UNIDROIT - Report General Assambly 2005

GENERAL ASSEMBLY UNIDROIT 2005 59th session A.G. (59) 12

Rome, 1 December 2005 Original: English December 2005

REPORT

(prepared by the UNIDROIT Secretariat)

Item No. 1 on the draft Agenda: Opening of the session by the President of the General Assembly for 2004/2005

1. The 59 th session of the General Assembly was held on 1 December 2005 at the seat of UNIDROIT. The session was attended by the diplomatic representatives in Italy of 47 member States and three observers (cf. list of participants se t out in Appendix I). The session was opened by H.E.

Mr H.A.H. Bedeir, Ambassador of Egypt in Italy, President of the Assembly for 2004/2005.

2. H.E. Mr Bedeir welcomed participants, on his own behalf but also on behalf of Mr B. Libonati, President of UNIDROIT, who had been unable to attend. Mr Libonati had transmitted his address, and H.E. Mr Bedeir read it to the Assembly.

3. In his address Mr Libonati stated that he si ncerely regretted that a sudden indisposition had made it impossible for him to participate in the session. He wished, however, to record his pleasure at the presence of a representative of the Go vernment of Latvia, as a consequence of that Government’s recent decision to accede to the Statute of the Institute.

4. Of the three major issues on the Agenda, th e draft Budget took pride of place. He was greatly heartened by the recent displays of generosity by the private sector and other international bodies that had made it possible to take forward an U NIDROIT project specifically addressed to

4. Of the three major issues on the Agenda, th e draft Budget took pride of place. He was greatly heartened by the recent displays of generosity by the private sector and other international bodies that had made it possible to take forward an U NIDROIT project specifically addressed to

d e v e l o p i n g c o u n t r i e s a n d c o u n t r i e s i n t r a n s i t i o n t o a m a r k e t e c o n o m y , w i t h n o c a l l s o n t h e Institute’s regular budget. He was especially plea sed that this novel extra-budgetary support was scheduled to continue for the foreseeable future.

5. In recent years member States had increasingly urged the Institute to link its projects more effectively to the amount of funding that they were prepared to disburse. Both the Governing Council and the Secretariat had been particularly sensitive to this concern in the draft Work Programme for 2006/2008 that the Assembly had before it for approval. He believed that the concerns of member States had been duly addres sed in the process of working out this new Work Programme and he therefore commended also this for the Assembly’s approval.

6. Finally, all members of the Assembly recalled the shock of losing all three African candidates presented for election at the last elections to the Governing Council. In accordance with the decision taken in 2004, an ad hoc Committee of the Assembly had met in the interim to propose amendments to the Regulations of the Institute desi gned to ensure that this did not happen again.

He commended these proposals for the approval of the Assembly.U NIDROIT 2005 – A.G. (59) 12

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7. He wished the Assembly every success in its deliberations and, while reiterating his apologies for not being present, stated that he looked forw ard to the pleasure of being with the Assembly again next year.

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7. He wished the Assembly every success in its deliberations and, while reiterating his apologies for not being present, stated that he looked forw ard to the pleasure of being with the Assembly again next year.

Item No. 2 on the draft Agenda: Election of the President of the General Assembly for 2005/2006

8. H.E. Mr Bedeir recalled that it was customary for the presidency of the General Assembly of UNIDROIT to rotate among the members of the different continents. The year 2005/2006 should have seen the election of an Ambassador from the Americas, but as the representative who had accepted at first, had at the last minute communicated his inability to take on this duty, it had been decided that there should be a swap betwee n the continents to which the presidency was to fall for 2005/2006 and 2006/2007. Consequently, a representative of the continent to which the Presidency should have fallen in the year 2006/2007, namely Europe, had been contacted. He was pleased to inform the Assembly that H.E. Mr Vasco Taveira da Cunha Valente , Ambassador of Portugal in Italy, had kindly accepted to stand for election as President of the General Assembly for 2005/2006. No objections having been raised to the proposed election of H.E. Mr Valente as President, H.E. Mr Valente was duly elected.

