UNIDROIT - Report General Assambly 2006

GENERAL ASSEMBLY UNIDROIT 2006 60th session A.G. (60) 7

Rome, 1 December 2006 Original: French December 2006

REPORT

(prepared by the UNIDROIT Secretariat)

Item No. 1 on the draft Agenda: Welcome by the President of UNIDROIT

1. The 60 th session of the General Assembly was held at the headquarters of U NIDROIT on 1

December 2006 and was attended by the diplomatic representatives in Italy of 49 member States and three observers ( cf. the list of participants in Appendix I). The meeting was opened by Mr B. Libonati, President of UNIDROIT.

2. The President welcomed the participants and thanked them for their presence. He recalled that the General Assembly offered an opportunity for the Secretariat to present to the representatives of the member States the work accomplished over the past year, to inform them of any difficulties encountered and to submit propos als to solve these difficulties; in 2002 and 2003, the General Assembly had held joint brainstorming sessions with the Governing Council and on those occasions the Secretariat had presented a memorandum containing proposals to increase Governments’ involvement with the life of the Institute. However, the heavy workload of diplomats posted in Rome and of their respective Ministries probably explained why these proposals were never followed up.

3. The President expressed his profound gratitude to H.E. Ambassador Valente who, in his capacity as President of the General Assembly in the year 2005/2006, had given freely of his advice and support, both essential to the work of the Institute. The President then thanked Mr J.

Renggli, who had served the Institute as Pres ident of the Finance Committee and who had now returned to Berne; Mr Renggli, who never lost his calm and was unfailingly efficient and thorough, was always at the Secretariat’s disposal, an attitude which reflected the staunch generosity of the Swiss Government vis-à-vis the Organisation. The President expressed his gratitude to Mr K.

returned to Berne; Mr Renggli, who never lost his calm and was unfailingly efficient and thorough, was always at the Secretariat’s disposal, an attitude which reflected the staunch generosity of the Swiss Government vis-à-vis the Organisation. The President expressed his gratitude to Mr K. Vachon, Counsellor at the Embassy of Canada, who had agreed to take over from Mr Renggli.

4. The President then went on to remind those present of the invitation to participate in the diplomatic Conference for the adoption of a Rail Pr otocol to the Cape Town Convention in February 2007 issued by the Government of the Gran d Duchy of Luxembourg, and requested the representative of the Grand Duchy to express to his Government the Institute’s sincere gratitude.

5. The President recalled that the Institute had been able, in 2006, to fill the key position of Deputy Secretary-General, thanks to the backing of the Government of the United Kingdom, and that the Institute’s most important project in economic terms – the draft Convention on intermediated securities – had attracted support from the private sector; as a consequence, cautious optimism was in order as to the future activities of the Organisation.

6. The President wished the Assembly every possible success in its deliberations.2. U NIDROIT 2006 – A.G. (60) 7

Item No. 2 on the draft Agenda: Statement by the President of the General Assembly for the year 2005-2006

7. The President of the General Assembly for the year 2005/2006 , H.E. Mr Vasco Taveira Da Cunha Valente, Ambassador of Portugal in Italy, thanked U NIDROIT and congratulated it on the excellent work that had been done in 2006. It had been a great honour to serve as President of the UNIDROIT General Assembly for the past year. He recalled that 2006 had seen, in particular, the accession of a new member State, Lithuania, and invited all participants to join him in welcoming

excellent work that had been done in 2006. It had been a great honour to serve as President of the UNIDROIT General Assembly for the past year. He recalled that 2006 had seen, in particular, the accession of a new member State, Lithuania, and invited all participants to join him in welcoming Lithuania, represented by H.E. Mr Sarunas Adomavicius, Ambassador of Lithuania in Italy.

