Opinion of the European Economic and Social Committee on the GALILEO programme: successful establishment of the European supervisory authority
Date: 2006-09-13
Institutions: European Economic and Social Committee
Subjects: EU office or agency, EU programme, branch of activity, joint venture, satellite navigation

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EN

Official Journal of the European Union

23.12.2006

Opinion of the European Economic and Social Committee on the GALILEO programme: successful
establishment of the European supervisory authority

(2006/C 318/34)

On 19 January 2006 the European Economic and Social Committee, acting under Rule 29(2) of its Rules of
Procedure, decided to draw up an opinion on the GALILEO programme: successful establishment of the European
supervisory authority.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee's work on the subject, adopted its opinion on 18 July 2006. The rapporteur was
Mr Buffetaut.

At its 429th plenary session, held on 13 and 14 September 2006 (meeting of 13 September), the European
Economic and Social Committee adopted the following opinion by 200 votes to four with two abstentions.

1. Conclusions and recommendations

taken up by the supervisory authority, should continue seam-
lessly.

The European Economic and Social Committee attaches great
the Galileo programme, and
importance to the success of
accordingly emphasises the need for
the hand-over period
between the Galileo Joint Undertaking (GJU) and the Galileo
Supervisory Authority (GSA) to be effected smoothly. To this
end, it recommends:

— setting up a plan for the transfer of activities from the Joint
Undertaking to the Supervisory Authority in order to ensure
the legal certainty of the operation;

— providing legal and practical solutions for the issue of the
transfer of activities carried out by third country entities
(China and Israel) associated with the Joint Undertaking to
the Supervisory Authority;

— ensuring that the Joint Undertaking's remaining appropria-
to the Supervisory

effectively handed over

tions are
Authority;

there is no overlap of responsibilities
— making sure that
Joint Undertaking and the Supervisory
between the
Authority before the date of winding up of the Joint Under-
taking;

— avoiding any interruption in the negotiations on the conces-

sion contract;

— guaranteeing the international liability arrangements for the

launching States of the Galileo constellation satellites.

2. Introduction

2.1
The transfer of business between the Galileo Joint Under-
taking (GJU) and the Galileo Supervisory Authority (GSA) must
be completed by the end of 2006. For the future success of the
it is crucial that the transfer should take
Galileo programme,
place under the best possible conditions from the legal, human,
financial and budgetary points of view.

Similarly,

it is preferable that the negotiations on the
2.2
concession contract begun by the Joint Undertaking, and to be

2.3
Lastly, the specific issue of the international liability of
states under the Galileo programme needs to be addressed, as it
must be resolved before the concession contract discussions end
and the forthcoming launches of the Galileo constellation satel-
lites.

3. General comments

3.1 Summary description of the Galileo programme

3.1.1
Galileo is the European Union's flagship scientific and
technical project. Satellite radionavigation systems are an issue
of strategic importance to Europe, which it cannot afford to
neglect. Europe has consequently decided to fund and deploy its
own global navigation satellite system (GNSS) similar to its US
and Russian counterparts.

3.1.2
Galileo will provide a highly accurate, robust and guar-
anteed worldwide positioning system, containing an integrity
message. It will supply independent navigation and positioning
services under civilian control, while remaining compatible and
interoperable with the two existing military systems: the Amer-
ican GPS (Global Positioning System)
and the Russian
GLONASS system. Galileo will also provide a secured govern-
mental service which will be accessible to authorised users
under all conditions.

3.1.3
The European system will comprise a constellation of
thirty satellites and ground stations, which are necessary for
optimum system functioning, and should be operational by the
end of 2010.

carried

is being

The programme

3.1.4
and
supported by two major players: the European Union, repre-
sented by the European Commission, and the European Space
Agency (ESA). The European Commission and the ESA set up
the Galileo Joint Undertaking (GJU) with the task of supervising
the programme and management the EU's funding for Galileo.

forward

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At the end of the in-orbit validation (IOV) phase, the
3.1.5
entire system will be transferred from the GJU to the Galileo
Supervisory Authority (GSA), a Community regulatory agency,
which will be responsible for signing a concession contract with
a group of private companies.

authorities (the GJU being subject to Belgian law for aspects not
covered by the above-mentioned regulation) have deemed it not
to be a commercial enterprise but a legal person (falling into the
same category as an association in Belgian law).

