Survey of international commercial law developments: 2000-2001
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Significant developments on the international front, with several inter-governmental and private organizations
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The past year has seen significant developments on the international front, with several inter-governmental and private organizations contributing to the effort to advance international commercial law doctrine. Important contributions of the United Nations Commission on International Trade Law (UNCITRAL or the “Commission”), the International Institute for the Unification of Private Law (UNIDROIT), the Organization of American States (OAS), the Hague Conference on Private International Law, and the International Monetary Fund will be discussed below.
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Through its Working Group on International Contract Practices, UNCITRAL had already completed work on its proposed Convention on Assignment of Receivables in International Trade (the “Convention”) at the end of 2000. (1) UNCITRAL adopted the Convention in July 2001 and on December 12, 2001, it was adopted by the U.N. General Assembly. (2) The types of transactions most affected by the Convention, the goal of which is to “promote the availability of capital and credit at more affordable rates,” will be cross-border asset based loans, factoring, securitization, and project finance. (3) The ABA has recommended that the United States sign and ratify the Convention. (4)
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At its thirty-third session in New York in the summer of 2000, the Commission adopted the UNCITRAL Legislative Guide on Privately Financed Infrastructure Projects (the “Legislative Guide”), (5) consisting of legislative recommendations, (6) with amendments adopted by the Commission at that session and notes to the legislative recommendations, (7) which the Secretariat was authorized to finalize in the light of the deliberations of the Commission. (8) Subsequently, the Legislative Guide was published in all official languages. (9) The Commission also began to analyze whether it made sense to “formulate more concrete guidance in the form of model legislative provisions or even in the form of a model law dealing with specific issues.” (10) It decided to consider the “question of the desirability and feasibility of preparing a model law or model legislative provisions on selected issues covered by the Legislative Guide” at its thirty-fourth session and requested that the Secretariat “organize a colloquium, in cooperation with other interested international organizations or international financial institutions, to disseminate knowledge about the Legislative Guide.” (11) The resulting Colloquium on Privately Financed Infrastructure: Legal Framework and Technical Assistance “was organized with the co-sponsorship and organizational assistance of the Public-Private Infrastructure Advisory Facility (PPIAF), a multi-donor technical assistance facility aimed at helping developing countries improve the quality of their infrastructure through private sector involvement.” (12) It was held in Vienna from July 2 to 4, 2001. (13)
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The Working Group on Privately Financed Infrastructure Projects (the “Working Group”) (previously named Working Group on Time-Limits and Limitations (Prescription) in the international sale of goods) held its fourth session in Vienna from September 24 to 28, 2001, at which it considered the foregoing Legislative Guide, “with a view to possible use of the legislative recommendations contained therein as a basis for its deliberations,” as well as the report produced by the Colloquium on Privately Financed Infrastructure. (14)
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The Working Group started drafting the core model legislative provisions regarding privately financed infrastructure projects pursuant to a Commission decision at its thirty-fourth session (Vienna, June 25-July 13, 2001)
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At the June-July 2001 Vienna Session, UNCITRAL adopted the Model Law on Electronic Signatures, together with a Guide to Enactment that provides guidance for its incorporation into national legal systems by U.N. member states. (17) The Model Law on Electronic Signatures has three main parts: (i) criteria for reliable electronic signatures
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The UNCITRAL Working Group on Electronic Commerce is currently developing a draft convention dealing with certain issues related to electronic contracting. (21) In addition, the Secretariat has begun conducting studies on three other topics:
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(a) a comprehensive survey of possible legal barriers to the development of
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electronic commerce in international instruments …
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of the issues related to transfer of rights, in particular, rights in
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tangible goods, by electronic means and mechanisms for publicizing and
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keeping a record of acts of transfer or the creation of security interests