9. Taking the Chair, H.E. Mr Valente thanked the members of the Assembly for the honour they did him in electing him President. He paid tribute to his teacher, Ms Isabel de Magalhães Collaço, Professor of Law and member for many years of the Governing Council of U NIDROIT, whose contribution to the work of the Institute had been appreciated by all.

Item No. 3 on the draft Agenda: Adoption of the agenda (A.G. (59) 1 rev. 3)

10. The draft Agenda was adopted as proposed (it is reproduced in Appendix II).

contribution to the work of the Institute had been appreciated by all.

Item No. 3 on the draft Agenda: Adoption of the agenda (A.G. (59) 1 rev. 3)

10. The draft Agenda was adopted as proposed (it is reproduced in Appendix II).

Item No. 4 on the Agenda: (a) Statement regarding the Institute’s Activity in 2005 (c) Implementation of the Strategic Plan (A.G. (59) 2)

11. The Secretary-General focused on those topics, areas of activity and problems where little progress had been made, or where there was reason to be concerned.

12. The year 2005 had provided tangible evidence that U NIDROIT’s work was being perceived as increasingly relevant: ♦ UNIDROIT’S instruments were governing more commercial transactions world-wide and were relied on by more parties to commercial disputes than ever before; ♦ for the first time, world business leaders such as the Group of 30 made reference to, and based their policy recommendations on, the Institute’s projects; ♦ for the first time in recent history, a member State’s Government had seconded a senior official from its directly responsible ministry to the Secretariat; negotiations for the secondment of a high-level expert from another member State’s Government were underway. On this point the Secretary-General invited all representatives attending the Assembly to draw their Government’s attention to those examples and to find out whether they might wish and be prepared to contribute to U NIDROIT’S work through a secondment for a year or two; ♦ core legislative activities were funded by private donors and extra-budgetary contributions to an ever increasing extent;UNIDROIT 2005 – A.G. (59) 12 3. ♦ demand for U NIDROIT’S outreach resources, in particular legal co-operation, technical assistance and use of the UNIDROIT library facilities, was rising steeply; ♦ the international competition for the filling of the post of Deputy Secretary-General had drawn no fewer than twenty-four candidatures from eighteen countries in four continents,

assistance and use of the UNIDROIT library facilities, was rising steeply; ♦ the international competition for the filling of the post of Deputy Secretary-General had drawn no fewer than twenty-four candidatures from eighteen countries in four continents, among them senior Government officials and officials from other international Organisations, but also experienced practitioners from the private sector and academics; and ♦ last, but not least, U NIDROIT was able to welcome its 60 th member State, while the 61 st was expected to join shortly.

Legislative activities: preparation of instruments

13. With respect to the preparation of the second and third protocol to the Cape Town Convention on International Interests in Mobile Equipment , i.e. the rail-financing protocol and the protocol designed to facilitate privately financed space-asset operations and space-based services, work had fallen behind.

14. As regarded the draft Protocol on Matters specific to Railway Rolling Stock , preparations had almost been completed, with the exception of the third planned regional preparatory seminar, to be held in Africa. Unfortunately, the Government with which negotiations had been underway regarding the hosting of the diplomatic Conference for its adoption, had recently advised the Secretariat that it was not in a position to extend an invitation. Despite this unfortunate outcome, the Ministry of Foreign Affairs of the country concerned had extended its full support throughout the negotiations and he wished to place this on record. It was now necessary to look for an alternative.

15. Work on the preliminary draft Protocol on Matters specific to Space Assets had not advanced as planned at the 2004 session of the Committee of governmental experts for three reasons: firstly, Governments’ failure to participate in urgent inter-sessional work for the clarification of one key issue; secondly, problems in securing the Space Working Group’s continued involvement; thirdly and most importantly, the Principal Resear ch Officer’s taking on the role and duties of

firstly, Governments’ failure to participate in urgent inter-sessional work for the clarification of one key issue; secondly, problems in securing the Space Working Group’s continued involvement; thirdly and most importantly, the Principal Resear ch Officer’s taking on the role and duties of Deputy Secretary-General a.i. W i t h M r S t a n f o r d ’ s 1 0 0 % a v a i l a b i l i t y ( i n s t e a d o f 2 0 % ) f o r t h e project, that delay would not have occurred.