3.1.6
development and in-orbit validation phase,
EUR 1 500 million.

The total cost of the Galileo programme for the design,
is estimated at

3.1.7
The concession contract is currently being negotiated
between the GJU and a consortium of European companies
(Anea, Alcatel, EADS, Finmeccanica, Hispasat, Immarsat, Teleop
and Thales).

Arrangements for the transfer of activities between the
3.1.8
GJU and GSA are being defined at present: it must be ensured
that they do not entail any delays, complications or duplication
of costs.

3.2 The Galileo Joint Undertaking (GJU)

3.2.1
The Joint Undertaking was set up by decision of the
Council of the European Union in Regulation No 876/2002 of
21 May 2002, on the basis of Article 171 of the Treaty estab-
lishing the European Community, which provides that ‘the Com-
munity may set up joint undertakings or any other structure
necessary for the efficient execution of Community research,
technological development and demonstration programmes’.
The annex to the regulation contains the statutes of the GJU.

3.2.2

The members of the GJU are:

— the European Community, represented by the Commission,

— the European Space Agency (ESA).

It now in fact

3.2.3
Article 2 of the Statutes allows undertakings, including
those from third countries, to become members of the Joint
includes a Chinese body (the
Undertaking.
National Remote Sensing Centre of China — NRSCC) and an
Israeli commercial company (MATIMOP). Both these entities sit
on the Administrative Board with voting rights in proportion to
their contributions.

3.2.5

The GJU's capital breaks down as follows:

— European Commission

EUR 520 million

— ESA

EUR 50 million

— NRSCC

EUR 5 million

— MATIMOP

EUR 5 million.

it only receives

Because of the GJU's specific legal nature and the fact
3.2.6
the Commission has
contributions,
that
proposed that the word ‘capital’ be replaced by ‘contribution’,
which requires an amendment of
the Statutes. This was
approved by the GJU Administrative Board on 2 June 2006. The
European Court of Auditors had also pointed out that use of
the word ‘capital’ was inappropriate, since the GJU's budget line
did not allow for capital contributions.

The main task of the GJU is successfully to complete
3.2.7
the development of the Galileo programme during its develop-
ment phase by combining public and private sector funding,
and to ensure the management of major demonstration projects.
A further mission of the GJU is to undertake the research and
development steps needed to ensure the success of the develop-
ment phase and of the coordination of national activities in this
field and, consequently,
to manage the contracts concluded
under the European Commission's framework programme for
research and technological development (FP6).

3.2.8

The GJU is directed by:

— an Administrative Board,

— an Executive Committee, and

— a Director.

3.2.9
The Council of the European Union also established a
Supervisory Board and a Security Board to monitor its activities.

3.2.4
The GJU's legal nature is complex as a result of the
membership of its Administrative Board. The regulation stipu-
lates that it is to be considered as an international organisation
for the purposes of European legislation on turnover taxes and
excise duty. It also specifies that it is not designed to fulfil an
economic purpose. According to the Commission, the GJU's
legal character is closer to that of an association than a commer-
cial undertaking, as the GJU receives only contributions from its
members and does not make a profit. Moreover, the Belgian tax

The GJU was set up for a period of four years from
3.2.10
28 May 2002 (date of publication in the Official
Journal),
covering the initial duration of the Galileo programme develop-
ment phase. The regulation makes provision for extending this
period until the development phase is completed, but without
defining how the extension is to be carried out. In the light of
the establishment of the GSA, the Commission has proposed
winding up the GJU on 31 December 2006, requiring an
amendment to the Statutes annexed to Council Regulation No

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876/2002 of 21 May 2002 and the opinions of both the Euro-
pean Parliament and the EESC. At the end of the procedure for
consulting the GJU's Supervisory Board and the ESA's naviga-
tion steering committee, commenced on 10 March 2006, the
GJU's Administrative Board approved the amendment to the
Statutes on 2 June 2006, enabling the Commission to adopt the
proposal for a regulation amending the Statutes of the GJU on
29 June 2006. This regulation is in the process of being
approved by the Council of the EU.

