Fiat Luxembourg: How a Tiny European Nation Is Leading the Evolution of Space Law

A new law signals Luxembourg’s intention to persist with its bold pro-space strategy after reaping immense rewards from the first time it tried it, in 1985.

Of the 195 countries in the world, only 27 are smaller than Luxembourg. The landlocked country in western Europe is itself roughly twice as large as Delhi but with only 3% of the population. It is a developed country, the world’s only grand duchy and has the world’s second highest GDP per capita (over $104,000, almost 150-times India’s). Its lands are rich in iron ore and, since the 1970s, Luxembourg has been promoting itself as a hub of financial services in Europe. The country has had a stable government and is generally welcoming of foreigners. But in the near future – or even today – knowing this much about Luxembourg will not be enough.

What sets Luxembourg apart, in Europe and around the world, is the choice of its political leadership to use the opportunities afforded by space exploration and associated technologies to develop the country. On July 13, Luxembourg’s Chamber of Deputies, its unicameral legislative body, passed a law that recognises the legal ownership of resources mined in outer space by private companies. The law is reportedly compliant with the Outer Space Treaty (OST) 1967, ratified by 107 countries, including Luxembourg.

Recognising ownership

As one of the financial capitals of the European Union, it has already been easy to get money in and out of Luxembourg. The new law will further lubricate existing mechanisms and make the landlocked nation a desirable HQ for space prospecting and mining cos, who will also be able to enjoy the associated legal clarity not available in most other states on the planet. A draft version of the law had been adopted by the Luxembourgish government in November 2016, a few months after its economics minister instituted a $227-million fund to be used to seed new startups, as capital for bigger companies and to help set up the country’s first space agency (outside of its participation with the ESA).

As a result, two American companies, Deep Space Industries (DSI) and Planetary Resources, already have plans to move. The government is also working with a Japanese company named ispace and a German one named Blue Horizon.

A new law signals Luxembourg’s intention to persist with its bold pro-space strategy after reaping immense rewards from the first time it tried it. In 1985, its government played a major role in the founding of SES, the company that would launch Astra, Europe’s first private satellite, three years later. Today, SES operates a fleet of 42 satellites and rakes in $2 billion in annual revenues, with the Luxembourg government as a major shareholder. In a press conference in June 2016, the country’s prime minister Xavier Bettel said, “We should never forget that and be proud of the courage the politicians had at that time.”

Our natural satellite, the thousands of near-Earth objects (i.e. objects within 200 million km from the Sun) and the belt of asteroids between the orbits of Mars and Jupiter contain water, metals, minerals and gases worth a fortune, either for their rarity or their relevance to sustaining life.

Both Planetary Resources and DSI had announced around 2013 that they would mine some of these resources before the decade’s close, although their plans have rapidly evolved since. David Gump, the founding CEO of DSI, had told me in 2013 that they would mine compounds that could be used as fuel for communication satellites already in orbit around Earth and mine metals to expand their functionality. Planetary, on the other hand, is set to focus on mining the platinum group metals and bringing them home for trade. To these ends, Luxembourg has agreed to help build experimental spacecraft as a testbed for prospecting and mining technologies for DSI and invested $28 million in Planetary to help realise its prospecting mission by 2020.

But a bigger problem lay with recognising ownership. The OST 1967 had been drafted and ratified with governments in mind. Today, there is a privately funded competition requiring its participants to land and operate a rover on the Moon. Additionally, until around 2015, it wasn’t clear if a private organisation could plant its flag on an off-Earth object and claim ownership. Even if it did, there was no legal framework within which a government could be called upon to defend the organisation’s claim on a multilateral forum. Third, the OST was also concerned about preventing off-Earth bodies from becoming contaminated by substances from Earth that could in any way alter or destabilise the local environment. Fourth, and most importantly, OST had envisioned the utilisation of space as the common heritage of mankind.

Overall, as Dale Broucher, of NORCAT, a nonprofit innovation centre in Ontario, told Space in 2012, “I don’t think a big mining industry is really going to get involved unless that have some surety that they can make a profit. They can’t make a profit from it unless there is some regulatory regime in place that allows them do that … whether that’s tax incentives or whether it’s a mining claim concept.”

Audacity of greed?

The Luxembourg legislation goes partway in fixing this. Its government’s deputy prime minister, and economy minister, Étienne Schneider had said in 2016, “The Luxembourg government will provide funding for relevant R&D in this field, namely to build and operate a risk-reduction technology demonstration mission for small spacecraft asteroid exploration [for DSI]. … The funding will be sourced by the Luxembourg space programme, the national R&D support programme, as well as from financing instruments of the public-law banking institution … Luxembourg is willing to invest in relevant R&D projects and the government is even considering direct capital investments in companies active in the field of space resources.” The COO of DSI has said that such instruments are the difference between allowing asteroid-mining, as the US does through contracts, and encouraging it.

Another piece of legislation that addressed some of these issues was drawn up by the US. A year before Bettel’s government had adopted their draft law, Barack Obama’s government had passed the Commercial Space Launch Competitiveness Act, a.k.a. the Space Act. It declared that while no private player could plant a flag on the Moon and claim it for herself, she could be said to own the resources mined therefrom. This was good news for DSI and Planetary because the Space Act would help protect investments – but it was bad news for the international regime as such. Justin Rostoff, the editor-in-chief of the New England Law Review, had argued that the Space Act violated the first two articles of the OST because the US government sought to benefit at the detriment of others and to grant rights to objects it could not have originally claimed.

In sum, as Gbenga Oduntan, an expert on international law at the University of Kent, had written at the time, “that American companies could on the basis of domestic laws alone systematically exploit mineral resources in space … really amounts to the audacity of greed.”

The Luxembourg law has been patterned on the Space Act. In fact, in one place, it even goes further and states that a company need only have an office address registered within the country’s borders to enjoy its government’s protection. Is this then another face of the ‘audacity of greed’? It doesn’t seem so. The international community has certainly been less vehement in its opposition now than when the Space Act was passed. Why?

A digital magazine named Delano reported in April that the Council of State, a group of citizens who work with the Chamber of Deputies in the drafting of legislation, had voiced concerns that “private property claims are illegal or at least not legally binding in most of the international treaties and agreements relating to space and celestial bodies”. Following this, Space News had reported in June that, according to Mario Grotz, the chief of research for the new initiative, “language [has been] included in order to comply with those treaty obligations”. Schneider clarified, in a different statement, that their law did not “suggest to either establish or imply in any way sovereignty over a territory or over a celestial body. Only the appropriation of space resources is addressed in the legal framework.” It seems disagreeing with the OST in spirit is fine so long as it follows the letter, if only because it is dawning on us all that there is no way to hold the private exploitation of space resources back.

Note: This article originally stated that Luxembourg’s GDP per capita was nearly 15-times India’s. The actual figure is 150-times, and the mistake was corrected on July 20, 2019.