Tuesday, April 29, 2014

Sea Launch and the waterworld that wasn't

Back in the last millennium--1997 to be more precise--I wrote an article for Reason magazine called "New Waterworld Order." (This was long before that magazine and I parted company.) In it, I predicted a growing "free market waterworld" in which offshore platforms would serve a variety of purposes and offer some relief from heavy-handed regulators on shore. I also expressed skepticism at the idea that the platforms would become autonomous societies, free of all government control. That latter idea, which later was popularized as "seasteading," struck me as utopian and far-fetched.

One example I gave of the emerging offshore economy was Sea Launch, a joint venture then being formed in which Boeing and partners were planning to launch rockets from a platform in the Pacific. Sea Launch has had various troubles over the years. In 2007 a rocket exploded on launch. In 2009 it went into bankruptcy, emerging the following year under majority Russian ownership (but registered in Switzerland), with Boeing retaining only a small share. In early 2013, Boeing sued its Russian and Ukrainian partners, saying they had failed to pay Boeing more than $350 million they owed it.

The dispute is ongoing, and resolution has been stalled by uncertainty over who has jurisdiction. Boeing took its case to arbitration at the Stockholm Chamber of Commerce as per an agreement with its partners, but that body then said it lacked jurisdiction. So Boeing appealed to a Swedish appellate court but that body said the arbitrator's decision can't be appealed. Next stop is the Swedish Supreme Court. Who knows if that body thinks it has authority over this matter?

It turns out that the murkiness of doing business in the ocean is not necessarily conducive to a "free market waterworld" but instead can lead to a legal dead zone that's not healthy for business. Expect the same sort of problems to arise in other areas of the space industry as well, as companies try to operate in the even more hostile legal and regulatory environment beyond Earth's atmosphere.

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