UNIDROIT - Report General Assambly 2007

GENERAL ASSEMBLY UNIDROIT 2007 61st session A.G. (61) 8

Rome, 29 November 2007 Original: English/French December 2007

REPORT

(prepared by the UNIDROIT Secretariat)

Item No. 1 on the draft Agenda: Opening of the session by the President of the Institute and the President of the General Assembly 2006/2007.

1. The 61st session of the General Assembly was held at the headquarters of U NIDROIT on 29

November 2007 and was attended by the diplomatic representatives in Italy of 45 member States and one observer ( cf. the list of participants in Appendix I). The session was opened by H.E. Dr Gabriel Valdés Subercaseaux, Ambassador of Chile in Italy, President of the Assembly for 2006/2007.

2. The President of the General Assembly welcomed the participants. He stated that the year that had elapsed had been particularly intense and productive for the Institute. He recalled that the Diplomatic Conference that in February had adopted the Protocol to the Cape Town Convention on financing of rail equipment had been a major achievement in the life of the Organisation, thanks to the generosity and hospitality of the Grand Duchy of Luxembourg. Similarly, the first meeting of the Committee of Governmental Experts held in Johannesburg to prepare a Model Law on Leasing concerned a subject that is particularly important in a globalised world. Chile, a country belonging to the southern hemisphere, followed with particular interest the work on the third Protocol to the Cape Town Convention, dealing with commercial financing of space assets, especially telecommunication satellites and satellites for monitoring the environment and forecasting natural disasters.

3. H.E. Dr Valdés concluded his address by thanking all the Governments for their support for UNIDROIT, and expressed his gratitude to the Secretariat for its efforts.

Item No. 2 on the draft Agenda: Appointment of the President of the General Assembly for the year 2007-2008

3. H.E. Dr Valdés concluded his address by thanking all the Governments for their support for UNIDROIT, and expressed his gratitude to the Secretariat for its efforts.

Item No. 2 on the draft Agenda: Appointment of the President of the General Assembly for the year 2007-2008

4. The President of the General Assembly recalled that there was a well-established practice for the presidency of the General Assembly of U NIDROIT to be held on the basis of a system of rotation among continents, by a member State from one of th e five continents. For the year to come it was the turn of Australia and the Pacific; U NIDROIT had only one member State in that region, and thus, without need of the usual consultation process, he was pleased to propose H.E. Mrs Amanda Vanstone, Ambassador of Australia in Italy , to be elected President of General Assembly for the year commencing with today’s session. A former lawyer who had held political office at the highest level, her experience, diplomatic skills and leadership would ensure that under her guidance UNIDROIT would continue to be an important intergovernmental forum in the world scenario.

5. The General Assembly accepted the proposal.2. U NIDROIT 2007 – A.G. (61) 8

Item No. 3 on the draft Agenda: Adoption of the Agenda (A.G. (61) 1 rev.)

6. Taking the chair, Ambassador Vanstone expressed her delight at the opportunity to chair the General Assembly at its 61st session and to co-operate with member Governments’ representatives and the Institute’s Secretariat during the coming year.

7. The President of the General Assembly proposed the adoption of the draft Agenda.

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

Item No. 4 on the Agenda: Statement regarding the Organisation’s activity in 2007 and the implementation of the Strategic Plan (A.G. (61) 2)

9. Before introducing this item, the Secretary-General welcomed the representatives of the

Item No. 4 on the Agenda: Statement regarding the Organisation’s activity in 2007 and the implementation of the Strategic Plan (A.G. (61) 2)

9. Before introducing this item, the Secretary-General welcomed the representatives of the member States on his own behalf and also on behalf of the President of U NIDROIT, Mr B. Libonati , who was unable to attend. The President of U NIDROIT had transmitted his address, a copy of which had been distributed to all the participants; th e Secretary-General gave a brief outline of its content.

