UNIDROIT - Report General Assambly 2010

EN GOVERNING COUNCIL 89th session Rome, 10 - 12 May 2010

UNIDROIT 2010

C.D. (89) 17

Original: English

November 2010

REPORT

(prepared by the Secretariat)

Contents

Item No. 1 on the agenda: Adoption of the agenda (C.D. (89) 1) 3

Item No. 2 on the agenda: Appointments (C.D. (89) 1) 3

Item No. 3 on the agenda: Reports 2009 3 (a) Annual Report 2009 (C.D. (89) 2) 3 (b) Report on the Uniform Law Foundation 4

Item No. 7 on the agenda: Model Law on Leasing (C.D. (89) 6) 5

Item No. 5 on the agenda: International Interests in Mobile Equipment 7 (a) Implementation and status of the Cape Town Convention, Aircraft Protocol and Luxembourg Protocol (C.D. (89) 4(a)) 7 (c) Preparation of other Protocols to the Cape Town Convention, in particular on matters specific to agricultural, mining and construction equipment (C.D. (89) 4(c)) 8 (b) Preliminary Draft Protocol on Matters specific to Space Assets to the Cape Town Convention (C.D. (89) 4(b)) 10

Item No. 6 on the agenda: Transactions on transnational and connected capital markets 13 (a) U NIDROIT Convention on Substantive Rules regarding Intermediated Securities: Follow-up work and promotion (C.D. (89) 5(a)) 13 (b) Principles and Rules Capable of Enhancing Trading in Securities in Emerging Markets (C.D. (89) 5(b)) 14

Item No. 4 on the agenda: Principles of International Commercial Contracts:

Follow-up work and promotion (C.D. (89) 5(a)) 13 (b) Principles and Rules Capable of Enhancing Trading in Securities in Emerging Markets (C.D. (89) 5(b)) 14

Item No. 4 on the agenda: Principles of International Commercial Contracts: Consideration and adoption of additional Chapters (C.D. (89) 3)) 19

Item No. 8 on the agenda: Triennial Work Programme of the Organisation (C.D. (89) 7) 232. U NIDROIT 2010 – C.D. (89) 17 Item 8(a) on the agenda: Possible Future Work on Third Party Liability for Global Navigation Satellite Systems (GNSS) Services (C.D. (89) 7 Add. 1) 23

Item 8(b) on the agenda: Proposal for an instrument on the Netting of Financial Instruments (C.D. (89) 7 Add. 2) 26

Item 8(c) on the agenda: Proposal for a Model Law on the Protection of Cultural Property (C.D. (89) 7 Add. 3)) 27

Item 8(d) (i) on the agenda: Possible Future Work in the Area of Private Law and Development - Private law aspects in the area of Private Law and Development (C.D. (89) 7 Add. 4) 28

Item 8(d)(ii) on the agenda: Guidelines for a legal framework for social enterprises (or for a certain type of social enterprise) (C.D. (89) 7 Add. 5) 30

Item 8(e) on the agenda: Proposal to establish a UNIDROIT Centre for e-research (C.D. (89) 7 Add. 6) 32

Item No. 9 on the agenda: Uniform Law Review / Revue de droit uniforme and other publications (C.D. (89) 12) 33

Item No. 10 on the agenda: The Library (C.D. (89) 11) 34

Item No. 9 on the agenda: Uniform Law Review / Revue de droit uniforme and other publications (C.D. (89) 12) 33

Item No. 10 on the agenda: The Library (C.D. (89) 11) 34

Item No. 11 on the agenda: The UNIDROIT Web Site and Depository Libraries or UNIDROIT documentation (C.D. (89) 13) 35

Item No. 18 on the agenda: Re-appointment of the Deputy Secretaries-General and report of the Permanent Committee 36 (a) Re-appointment of the Deputy Secretaries-General 36 (b) Report of the Permanent Committee on personnel matters 37

Item No. 16 on the agenda: Preparation of the draft budget for the 2011 financial year C.D. (89) 15) 39

Item No. 12 on the agenda: Strategic Plan (C.D. (89) 16) 39

Item No. 13 on the agenda: Implementation and promotion of UNIDROIT instruments other than Cape Town instruments (C.D. (89) 8) 41

Item No. 14 on the agenda: Correspondents (and C.D. (89) 10 Add.) 42

Item No. 15 on the agenda: Legal Co-operation Programme (C.D. (89) 9) 42

Item No. 16 on the agenda: The Uniform Law Data Base (C.D. (89) 14) 42

Item No. 17 on the agenda: Date and venue of the 90th session of the Governing Council (C.D. (89) 1) 44

Item No. 18 on the agenda: Any other business 44

Appendix I List of participants 45 Appendix II Agenda 49 Appendix III Report on the meeting of the Scholarships Sub-Committee of the Governing Council 51UNIDROIT 2010 – C.D. (89) 17 3.

REPORT

Appendix I List of participants 45 Appendix II Agenda 49 Appendix III Report on the meeting of the Scholarships Sub-Committee of the Governing Council 51UNIDROIT 2010 – C.D. (89) 17 3.

REPORT

1. The President opened the session, welcoming all those present. Apologies had been received from Mr Sen and Mr Soltysinski.

