Contribution to:

Liber Amicorum for Ulf Franke:

SOME REFELECTIONS ON DISPUTE SETTLEMENT

IN AIR, SPACE AND TELECOMMUNICATION LAW

By Karl-Heinz Böckstiegel *

* Independent Arbitrator, Member of Law Faculty of University of Cologne as

Professor Emeritus. Chairman of the Board, German Institution of Arbitration
(DIS). Patron of Chartered Institute of Arbitrators.
Formerly: President of International Law Association (ILA) 2004-2006; President
of London Court of International Arbitration (LCIA) 1993-1997; Panel Chairman
of the United Nations Compensation Commission 1994-1996. President of Iran-
United States Claims Tribunal, The Hague, 1984-1988. And: Director, Institute of
Air and Space Law and Chair for International Business Law, University of
Cologne; Chairman, Air Law Working Group, International Chamber of
Commerce; Chairman, Space Law Committee of the International Law
Association.

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I. PRELIMINARY NOTE

It is with great pleasure that I contribute to this book honoring Ulf

Franke. I have known Ulf for many years and we have met and co-
operated in a number of functions, particularly on cases of the Stockholm
Chamber, as members of ICCA, and representing our national arbitration
institutions at various levels.

At all these occasions, the cooperation with Ulf was professionally

extremely efficient and personally very pleasant. Ulf, in spite of his
great knowledge and qualifications and the highly important functions
at the national and international level he has held, has always kept a
low profile personally and a “no nonsense” approach in addressing
procedural and substantive problems.

To his peers, therefore, it is no surprise that, to a great part due to Ulf’s

leadership, the arbitration system of the Stockholm Institute has
become – as for example is illustrated by the Energy Charter Treaty -
one of the major players accepted worldwide for international
commercial and investment disputes.

II. THE TOPIC

Since my contacts and work over the years with Ulf have been dealing
with many of the usual fields and subjects of international arbitration,
commercial and investment arbitration, disputes between states and
investors, publications and conferences, particularly of ICCA, in this
Liber Amicorum I will contribute some reflections regarding dispute
settlement in less common areas of the law of international
commercial and economic relations, i.e. air law, space law, and
telecommunication law. Obviously, in the limited context available
here, only some short and rather eclectic observations may be offered
which, however, may at least give an impression of what is happening
and what may be perspectives regarding dispute settlement in these
less known areas.

There is little need to explain the enormous and still growing volume
and relevance of air transport both at the national and international
level and that its legal framework both in domestic law, European law,
and international bilateral and multilateral treaty law has been existing
for decades and continues to grow. Much of the legal work has been
done at the governmental level in the framework of the International
Civil Aviation Organisation (ICAO), at the non-governmental level by
the International Air Transport Association ("IATA") and the Air Law
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Working Group of the International Chamber of Commerce (ICC) and
their cooperation over many years.

The exploration and use of outer space was initially carried out by
states through their institutions, and the major codifications of space
law still reflect that practice. However, with the commercialization of
space activities, including the increased participation of private business
in the field, the legal framework needs to be re-examined and developed.
Just to mention one example particularly familiar to me, the Institute of
Air and Space Law at the University of Cologne, along with
institutions and experts from all over the world, engaged in an
international research project entitled Project 2001 -Legal Framework
for the Commercial Use of Outer Space,1 and continues to explore and
develop the respective legal framework further in cooperation with
national space agencies and international institutions such as the
European Space Agency and the annual meetings of the Committee on
the Peaceful Uses of Outer Space (COPUOS) of the United Nations2.

International telecommunications has virtually "exploded" as a branch

of international business, and it is becoming more and more space-
related due to the growing use of satellites and the allotment by the
International Telecommunication Union of slots and frequencies in the
Geostationary Orbit. In some of its areas, therefore, it overlaps with
space law.

Thus, as air transport, space activities, and telecommunications emerge

as ever growing fields of international business, there is an evident need
not only for a substantive legal framework, but also for an effective
dispute settlement framework to ensure that participants in these new
international businesses can evaluate and, if need be, enforce their legal
rights.

III. OPTIONS AND DEVELOPMENTS

In the field of aviation, rules for dispute settlement and actual cases
have been a regular feature both between states and between private
enterprises and private persons variously involved in aviation. The
IATA dispute settlement mechanism is regularly used by members of
the organization. And at least to some extent, the contracts between
airlines and manufacturers contain arbitration clauses.