10. In his address the President of U NIDROIT stated that he sincerely regretted that a sudden indisposition had made it impossible for him to participate in the session. He welcomed the participants and thanked them for their presence. He expressed his particular gratitude to the Government of the Grand-Duchy of Luxembourg, for having hosted the Diplomatic Conference which adopted the Rail Protocol to the Cape Town Convention, the Government of South Africa, for having hosted the first Committee of Governmental experts for the adoption of the Model Law on Leasing as well as the Governments of Switzerlan d and, again, Luxembourg for having provided the funding for the Ougadougou colloquium for the presentation of the draft Uniform Act on contract law for OHADA member States. He then expressed his profound gratitude to H.E.

Ambassador Valdés who, in his capacity as President of the General Assembly in the year 2006/2007, had given his advice and support, both essential to the work of the Institute, and he concluded by wishing the Assembly every possible success in its deliberations.

11. In introducing this item, the Secretary-General focused on the extra-ordinary cumulation of events in the year to come (election of a new Governing Council, adoption of the new triennial Work Programme and appointment of a new Secret ary-General) and the ensuing top priority for completing as much outstanding work as possible by the end of the third quarter of 2008.

12. With respect to those items which had been finalised or which were progressing on

Work Programme and appointment of a new Secret ary-General) and the ensuing top priority for completing as much outstanding work as possible by the end of the third quarter of 2008.

12. With respect to those items which had been finalised or which were progressing on schedule, he reiterated the expression of the Or ganisation’s gratitude to the Government of the Grand Duchy of Luxembourg for engaging forcefu lly in the preparation of and for hosting the Diplomatic Conference that adopted the Luxembou rg Protocol to the Cape Town Convention on secured rail financing. - Likewise, the text of the draft Convention on Intermediated Securities, as finalised by a fourth session of a Committee of governmental experts held in May, had been approved by the Governing Council and transmitted to a Diplomatic Conference for adoption. The Diplomatic Conference would be held, at the invitation of the Government of Switzerland, in Geneva from 1 to 13 September 2008. - Following the very successful first session of a Committee of governmental experts for the preparation of a Model Law on leasing, held thanks to the support of the Government of South Africa from 7 to 10 May 2007 in Johannesburg; a second session would be held, probably in March 2008, in Oman. This would enable the Institute to lay the text before the General Assembly, for adoption, in late summer or early autumn. - The Working Group for the preparation of five additional chapters of the U NIDROIT Principles of International Commercial Contracts (hereinafter UPICC) had held its second session from 4 to 8

June 2007 and was confident to finalise its work, as planned, by 2009/10.UNIDROIT 2007 – A.G. (61) 8 3.

13. With respect to the only item where work was behind schedule, i.e. the preliminary draft Protocol to the Cape Town Convention on Matters specific to Space Assets, the Secretary-General referred the Assembly to a brief up-date which the Deputy Secretary-General Mr Martin Stanford would give under agenda item 5.

14. The Secretary-General suggested that, in ligh t of the status of work, two conclusions for

Protocol to the Cape Town Convention on Matters specific to Space Assets, the Secretary-General referred the Assembly to a brief up-date which the Deputy Secretary-General Mr Martin Stanford would give under agenda item 5.

14. The Secretary-General suggested that, in ligh t of the status of work, two conclusions for the preparation of the next triennial Work Programme (2009-2011) appeared to be in order. First, it had been a wise decision of the Institute’s organs to focus during the 2006-2008 period on a few projects which had proved to be manageable and whose finalisation gave welcome manoeuvring space for the up-coming triennium. Second, it would be advisable to move forward in very select areas (such as credit, finance and capital market transactions, the development of reliable commercial law bases for the employment of new technologies, transactions in regulated industries as well as general contract law) where Governments and industry had come to trust U NIDROIT’s specific expertise and the usefulness of its flexible working methods. In this connection, the Secretary-General mentioned that representatives of the financial services industry had already sought a first round of an exchange of views with the Secretariat. The document inviting Governments, international Organisations, research institutions and individual scholars, trade associations and the Institute’s correspondents to submit proposals and comments regarding future work was being prepared and would be sent out in early January.

