction of space resources rather than appropriation. They are multilateral in nature. The implementation of the Artemis Accords is practiced by space agencies. For example, NASA and the European Space Agency signed a cooperation agreement in June 2022. A cooperation agreement can also be envisaged between a partner agency and a private company. The space agencies would therefore be the contracting authorities for business contracts signed with private contractors. These contracts could include the sustainable exploitation of minerals on the lunar soil by a company hired by the space agency. In order to have a more precise look at the profitability of mining activities on the lunar soil, subcontracting companies could study in depth the water ice available on the lunar poles, determine the morphology of the mining areas, the way to distribute the water over the entire base, the calculation of the energy cost of extracting the mines. A lunar industry market could then emerge in which French companies could find a certain place as subcontractors (in the pharmaceutical and robotics industries, or through a public/private partnership).
Formation of the subcontract in situ
The Artemis Accords provide opportunities for subcontractors to participate in the lunar space program. Section 1 of the Artemis Agreements provides that activities may take place on the Moon, Mars, comets and asteroids, including their surfaces and subsurface, including through contractual mechanisms. For example, it would be possible for French companies to exploit selenic resources in situ with the aim of building a lunar base in the long term. The subcontracting contract is only possible between signatories of the Artemis agreements. It is carried out through bilateral instruments. For example, NASA hires an influential American company as a contractor from a public/private partnership, this American company will conclude a subcontracting contract with a French company to perform part of its service. NASA’s Commercial Lunar Payload Services (CLPS) program has made it possible to subcontract to private players, through service contracts, all operations to deliver payloads to the surface of the Moon in order to prepare Artemis and test ISRU technologies. The signatories of the subcontract will have to respect the environment since there is a notion of sustainability which is a main obligation of the subcontract . It is imperative that the signatories of the subcontract inform the Secretary-General of the United Nations as well as the public and the international scientific community of the existence of a mining subcontract, specifying the mineral extraction activities . The mining activities authorized under the Artemis program are set out in Section 10 of the agreement. The parties must provide that the extraction of space resources does not constitute «inherently national ownership within the meaning of article II of the Outer Space Treaty» and that the performance of the contract must be in accordance with the treaty. There is therefore a limit of public policy here, since the contracting parties will have to act in accordance with international law . The parties will have to define the liability regime applicable in the event of non-performance of the subcontract. As a logical continuation of what is provided for in the Artemis Agreements and in order to facilitate the application of the law, the applicable law could be that of the place of the plaintiff, i.e. the place of the registered office of the company bringing legal action against the defendant. There is nothing to prevent the two companies from considering an arbitration system to settle the dispute, by appointing an arbitrator.
Effects of the in situ subcontract
The subcontracting company will have to exploit the «resources» that are defined in the space program. For example, the Artemis agreements authorize the exploitation of resources related to the fuel storage and delivery system, the landing structure, the communication system, and the power supply system. The specificity of the environment is also a crucial factor to be taken into account both for the planned activities and for the pollution generated. The activity generated must respect the celestial environment and avoid any deterioration in the health of the crews.
Concept of ex-situ subcontract: open ecosystem
On the other hand, subcontracting can be envisaged between two companies (a main contractor obliged by a works contract with a project owner, and a subcontracting company performing the main contractor’s requirement) on the basis of a bilateral agreement (a subcontract between space companies). This concerns the ex situ exploitation of celestial mineral resources, i.e. the extraction of minerals, the marketing of minerals in compliance with international law but according to the rules of business law, taking place in an open ecosystem . While the space sector has been the exclusive domain of States, the presence in recent years of entrepreneurs investing in it for commercial purposes could be a game-changer. This is the advent of the «new space», the conquest of celestial soils. This implies a review of legal standards relating to natural resources. This leaves room for certain innovative companies to take a share of the market abandoned by NASA and therefore to provide for contractual subcontracting mechanisms. Beyond the Artemis Accords, a crucial point of law is the multiplication of national laws, a factor of instability and uncertainty. An important milestone in resource development was reached with President Obama’s signing of the U.S. Commercial Space Launch Competitiveness Act on November 25, 2015, which provides that a U.S. citizen engaged in the commercial recovery of an asteroid or space resource will have the right to possess, transport, use, and sell that resource in accordance with applicable law and in compliance with U.S. international obligations. Luxembourg, the United Arab Emirates, Japan and Saudi Arabia have also adopted this approach. However, Europe and France are struggling to find their place because of a very incomplete legislation on the exploitation of space resources in the face of the liberal global game. They are reduced to being partners for the commercial uses of space with companies that are only subcontractors . The draft EU law does not regulate the commercial exploitation of space resources. The subject remains completely absent from the European political discourse and does not feature in any list of strategic priorities. This is unfortunate when France and Europe have several important assets. For example, established players in the key fields of ISRU and lunar and orbital logistics, familiar with the space sector (Airbus, Air Liquide, etc.) or from other sectors (mining and oil industry, mobility, energy with in particular the green hydrogen sector, artificial intelligence, waste recovery, etc.) Tags: These players will have only a secondary role in the mining sector because of sustainable gaps in legislation. To overcome these Franco-European legal difficulties, it is still possible to provide for subcontracting contracts for French/European companies with new-space companies that have their head office on the territory of a State that authorizes the extraction of minerals.