Item No. 3 on the draft Agenda: Appointment of the President of the General Assembly for the year 2006-2007

8. The President of the General Assembly recalled that there was a well-established practice for the presidency of the General Assembly of UNIDROIT to be held on the basis of a system of rotation, by a Member State from one of the five continents. For the year to come it was the turn of the Americas and, following informal consultations, he was pleased to propose H.E. Dr Gabriel Valdéz, Ambassador of Chile in Italy, to be elected President of General Assembly for the year commencing with today’s session. He recalled that Ambassador Valdéz was a distinguished lawyer, a leading political figure in his country and that he served for many years as Minister of Chile and as UnderSecretary General of the United Nations, and that he contributed greatly to the restoration of democracy in his country.

9. The General Assembly accepted the proposal.

Item No. 4 on the draft Agenda: Statement by the President of the General Assembly

10. Taking the chair, Ambassador Valdéz expressed his gratitude for the trust which was placed in him. It would be a pleasure for him to chair the General Assembly at its 60th session and to be at the disposal of the Institute for the year to come.

11. He recalled that Chile acceded to the U NIDROIT statute more than half a century ago, and that there existed strong cultural, and in particular legal, links between Chile and its neighbours and friends in the Western hemisphere and the Old World, notably with Rome. However, the work of

11. He recalled that Chile acceded to the U NIDROIT statute more than half a century ago, and that there existed strong cultural, and in particular legal, links between Chile and its neighbours and friends in the Western hemisphere and the Old World, notably with Rome. However, the work of UNIDROIT tended to be at that time somewhat eurocentric, and that had changed dramatically in recent years. He affirmed that the Institute was contributing, with the instruments finalised recently or to be adopted in the near future, to the modernisation of the law in financial and commercial matters in developing countries, economies in transition and in the so-called tiger

States.

12. The President expressed his desire briefly to introduce himself and to share with the members of the Assembly a few thoughts regarding their common mission. After his studies in I t a l y , i n C h i l e a n d i n P a r i s , h e h a d b e e n f o r 1 4 y e a r s t h e h e a d o f t h e l e g a l d e p a r t m e n t o f t h e greatest Chilean steel company, was then appoin ted Minister of Foreign Affairs and thereafter Assistant Secretary-General and Director of the UNDP in New York. Back in Chile, he organised the fight against the dictator Pinochet, spent a long time in jail, and after the change of regime was elected to the Senate and served as President of the Senate until the previous month. At the end of his life he had been sent to Rome as Ambassador, and he considered it a great honour now to serve as President of the UNIDROIT General Assembly. He wished to state, both as a former businessman and a former legislator, that new ho rizons were beckoning, and that the world was facing unprecedented challenges. Globalisation could either be a very dangerous development or produce significant benefits for mankind, depending on the legal framework. He recalled that

businessman and a former legislator, that new ho rizons were beckoning, and that the world was facing unprecedented challenges. Globalisation could either be a very dangerous development or produce significant benefits for mankind, depending on the legal framework. He recalled that Joseph Stiglitz, the economist and Nobel laureate, had warned that globalisation would produce more problems than benefits if a few multinational groups of companies were allowed to eliminate true competition. Modern and functional frameworks for international commerce and finance wereUNIDROIT 2006 – A.G. (60) 7 3. needed. Moreover, international law – both public and private – had an impact on the environment and the common heritage of mankind. Activities in the Arctic and Antarctic, which he watched closely in his capacity as Senator from the South of Chile, called for adequate regulation. The law was essential and aimed at organising three values: property, freedom and efficiency. He added that legal education should remain a priority in this Organisation. The combination of the scholarly and the practitioner’s approach distinguished the activity of U NIDROIT. He concluded that with everybody’s help, he would do his best to support UNIDROIT’s activities in the coming year.

Item No. 5 on the draft Agenda: Adoption of the agenda (A.G. (60) 1 rev.)