15. As regards the promotion, implementation and monitoring of adopted instruments, the Secretary-General focused on the Cape Town system on the one hand and, on the other hand, the UPICC. The success of the former – there were now 20 Contracting States to the Convention – was largely due to the huge amount of time which the officer in charge of the depositary functions was investing in counselling interested Governments at the stage when the decisions regarding appropriate declarations were made and the ratification documents prepared. The Preparatory Commission, the nucleus of the future Supervisory Authority for the international registry established under the Luxembourg Protocol, was currently finalising the Request for Proposals as well as the Regulations governing the international registry, and the international tender process

appropriate declarations were made and the ratification documents prepared. The Preparatory Commission, the nucleus of the future Supervisory Authority for the international registry established under the Luxembourg Protocol, was currently finalising the Request for Proposals as well as the Regulations governing the international registry, and the international tender process for the selection of the registry’s operator would commence shortly.

16. With respect to the UPICC, the spotlight ha d clearly been on the colloquium devoted to the draft Uniform Act on contract law for OHADA member States, prepared on the basis of the Principles by Professor Marcel Fontaine. Held from 15 to 17 November in Ouagadougou (Burkina Faso), it had provided the stage for in-depth discussions of the draft for some 250 scholars, practitioners and representatives of development banks and other international Organisations. All participants as well as the Government of Burkina Faso had expressed their appreciation for this so far unparalleled exercise in commercial law reform in the region, and the Secretary-General reiterated the Institute’s and the participants’ expression of gratitude to the Governments of Switzerland and Luxembourg for their generous financial support.

17. Turning to the Institute’s research and outreach resources, the Secretary-General emphasized the Library’s and the Uniform Law Review’s centrality to its mission. The financial means at the library’s disposal, for all practical purposes frozen for a number of years, did not match the demand (2,400 users from 22 countries) in particular from researchers and government officials from developing countries and transition economies. The Uniform Law Review had undergone some organisational changes aimed at reducing production costs. While the activities of UNIDROIT’s sister Organisations (Hague Conference on Private International and UNCITRAL) were now reported on by authors from the two Organisations’ staff, U NIDROIT’s own projects were to feature more prominently in special issues planned for 2007/2008. In concluding his report on this field of activities, the Secretary-General drew the Assembly’s attention to a new type of cooperation agreement which was currently being discussed with the law school of Kyushu University

feature more prominently in special issues planned for 2007/2008. In concluding his report on this field of activities, the Secretary-General drew the Assembly’s attention to a new type of cooperation agreement which was currently being discussed with the law school of Kyushu University in Fukuoka (Japan): hopefully supported by the Japan Society for the Promotion of Science (JSPS), postgraduate students from developing countries would include in their curricula internships with4. U NIDROIT 2007 – A.G. (61) 8 intergovernmental Organisations such as U NIDROIT, WIPO and others. During his visit to Chile the Secretary-General had been approached by two to p institutions with a view to exploring the possibility to develop similar schemes for co-operation.

18. Passing on to a brief overview of activiti es and contacts designed to strengthen the relationship with member States and to broaden the Organisation’s membership, the SecretaryGeneral highlighted his visits to Chile and Turkey. Both in Santiago and in Ankara he had met Government officials (in Chile also the Senate’s Foreign Relations Committee), airlines, rail operators, financial institutions and other selected groups of stakeholders in U NIDROIT work invited b y t h e n a t i o n a l c h a m b e r s o f c o m m e r c e . A s r egards recruitment of new member States, the Secretariat had received encouraging news from Indonesia, Vietnam and the Kingdom of Saudi

Arabia.

19. The President of the General Assembly thanked the Secretary-General for his statement.

No desire to commenting on the document or the oral presentation having been expressed, the President asked the Assembly for its views as regard s confirmation or change of the priority status currently assigned to the various projects and activities.