Formation of the ex-situ subcontract
Unless imbued with a strong intuitus personae, the contract for services may be performed by a third party other than the contractor himself . This may involve the conclusion of a subcontract for services by the contractor, who entrusts a third-party subcontractor with the performance of all or part of the main contract concluded with the client. The subcontract is necessarily a contract for services. The main contractor is considered to be the owner of the subcontractor. The operation carries out a chain of enterprise contracts: a main contract for services and a contract for subcontracting. The mining subcontract will need to be formed bilaterally between a main contractor and a subcontractor. The mining sector is part of industrial subcontracting. The mining subcontracting industry can only be considered with entrepreneurs whose head office is located in a territory that has already legislated on the legal exploitation of space mining resources (e.g. American, Indian, Emirates, Japanese entrepreneurs). For example, exploiting mineral resources with another space power that authorises the exploitation of celestial minerals (United States, Japan, Emirates, Saudi Arabia, Luxembourg). In order for the mining subcontract to be validly formed, the approval of the client and the authorization of the State are always required. The parties involved in the subcontract will therefore be supervised by the State in whose territory their registered office is located.
Effects of the ex-situ Mining Contract
Legislation passed by Luxembourg, the United States, the United Arab Emirates and Japan allows for the claim of extracted resources, thus providing security of tenure to space mining companies based in these jurisdictions. It would be strategic to contract with companies belonging to these states because, in France, there would be a risk of diversion of minerals. The subcontractor’s activity must be consistent with what the main contractor is asking the subcontractor to do. The main contractor may act as a principal against the subcontractor or its insurer. This obligation of result of the subcontractor does not apply to the client. Therefore, if the subcontractor does not perform the task or performs it poorly, the client will be able to sue the subcontractor in tort, knowing that the client must always prove the subcontractor’s fault. In principle, the subcontractor must be paid by its direct co-contractor, i.e. the main contractor. The issue of pollution resulting from the intensive exploitation of space resources is essential in a context of sustainable preservation of the Earth’s environment. In the case of mining activity, it is indeed imperative to anticipate the issue of pollution in the contract. The use of outer space has the potential to alter the environment, but the full consequences are not known. If there is a lack of agreement between the owner and the main contractor, there is a contractual fault on the part of the main contractor. The contracting authority may take action for enforcement after a formal notice from the contractor to present the contracting authorities to him. It can also take action to rescission the contract and on the basis of contractual liability. Since the Besse judgment of 12 July 1991, the subcontractor’s liability vis-à-vis the contracting authority has been non-contractual . The fault of the subcontractor must therefore be established, unless its breach of contract constitutes a tortious fault vis-à-vis third parties. However, the Court of Cassation considers that the mere breach of a contractual obligation of result to deliver a compliant and defect-free work is not suitable for characterizing a tortious fault.
Outcomes
To conclude, the legal operation of subcontracting contract is a relevant sustainable alternative to take part in the space industry. The celestial mining subcontracting would allow European and France companies to participate more actively in closed space programs. The celestial mining subcontracting would allow a sustainable technological and economic contribution of European and France companies in the new space. The celestial mining subcontracting could be the keystone of the European contribution to a sustainable development of a “business law on space resources”. However, in order to do so, the European and the French firms must participate in global ecosystem and must participate in an ecosystem specific to the lunar market indirectly. A French company cannot currently market minerals because French and European laws do not provide for it. It will then be necessary to approach, among the signatories of the Artemis Program, companies belonging to States where domestic law authorizes the marketing of minerals. Into the new space, European companies must specialize their industry in the selene, cislunar market to bring a more important technological contribution. A technological contribution is synonymous with political weight but for a service rendered to a foreign economy. Receive payment for a subcontractor with economic benefits due to land-based synergies (autonomous rovers for mining in extreme environments) and mixed applications (Maana Electric and its solar panels based on regolith or desert sand). To raise this technical issue to the rank of political priority: to assume a European strategy for space resources. Make this subject one of the axes of their space strategy, and stick to it over the long term, in order to allow the sector to structure itself. The European Commission proposes European union space legislation, but space resources are not among the priorities. This is the same regret in national law despite the revision of the French space operation law in 2023. The subject of mineral exploitation that is not included in the public policy. It is not only a question of enabling the appropriation and sustainable exploitation of space resources, but also of starting to think about their modalities: allocation rules, approval procedures, control and police powers, tax regime, insurance, liability, transparency and publication of data safety, environmental protection.
References
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