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

Item No. 6 on the Agenda: Statement regarding the Institute’s activity in 2006 and Implementation of the Strategic Plan (A.G. (60) 2)

14. In introducing this item, the Secretary-General focused on the continuing tension between the high expectations Governments nurture as regards the Organisation’s ability to deliver largescale technical assistance (developing countries) and highly sophisticated instruments for the world’s financial markets (Europe, north America, east Asia), at the same time. While UNIDROIT was flattered by the trust in its capacity to develop first-rate legislative instruments and provide a whole range of documentation services and research resources, the Secretariat kept reminding Governments, in particular Governments in developing countries contemplating accession to the

flattered by the trust in its capacity to develop first-rate legislative instruments and provide a whole range of documentation services and research resources, the Secretariat kept reminding Governments, in particular Governments in developing countries contemplating accession to the Organisation, that its budgetary and, therefore, human resources were very limited and that, consequently, the Secretariat was forced rigorously to prioritise. At the same time, he wished to remind everybody that, on the occasion of the joint brainstorming sessions, agreement had been placed on record that U NIDROIT’s distinct identity required to prioritise within both areas, legislative work and outreach-services, rather than narrowing th e scope of its activities to just one of the two principal branches. The Secretary-General elaborated further on such requests for capacity-building services by ASEAN Member States, in particular Indonesia. He underlined the leading role Member States from the Asia-Pacific region would ideally assume in shaping and supporting initiatives of this nature and expressed his gratitude to the Go vernments of Australia, China, Japan and Korea who had indicated their willingness to assist the Institute in its efforts to broaden its membership basis in Asia and the Pacific.

Legislative activities: preparation of instruments

15. With respect to the second protocol to the 2001 Cape Town Convention, i.e. the railwayfinancing protocol, the Secretary-General reminded the Assembly that, in July, the Government of the Grand Duchy of Luxembourg had invited all Memb er States of the United Nations to attend the diplomatic Conference for the adoption of the instrument from 12 to 23 February 2007. He emphasized that it was one of the most sophisticated financial centres that had thereby acknowledged the potential of the draft Protocol for the future of transportation infrastructure in many parts of the world. The Government of Lu xembourg had, moreover, funded the preparatory seminar for African countries held on 17 November 2006 in Lomé (Togo).

16. The Secretary-General reported on the status of the Cape Town Convention and the Aircraft Protocol (13 Contracting States) and on the 1st Asia-Pacific Cape Town Convention organised by the

seminar for African countries held on 17 November 2006 in Lomé (Togo).

16. The Secretary-General reported on the status of the Cape Town Convention and the Aircraft Protocol (13 Contracting States) and on the 1st Asia-Pacific Cape Town Convention organised by the Chinese Civil Authority and the Aviation Working Group and attended by Government representatives and experts from all Chinese and ma jor Asian airlines. At the meeting, the CFOs of airlines had given testimony regarding the economic benefits of ratifying the instruments provided the right declarations with respect to remedies and the insolvency regime were made.

17. With respect to the draft Space Protocol, wo rk was held up due to various factors, most importantly Mr Stanford, Principal Research Officer in charge of the project having temporarily been forced to carry out the functions of Deputy Secretary-General ad interim and chief4. U NIDROIT 2006 – A.G. (60) 7 administrator. He would now again be free to devote his unique talents and his attention to getting the draft Protocol back on track. The lesson to be learnt was that an apparently quick and inexpensive fix of a structural staffing problem coul d create significant extra cost in terms of delay to member States.

18. The Secretary-General further reported that th e draft Convention on intermediated securities had been before the Committee of governmental experts which had held its third session from 6 to 14 November 2006. A very short fourth session, entirely devoted to specific issues such as the socalled “transparent systems”, would be held in May 2007. The diplomatic Conference was expected to be held in early 2008. How important this draft and the other capital-market related projects were, was evidenced by a special conference on stability of financial markets organised by the International Monetary Fund (IMF) in mid-October for specialists from central banks and regulatory agencies where the UNIDROIT work had featured prominently.

19. With respect to the draft Model Law on leas ing, the Secretary-General briefly outlined the envisaged timetable for the intergovernmental consultation process and referred for details to Mr Stanford’s presentation.

agencies where the UNIDROIT work had featured prominently.