3.2.11
In order to promote the widespread use of satellite
navigation systems and to allow third country entities to take
part in the GJU, a number of international agreements have
been signed between the European Union and third countries
(China, Israel, India, Ukraine and others), with others in the
process of negotiation (Morocco, Korea, Russia and Argentina).
These agreements explicitly exclude any cooperation in aspects
concerning the service reserved for government applications.
Two technical cooperation agreements have been concluded
between the GJU and bodies representing two countries (the
National Remote Sensing Centre for China and MATIMOP for
Israel) which, under the GJU Statutes, enables representatives of
these entities to sit on the Administrative Board of the GJU.

— managing frequencies (coordination, rights of use, relations

with the concession holder);

— modernising and further developing the system;

— ensuring certification of system components;

— dealing with aspects relating to the system's security.

3.3.4
It should be emphasised that the GSA will own the
system and in particular the property developed by the conces-
sion holder, and will be responsible for protecting and valorising
investment already made by the Community.

The GSA is directed by an Administrative Board (one
3.3.5
representative for each Member State and one for the Commis-
sion), a System Safety and Security Committee and a Scientific
and Technical Committee. An Executive Director represents the
authority and is in charge of its management.

3.2.12
taking are set out in Article 21 of the Statutes.

Lastly, arrangements for winding up the Joint Under-

3.4 Legal, technical and financial questions and risks involved in the

GJU-GSA transfer

3.3 The Galileo Supervisory Authority (GSA)

3.3.1
This body was set up by decision of the Council of the
European Union in Regulation No 1321/2004 of 12 July 2004.
It is a Community agency having legal personality.

3.3.2
GNSS programmes and to be their regulatory authority.

Its task is to manage the public interests relating to the

3.3.3

Its tasks, defined in Article 2 of the regulation, are:

— managing and controlling the use of the European funds
specifically allocated to it for GNSS (Global Navigation Satel-
lite System) programmes;

— concluding a concession contract with the consortium

selected for the deployment and operation of Galileo;

— taking over the management of

the agreement with the
economic operator charged with operating EGNOS (Euro-
pean Geostationary Navigation Overlay Service);

3.4.1 Implementing the GJU-GSA transition

The arrangements for the transition and transfer of activities
from the GJU to the GSA have not been clearly defined by the
Commission. A non-paper from the Commission's Transport
and Energy DG (1) has however suggested that an exchange of
letters or a Memorandum of Understanding might take place
between the two bodies in order to lay down the cooperation
and
ensuring complementarity of
arrangements,
preventing duplication.

activities

Although the tasks allotted to the two bodies when the
3.4.2
Galileo programme was launched were different in kind and in
the implementation deadlines, in the light of the delay in the
development phase (approximately two years) and of the effec-
tive establishment of the GSA (the director was appointed in
May 2005) it is now necessary for economic, legal and technical
reasons to authorise the GSA to intervene immediately — well
before the end of the development and validation phase — and
to wind up the GJU as soon as possible (2). To this end, the
progressive transfer of activities from the GJU to the GSA,
including work arising from the management of the contracts
concluded by the GJU, must be put in motion; it is also impor-
tant that GSA teams be very closely involved, as of now, in the
negotiations for the concession contract which is to be signed
and managed by the regulatory authority.

(1) Setting up of the Galileo Supervisory Authority, Document for discus-
sion at the executive Committee of 24 June 2004, TREN E/4/OO/bp D
11090 (2004) of 24 June 2004, p. 1.

(2) It is recalled that the initial date for the end of GJU activity was 28 May

2006 (see above — duration of the GJU).

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The GJU is now expected to cease activity on
3.4.3
31 December 2006, subject to acceptance by its members of
the amendment to the GJU Statutes. An initial plan for the tran-
sition and the transfer of GJU activities and know-how has been
drawn up between the Directors of the GJU and the GSA and
was submitted to the Supervisory Board and the Administrative
Board of the GJU in February 2006. This transition plan will
have to be worked out in detail and adapted in order to ensure
the transfer takes place as quickly and smoothly as possible.

3.4.4
During this transitional period, the two bodies must
work in close cooperation to ensure a smooth, problem-free
transfer of activities and know-how. This period should also
enable the GSA to become fully operational in order to avoid
the risk of personnel shortages at a time when the main tasks
on which the programme's success depends are to be carried
out.

