Proceedings of the Workshop - United Nations Office for Outer ...

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138 THE ROLE OF INTERNATIONAL ORGANIZATIONS IN PRIVATIZATIONAND COMMERCIAL USE OF OUTER SPACEdirectors, and three directors from smaller shareholdersor developing countries. There will be an identicalBoard in the operating Company.(vi) Other special features include a limit onshareholding by any one investor to 15% of the issuedcapital, except that the United States shareholder will beable to retain its existing share of about 22% for thetime being.(vii) There is also a requirement for the Company tohold regional meetings to consider local interests.(viii) During the initial 12 months after 15 April1999, trading of shares will mainly be possible amongthe existing shareholders; thereafter, it will be possiblefor the holding Company to issue shares to multipleinvestors from any country and to strategic investors.The holding Company will make an initial publicoffering (IPO) on appropriate stock exchanges withinapproximately two years after that date.(ix) The operating Company will continue to act asa wholesaler of space segment capacity to the existingland earth station operators, which are owned by formerSignatories and provide the existing services to themobile end-users. This arrangement was made underLand Earth Station Operator Agreements (LESOAgreements) concluded between the Company and eachof the operators, on identical conditions, for an initialfive year term.(x) The IGO will continue to exist, with anamended Convention, but its only organs will be theAssembly and a small Secretariat. The purpose of theIGO will be to ensure that the Company continues tomeet 1he following Basic Principles referred to above.Other obligations of the Companies are toobserve the international regulatory requirements andinternational standards of the ITU, IMO and ICAO, andalso to work towards the IPO for the holding Company’sshares.(xi) The IGO will own a Special Share in theholding Company, entitling it to veto changes tospecified parts of the Company’s Memorandum andArticles of Association that relate to GMDSS and theother public service obligations.(xii) There is a contract, called the Public ServicesAgreement (PSA), between the IGO and theCompanies, enabling the IGO to oversee theCompanies’ performance of the basic principles andother public service obligations, and, if necessary, totake certain enforcement action. The continuingexistence of the IGO will be reviewed when IMOconfirms that there are alternative providers of GMDSSservices.(xiii) The IGO will continue to cooperate with theUN and the Committee on the Peaceful Uses of OuterSpace, and its Specialized Agencies.Special Problems10 Various corporate, commercial and legal problemshad to be resolved during the long restructuring process.Corporate and Commercial Issues11 These issues included the delinkage of investmentshares from utilization; early dilution of ownershipthrough a public listing; the right of shareholders todetermine their own level of investment; the size of thefiduciary Board of directors; enhancement of theinterests of developing countries through pricing andother policies; demand for appointment of Directorsfrom smaller and developing countries; the need forindependent Directors; limits on the size of individualshareholdings; and restraint on convergence of Inmarsatwith ICO.12 Another hard-fought issue was to negotiate thestandard form of the LESO Agreement referred to inparagraph 9 (ix) above. Most of the LES operators hadbeen Inmarsat Signatories, in control of Inmarsat’scommercial decision-making through the InmarsatCouncil. Restructuring would mean the loss of thatcontrol, and they insisted on having the LESOAgreement in order to guarantee their investments and
THE ROLE OF INTERNATIONAL ORGANIZATIONS IN PRIVATIZATION 139AND COMMERCIAL USE OF OUTER SPACEbusiness in their LESs for a minimum period after therestructuring.13 There was, on the other hand, broad agreement onmaintenance of GMDSS services and other BasicPrinciples, and on many Essential Elements such as theneed for more commercialization, improved governance,broader ownership and access to space segment, andremoval of privileges and immunities.Limited Liability14 Consideration was given to restructuring in the formof a treaty-based public international corporation Thisraised an important public international law problem asto whether limited liability of shareholders could beachieved in such a corporation. Research indicated thatthis could not be assured, and according it becamenecessary to establish a national law corporate structure.Provisional Application15 The most crucial legal problem was whether therestructuring amendments could be provisionallyapplied. Normally, amendments to the Convention andOperating Agreement took years to enter in force. It wasconsidered vital to implement the new commercialstructure without delay to enable decisions to be madeon large investments and new satellite systems andservices, on which the future commercial viability ofInmarsat would depend.16 Though provisional application is recognized underArticle 25 of the Vienna Convention on the Law ofTreaties, its use by decision of a governing body of anIGO is not so extensive. The problem is one that hasfaced other organizations. Legal analysis of the issuesupported the view that the Inmarsat Assembly hadpower to decide to implement the amendmentsprovisionally.17 Some Parties were precluded by their constitutionsfrom accepting provisional application without speciallegislation, particularly where the Convention did notitself provide explicitly for provisional application aswas the case with Inmarsat. For those countries,practical solutions were proposed whereby aprovisional application decision by the Assemblywould be subject to the internal laws of each Party, butwithout affecting the restructuring of the Organizationat the international level.18 In accordance with the decision of the Assembly,the restructuring amendments to the Convention andOperating Agreement were therefore appliedprovisionally as from 15 April 1999, pending eventualformal entry into force of the amendments.Conclusion19 Inmarsat is the first international satelliteorganization known to have restructured itself into aprivate sector entity. The process established a newform of constructive relationship between the privatesector and governments as to the way in which spacetelecommunications are provided to the worldcommunity. Another special feature of the restructuringis the role of IMO, which is not a party to the PublicServices Agreement, but whose decision about theavailability of alternative satellite systems able toprovide GMDSS services will affect the duration of theCompanies’ legal obligations under that Agreement.20 The influence of Inmarsat’s pioneering work inrestructuring has already been seen. For example, inMay 1999, Eutelsat’s Assembly of Parties adopted asimilar decision on accelerated (or provisional)implementation on its restructuring amendments.Another example is in the Draft Final Report of EC’sAd-Hoc Working Group on the Set-Up of anOrganisational Framework for GNSS, May 1999.Though the Report has not yet been adopted by theCommission, it refers to the restructured Inmarsat IGOand the Public Services Agreement as one of a numberof possible models for a proposed GNSSAdministration which would have responsibility forestablishing and managing the future GNSS.
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ST/SPACE/2Office for Outer Space Af
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IntroductionThe Workshop on Space L
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CONCLUSIONS AND PROPOSALS OF THEWOR
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3between public and private law and
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6provide for the application of int
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8obstacles that impede ratification
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SESSION ONEExisting United Nations
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EXISTING UNITED NATIONS TREATIES: S
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36 EXPANDING GLOBAL LAUNCH SERVICES
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48low earth orbit. This commercial
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POSSIBLE INTERNATIONAL REGULATORY F
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SESSION EIGHTMaintaining the Space
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MAINTAINING THE SPACE ENVIRONMENT 1
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220Session 3: Wednesday. 21 July. 1
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223Annex IITHIRD UNITED NATIONS CON
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225No Name Address E-Mail27. Ersfel
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227No Name Address E-Mail57. Koloso
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