20. The General Assembly adopted the document, agre ed with the procedural proposal to take all items listed in Document A.G.(61)2 en bloc and confirmed the priority status assigned, as indicated in the document.

Item No. 5 on the Agenda: Presentation of the state of affairs regarding two of the projects in progress:

all items listed in Document A.G.(61)2 en bloc and confirmed the priority status assigned, as indicated in the document.

Item No. 5 on the Agenda: Presentation of the state of affairs regarding two of the projects in progress: (a) Presentation of the draft Convention on Intermediated Securities

21. Mr Thomas Keijser (U NIDROIT Secretariat) illustrated the content of the draft Convention on Substantive Rules regarding Intermediated Securities . He recalled that, after the fourth session of the Committee of Governmental experts held in Rome from 21 to 25 May 2007, the Governing Council had considered the draft Convention mature for its submission to a Diplomatic Conference, which was to be held in Geneva at the invitation of the Government of Switzerland from 1 to 13

September 2008.

22. Mr Keijser illustrated the issues addressed in the draft Convention and explained its structure, indicating that its main objectives were the cross-border compatibility of the different legal systems, the better protection of market participants and of the financial system itself, and gains in economic efficiency. The Secretariat was currently drafting the Explanatory Report to the draft Convention, which would be ready by mid January 2008; and preparatory work was also being carried out by three Working Groups created by the Committee of Governmental experts.

23. The complete presentation made by Mr Keijser would be posted on the Institute website

(reserved area for the Governments of member States).

24. The representative of Switzerland expressed the appreciation of its Government for the draft Convention on the Intermediated Securities, which is fully compatible with the Hague Convention on the Intermediated Securities that the Government of Switzerland signed in July 2006; he stated that the Government of Switzerland will therefore be particularly pleased to host the Diplomatic Conference for the adoption of the draft Convention.

(b) Update on procedural issues regarding the draft Space Protocol to the Cape Town Convention

25. Mr Martin Stanford (Deputy Secretary-General of U NIDROIT) reported on the current state of play regarding the Institute’s project for the es tablishment of a Protocol to the Cape Town

(b) Update on procedural issues regarding the draft Space Protocol to the Cape Town Convention

25. Mr Martin Stanford (Deputy Secretary-General of U NIDROIT) reported on the current state of play regarding the Institute’s project for the es tablishment of a Protocol to the Cape Town Convention on commercial space financing. This project had had rather chequered progress, essentially as a result of the 15 months during which he had been acting as Acting Deputy Secretary-General and had thus been obliged to give absolute priority to administrativeUNIDROIT 2007 – A.G. (61) 8 5. responsibilities. Since January 2006, however, he had devoted every effort to revitalising this project and believed that, as a result of the thorough intersessional work carried out over the previous 18 months, the Secretariat was well on track to ensuring the successful completion of yet another Protocol to the Cape Town Convention within a reasonable time.

During this time the Secretariat had essentially been dealing with the key problems left open since the last session of the U NIDROIT Committee of governmental experts. This had not been made any easier by the fact that only a very small number of Governments had responded to the requests for additional information issued by the Chairman of the Committee on these issues at the conclusion of the last session. Rather than sending out even more reminders to Governments, the Secretariat had adopted the strategy of organising two Government/industry meetings, first, to clarify the issues needing to be addressed and the most appr opriate means of doing this, in particular with industry input, and, secondly, to review the re sults of the work done on addressing these key issues. Given the importance of ensuring a workable end-product, from the point of view of both Government and industry, the Secretariat had considered it at all times essential to ensure the participation in this work of a representative cross-section of both Governments and industry. It had been encouraging to witness the signific ant support pledged to this process by leading industry players. The first intersessional meetin g was hosted by the Royal Bank of Scotland in