3.4.5
The actions should be planned with a view to ceasing
activity at the end of December 2006. This would enable the
winding-up phase to commence at the beginning of 2007. This
transition must also be completed as soon as possible so that
the regulatory authority can define and implement Galileo's
security and safety rules, define the relevant rules governing
intellectual property rights and coordinate Member States'
actions and positions regarding the frequencies needed to use
the Galileo system.

3.4.6
The transition plan must contain measures to ensure
that the actions carried out by the two entities are compatible,
and provide procedures for settling any disputes that may arise
between them. It has so far been agreed that the Director of the
Energy and Transport DG should serve as a mediator between
the GJU and the GSA in the event of difficulties in carrying out
the transfer.

3.5 Ensuring legal certainty in the transfer of assets from the GJU to
the GSA by drawing up a practical transfer of activities plan

3.5.1
As presently worded, the regulation establishing the
Supervisory Authority does not permit it to intervene during
the development phase, which is the responsibility of the ESA.
The regulation should therefore be amended to grant this power
to the Supervisory Authority. An opinion of
the European
Parliament (but not necessarily of the EESC) will be required for
this purpose. The agreement between the GJU and the GSA
should guarantee the legal certainty of operations to transfer
GJU assets to the GSA, by drawing up a practical transfer of
activities plan which comprises an identification of the roles of
the different bodies and entities concerned, an accurate cata-
logue of assets and liabilities, practical transfer arrangements, a
timeframe for the transitional phase, the essential steps to be
taken, the financial and fiscal consequences of the transfer, etc.
The decisions to be taken regarding the arrangements for trans-
ferring assets from the GJU to the GSA should require the active
involvement of a range of bodies such as the GJU Supervisory

the GJU Administrative Board,

the
Board,
Administrative Board of the Galileo Supervisory Authority, the
European Commission, the EU Council and the European Parlia-
ment.

the ESA Council,

3.5.2
It should be pointed that, despite the fact that Article 6
of the GJU Statutes lays down that the Joint Undertaking shall
own all the tangible and intangible assets created or transferred
to it for the development phase of Galileo, most of the items
developed under the programme, including satellites, appear to
belong not to the GJU, but rather to the ESA under the Gali-
leoSat programme. Article IV of Annex III of the ESA Conven-
tion clearly shows that the Agency, acting on behalf of the parti-
cipating States, is the owner of the satellites, space systems and
other items produced under the ESA programme as well as of
the facilities and equipment acquired for its execution. Any
transfer of ownership is decided on by the ESA Council. Thus, it
would seem that until such times as the ESA Council decides on
a transfer of ownership or grants a licence for use to the GJU,
the GJU will not have any right to these items. For its part, the
Commission considers that Community law is applicable and
that, following the amendment of the GSA and GJU Statutes,
and the winding-up of the latter, all the assets will automatically
be transferred to the Supervisory Authority. The ESA's and the
Commission's interpretations could therefore differ.

3.5.3
It would consequently appear that this state of affairs
might give rise to discussion on how to interpret Article 7 of
the GJU-ESA contract, which states that the ownership of the
satellites and other physical and immaterial property produced
in the framework of the programme shall be vested in ESA,
acting on behalf of the JU.

3.5.4
The meaning of ‘on behalf of’ is in fact interpreted by
the ESA on the basis of the wording of Article IV of Annex III
to the ESA Convention. In this context, the expression means
that the ESA acquires the results of developments carried out on
relevant ESA
behalf of
programme, and that the latter may ask the Agency for a licence
to use the results;
less restrictive
depending on the requirements which the States specify (use for
commercial or scientific purposes, etc.).

the States participating in the

this licence is more or

3.5.5
This position seems to be confirmed in the text of the
GalileoSat programme Declaration, Article 12 of which stipu-
lates that the ESA is the owner of all tangible and intangible
items of the GalileoSat programme.

3.5.6
For EGNOS, in contrast, the ESA is only the owner of
the tangible items on behalf of the States participating in the
programme, with intellectual property rights remaining with the
ESA contractors under the Agency's rules.

3.5.7
The expression ‘vested in ESA, acting on behalf of the
JU’ is consequently interpreted by the ESA as ‘vested in ESA in
the interests of the GJU’.