16. As regarded the preliminary draft Convention on subs tantive rules regarding intermediated securities, work was advancing quickly and on schedule. The invitations for the second session, to be held in March 2006, had been sent out. He stressed that an estimated 85% of the costs of this project had so far been, and continued to be, borne not by Governments of member States, but by a private donor, namely the German Banking Federation. During the year 2005, the United Kingdom generously seconded Ms Alison McMillan to assist this project.

17. As regarded the implementation and promotion of U NIDROIT instruments, three additional accessions to the Cape Town Convention and the Aircraft Protocol (Oman, Ireland and Malaysia) would bring the latter into force and make the two instruments operational on 1 March 2006.

18. The International Registry for aircraft objects, located in Ireland, was up and running, the International Civil Aviation Organization (ICA O) had accepted the functions of Supervisory Authority, and U NIDROIT, in the person of Mr John Atwood , was geared up to attend to the depositary’s functions under the Convention and the Aircraft Protocol.

19. Mr Atwood’s work on editing the Acts and Pr oceedings of the Cape Town Conference, the participation of the organisation in seminars for the Asia-Pacific region in Singapore and central and eastern Europe in Prague, as well as the devotion of three U NIDROIT research scholarships to the

19. Mr Atwood’s work on editing the Acts and Pr oceedings of the Cape Town Conference, the participation of the organisation in seminars for the Asia-Pacific region in Singapore and central and eastern Europe in Prague, as well as the devotion of three U NIDROIT research scholarships to the Cape Town Convention (with recipients from Argentina, China and the Russian Federation), completed the Secretariat’s efforts aimed at the implementation and pr omotion of these two instruments.U NIDROIT 2005 – A.G. (59) 12

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20. The activities aimed at implementing and promoting the other instruments had become routine and routinely successful: ♦ the Principles of International Commercial Contracts were sailing; ♦ four new ratifications had rendered the UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects the most successful of all UNIDROIT Conventions so far; ♦ the ALI/UNIDROIT Principles of Transnational Civil Procedure were meeting keen interest in Thailand, Lithuania, Botswana, Mozambique and three Latin American member States.

21. The Secretary-General considered that an overall assessment of the Organisation’s legislative activities from the point of view of the Strategi c Plan and the criteria and objectives set forth therein might be that: ♦ the quality criteria were being met; ♦ work had continued to reflect the priorities established by the Strategic Plan; ♦ work on the intermediated securities progressed satisfactorily; work on the two outstanding protocols to the Cape Town Convention had been delayed and must cause concern.

Legal Co-operation Programme

22. The first tier, the Research Scholarships Programme , was built on the quality and the development of the U NIDROIT Information Centre, notably the library. The second tier was assistance in the preparation and implementation of domestic laws based on or otherwise related to work carried out in U NIDROIT or in the other private law formulating organisations. The most prominent example of the latter was the draft Uniform Act on Contracts transmitted to OHBLA/OHADA. This project, based on the Principles of International Commercial Contracts and

to work carried out in U NIDROIT or in the other private law formulating organisations. The most prominent example of the latter was the draft Uniform Act on Contracts transmitted to OHBLA/OHADA. This project, based on the Principles of International Commercial Contracts and carried out with funding from Switzerland, was being praised throughout Western Africa for its inclusive approach. It had raised U NIDROIT’s profile in that region significantly. Requests for followup work as well as requests to assist legislation in other parts of the world in a similar fashion were evidence of the programme’s impact on the realisation of the relevant strategic objectives. The available funds were, however, not sufficient to make any commitment. Development of the UNIDROIT Information Centre