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International Commercial Arbitration, as well as the UNCITRAL Arbitration
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Rules, to assess their appropriateness for meeting the specific needs of
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INTERNATIONAL INSOLVENCY LAW
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In 2001, UNCITRAL’s Working Group on Insolvency Law prepared a comprehensive statement of key objectives and core features for a strong insolvency/ debtor-creditor regime and developed a draft legislative guide on insolvency law containing model provisions designed to implement these objectives and features. (23) The draft guide was discussed at the May 2002 session in New York. (24)
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Montenegro, Yugoslavia joined the small but growing list of states having adopted legislation based on UNCITRAL’s Model Law on Cross-Border Insolvency, (25) which was approved by the General Assembly in 1997. (26) The proposed bankruptcy legislation which still remains pending in the United States includes amendments based on the Model Law to address various issues relating to foreign insolvency. (27)
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In 2000 and 2001, UNCITRAL continued a 1999 initiative aimed at improving arbitration laws, rules, and practices by considering possible changes to the 1985 UNCITRAL Model Law on International Commercial Arbitration, the UNCITRAL Arbitration Rules, and the UNCITRAL Coalition Rules. (28) The Working Group on Arbitration and Conciliation is currently concentrating on the following issues: (i) court-ordered interim measures of protection in support of arbitration
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MOBILE EQUIPMENT CONVENTION
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In order to provide for the creation and enforceability of international security interests in mobile equipment, UNIDROIT has taken the approach of drafting a base convention and separately-negotiated protocols pertaining to specific mobile equipment-related industries. The base convention and a particular protocol will together regulate the relevant industry. (31) Final texts of the Convention on International Interests in Mobile Equipment (the “Mobile Equipment Convention”) (32) and the Protocol on Matters Specific to Aircraft Equipment (33) were adopted by a diplomatic conference in Cape Town from October 29, 2001 through November 16, 2001. (34) Each text has since been signed by more than twenty states. (35) The Mobile Equipment Convention includes provisions on (i) secured financing priorities recognized by the Mobile Equipment Convention
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UNIDROIT is also reviewing provisions for rail, space, and satellite equipment in connection with the base convention. (37) The Rail Working Group has drafted a Protocol on Matters specific to Railway Roiling Stock for submission to the Joint UNIDROIT/International Organisation for International Carriage by Rail Committee of Governmental Experts Study Group at its second session, to be held in Rome from June 17 to 19, 2002. In September 2001, the UNIDROIT Governing Council approved the draft Protocol on Matters specific to Space Property for transmission to governments, with a view toward convening in 2002 to finalize the draft. (38)
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PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS
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In June 2001, UNIDROIT continued to develop its Principles of International Commercial Contracts by reviewing draft chapters on agency, limitation of actions, assignment of rights and duties, third-party beneficiaries, and set-offs. (39) In conjunction with the Centre for Comparative and Foreign Law Studies, UNIDROIT is also compiling case law from various national courts and arbitral tribunals that references the UNIDROIT Principles. (40)
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ORGANIZATION OF AMERICAN STATES
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The Inter-American Conference on Private International Law (CIDIP) meets every four years to discuss matters pertaining to cooperative private international law initiatives. CIDIP-VI was held in Washington from February 4 to 8, 2002, and approved the Model Inter-American Law on Secured Transactions, the NonNegotiable Inter-American Uniform Through Bill of Lading for the International Carriage of Goods by Road, and the Negotiable Inter-American Uniform Through Bill of Lading for the International Carriage of Goods by Road. (41)
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HAGUE CONFERENCE ON PRIVATE INTERNATIONAL LAW