At the governmental level, some will remember the arbitration

between the United States and the United Kingdom concerning
Heathrow Airport user charges, which marked the end of a chapter in
the on-going dispute regarding such user charges.3

1
K.H.Böckstiegel (ed), Project 2001 – Legal Framework for the Commercial Use of
Outer Space, Cologne 2002.
2
Hobe/Schmidt-Tedd, Schrogl (eds), Project 2001 Plus – Global and European
Challenges for Air and Space Law at the Edge of the 21st Century, Cologne 2006.
3
Heathrow Airport User Charges, 102 I.L.R. p. 216 (1996), summarized in THE PERMANENT
COURTOFARBITRATION: INTERNATIONALARBITRATIONANDDISPUTERESOLUTION- SUMMARIESOF
AWARDS, SETTLEMENTAGREEMENTSANDREPORTSp.170 (P. Hamilton et al. eds., Kluwer Law
International 1999).
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 In a quite different area, I recall the dispute in the United States
between the Civil Aeronautics Board ("CAB") and IATA in a
legislative hearing in 19794, dealing with the status of IATA as an
international NGO and particularly on the order issued by the U.S.
Department of Transportation granting antitrust immunity to IATA
and. For much later, in the long and continuing efforts to update the
Warsaw Liability System in international air transport, the
discussions between governmental and non-governmental and
academic institutions continued at he national, European and
international level directed towards producing a uniform set of
passenger liability limits5. These were the initiating factors for more
recent codifications in this field, both by the European Community
and particularly by the Montreal Convention establishing new
standards of passenger liability6 at the Montreal international
conference on air law, a major topic of which was the "fifth
jurisdiction"7. Recent mergers, take-overs, alliances and franchises
between airlines, as well as the building, opening and outsourcing of
the management of new airports, have also led to disputes that are
familiar in the international arbitration community such as the much
discussed Fraport ICSID Case, but also include confidential
proceedings in ICC and LCIA cases familiar to me from my arbitration
practice.

Not every effort has been a success: For example, when certain
among us were involved in a common effort of IATA and the ICC to
draft new arbitration rules for a quick settlement of disputes arising
from aircraft accidents, no acceptable practical solution could be
reached.

As regards space activities, differences of opinion were, during the

initial exploratory stage, mostly academic in nature and revolved
around disputed principles. With the growing use of outer space,
however, and with the increasing number of states and private
enterprises active or interested in space activities, a situation evolved
where disputes on various aspects of space activities can no longer
be left open, as conflicting views and uses of outer space will not
only be incompatible in theory, but incompatible in practice. Thus,
the growing demand for developing dispute settlement techniques
has led to several affirmative measures: the International Law
Association, which in 1984 had already adopted a preliminary draft
for the settlement of space law disputes,8 later adopted a Final Draft

4
See Karl-Heinz Böckstiegel, CAB v. IATA- Documentation on Air Law Aspects
into the Legislation Hearing, Washington, October 1979 on IATA Traffic
Conference, ZLW p. 3 (1980).
5
See, e.g., Karl-Heinz Böckstiegel, A Historic Turn in International Air Law: The
New IATA Intercarrier Agreement on Passengers Liability Waives Liability Limits,
ZLW p. 18(1996).
6
Convention for the Unification of Certain Rules for International Carriage by Air,
Montreal, signed May 28, 1999 (not yet in force), ICAO Doc. 9740. For the text of the
Convention, see http://www.dotrs.gov.au.aviation/montrealconvention.htm (visited
November 1, 2001).
7
Montreal, May 10 – 28, 1999.
8
Proposed Draft Convention on the Settlement of Space Law Disputes, 12 J.
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 Convention for the Settlement of Disputes Related to Space
Activities.9

Those involved in the work of the International Court of Justice

("ICJ"), may also recall that the ICJ, when celebrating its fiftieth
anniversary by an international colloquium, included a special
session on space law disputes in the context of examining how the
procedures of that Court could be made more effective.10

With the use of mobile phones, satellite television and navigation

systems and other areas of telecommunication having become one of
the most important and fastest growing business areas throughout the
world, it is not surprising that, in recent years, both commercial and
investment arbitrations on national and international
telecommunication contracts have become a regular feature of the
pending caseload of the established institutions of international
arbitration.

V. PERSPECTIVES FOR THE FUTURE

Since the dispute settlement framework in these areas is far from

complete and satisfactory, a few reflections and tentative
predictions regarding future perspectives may also be appropriate.