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the ESA Council

Discussions with the ESA, however, do not suggest that
3.5.8
the ESA does not wish to transfer assets to the GJU or the GSA.
Nevertheless, the ESA has made it known that this transfer
requires the authorisation of
(by a simple
majority) and that the transfer arrangements have still to be
defined. The ESA would prefer the option of a direct transfer
from the ESA to the GSA for both fiscal reasons and because it
would be more appropriate, insofar as in this case third coun-
tries holding GJU capital would have no rights over items
whose ownership was transferred by the ESA. These items
would not be counted among the GJU's assets and would there-
fore not be subject to its winding-up procedures.

transfer the GJU's activities to the GSA, and provide for a
winding-up period the duration of which will remain to be
defined;

— amendment of the GSA regulation in order to introduce the
tasks transferred from the GJU to the GSA, such as steering
the development and in-orbit validation phase, managing
the activities emerging from the European R&D framework
programmes, and monitoring and managing technical devel-
opments in the operational system (4).

3.5.9
The specific question of the intellectual property rights
and items developed by third countries is governed by the inter-
national agreements concluded between firstly, the EU and non-
EU third countries and secondly, between third party bodies and
the GJU (3).

3.6 Plan for transfer of activities from GJU third countries to the

GSA

However, the GSA regulation would appear to clearly
3.5.10
show that the Supervisory Authority is the owner of all the
tangible and intangible assets which are transferred to it by the
GJU on completion of the development phase or which may be
created or developed by the concession holder during the
and operational phases. The GSA regulation
deployment
provides that
the procedures governing ensuing transfers of
property will, in the case of the GJU, be set out in the course of
the winding-up proceedings laid down in Article 21 of the GJU
Statutes. For EGNOS, the Authority is the owner of all the
tangible and intangible EGNOS assets subject to agreement with
the EGNOS investors on the terms and conditions of
the
transfer from the ESA of ownership of all or part of the EGNOS
facilities and equipment. This could be interpreted to mean that,
from the Commission's point of view, no transfer procedure
between the GSA and the ESA would be necessary, since all the
tangible and intangible assets belong to the GJU (in contrast to
the ESA's current interpretation based on its Convention and on
the programme Declaration).

3.5.11

The following legal steps in particular must be taken:

— amendment of the GJU Statutes to establish the closure of
the GJU on 31 December 2006, complete operations to

(3) The involvement of non-EU third countries in the Galileo programme
is covered by international agreements negotiated and concluded by
the EU on behalf of the Member States, following negotiation of the
provisions of the Agreement by the European Commission acting on
the instructions of the Council. The first agreement was signed with
China in October 2003, and is in the process of being ratified by the
Member States. These agreements call on third countries to appoint an
entity to participate in the Joint Undertaking (see above — Interna-
tional cooperation).

Negotiations for the transfer of activities carried out by third
country entities, by means of additional transfer clauses between
the GSA, the GJU and the bodies concerned, must get under
way rapidly. Contact must be made with these bodies to sound
out their positions regarding the closure of the GJU and their
future place and role within the GSA. The provisions of the
regulation establishing the GSA stipulate that
it should be
possible for third countries, particularly those which have been
involved in the programme's previous phases, to participate in
the GSA provided they have concluded an agreement with the
Community. Such agreements must specify,
in particular, the
nature, extent and manner in which these countries are to parti-
cipate in the work of the Authority, including provisions relating
to participation in the initiatives undertaken by the Authority,
financial contributions and staff. It would seem that the reaction
of third-country entities to the decision to wind up the GJU
before the end of the IOV (in-orbit validation) phase might
depend on the place accorded to them in the GSA. The NRSCC
and MATIMOP could, for example, demand repayment of a part
of their contributions as a result of GJU closure. The question of
third party participation on the GSA Administrative Board will
inevitably arise during the negotiations. Initial contacts on this
question with the Community bodies seem to indicate differing
views between the Member States: some do not wish to grant
voting rights to third countries, while others point to the danger
of compromising system security if it is opened up too widely
to third countries. All, however, appear to agree that third party
involvement in the GSA's Administrative Board must under no
circumstances jeopardise EU control over the system. A special
position might be granted, under certain conditions, to non-EU
European countries (Norway and Switzerland). One solution
might be to group third countries together within a dedicated
structure to allow them to state their positions regarding deci-
sions taken by the GSA.

(4) Two information memos have been drawn up by the Commission on
this question for the members of the GJU Administrative Board:
‘Changes to the GJU Statutes and GJU/GSA transfer’, TREN B5 D(2006)
of 18 January 2006; ‘Envisaged changes to the GSA Regulation and
GJU/GSA transfer’, TREN B5 D(2006) of 19 January 2006.