23. The Centre’s core feature was the library. Under a strategic perspective and applying privatesector accountancy criteria such as costs/profits, the library provided a valuable and noteworthy case study: ♦ costs for staff had decreased by almost 4.5% over the last seven years; ♦ costs (i.e. expenditure under the regular budget) for the acquisition of books and periodicals had remained unchanged over the last six year s although prices for books and periodicals had increased by 30 – 40%; ♦ in 2005 private donors’ contributions to the library had exceeded budgetary means at its disposal by more than 20%, testifying to the recognition of the library’s, and its management’s, outstanding quality; ♦ the decision, taken by the Secretariat and suppo rted by the Finance Committee, to apply the savings to the only significant investment in technology in years, enabling the catalogue to be made fully accessible online, was beginning to bear fruit; users around the world would be able to reap the full benefits in two years’ time.UNIDROIT 2005 – A.G. (59) 12 5.

Staffing / internal organisation of the Secretariat

24. The Secretary-General stated that the Secretariat was just about able to carry its burden thanks to the generosity of the Government of the United Kingdom and of the German banks.

Staffing / internal organisation of the Secretariat

24. The Secretary-General stated that the Secretariat was just about able to carry its burden thanks to the generosity of the Government of the United Kingdom and of the German banks.

Recently, Mr Ronald DeKoven (3/4 South Square, London; Je nner and Block, Washington) had committed to seconding, for periods of one year each, a young top-level attorney.

25. As regarded the new Deputy Secretary-General, the Governing Council, encouraged by the commitment of the Government of the United Kingdom to make an extra-budgetary contribution of £ 50,000 (€ 74,000), had authorised the holding of an open, world-wide competition. The Permanent Committee had made its decision and pr oduced a short-list of three persons. The topranked candidate would receive an offer of a one-year contract. He found it astonishing that some Governments had difficulty in acknowledging that a chief administrator who had always been provided for in the organigramme and who, in the person of Mr Rodinò, had generously but unwisely offered his work over the years at a 60% discount, was actually needed and needed to be replaced, and that a newly hired person would insist on being 100% paid for working full time. As long as this kind of uncertainty over member Governments’ willingness properly to staff the organisation in accordance with an agreed organigramme persisted, a number of priority objectives identified in the Strategic Plan were likely to remain illusory.

Relationship with member States / Efforts to convince other Governments that joining UNIDROIT was a good thing

26. At the invitation of the Government of India, he had visited New Delhi and had had most fruitful discussions with representatives of the Mi nistry of Foreign Affairs and other stakeholder ministries. Thereafter, a joint seminar devoted to the capital market-related projects, organised by Mr B. Sen, member of the Governing Council and sponsored by the Securities Commission of India, had been held in Mumbai.

27. Immediately following that visit, he had gone to Brazil where he had had a series of useful

ministries. Thereafter, a joint seminar devoted to the capital market-related projects, organised by Mr B. Sen, member of the Governing Council and sponsored by the Securities Commission of India, had been held in Mumbai.

27. Immediately following that visit, he had gone to Brazil where he had had a series of useful meetings with representatives of the Government and the judiciary, arranged by the Ministry of

External Relations.

28. A visit to Riga, at the invitation of the Government of the Republic of Latvia, had contributed to the accession of that Government to the Statute of UNIDROIT.

29. In Jakarta he had had meetings with the Minister of Justice as well as with high-level officials from the Ministry of Foreign Affairs, the Ministry for the Co-ordination of the Economy and the Ministry of Transport. A one-day seminar on U NIDROIT work, with almost 200 participants from among the legal professions, academics, business leaders and Government agencies, had followed.

The Governments of Australia and Italy had very effectively supported this initiative. He hoped that the foundations for the accession of Indonesia had been laid.

30. Listening carefully to his Indonesian hosts, and looking back at the series of similar contacts he had had with the Governments of Vietnam, Thailand and Malaysia over the years, it was clear to him that even very intense “one-offs” were not enough. There needed to be a sustained follow-up.

Since the Asia-Pacific region was, and must be, a key target in efforts to strengthen and widen membership, he intended to draw up proposals on how the organisation might structure these efforts and would revert to Governments on that matter shortly.

31. There was more than hope with respect to Ukraine. He was therefore pleased to welcome the Ambassador of Ukraine to the Assembly meeting which he was attending as observer.

