New Law Aims to Expand Japan’s Space Business

Objectives of Space Activity Legislation

On November 16, 2016, Japan’s Space Activities Act was promulgated, establishing a system for licensing the launching of rockets and the operation of satellites by private-sector companies. Almost 20 Western and other countries have already enacted this sort of legislation; Japan is a relative latecomer in this respect. The contents of these laws vary from country to country depending on such factors as whether they have their own launching site or sites and how mature their space activities are. But in most cases the legislation includes provisions aimed at meeting objectives in the following three areas:

The first relates to the Outer Space Treaty. This pact—whose full name is the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies—was adopted by the United Nations General Assembly in December 1966 and entered into force in October 1967. Often referred to as the “space constitution,” this treaty forms the basis of today’s international space law, including provisions regarding freedom of exploration and use of outer space and a ban on the placement of weapons of mass destruction there. As of January 2017 it had been ratified by 105 countries. Since the treaty requires that states take direct international responsibility for the activities in space of private-sector companies under their jurisdiction, once the involvement of such companies reaches a certain level, national governments establish systems to authorize and supervise their activities. Also, if rockets or satellites of companies from one state cause damage to foreign individuals on the ground, the first state, called the “launching state,” bears non-fault liability for such damage; in other words, it must compensate the affected state even if the company under its jurisdiction has not neglected to observe the proper level of care to avoid such accidents. For this reason, states must establish strict  standards of supervision to assure the safety of domestic launch vehicles. In order to maintain equity among taxpayers, states tend to see to it that if such an accident occurs, the domestic company in question reimburses the launching state for the compensation it provides to the affected state internationally. This entails the establishment of systems of compulsory insurance coverage for third-party liability as part of national legislation on space activities.

Second, inasmuch as rocket launches and other space activities are highly dangerous, states have the responsibility to set standards for them that will amply ensure public safety and protection of the environment. They must also establish a system of compensation for those affected by accidents that may occur. Since the state is responsible for non-fault compensation in full to other states, it naturally bears non-fault liability toward its own nationals. This differs from the system of liability arising from negligence that applies under ordinary civil law, whereby a person is liable only for damage caused by his or her deliberate acts or negligence. Hence it is necessary to establish clear provisions covering this point through the adoption of space activity legislation.

Third, space activity legislation in many cases provides support for the conduct of space business by companies that are not yet robust. The main objective of Japan’s Space Activities Act is to provide this sort of support so as to promote the expansion of space business. How does the existence of this legislation make such support possible? Below I will describe the characteristics of Japan’s space activities and write about the current state of such activities around the world. Then I will offer my outlook for the future of Japan’s space activities on the basis of the new law.

Japan: Advanced in Space Development but a Latecomer to Space Business

In February 1970 Japan became the fourth country to succeed at launching a 100% domestically produced solid propellant rocket, and over the years that followed it established a place for itself among the leaders in space. It is the only Asian participant in the International Space Station project, and it is the first country to have successfully retrieved a sample from an asteroid beyond the earth’s gravitational field.

However, until 2008 Japan maintained a national policy prohibiting the use of space for national defense, and partly for this reason, it lagged in the field of space business. Meanwhile, though the Global Positioning System based on the positioning, navigation, and timing satellites of the US Air Force was developed mainly for the purpose of improving the accuracy of missiles, the signals provided free of charge for civilian use around the world have given rise to a wealth of products and services, including car navigation systems, precision mapping, supply chain management, and ultra-fast stock trading. It is much more difficult to draw a line between the military and civilian sectors in the field of space activities than it is in other areas involving advanced technology, such as nuclear power, biotechnology, and artificial intelligence. And in this context, Japan’s space activities over the years were limited almost exclusively to scientific research and technological development.

In recent years, though, a global consensus has emerged that outer space is a rich potential source of wealth and a key to the security of nations, and Japan has come to recognize that it cannot afford to miss the opportunities that space offers, not just for business but also for the fulfillment of the responsibilities it shares in the international security field. In 2008 it undertook a major change in its space policy with the enactment of the Basic Space Law, making it possible, for example, to operate image surveillance satellites to observe military bases of countries of concern. This law also mandated measures by the government to promote the commercialization of space and encourage space business through enacting a space activities act.