19. With respect to the draft Model Law on leas ing, the Secretary-General briefly outlined the envisaged timetable for the intergovernmental consultation process and referred for details to Mr Stanford’s presentation.

20. The Working Group for the preparation of five new chapters to be added to the U NIDROIT Principles of International Commercial Contracts had held its first session. The Group had commenced to discuss a number of basic issues an d appointed reporters who would submit their reports for the next session in June 2007.

21. The Secretary-General considered that a fair assessment of the Organisation’s legislative activities from the point of view of criteria set forth in the Strategic Plan would conclude that: ♦ the quality criteria were being met; ♦ the delays from which the Rail and the Space Protocol had suffered during 2005 and into the first months of 2006 had almost been recovered.

Depositary functions and follow-up work

22. In the course of his overview of follow-up work, the Secretary-General described in detail the highly demanding and time-consuming depositary functions under the Cape Town Convention and the Aircraft Protocol. Given that the majority of States engaged in the implementation of the instruments were developing countries with little legal infrastructure and public-international–law know-how, the consultations as a rule were spread over many months and required Mr Atwood, the officer in charge of the depositary functions, not infrequently to spend nights and weekends in the office.

Publications

23. With respect to the Uniform Law Review , whose role as the most effective among the Institute’s tools employed in its efforts to disseminate its texts and to reach out to developing countries and transition economies was undisputed, the Secretary-General acknowledged that certain Governments had difficulties in accepting that more than one member of the staff was fully assigned to the journal. He indicated that discussions with members of the Review’s advisory board were under way with a view to identifying appropriate strategies capable of saving resources while maintaining the periodical’s quality.

Staffing/ internal organisation of the Secretariat

assigned to the journal. He indicated that discussions with members of the Review’s advisory board were under way with a view to identifying appropriate strategies capable of saving resources while maintaining the periodical’s quality. Staffing/ internal organisation of the Secretariat

24. The Secretary-General noted that eleven months after the arrival of a new Deputy SecretaryGeneral, it had become clear that a sound organigramme that included a skilled administrator was the foundation if one saw the Institute and its activities as a building. He submitted that only in solid foundations would prudent owners venture to anchor a sophisticated building in which complex and expensive processes designed to produce first-class instruments and services were toUNIDROIT 2006 – A.G. (60) 7 5. take place. Experience had shown that this was not sustainable without key administrative functions being carried out by a person with specif ic skills. In his personal view, one might even put a legislative or other project which had not the highest priority temporarily on hold if only such a sacrifice permitted the full re-instatement of a post which – generously but unwisely – had been taken care of by its retired former holder on an almost voluntary basis.

25. The representative of Canada expressed her thanks to the Secretary-General for his presentation and recalled that her Government had a strong interest in the development of the Strategic Plan, considering that it was an important tool both for medium and long-term planning for the Institute and for the member States. Canada believed that the prioritization of the activities still needed work; therefore it strongly urged the Secretary-General and the Secretariat to make sure that the Governing Council understood that when all of the activities were given high priority, the result was that there was no prioritization, and this did not help in making decisions about which activity should proceed in the context of the availability of budgetary resources. It would be helpful to have a more detailed breakdown of priorities in the context of certain initiatives; for example, for what concerned the International Interests on Mobile Equipment, it would be helpful to separate activities relating to the Convention itself and the Protocols. She indicated that the promotion of the Aircraft Protocol was a higher priority item, and that the Rail Protocol should

example, for what concerned the International Interests on Mobile Equipment, it would be helpful to separate activities relating to the Convention itself and the Protocols. She indicated that the promotion of the Aircraft Protocol was a higher priority item, and that the Rail Protocol should obviously be given a high priority. In terms of the Space Protocol, the representative of Canada appreciated the explanation that was given by the Secretary-General as to the reason for this project not advancing as quickly as the Secretariat or the Governing Council might have wished. Canada however suggested that progress on that Protocol might be also due to a lack of interest on the part of member States; the Government of Canada would attribute a much lower level of priority to the Space Protocol and would suggest that the Secretariat not devote significant resources to that Protocol for the foreseeable future. For what concerned other priorities, the Convention dealing with intermediated securities was a high priority matter which should go ahead. She indicated that, as most of the non-legislative ac tivities were indicated as high priority, it was essential that the Governing Council re-examined its approach to strategic planning and considered to assign priorities more selectively.