32. A specific issue with reference to membership of U NIDROIT was the question of the European Union. How and when the European Union would become a member of U NIDROIT was awaiting the solution of the question of the European Un ion membership of the Hague Conference. This

32. A specific issue with reference to membership of U NIDROIT was the question of the European Union. How and when the European Union would become a member of U NIDROIT was awaiting the solution of the question of the European Un ion membership of the Hague Conference. This procedure was nearing its conclusion, which was in fact expected by mid-2006.U NIDROIT 2005 – A.G. (59) 12

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33. Turning to the monitoring of the implementati on of the Strategic Plan as agreed by the Governing Council and the Finance Committee, he indicated that comments submitted by Governments, whether in the Finance Committee, the General Assembly or in response to the discussions in the General Assembly over the fo llowing weeks, would be reflected in a more comprehensive document that the Secretariat intended to submit to the Governing Council in 2006.

He suggested that this would be the appropriate pr ocedure, as it would permit the Secretariat to conduct the analysis and make projections on the basis of the new Work Programme 2006 – 2008 as adopted by the General Assembly. There was agreement that future updates would occur as an on-going dialogue between Governments, the Governing Council and the Secretariat.

Item No. 4 on the Agenda: (b) Presentation of the draft Protocol to the Convention on International Interests in Mo bile Equipment on Matters specific to Railway Rolling Stock

34. Mr John Atwood (UNIDROIT Secretariat) recalled that in recent years it had become customary for a project on which the Institute was working to be illustrated in greater detail to the representatives of member States meeting in the General Assembly. This year, the project to be presented was the draft Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Railway Rolling Stock.

35. The draft Rail Protocol was part of what co uld be called the “Cape Town package”, which established a framework Convention, with Protocols to be developed to apply that framework to the context of particular categories of mobile equipment. The Convention had been developed over

on Matters specific to Railway Rolling Stock.

35. The draft Rail Protocol was part of what co uld be called the “Cape Town package”, which established a framework Convention, with Protocols to be developed to apply that framework to the context of particular categories of mobile equipment. The Convention had been developed over many years and had been adopted at a diplomatic Conference held in Cape Town in 2001. It had entered into force in April 2004. The Aircraft Protocol was due to enter into force on 1 March 2006, together with the International Registry for aircraft objects.

36. The Cape Town Convention was designed to overcome the problem of obtaining secure and readily-enforceable rights in items of high-value mobile equipment which by their nature did not have a fixed location. Different legal systems recognised different security interests in different ways and circumstances. This created uncertainty about whether financiers would be able to enforce their rights in the event of default. Th is inhibited the extension of finance for those categories of equipment, particularly to developing countries, and increased borrowing costs. The Convention’s approach was to create an internationally-recognised system for the recognition and enforcement of such security interests. This syst em would take precedence over national systems and would therefore enable financiers quickly and effectively to take action in the event of default.

Under the Convention, the system would be applicable to different types of mobile equipment as set out in a Protocol.

37. Work on the draft Rail Protocol had begun prior to the adoption of the Cape Town Convention. A Rail Working Group had been esta blished in 1996. The draft Rail Protocol would apply the Convention to railway rolling stock. In its current state the Protocol differed from the Aircraft Protocol in a few technical areas, but it largely followed the model that had been successfully adopted with the Aircraft Protocol.

38. The reasons for the preparation of the first version of the draft Rail Protocol were that the rail sector urgently needed additional capital expe nditure (e.g. in Europe the average life of freight rolling stock was close to its recommended useful life). Furthermore many operators were Stateowned, and resources were limited. Investments had been frustrated because of the absence of

rail sector urgently needed additional capital expe nditure (e.g. in Europe the average life of freight rolling stock was close to its recommended useful life). Furthermore many operators were Stateowned, and resources were limited. Investments had been frustrated because of the absence of public national registries where financiers could register their interests. Lenders did not have the security that they needed to advance funds. The draft Rail Protocol would address these problems by providing a mechanism for private and public sector rail operators to utilise the private capital markets.UNIDROIT 2005 – A.G. (59) 12 7.