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3.7 Limiting overlap of responsibilities

3.7.1
A plan to reduce the GJU establishment plan should be
put in place, with firm step-by-step deadlines in keeping with
the timetable for the transfer of activities, in order to avoid the
presence of a large number of staff at the end of December
2006, take stock of the employment contracts and ensure that
there is no risk of end-of-contract disputes which might block
the transfer of assets. It should be noted that some 24 people
are expected to continue working up to the date of the end of
than
negotiations on the
concession contract, no later
31 December 2006. The GJU winding-up phase
after
31 December 2006 is to be carried out by approximately six
people.

It is also necessary to have a clear picture of how the
3.7.2
GSA is to grow, and particularly of the staff recruitment plan, in
order to check on its compatibility with the plan for the transfer
of GJU activities. It should be noted that the GSA must comply
with Community procedures and deal with a number of
salaries,
constraints concerning staff
contracts limited to three years, final location of the agency as
yet undecided) which are holding back the process of setting up
the GSA organisation.

recruitment

(level of

3.8 Financial and budgetary aspects

3.8.1
It is important that the remaining appropriations at the
closure of the GJU (estimated at some EUR 46 million) should
be transferred to the GSA. The Commission would like the
transfer of funds from the GJU to the GSA to take place as soon
as the Supervisory Authority is empowered to manage the end
of the development phase. In this way, the only funds remaining
available to the Joint Undertaking at the time of closure of activ-
ities would be those required for the winding-up process.

The revised GJU budget for 2006,

3.8.2
incorporating an
increase of EUR 7 million over the budget adopted in 2005,
when it was expected that closure would take place in May
2006 (instead of the EUR 14 million originally requested by the
GJU without taking account of the transfer of activities to the
GSA), means that the transfer of activities to the GSA by the
end of 2006 at the latest can be covered with maximum flex-
ibility: this revised budget was adopted by the GJU Administra-
tive Board and Supervisory Board at the end of February.

to the suggested
2006. The increase in the GSA's budget
amount is a precondition for the GSA's ability to recruit the
necessary staff and conduct the transferred activities. The final
savings made on the GJU's budget, as a result of the progressive
transfer of activities to the GSA should ideally cover
the
this should serve to reassure MEPs
increased GSA budget:
regarding the proper use of European funds in the transfer
operation even in, in practice, the funds and budgets in question
come from different sources.

3.8.4
An assessment of the costs of winding up the GJU (in
particular, staff kept on to complete the winding-up operations)
and the financial impact in terms of VAT and other taxes (e.
g.
transfer of ownership duties) must be made as soon as
possible. Since the GJU, to which the Belgian authorities have
sent a comfort letter,
is regarded by them as a legal person
under Belgian law (falling into the same category as an associa-
tion) rather than a commercial enterprise, it should not be liable
to any tax on the liquidation surplus. The amount of tax levied
should therefore be small, especially if most of the funds have
been transferred prior to winding up. Such issues must, of
course, be dealt with in advance in order to avoid any unplea-
sant surprises.

3.9 Negotiation of the concession contract and finalisation of tech-

nical activities

The GJU's revised 2006 budget will enable it

3.9.1
to
continue negotiations on the concession contract, the aim being
to complete them by 31 December 2006 at the latest, while
facilitating the transfer of know-how to the GSA and progres-
sively involving it in the negotiations as it gathers speed.

3.9.2
It should be pointed out that it is stated in the records
of the various GJU and GSA control bodies that if the negotia-
tions have not been finished by 31 December 2006, responsi-
bility for conducting them will pass to the GSA on 1 January
2007.

The GJU will also have to introduce a procedure or
3.9.3
action plan so that the technical files can be closed and technical
documents finalised before its closing date.

