Contracts – final frontier?

The story so far

America’s lunar scientists are keen to excite the private sector about space development. The days of central government hegemony² over space exploration are ended, in any case, with space entrepreneurship via the likes of Elon Musk (SpaceX), Jeff Bezos (Blue Origin) and Sir Richard Branson (Virgin Galactic). ³ So, clearly, if you have the money, you can “do” space!

Today, South Korea, UAE, India, China, Japan, and other nations have specific space objectives, and the European Space Agency continues to do its thing! ⁴ Britain has quietly emerged as a satellite niche player.  Many ask about the future landscape.  Can lunar resources be owned? And if so, can they be contracted the same way as between trading parties? In addition, might this fact be problematic:  the 1967 Outer Space Treaty, which has been ratified by 111 countries,⁵ bans claims of sovereignty over heavenly bodies, but sovereignty and ownership are certainly not the same thing.

The USA and several other countries argue over this, saying that useful lunar materials are literally there for the taking, and the same idea would apply equally to other planets or heavenly bodies. The 1967 Treaty stipulates that space exploration should be “for the benefit and in the interests of all countries.”⁶ Some believe this merely means that exploration should be for peaceable purposes. Others think the interpretation can widen to include benefits from world resources should be shared here on planet earth.

Since 2016 The Hague Space Resources Governance Working Group^,7an international discussion forum, has discussed the question of ownership and use of space materials. Recently, the governments of USA, Luxembourg, Japan, and the United Arab Emirates (UAE) have passed laws to provide to business the right to extract extraterrestrial resources. USA developments may soon experience their first practical commercial test. 

At this point a first contract will emerge with a significant “first step” role to play…

First contract in space?

NASA has signed a contract⁸ with Lunar Outpost Inc, a high-tech firm in Colorado,⁹ to provide a certain exploration kit (rover)¹⁰ for lunar experimental work. Current plans will be to provide a Lunar Outpost rover to be used near the moon’s south pole in late 2022. And, in a related, separate contract arrangement, this rover kit will:

• scoop up a small container’s worth of lunar dust (technical term, regolith);
• photograph it; and
• transmit the image back to NASA headquarters.

This process will require Lunar Outpost to transfer ownership of the regolith¹¹ to NASA, for which NASA will pay Lunar Outpost $1 dollar (£0.74).  NASA claims this will be the first contract concluded in space.

What is going on here from a terrestrial perspective of earthly inhabitants? Strictly speaking and logically, the main operational elements of a valid contract are offer, consideration, and acceptance.¹² This operational flow will happen during the NASA-Lunar Outpost deal.

We could say that through a framework agreement (or a side deal) the two parties have agreed to a system that will scoop up the bucket full of dust.  In other words, NASA receives the picture and the associated payment becomes due. Whether the dust is delivered physically to NASA is a secondary issue presumably covered under the contract.

This arrangement has terrestrial parallels. In a framework contract arrangement, typically, each order placed under the framework becomes a mini contract.  That is the clear practice here – and the fact that the contractual action in fulfillment happens in outer space is irrelevant. Nevertheless, concluding a specific contract agreement in space is probably going to be a first of its kind, and it points the way ahead for future space-based contracts.

Considering that moon–based communities (“space stations”) may appear in our lifetimes, the next interesting development might be signing and performing contracts between two space stations on the moon. This means they could transact in outer space but specifically identify in their contract the laws of an agreed third party located on earth. For examples, the laws of England, or New York could apply and the relevant courts can be identified and stated as having sole jurisdiction.

When this event occurs, viewers will observe NASA and Lunar Outpost Inc. and wish them great success as they watch with great interest.

END NOTES

1. In 2021 billionaires headed to the stars, Engadget article, by A. Tarantola, December 20, 2021
2. Hegemony, definition - leadership or dominance, particularly by one country or social group over others
3. Golden company reaches historic agreement to collect moon dust for NASA, Arvada Press, Colorado Community Media article, January 25, 2021, by Paul Albani-Burgio
4. The European Space Agency (EESA)
5. Outer Space Treaty, Wikipedia definition. 
6. See article about the Outer Space Treaty posted by the United Nations Office for Outer Space Affairs
7. The Hague International Space Resources Governance Working Group Publishes New Commentary, Global Space Technology Convention (GSTC), Eleven International Publishing April 2020
8. NASA Awards Contract to Launch Initial Elements for Lunar Outposts, Feb 9, 2021, NASA announcement
9. Lunar Outpost, Inc. website
10. A rover is a planetary surface exploration device designed to move across the solid surface on a planet or other planetary surfaces.
11. A regolith, an area of rock and dust covering the surface of a layer of bedrock, is the Greek term for “blanket rock.”  See also article titled NASA will pay a company $1 to collect moon rocks, article CNBC published Dec 3 2020, Michael Sheetz.
12. Legal Information Institute (LII) paper titled Contract: Cornell Law School, last updated July 2019.

ABOUT THE AUTHOR

Peter Sammons, a business trainer with Procurement Central in the UK. Author of many books available online, Peter published Contact Management, Core Business Competence in 2017. The preview of this work may be found here. His recent book Right First Time – Buying and Integrating Advanced Technology looks in depth at this subject area. Available as hard or soft copy.