Regarding disputes involving states and state institutions, first, it

must be stressed that any new dispute settlement efforts are to be
realistic, not only in order to develop academically satisfying rules,
but also to find frameworks for dispute settlements that will be
accepted in practice by states and private enterprises alike. Second,
in order to take into account political feasibility and practical
relevance, some major criteria will have to be designed for the
development of any new system of dispute settlement. One may try
to identify such criteria by posing the following sixteen questions:

1. Are we looking for a universal formula for all states or is

only a limited number of states involved and in the latter
case, do they have common denominators with regard to

SPACE L. p. 136 (1984). See also Maintaining Outer Space for Peaceful Uses (United
Nations University, Tokyo 1984).
9
Final Draft of the Revised Convention on the Settlement of Disputes Related to Space
Activities, as amended at the 68th International Law Association Conference, Taipei
(1998). See further Karl-Heinz Böckstiegel, Neue weltraumrechtlichen Arbeiten der
International Law Association (ILA), ZLWp. 331 (1998).
10
See ROY S. LEE & CONNIE PECK, INCREASING THE EFFECTIVENESS OF THE
INTERNATIONAL COURT OF JUSTICE: PROCEEDINGS OF THE ICJUNITARCOLLOQUIUM
TO CELEBRATE THE 50™ ANNIVERSARY OF THE COURT, The Peace Palace, April 16-18,
1996, (Kluwer Law International 1997).

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 factual, political, economic or legal circumstances?

2. What is the character and the political importance of the

interest involved for the states?

3. How strong is the pressure to come to a solution? Or, vice

versa: Which negative effects, if any, will the states have to
face in practice in case no solution is reached?

4. How wide is the gap between legal equality and factual

inequality in the respective area of activities between the
states concerned?

5. Are the types of disputes predominantly or even

exclusively either political or legal?

6. Is an international institution or organization available for

the respective area that might host the dispute
administration?

7. Will the type of dispute be exclusively relevant for the

parties concerned or will the interests of other states be
directly or indirectly involved by any decision?

8. Do the disputes concern well codified areas of law or

areas of law still in an early development?

9. Can a non-binding settlement procedure be expected to be

followed by the parties?

10. Does the nature of the disputes require a fast and final
decision?

11. Do the disputes concern questions of law to which many

states have already expressed a definite view?

12. Will it require special technical or other expertise to

adequately deal with the disputes in procedure and
substance?

13. Would a flexible or a well codified set of rules of

procedure seem preferable for the types of disputes
concerned?

14. Must difficulties as to the applicable substantive law be

expected?

15. Are only states to be expected to be parties to disputes or

also international organizations, private enterprises,
individuals?

16. Have the states concerned already expressed a preference

for a specific settlement method at some recent other

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 occasion?11

In disputes between states, although other means of settlement

known in public international law such as negotiations and
conciliation should not be forgotten, the decisive question is: how can
a binding solution be achieved in cases where the parties cannot agree
on a settlement between themselves? As for compulsory and binding
third-party settlement, one must choose between three basic options,
namely:

1. adjudication, be it by the ICJ or by a specific international court;

2. arbitration, be it ad hoc or institutional; or

3. a combination of both, allowing the parties to choose between the

two methods but obliging them to accept one of them.

The experience from the United Nations Convention on the Law of the
Sea12 and from other existing treaties seems to indicate that the third
option may have the best chances of being accepted by states13 and
that, in cases where two states cannot agree on a particular method,
arbitration may be the preferred binding method.

As regards disputes between private enterprises as well as disputes

between private enterprises on one side and on the other side states or
state institutions, there is perhaps less of a need for major new
developments. The international business community - including
private enterprises involved in air transport, the space industry and
telecommunication industry - has for many years chosen and made
use of the major institutions of international commercial arbitration.
For the areas discussed in this contribution, this is illustrated by
cases between airlines, between airlines and manufacturers, and
between space agencies, telecommunication companies and
insurance companies on one side and satellite manufacturers on the
other side.

The arbitration rules of ICC, LCIA and the Stockholm Institute as

well as others have been regularly updated and, together with some
other national arbitration institutions, offer options for an accepted
and predictable dispute settlement machinery. Presently, with the ever-
increasing involvement of developing countries in the field, the
UNCITRAL Arbitration Rules, used already in many commercial
and investment disputes, may perhaps be expected to take on a

11
See the similar reflections in: Karl-Heinz Böckstiegel, Developing a System of Dispute
Settlement Regarding Space Activities,
in PROCEEDINGS OF THE WASHINGTON 1992 SESSION OF THE INTERNATIONAL INSTITUTE OF
SPACE LAW p. 27 (Washington, 1993), reprinted in ECSL SPACE LAW AND POLICY
SUMMER COURSE, BASIC MATERIAL p. 187 (European Center for Space Law, 1994).
12
United Nations Convention on the Law and Sea, Montego Bay, December 10,
1982, U.N. A/CONF. 62/122, reprinted in 211.L.M. p. 1261 (1982).
13
See id. art. 287, para. 1.

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relatively greater importance because of their elaboration by
specialized practitioners in both the industrialized and developing
world.