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The Special Commission on General Affairs and Policy of the Hague Conference on Private International Law met during January 2002 to discuss its project on the law applicable to dispositions of securities held through indirect holding systems. The participants again included the various country delegations (from North America, most of Europe, Latin America, the Asia-Pacific region, and elsewhere) and various private and non-governmental organizations. Significant progress was made on reconciling the lex rei sitae and contract law approaches to conflict of laws rules in the context of current securities holding practices. (42) Support for the “place of the relevant intermediary” (or PRIMA) culminated in the approval during the January meeting of a provisional version of the “Preliminary Draft Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary.” (43) Under the approach reflected in the preliminary draft, the place of the relevant intermediary would be determined through a combination of party autonomy and factual relationship: the jurisdiction (“State” in convention parlance) chosen by the relevant intermediary and customer to be the jurisdiction in which the securities account is maintained, provided that the intermediary has an office in that jurisdiction engaged in a business or other regular activity of maintaining securities accounts. (44) If the foregoing test is not met, the place of the relevant intermediary generally would be the jurisdiction in which the relevant intermediary is organized. (45) Significant discussions among the participants are continuing, with the leading issues including the factors, if any, to be included for determining whether the “reality check” component of the PRIMA test is met, the proper approach to systems that may combine intermediary and issuer/registrar functions, properly accommodating multi-unit and federal “States,” and the appropriate treatment of existing contractual arrangements that do not contain explicit securities account maintenance language. (46)
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In April 2002, the Commission on General Affairs and Policy of the Hague Conference on Private International Law met at the Hague in order to decide on the future work program of the Conference. (47) The Commission decided to fasttrack completion of its Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary, agreeing to hold a series of discussions in summer 2002 to complete the draft with the intention of adopting the final text at a diplomatic conference before the end of 2002. (48) The Permanent Bureau has prepared a note entitled “Transfers Involving Several Intermediaries” explaining the functioning of PRIMA. (49)
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INTERNATIONAL MONETARY FUND
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On November 26, 2001, Anne Krueger, First Deputy Managing Director of the International Monetary Fund (IMF), publicly proposed the adoption of an international bankruptcy regime applicable to sovereign debtors. (50) The objective of such a regime would be to facilitate orderly workouts of sovereign indebtedness in cases where a country’s debt burden had become unsustainable. Krueger’s proposal sparked a debate within the international financial community about how this objective could be achieved with the least disruption to private capital flows to emerging market sovereign borrowers. The U.S. Treasury and some private sector groups have endorsed an alternative approach calling for a more widespread use of collective action clauses in sovereign debt instruments that would permit a supermajority of creditors to approve amendments to the payment terms of those instruments when necessary.
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(1.) See Report of the Working Group on International Contract Practices on the work of its twenty-third session, UNCITRAL, 34th Sess., at 1, 3-5, U.N. Doc. A/CN.9/486 (2001).
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(2.) G.A. Res. 56/81, U.N. GAOR, 56th Sess., Agenda Item 161, at 1-3, U.N. Doc. A/RES/56/81 (2002)
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(3.) G.A. Res. 56/81, supra note 2, at 3.
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(4.) See generally AMERICAN BAR ASSOCIATION, SECTION OF INTERNATIONAL LAW AND PRACTICE, REPORT TO THE HOUSE OF DELEGATES, available at http://www.abanet.org/leadership/2002/113c.pdf.
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(5.) See Report of the Working Group on Privately Financed Infrastructure Projects on the work of its fourth session, UNCITRAL, 35th Sess., at 2, U.N. Doc. A/CN.9/505 (2001).
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(6.) Privately Financed Infrastructure Projects: Draft chapters on a legislative guide on privately financed infrastructure projects–Addendum–Consolidated Legislative Recommendations, UNCITRAL, 33rd Sess., U.N. Doc. A/CN.9/471/Add.9 (1999).
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(7.) Privately Financed Infrastructure Projects: Draft chapters on a legislative guide on privately financed infrastructure projects, Addenda 1-8, UNCITRAL, 33rd Sess., U.N. Doc. A/CN.9/471/Add. 1-8 (1999).
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(8.) Report of the Working Group on Privately Financed Infrastructure Projects on the work of its fourth session, supra note 5, at 2.
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(16.) Legislative Guide on Privately Financed Infrastructure Projects, UNCITRAL, 33rd Sess., U.N. Doc. A/CN.9/SER.B/4 (2001).
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(17.) See Report of the United Nations Commission on International Trade Law on the work of its thirty-fourth session, 56th Sess., Supp. No. 17, at [paragraph] 284, U.N. Doc. A/56/17 (2001).