3.8.3
The 2006 GSA budget, for its part, must take account
of additional staff recruitment requirements in the course of
2006 and must be increased accordingly. Following the adop-
tion of the new draft 2006 budget of some EUR 8 million
(instead of an initial budget of EUR 5 million for 2006 voted in
2005) by the GSA's Administrative Board on 23 January 2006,
the revised draft budget is to be examined by the Ecofin Council
and then by the European Parliament in the second half of

3.9.4
The role and responsibilities of the ESA during the
reception and system validation phase, and subsequently for
technical developments of
the system and maintaining the
system in operational condition following validation, will have
to be specified in a framework contract between the GSA and
the ESA. The ESA's role in the GSA Administrative Board as an
observer rather than as a full member as in the GJU means it
will no longer be able to play such an active role in decision-
making. The GSA regulation provides that cooperation with the
ESA should exploit to the fullest the possibilities offered by

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23.12.2006

the framework agreement concluded between the European
Community and the ESA on 25 November 2003, where rele-
vant (5), and that the ESA may be requested to provide the
Authority with technical and scientific support (6). In any case,
an agreement must be reached between the Supervisory
Authority and the ESA before the end of 2006 to cover activ-
ities concerning the end of the development phase, and another
agreement will have to be concluded by 2008 to organise rela-
tions between the Supervisory Authority and the ESA after the
development phase has ended, during the reception and system
validation phase and possibly beyond, for the operational phase.

4. Further points for consideration: International liability
of launching States for Galileo constellation satellites

4.1
The satellites launched during the IOV phase are at
present owned by the ESA (development of satellites under the
ESA GalileoSat programme). Their ownership is to be transferred
to the GSA at the end of the in-orbit validation phase.

4.2
Under the GJU/ESA agreement, the ESA is responsible
for launching the first IOV phase satellites and for registering
them with the United Nations Office for Outer Space Affairs in
Vienna. The first satellite in the constellation (GIOVE-A) was
launched in December 2005 by the Starsem operator from
Baikonur using a Soyuz-ST launch vehicle.

4.3
In practical terms, the ESA should proceed in the same
way as for the transfer of ownership of the satellites it develops
on behalf of third parties, as in the case of Meteosat or MetOp,
for example (ESA-Eumetsat transfer). Notification of the transfer
of ownership of the orbiting satellites should then be made to
the appropriate authorities.

activities carried out from its territory or from installations
owned by the Belgian State or placed under its jurisdiction or
control (7), which is not the case here. However, the question
remains entirely valid in terms of international law.

4.7 Moreover, following the winding-up of the GJU and the
transfer of its activities to the GSA, the GSA will become the
entity on behalf of which the satellites are launched; in conse-
quence the international
legal person to which it is attached
could also be considered to be the launching State. The defini-
tion of the EU launching State should therefore be analysed,
with a view not only to the launch of the IOV phase satellites,
but also to the launch of the other satellites of the Galileo
constellation during the deployment and operational phase.

4.8
In the deployment and operational phase, the country in
which the head offices of the operator in charge of the constel-
lation (the company holding the concession) — which will
launch the satellites — are located could also incur liability.
Since the head offices of the concession holder are located in
France (Toulouse), under
the agreement of
5 December 2005 between the main parties involved in the
concession, France could in consequence incur liability.

the terms of

Lastly, the country under whose jurisdiction the launch
4.9
operator falls will also be considered to be a launching State, as
may any country whose territory or installations are used. If the
operator selected is the French company Arianespace, France
could be considered to be the launching State.

4.4
Given the provisions of the 1967 Outer Space Treaty
and the 1972 Liability Convention, the liability arrangements
following the launch and use of the satellites in orbit need to be
examined.

Given that several

4.10
launching States are involved, the
relations between the various entities in terms of liability and
sharing of risk between the various launching States in the
event of damage during the launch and working life of the satel-
lites need to be clarified.

4.5
In the light of the criteria for defining a country as a
‘launching State’, which may incur international liability in the
event of damage on the ground or in orbit caused by space
objects, the ESA could be considered as a de facto‘launching
State’, as it
is considered as a State which ‘procures the
launching’ of satellites in the IOV phase and concludes the
launch contract with the launch operator.

4.6
Similarly, the question could arise as to whether Belgium
could be considered as the launching State, since the GJU —
closely involved in developing and launching satellites for the
IOV phase — lies within its jurisdiction (the GJU is based in
Brussels). Under Belgian national law, it would appear that the
space
Belgian Federal State

can only incur

liability for

(5) Recital No 12 of the GSA regulation.
(6) Article 2(2) of the GSA regulation.