26. The representative of the Russian Federation , having expressed his appreciation for the intervention of the Secretary-General, inform ed the General Assembly that its Government approved the main provisions of the Strategic Plan of U NIDROIT for the years 2006-2007, and in particular the elaboration of the draft Protocols to the Cape Town Convention, the Model Law on leasing, the Convention on substantive rules regarding intermediated securities as well as the new chapters of the Principles of International Commercial Contracts. He indicated that his Government wished that UNIDROIT prepare the draft Space Protocol as soon as possible; he was able to declare officially that in case of successful termination of the work on the draft, the Government of the Russian Federation could consider the possibility of hosting the Diplomatic Conference for its adoption.

27. The representative of Italy expressed satisfaction at the success of the activities accomplished in the current year, and appreciation for the efforts undertaken by the SecretaryRussian Federation could consider the possibility of hosting the Diplomatic Conference for its adoption.

27. The representative of Italy expressed satisfaction at the success of the activities accomplished in the current year, and appreciation for the efforts undertaken by the SecretaryGeneral. He affirmed that the Government of Ital y strongly supported the call of the Diplomatic Conference for the adoption of the draft Rail Protocol to the Cape Town Convention in Luxembourg in 2007 in which Italy intended to participate with a large delegation. He stated that the Government of Italy was interested in the adoption of a draft Model Law on leasing and strongly encouraged the rapid finalisation of the work on the draft Convention on intermediated securities and hoped that it would be possible to have a Diplomatic Conference for its adoption in 2007 or

2008.

28. The representative of Switzerland expressed his gratitude for the way in which the activities of the Institute had been presented; he went on to state that the Swiss Government endorsed the need to prioritise raised by the representative of Canada. His Government attached very high6. U NIDROIT 2006 – A.G. (60) 7 priority to the intermediated securities project, and the diplomatic Conference for its adoption, which was to take place in the first half of 2008, might be held in Switzerland. The Swiss Government’s decision in this connection might be expected in the Spring or Summer of 2007.

29. The representative of the United Kingdom thanked the Secretary-General for his useful and informative report, and indicated that she was interested in what was said on reforms on budget planning, accounting and internal audit. The Government of the United Kingdom endorsed what had been said by the representative of Canada regarding the need to prioritise and for the Governing Council to be more rigorous. She indicated that for the United Kingdom the project on intermediated securities was a high priority and that it considered the Space Protocol a low priority.

30. The representative of Nigeria indicated that his Government accorded the highest priority to the timely completion of work on the draft Protocol to the Cape Town Convention on Matters Specific to Space Assets. He recalled that the meeting which took place in London in April showed

30. The representative of Nigeria indicated that his Government accorded the highest priority to the timely completion of work on the draft Protocol to the Cape Town Convention on Matters Specific to Space Assets. He recalled that the meeting which took place in London in April showed clearly the need for this Protocol and the importance of active participation of all the representatives of the international commercial space financial communities in the remaining stages of this work. He wished to stress the particular importance of the future Space Protocol for developing countries. His Government also supported the preliminary draft Model Law on leasing, because the project was specifically intended for developing and transition economies in general, and for African countries in particular, and hoped that this project could be completed without delay.