The Era of “NewSpace”

Taking a broad view, we are now in what we can term the fourth period in the development and use of space. The first period, 1957–72, saw the United States and the Soviet Union competing intensively to develop military uses of space and to put the first man on the moon. In the second period, from 1973 to around 1990, the European Space Agency entered the picture, and countries like Japan, China, and India emerged as autonomous spacefaring nations. In the latter part of this period, moves to make commercial use of space got into full swing, with companies providing commercial space launch services and operating satellites for communications and broadcasting and for remote sensing. The third period, roughly 1990–2006, brought a surge in the number of actors involved, thanks in part to the development of satellites offering radically improved functions at relatively low prices. During these years there was also a major expansion in downstream space-related activities involving the provision of products and services created on earth by processing data from space. Britain was the leader in this field.

And now we are in the fourth period, marked by the emergence of “NewSpace” since around 2006. This refers to a new class of space businesses taking advantage of the maturation of relevant technologies and the lowering of costs. Start-ups and other relatively small companies, working either independently or in liaison with major corporations and government agencies, have been getting involved in areas like inter-orbit transportation, planning for space tourism to destinations like the moon and Mars and for long-term stays in outer space, and the recovery of space resources. Space Exploration Technologies Corporation, SpaceX for short, which was established in 2002, has developed and put into operation commercial uncrewed resupply cargo spacecraft for the International Space Station under contract from the US National Aeronautics and Space Administration. SpaceX is also developing commercial crew transportation capabilities for NASA, and it is working on its own plans for human exploration and colonization of Mars.

In addition, NewSpace ventures are aiming to establish businesses such as building Internet infrastructure to blanket the globe with constellations of hundreds or thousands of small satellites, exploration and recovery of asteroid resources, active removal of space debris, and on-orbit servicing for efficient operation of resource recovery and space exploration vehicles. NewSpace relies on a combination of the vitality of start-ups with new business models and the technology for their implementation and the active support of investors, major aerospace industry firms, and governmental space agencies. And its emergence has depended not only on the availability of funding but also on the adoption of national legislation to minimize the barriers to various specific types of space activities.

In November 2015 the United States adopted the US Commercial Space Launch Competitiveness Act, which entitles US citizens to “possess, own, transport, use, and sell” asteroid or space resources (including water). The Outer Space Treaty provides that outer space is not subject to national appropriation, and it has been interpreted to forbid the ownership by companies of territory on celestial bodies. But it has no provisions on the ownership of space resources. And so it remains unresolved under international law whether companies may own, exploit, and sell such resources.

This lack of legal clarity acts as a disincentive for companies thinking of getting into the business of space resource recovery. So the United States moved to support this sort of business by coming out with its own interpretation of the Outer Space Treaty and providing security for its citizens’ space activities. Luxembourg, which aims to become the center of the space mining industry, is now in the process of enacting similar legislation.

Japan’s Space Activities Act: Supporting Space Business

As we can see from the example of the United States’ legislation, a lack of clear provisions discourages companies from undertaking space business. Providing support, in the broad sense of the term, includes the establishment of a system that clarifies matters for start-ups or other companies that develop small-scale rockets or that undertake to operate remote sensing satellites by identifying the government agency to which license applications are to be submitted and clarifying the conditions for license approval and the procedures for supervision.  Now that Japan has adopted its Space Activities Act, start-ups are not left wondering what agency they should contact but can go in advance to discuss their plans with officials at a specially designated counter in the Cabinet Office.

The new Japanese law also provides government support in the provision of financial guarantees required by commercial space launch operators, such as by arranging third-party liability insurance coverage. The required coverage is calculated on the basis of the maximum probable loss estimated in line with the rocket type and the payload content; in the case of damages in excess of this coverage, the law provides that the government is to pay for the residual damages up to a certain limit. This is similar to arrangements that have been adopted in the United States and France, although the French government sets no limit on  payments.

In addition, Japan’s Space Activities Act provides that the launch operator bears liability for accident damages even if they are due to problems in the payload. This channeling of liability would seem to be disadvantageous to launch operators, but it can be expected to enhance the competitive position of the Japanese companies providing this service, because it reassures customers around the world who are seeking to have their satellites put into orbit. France is the only other country that has adopted a similar provision.

Alongside technological development and financing, the design of the legal and regulatory system is a key determinant of success or failure in space business. The new Space Activities Act is sure to give a major boost to this business in Japan, which has both technological strength and great potential. Within the next few years we can expect to see start-ups launching small rockets carrying miniaturized satellites into orbit.