participation in this work of a representative cross-section of both Governments and industry. It had been encouraging to witness the signific ant support pledged to this process by leading industry players. The first intersessional meetin g was hosted by the Royal Bank of Scotland in London in April 2006 and the second by a leading law firm Milbank Tweed Hadley & McCloy in New York in June 2007. Representatives of all the key sectors of the space industry, whether manufacturers, operators, financial institutions or insurers, participated actively in all stages of this work, taking a full part in both meetings and the preparatory work for them. On the key outstanding issues the Secretariat had consulted industry, and in particular financial institutions, to complement the limited responses it had received from Governments. These consultations had provided the backbone of the pr oposals that the Secretariat had put to the New York meeting. In particular, it emerged from the Secretariat’s inquiry into the question of the most suitable criteria to be employed for the identification of space assets - of fundamental importance for the future international registration system - that th ere was a significant body of opinion of the view that it would be appropriate to consider narrowing the sphere of application of the preliminary draft Protocol with a view to ensuring early completion. Hitherto the Secretariat had taken the view that, while preparing what would in effect be a blueprint for the future of commercial space financing, it made sense to embrace as many likely developments in the field of commercial space activities as possible; for instance, the current version of the preliminary draft Protocol referred to assets manufactured or assembled in space and, whilst everyone was familiar with the prospects for such activity in the not too distant future, this was, nevertheless, not something that was currently the subject of commercial financing. Likewise, the curre nt draft covered not only satellites after launch but also satellites in their pre-launch phase, a phase in which commercial financing was extremely important but something which perhaps complicated the equation more than was desirable vis-à- vis national law if the intention was to try to comp lete the project as expeditiously as possible. For

but also satellites in their pre-launch phase, a phase in which commercial financing was extremely important but something which perhaps complicated the equation more than was desirable vis-à- vis national law if the intention was to try to comp lete the project as expeditiously as possible. For these and other reasons, the conclusion of the Secretariat’s inquiry was that it would be wise to concentrate more or less on the satellite itself, which, all were agreed, probably represented 90% of the space assets at present subject to commercial financing. There was general consensus in New York as regards the importance of building broader consensus around the provisional conclusions reached during the intersessional negotiations on the key outstanding issues, both among Governments and wi thin industry. If the Secretariat were to be able to move relatively quickly to completion of the project once the Committee of governmental experts was reconvened, then it was essential to broaden the consensus reached among the key players that participated in the intersessional work in such a way as to ensure that other players serving on the Committee did not see fit to hold up the process.6. U NIDROIT 2007 – A.G. (61) 8 After wide-ranging consultation with key Governme nt and industry players, the Secretariat had, therefore, decided to establish a steering committee, open to representatives of both key Governments and key industry players (very mu ch along the lines of the successful working method established during the intersessional negotiations), to streamline the way forward to the resumption of full intergovernmental negotiations by drawing the necessary conclusions from the intersessional negotiations, through the drawing up of a new alternative draft, and by seeking to build broad consensus around the conclusions to be embodied in this new draft. Both the U.K. Foundation for international uniform law and the German Space Agency had generously agreed to pledge extra-budgetary resour ces to assist the Secretariat in realising this programme and the Government of Germany had kindly also offered to host a short meeting of the Steering Committee in Berlin in Spring 2008 to review the work done since the New York meeting,

generously agreed to pledge extra-budgetary resour ces to assist the Secretariat in realising this programme and the Government of Germany had kindly also offered to host a short meeting of the Steering Committee in Berlin in Spring 2008 to review the work done since the New York meeting, in particular the new alternative draft. The intent ion would then be to reconvene the Committee of governmental experts to complete a draft Protocol capable of being laid before the diplomatic Conference of adoption that the representative of the Government of the Russian Federation had kindly announced at the 60 th session of the General Assembly that his Authorities would be considering hosting. In conclusion, the Secretariat was most definitely back on track with this ambitious project, thanks to the loyal and generous support of those Govern ment and industry players prepared to see the landmark contribution that it stood to make to the development of international space law and the opening of new markets for commercial space financing in the developing world. In particular, he submitted that the Secretariat had identified and taken the steps necessary to ensure its completion as speedily as possible, consonant with the achievement of a commercially viable instrument that Governments of every complexion would be able to accept. The Secretariat, therefore, proposed that this project continue to enjoy the high level of priority on the U NIDROIT Work Programme confirmed at the 60 th session of the General Assembly, as moreover recommended at the 86th session of the Governing Council.

