Background Press Release
UN COMMISSION ON INTERNATIONAL TRADE LAW ON
To Discuss Draft Convention on Assignment of Receivables
VIENNA, 25 June (UN Information Service) – The draft Convention on assignment of receivables in international trade and the draft Model Law on Electronic Signatures will be the main topics to be discussed at the thirty-forth session of the United Nations Commission on International Trade Law (UNCITRAL) which will be convening from 25 June to 13 July in Vienna.
The Commission will also consider the ongoing and future work. Among other issues to be dealt with, the Commission will look into what work will have to be done in the field of electronic commerce. In addition, the Commission will decide whether to do work in the area of security interests laws, and what can be done as far as the uniform interpretation of conventions is concerned.
The Draft Convention
The draft Convention was prepared by the Working Group on International Contract Practices after eight sessions, from November 1995 to October 1999. At its thirty-third session, in 2000, the Commission adopted articles 1 through 17 of the draft Convention. The remaining articles were reviewed by the Working Group in December 2000. The draft Convention as a whole is expected to be finalized by the Commission at its thirty-fourth session in 2001. After it is adopted by the Commission, the draft Convention will be sent to the General Assembly for formal adoption or to a diplomatic conference for a final round of discussions.
The draft Convention is intended to apply to a wide range of trade and consumer receivables – claims for the payment of money – that are normally transferred or encumbered in the context of transactions, such as factoring, forfeiting, securitization, asset-based lending, refinancing and project financing.
More concretely, the draft Convention is designed to apply to contractual transfers of contractual receivables. Included are transactions involving an assignment, a pledge or a contractual subrogation. Also included are outright transfers, transfers for security purposes or transactions creating a security right in receivables. Not included are transfers by law. Equally not included are transfers of so called financial receivables (e.g. arising from derivative transactions, bank deposits or letters of credit).
The draft Convention is also designed to apply to international assignments or to assignments of international receivables. Internationality depends on the location of the parties to the assignment or to the contract from which the assigned receivables arise. Location is defined as the place of business and, in the case of multiple places of business of the assignor and the assignee, the place of their central administration or, in the case of individuals, habitual residence. This approach is intended to ensure certainty in the application of the draft Convention and in the determination of the law applicable to priority (which is the law of the assignor’s location). Another requirement for the territorial application of the draft Convention is that the assignor be located in a Contracting State (only for the application of the debtor-related provisions, the debtor too needs to be located in a Contracting State). The draft Convention is to apply to assignments from the initial assignee to subsequent assignees irrespective of whether there is a territorial connection with a Contracting State.
One of the main objectives of the draft Convention is the facilitation of access to credit at more affordable rates. In order to achieve that objective, the draft Convention validates assignments of future receivables and bulk assignments. Non-existing as they may be in law, future receivables have some very present practical value, since vast sums of money are raised on the basis of future receivables. Similarly, the vast majority of receivables financing transactions involves great numbers of receivables, usually not specified individually but described in general terms ("all present and future receivables"). In many legal systems, the validity of assignments of future receivables or of bulk assignments is still in question. The draft Convention generally recognizes the validity of such assignments, without prejudice to the rights of the assignor, the debtor or other third parties. While the draft Convention regulates many aspects of the validity of an assignment, it leaves other such aspects to other law. In particular, as to formal validity, the draft Convention contains a "safe harbour" rule, according to which the assignment is valid if it meets the requirements of the law of the assignor’s location or any other law applicable.
Draft Model Law on Electronic Signatures and Draft Guide to Enactment
The Commission will discuss the report of the Working Group on Electronic Commerce on the preparation of uniform rules on the legal issues of digital signatures and certification authorities. The Commission will have before it the text of the draft Guide to Enactment, which was completed and adopted by the Working Group at its thirty-eighth session, and a compilation of comments on the draft Model Law received from member States and observers. The Commission may wish to review and adopt the draft Model Law and its draft Guide to Enactment.
This Law applies where electronic signatures are used in the context of commercial activities. It does not override any rule of law intended for the protection of consumers.
The term "commercial" should be given a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road.
For the purposes of this Law, the term "electronic signature" means data in electronic form in, affixed to, or logically associated with, a data message, which may be used to identify the signatory in relation to the data message and indicate the signatory’s approval of the information contained in the data message.
In the election of seventeen members of the UNCITRAL, the Assembly elected to six-year terms, beginning with the Commission’s thirty-fourth annual session on 25 June 2001, the candidates endorsed by the regional groups, as follows: African States -- Benin, Cameroon, Morocco, Rwanda and Sierra Leone; Asian States -- China, Japan and Singapore; Eastern European States -- the Russian Federation and the former Yugoslav Republic of Macedonia; Latin American and Caribbean States -- Brazil and Mexico; Western European and other States -- Canada, France, Germany, Sweden and the United Kingdom.
* *** *