4.11
It should be noted that there is an agreement between
the ESA and France (agreements on the Centre Spatial Guyannais
[French Guiana Space Centre]). This agreement contains clauses
on international liability, particularly in the event of launches
carried out by Arianespace, and would appear to be applicable
to Galileo. The issue of
the
launching States during the working life of the satellites in orbit
remains open: the question of whether to conclude an agree-
ment on this matter between France and the other launching
States (the ESA, Belgium and the EU) may arise.

the international

liability of

(7) The Belgian law on the launch, flight operations or guidance of space
objects of 17 September 2005, published in the Moniteur of
16 November 2005, No 348. Article 2(1) of the law states that it covers
the launch, flight operations or guidance of space objects performed by
natural or legal persons in areas under the jurisdiction or control of the
Belgian state or by means of mobile or fixed installations which belong
to the Belgian state or are under its jurisdiction or control.

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Official Journal of the European Union

C 318/217

Reference documents

1) Council Resolution of 19 July 1999 on the involvement of
Europe in a new generation of satellite navigation services
— Galileo-Definition phase, OJ C 221 of 3.8.1999, p. 1

2) Council Decision 98/434/EC of 18 June 1998, OJ L 194 of

10.7.1998, p. 15

3) Council Regulation (EC) No 876/2002 of 21 May 2002
setting up the Galileo Joint Undertaking (GJU Statutes in
annex), OJ L 138, p. 1

4) Council Decision 2001/264/EC of 19 March 2001
adopting the Council's security regulations, OJ L 101 of
11.4.2001, p. 1

5) Agreement between the Galileo Joint Undertaking (GJU)
and the ESA — ESA/C(2002)51, rev 1 of 23 April 2002

6) Galileo Joint Undertaking Organisation and Decision
Process — ESA/PB-NAV(2003)20 of 5 September 2003

7) Council Regulation (EC) No 1321/2004 of 12 July 2004
on the establishment of structures for the management of
the
programmes,
OJ L 246 of 20.7.2004, p. 1

radio-navigation

European

satellite

8) Communication from the Commission — The operating
framework for the European Regulatory Agencies, COM
(2002) 718 final of 11.12.2002

9) Agreement between the EU and China of 30 October 2003

10) Agreement between the EU and Israel of 13 July 2004

11) Agreement between the GJU and the NRSCC of 9 October

2004

12) Agreement between the GJU and MATIMOP of 6 September

2005

13) Agreement between the GJU and ESA for the NRSCC of 9

October 2004

14) Agreement between the GJU and ESA for MATIMOP of

18 October 2005

Brussels, 13 September 2006.

15) Droits et obligations des nouveaux membres de l'entreprise
commune Galileo (Rights and obligations of new members
of the Galileo Joint Undertaking) — ESA/PB-NAV(2004)
18 rev. 2 of 23 June 2004

16) Galileo IPR: Ownership and protection — ESA/PB-NAV

(2004)26 of 23 September 2004

17) International Property Rights for the Galileo Programme —

GJU-EXC-2004-50 of 2 September 2004

18) Agreement between the Partners of the prospective Galileo

Concession, 5 December 2005

19) Transition Plan of GJU activities and know-how to the GSA

— GJU-ADB-2005-13 rev of 11 February 2006

20) Communication from the Commission to the European
Parliament and the Council — Integration of the EGNOS
programme
COM
in
(2003) 123 final of 19.3.2003

programme,

Galileo

the

21) Framework Agreement between the ESA and the European
Community signed on 25 November 2003 — ESA/C-M
(2004)4

22) EESC opinion on the European programme of radio satellite

navigation (GALILEO) — TEN/077 (12/09/2001)

23) EESC opinion on the Proposal for a Council Regulation on
the establishment of the GALILEO Joint Undertaking (COM
(2001) 336 final — 2001/0136 CNS) — TEN/089 (28/11/
2001)

24) EESC opinion on the Communication from the Commis-
sion to the European Parliament and the Council —
Progress report on the GALILEO research programme as at
the beginning of 2004 (COM(2004) 112 final) — TEN/179
(20/06/2004)

25) EESC opinion on the Proposal for a Regulation of the Euro-
pean Parliament and of the Council on the implementation
of the deployment and operational phases of the European
satellite radionavigation programme (COM(2004) 477 final
— 2004/0156 COD) — TEN/203 (09/02/2005).

The President

of the European Economic and Social Committee

Anne Marie SIGMUND