26. The representative of Germany stated that her Government and the German space industry had a strong interest in the project and strongly supported the continuation of the work and its rapid completion.

27. The representative of Portugal , in Portugal’s capacity as president of the European Union, read out a statement of the Czech Republic, expre ssing the appreciation of the Czech Republic for the Institute’s work on the project and its full support for its completion.

28. The representative of the United States expressed the keen interest of his Government in the project on the draft Space Protocol and its support for the formation of the steering committee.

29. The General Assembly took note of the pr esentation on the draft Convention on

the Institute’s work on the project and its full support for its completion.

28. The representative of the United States expressed the keen interest of his Government in the project on the draft Space Protocol and its support for the formation of the steering committee.

29. The General Assembly took note of the pr esentation on the draft Convention on Intermediated Securities and of the update on procedural issues regarding the draft Space protocol

to Cape Town Convention.

Item No. 6 on the Agenda: Revision of the Regulations: (a) Constitution of an ad hoc Committee

30. The Secretary-General informed the General Assembly that a Note Verbale would be sent to all Governments of member States, inviting all member States to indicate their interest in participating in an ad hoc Committee which would be set up in the spring or summer of 2008, with a view to examining amendments to the Regulati ons that will be proposed by the Governing Council and submitted to all member States for their observations.

31. The representative of Austria asked for more information on the issue. The SecretaryGeneral and the Deputy Secretary-General explained that the amendments to the Regulations had to be approved by the General Assembly. The practice of the Organisation was that an ad hocUNIDROIT 2007 – A.G. (61) 8 7.

Committee of the General Assembly, open to the pa rticipation of all members, would examine the proposals made by the Governing Council that would then be submitted to the General Assembly at its next session for their formal approval.

32. The General Assembly took note that a Note Verbale concerning the setting up of an ad hoc Committee of the General Assembly, open to all members, for the revision of the Regulations would be sent to the Governments of the member States.

(b) Fast track procedure for the revision of Article 31 (A.G. (61) 3)

33. The representative of Canada, in his capacity of chairman of the Finance Committee, and on the request of the Secretary-General, gave a pres entation on the proposed amendment of Article

(b) Fast track procedure for the revision of Article 31 (A.G. (61) 3)

33. The representative of Canada, in his capacity of chairman of the Finance Committee, and on the request of the Secretary-General, gave a pres entation on the proposed amendment of Article 31 of the Regulations. The new rule, as amended, would allow the Finance Committee to give a framework for the draft Budget according to which the Governing Council would then be able to assess the priorities. The amendment had received the full support of the Governing Council at its last session, and of the Secretariat. The fast track procedure was chosen in order to enable implementation of the new rule in time for the adoption of the 2009 Budget. A Note Verbale had been sent by the Secretariat to the Governments of member States, some of which had submitted observations as set out in document A.G. (61) 3.

34. No observations having been made , the President of the General Assembly concluded that the proposed amendment of Article 31 was approved.

Item No. 7 on the Agenda: Final adjustments to the Budget, and approval of the Accounts for the 2006 financial year (A.G. (61) 4 and Accounts 2006)

35. The Deputy Secretary-General introduced this item. As shown in Document A.G. (60)4, the Budget for the 2006 financial year, approved by the General Assembly at its 59 th session on 1

December 2005, provided for actual expenditur e of € 2,020,850.00 to be met by receipts of € 1,990,850.00 and an estimated surplus from 2005 of € 30,000.00. The Budget also provided for receipts and expenditure in the special accounts to balance at € 6,000.00. During the 2006 financial year, receipts and expenditure had shown increases in compa