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(18.) Report of the Drafting Group on UNCITRAL Model Law on Electronic Signatures (2001), available at http://www.bmck.com /ecommerce/Uncitral%20Model%20Law%20on%20Electronic%20Signatures.doc.
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(19.) G.A. Res. 56/80, U.N. GAOR, 56th Sess., Agenda Item 161, at 2, U.N. Doc. A/RES/56/80 (2002).
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(20.) See Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community Framework for Electronic Signatures, 2000 O.J. (L 13) Art. 13, available at http:// www.netlaw.pl/e-podpis/esign-directive1999-en.html.
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(21.) Legal aspects of electronic commerce–Electronic contracting: provisions for a draft convention: Note by the Secretariat, UNCITRAL Working Group IV (Electronic Commerce), 39th Sess., at 3-4, U.N. Doc. A/CN.9/WG.IV/WP.95 (2002).
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(22.) Id. at 4 (citation omitted).
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(23.) See Draft legislative guide on insolvency law: Report of the Secretary General, UNCITRAL Working Group V (Insolvency Law), 25th Sess., U.N. Doc. A/CN.9/WG.V/WP.57 (2001).
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(24.) Provisional Agenda, UNCITRAL Working Group V (Insolvency Law), 26th Sess., at 3, U.N. Doc. A/CN.9/WG.V/WP.60 (2002).
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(25.) See UNCITRAL, STATUS OF CONVENTIONS AND MODEL LAWS, available at http://www.uncitral. org/english/status/status-e.htm.
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(27.) See S. 420, 107th Cong., [subsection] 801-802 (2001).
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(28.) See Report of the Working Group on Arbitration on the work of its thirty-third session, UNCITRAL, 34th Sess., [paragraph] 3, U.N. Doc. A/C./CN.9/485 (2000).
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(29.) See Settlement of commercial disputes–Preparation of uniform provisions on written form for arbitration agreements: Note by the Secretariat, UNCITRAL Working Group II (Arbitration and Conciliation), 36th Sess., at 3, U.N. Doc. A/CN.9/WG.II/WP.118 (2002).
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(31.) See Peter Winship, International Commercial Transactions: 1998, 54 Bus. LAw. 2001, 2002-03 (1999).
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(32.) INTERNATIONAL INSTITUTE FOR THE UNIFICATION OF PRIVATE LAW, PRELIMINARY DRAFT UNIDROIT CONVENTION ON INTERNATIONAL INTERESTS IN MOBILE EQUIPMENT, 3 UNIF. L. REV. 76 (1998).
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(33.) INTERNATIONAL INSTITUTE FOR THE UNIFICATION OF PRIVATE LAW, PRELIMINARY DRAFT PROTOCOL TO THE PRELIMINARY DRAFT UNIDROIT CONVENTION ON INTERNATIONAL INTERESTS IN MOBILE EQUIPMENT ON MATTERS SPECIFIC TO AIRCRAFT EQUIPMENT, UNIDROIT Doc. Study LXXIID-Doc.3, available at http: //www. unidroit.org/ english/internationalinterests /jointsession3/report/1-report.pdf.
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(34.) Press Release, UNIDROIT, Diplomatic Conference to adopt a Mobile Equipment Convention and an Aircraft Protocol, Cape Town, South Africa, 29 October-16 November 2001, available at http: // www. unidroit.org /english /internationalinterests/ conference2001/main.html.
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(36.) See INTERNATIONAL INSTITUTE FOR THE UNIFICATION OF PRIVATE LAW, UNIDROIT DIPLOMATIC CONFERENCE TO ADOPT A MOBILE EQUIPMENT CONVENTION AND AN AIRCRAFT PROTOCOL, DCME Doc. No. 4, June 4, 2001, available at http://www.unidroit.org/english/internationalinterests/ conference2001/draftaircraftprotocol/draftaircraftprotocol.pdf.
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(37.) See Department of State, Proposed Convention Sponsored by UNIDROIT on International Equipment Finance and Draft Protocol on Space Equipment
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(38.) UNIDROIT, DEVELOPMENT OF WORK WITHIN UNIDROIT ON INTERNATIONAL INTERESTS IN MOBILE EQUIPMENT, available at http://www.unidroit.org/english/internationalinterests/history.htm.