31. The representative of the United States of America expressed the appreciation of its Government for the hiring of a new Deputy Se cretary-General, because that administrative position, that had been vacant for a long period, was essential to UNIDROIT. He affirmed that he had listened with great interest to the intervention of the Secretary-General explaining the document on the Strategic Plan, and that he believed that that living document could help refine the direction of UNIDROIT. Although the opinions expressed by the representatives of the member States would obviously not always match, in particular as concerned priorities, he expressed the view that it was an extremely valuable document. He indicated that the Government of the United States of America attributed a high level of priority to the Space Protocol, and that substantial support was evidenced for this work in London in 2006. He wished to commend the Secretary-General for showing leadership and vision in having proposed and shaped the investment securities treaty project and that his Government strongly supported the 4 th session of the Committee of Governmental Experts to take place in 2007. He expressed the hope that the draft Model Law on leasing could be concluded in 2007. He concluded that the Institute had to fund many activities with an extremely tight budget. Having designed and further developed the Strategic Plan had helped to carry through an ambitious work programme with a much smaller staff than other Organisations. His Government was confident that, on the basis of the Strategic Plan, the

with an extremely tight budget. Having designed and further developed the Strategic Plan had helped to carry through an ambitious work programme with a much smaller staff than other Organisations. His Government was confident that, on the basis of the Strategic Plan, the Governing Council, the General Assembly and its Finance Committee and the Secretariat would be able to provide leadership and to chart the map for the way forward, maintaining UNIDROIT’s distinct identity. It was, in his Government’s view, this distinct identity which was at the heart of the Organisation’s very good work.

32. The representative of Colombia expressed the pleasure of its Government at the nomination of Dr Gabriel Valdéz, the good and experienced Ambassador of Chile, as President of the Assembly.

He congratulated the Secretary-General on his report and announced the participation of his Government in the Diplomatic Conference in Luxembourg and all the other highly topical U NIDROIT meetings in the year to come.UNIDROIT 2006 – A.G. (60) 7 7. Item No. 7 on the Agenda: (a) Presentation of the draft Protocol on Rail Financing to the Cape Town Convention and the Preparatio n of the Diplomatic Conference for its Adoption (Luxembourg, 12-23 February 2007)

33. Ms Marina Schneider (U NIDROIT Secretariat) illustrated the content of the draft Protocol on Rail Financing to the Cape Town Convention, adopted in 2001. She recalled that a diplomatic Conference to adopt the draft Protocol was to be held in Luxembourg at the invitation of the Government of the Grand-Duchy of Luxembourg from 12 to 23 February 2007.

34. The Cape Town Convention was a framework Convention containing basic provisions capable of being modified by equipment-specific protocols (a ircraft, rail, space …), with a view to ensuring that the specific needs of the sector concerned would be met. A first such Protocol, the Aircraft Protocol, had been adopted alongside the Conventi on in 2001 and had entered into force in March 2006 (bringing the number of Contracting States to 13). A Space Protocol was being put together.

that the specific needs of the sector concerned would be met. A first such Protocol, the Aircraft Protocol, had been adopted alongside the Conventi on in 2001 and had entered into force in March 2006 (bringing the number of Contracting States to 13). A Space Protocol was being put together. The drafting of the prospective Rail Protocol had got underway prior to the Cape Town diplomatic Conference and the Final Act adopted on that occasion, in 2001, contained a Resolution (No. 3) urging that work on the Rail Protocol and its adoption should proceed at speed. Work on the Protocol benefited from the fruitful co-operation between Unidroit and another international Organisation, the Intergovernmental Organisation for International Carriage by Rail (OTIF), which had 42 member States and was headquartered in Berne (Switzerland). One of its objectives was to develop the uniform systems of law which apply to the carriage of passengers and freight in international through traffic by rail. The rail sector, which covered not only passenger vehicles and freight, engines and specialised equipment, but also light underground railways and urban underground railways and tram systems, was in dire need of capital investment. Cutting the cost of financing railway rolling stock was in the interests of the railway companies, equipment manufacturers, banks, the railways and States, in particular where the latter intended to scale down their financial involvement in this sector. The lower cost of financing railway rolling stock would also make an important contribution to increasing the competitive edge of railways v