39. The advantages were multiple. Firstly, for the operators there would be increased sources of capital for investment, and greater flexibility in how they funded (e.g. purchased, leased) their rolling stock. The manufacturers would see an increase in demand for rolling stock, which would enable manufacturers to explore extending credit to customers. For the banks there would be greater security, lower risks, lower financing costs and a larger number of transactions. There were also socio-economic reasons for Governments to develop freight transport by rail, and the draft Protocol would enable this to be financed by the private sector.

40. As regarded the future, work on this project had to all intents and purposes been completed.

Three sessions of governmental experts had been held (March 2001, June 2002, May 2003), four meetings of the special Rail Registry Task Force had also been held (March 2002, March 2003, September 2004 and February 2005), as had one re gistry workshop (Rome, February 2005) and regional seminars for Central and Eastern Europe (Warsaw, April 2004), and Latin America (Mexico City, October 2004). A third regional seminar, this time for Africa, was being planned. Thereafter the following step would be the diplomatic Conference for the adoption of the draft Protocol, which it was expected would be held in 2006.

41. The representative of the United States of America thanked Mr Atwood for the presentation, which, he stated, had given a good explanation of the benefits to be derived from the draft

the following step would be the diplomatic Conference for the adoption of the draft Protocol, which it was expected would be held in 2006.

41. The representative of the United States of America thanked Mr Atwood for the presentation, which, he stated, had given a good explanation of the benefits to be derived from the draft Protocol. Whereas, however, those present in the room who had benefited from this presentation now had a clear picture of these benefits, he was not sure that the benefits were clear to those who had a wider interest. He suggested that documents produced by the Institute, such as the Annual Report or specific reports on this matter, highlight the benefits that would be brought to both member States and industry by the adoption of the draft Rail Protocol.

42. The General Assembly took note of the presenta tion of the draft Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Railway Rolling Stock.

Item No. 5 on the Agenda: Composition of the Finance Committee for the 2006/2008 triennium (A.G. (59) 3)

43. Introducing this item on the Agenda, the Deputy Secretary-General a.i. stressed the importance of the role played by the Financ e Committee and the Sub-committee of the Finance Committee. The composition of the Finance Committee was due for renewal at this session, and it was for the General Assembly to decide on the composition of the Finance Committee for the three years commencing on 1 January 2006.

44. The current membership of the Finance Commi ttee was the following: Austria, Canada, France, Germany, India, Islamic Republic of Iran, Italy, Japan, Mexico, Romania, Russian Federation, Spain, Switzerland, United Kingdom and United States of America.

45. None of the current members of the Finance Committee had communicated their wish to stand down. They were therefore to be interprete d as accepting renewal of their membership for a further three-year period.

46. No other member States had indicated that they would like also to serve on the Finance Committee in its new composition. He stated that should there be any such States, the Secretariat

stand down. They were therefore to be interprete d as accepting renewal of their membership for a further three-year period.

46. No other member States had indicated that they would like also to serve on the Finance Committee in its new composition. He stated that should there be any such States, the Secretariat invited them to make themselves known.

47. No observations having been made, the members of the Finance Committee currently serving on that Committee were confirmed for the three-year period 1 January 2006 – 31

December 2008.U NIDROIT 2005 – A.G. (59) 12

8. Item No. 6 on the Agenda: Approval of the Work Programme for the 2006/2008 triennium (A.G. (59) 4)

48. Introducing this item on the Agenda, the Secretary-General recalled the procedure for the adoption of the Work Programme. He indicated that discussions in the Governing Council in April had led to a number of criteria for the selection of topics to insert in the Work Programme. These were whether there was evidence of the need for the instrument that it was suggested should be prepared, whether it was feasible to complete work within a reasonably foreseeable time-frame, whether U NIDROIT was better placed to work on the item suggested than other organisations, whether a cost-benefit analysis indicated that work should be done, and whether a particular group of member States, in particular developing countries and countries with economies in transition, stood to benefit from work on the item proposed.

49.