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(39.) UNIDROIT, FOURTH SESSION OF THE WORKING GROUP FOR THE PREPARATION PART II OF THE UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS, available at http://www.unidroit. org/english/principles/wg-2001.htm.
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(40.) See INTERNATIONAL INSTITUTE FOR THE UNIFICATION OF PRIVATE LAW, UNIDROIT WORK PROGRAMME FOR THE 2002-2004 TRIENNIUM, available at http://www.unidroit.org/english/workprogramme/ main.htm.
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(41.) INTER-AMERICAN SPECIALIZED CONFERENCES ON PRIVATE INTERNATIONAL LAW, DRAFT RESOLUTION (May 1, 2002), available at http://www.oas.org/XXXIIGA/english/docs_en/docs_items/AGdoc 4053_02.htm.
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(42.) See A UNIFORM CHOICE OF LAW RULE FOR THE TAKING OF COLLATERAL INTERESTS IN SECURITIES: USING PRIVATE LAW APPROACHES TO REDUCE CREDIT AND LEGAL RISK IN FINANCIAL SYSTEMS (University of Cambridge, ESRC Centre for Business Research, Working Paper No. 211, Sept. 2001), available at http://www.cbr.cam.ac.uk/pdf/WP211.pdf.
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(43.) HAGUE CONFERENCE ON PRIVATE INTERNATIONAL LAW, PERMANENT BUREAU OF THE CONFERENCE, PRELIMINARY DRAFT CONVENTION ON THE LAW APPLICABLE TO CERTAIN RIGHTS IN RESPECT OF SECURITIES HELD WITH AN INTERMEDIARY AS ADOPTED BY THE SPECIAL COMMISSION ON 17 JANUARY 2002 (PROVISIONAL VERSION), Prel. Doc. No. 8 (2002), available at ftp://ftp.hcch.net/doc/sec_pd08e.doc.
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(44.) Id. at Art. 4, [paragraphs] 1-2.
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(45.) Id. at Art. 4, [paragraph] 2.
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(46.) See generally HAGUE CONFERENCE ON PRIVATE INTERNATIONAL LAW, PERMANENT BUREAU OF THE CONFERENCE, PRELIMINARY DRAFT CONVENTION ON THE LAW APPLICABLE TO CERTAIN RIGHTS IN RESPECT OF SECURITIES HELD WITH AN INTERMEDIARY: SUGGESTIONS FOR AMENDMENT OF THE PROVISIONAL VERSION, Prel. Doc. No. 10 (2002), available at ftp://ftp.hcch.net/doc/sec_pd10e.doc
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(47.) PERMANENT BUREAU, SUMMARY OF THE COMMISSION I ON GENERAL AFFAIRS AND POLICY HELD ON 22-24 APRIL 2002, available at http://www.hcch.net/e/workprog/genaff.html.
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(49.) TRANSFERS INVOLVING SEVERAL INTERMEDIARIES: AN EXPLANATORY NOTE ON THE FUNCTIONING OF PRIMA WITHIN THE FRAMEWORK OF THE PRELIMINARY DRAFT CONVENTION ON THE LAW APPLICABLE TO CERTAIN RIGHTS IN RESPECT OF SECURITIES HELD WITH AN INTERMEDIARY, Prel. Doc. No. 12 (2002), available at ftp://ftp.hcch.net/doc/sec_pd12e/pdf.
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(50.) Anne Krueger, Address at the National Economists’ Club Annual Members’ Dinner (Nov. 26, 2001), available at http://www.imf.org/external/np/speeches/2001/112601.htm.
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Sandra M. Rocks, Sandra M. Rocks is special counsel at Cleary, Gottlieb, Steen & Hamilton, New York, New York. For further information about the matters covered by this Survey, contact Sandra M. Rocks, Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, NY 10006 (tel. (212) 225-2000
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