2. In his welcome address, the President recalled the various landmarks in the life of the Institute during his ten years as its President, years during which it had been able to retain its own identity as a leading forum for the development of modern uniform rules in highly technical areas of the law, while at the same time keeping its widely recognised expertise in more general areas of the law. Its membership had grown from 58 ten years previously to 63 today. Among the various challenges it, like other Organisations, now faced, the need to rejuvenate the Organisation and keep it fit to continue offering its distinct contribution to legal harmonisation in the years to come was of the utmost importance. He stressed the host country, Italy’s commitment to support UNIDROIT in its activities despite the constraints that the current financial climate imposed on many States. In this connection, the quality of the coordination and dialogue established by the members of the Governing Council with the other organs of the Institute and with their Governments would be essential in securing the support that the Institute needed to continue doing its valuable work.

Item No. 1 on the agenda: Adoption of the agenda (C.D. (89) 1)

3. The draft agenda was adopted as proposed (see Appendix II).

Item No. 2 on the agenda: Appointments (C.D. (89) 1)

4. The Council renewed Professor Arthur Hartkamp’s appointment as First Vice-President of the Governing Council and appointed Professor Lyou Byung-Hwa Second Vice-President, in both cases as from the end of the 89th session to the end of the 90th session of the Council.

4. The Council renewed Professor Arthur Hartkamp’s appointment as First Vice-President of the Governing Council and appointed Professor Lyou Byung-Hwa Second Vice-President, in both cases as from the end of the 89th session to the end of the 90th session of the Council.

Item No. 3 on the agenda: Reports 2009

(a) Annual Report 2009 (C.D. (89) 2)

5. The Secretary-General, in introducing this item, first summarised the Institute’s main achievements in 2009, starting with the completion and final adoption of the UNIDROIT Convention on Substantive Rules for Intermediated Securities at the second session of the diplomatic Conference in Geneva on 9 October 2009. A new revised draft of the original draft Official Commentary to the Convention was to be circulated to Governments for comments by early August 2010, i.e. within the deadline set by the diplomatic Conference, so that member States would have four months to submit comments before the text was finalised and published officially early the following year. A draft Official Commentary to the Model Law on Leasing had also now been completed.

6. As to the Cape Town instruments, the Institute was in the process of revising the request for proposals and specifications for the selection for operating the Registry under the Luxembourg Rail Protocol, following the initial difficulties experienced with the bidding process. An information meeting had been organised at the Institute’s headquarters in Rome which had evidenced an unexpectedly high level of interest from possible service providers, and there was now reason to be confident that this time round, the selection process would lead to a satisfactory result. With regard to the preliminary draft Protocol to the Cape Town Convention on Space Assets , significant progress had been made – to the point of breakthrough – and the project might be said to be back on track, with earlier opposition now being addressed in a more positive and constructive manner.4. U NIDROIT 2010 – C.D. (89) 17

7. Major progress had also been made in 2009 on the new chapters of the third edition of the

earlier opposition now being addressed in a more positive and constructive manner.4. U NIDROIT 2010 – C.D. (89) 17

7. Major progress had also been made in 2009 on the new chapters of the third edition of the UNIDROIT Principles, with only one further meeting planned to finalise the text and getting it ready for the Council to authorise its publication at its session the following year.

8. On the membership front, there had not been any new accessions to the U NIDROIT Statute in 2009, but the Secretariat was in contact with four countries that had expressed interest in becoming new members: Qatar, Algeria, Morocco and Cape Verde.

9. From an institutional point of view, the Secretariat had proceeded with the co-ordination with other international Organisations, in particular with the Institute’s sister organisations including the Hague Conference and UNCITRAL. The idea of a joint publication of the three Organisations presenting their work in the area of secured transactions, with a view to possibly devising joint promotional efforts, was still on the drawing board. Another very positive development in 2009 from the Institute’s internal point of view had been the decision by Italy’s Ministry of Cultural Heritage to release funds for renovation works in the Library building, including the provision of a multifunctional reading room. The Secretariat expressed its gratitude to the Italian Government for this work, which would further support the Institute’s activities.

10. In the ensuing debate, Mr Terada spoke on behalf of Professor Hideki Kanda, the Chairman of the Drafting Committee of the Geneva Securities Convention, to express his gratitude for the cooperation of the member States that had participated in the diplomatic Conference. Mr Kanda had indicated that even prior to entering into force, the Convention might prove a model law for domestic legislation. Ms Sabo and Mr Voulgaris added their voices to thank the Secretary-General and the Secretariat staff for the progress made generally.

11. The Council took note of the Secretary-General’s report on the activity of the Institute during

2009. (b) Report on the Uniform Law Foundation

legislation. Ms Sabo and Mr Voulgaris added their voices to thank the Secretary-General and the Secretariat staff for the progress made generally.

11. The Council took note of the Secretary-General’s report on the activity of the Institute during

2009. (b) Report on the Uniform Law Foundation

12. Sir Roy Goode , member ad honorem of the Council and President of the Uniform Law Foundation, offered a brief history of the Uniform Law Foundation (set up under Dutch law) and its sister foundations, the UK Foundation for International Uniform Law and the American Foundation for International Uniform Law, and of their work in raising supplementary funds for purposes not or not adequately catered for by UNIDROIT’s regular budget. Three sources of funds were available to the foundations: conferences (mostly on U NIDROIT instruments), publications (mainly Sir Roy’s Official Commentaries on the Cape Town in struments), as well as grants and donations. In 2009, the sole source of income had been revenue from sales of publications, producing € 17,784. The Uniform Law Foundation had provided € 15,306 for the UNILAW data base; The UK Foundation as every year had given £ 5,000 for a scholarship, £ 15,000 to fund a further six months’ salary for the assistant to Mr Martin Stanford, Mr Daniel Porras; a similar amount had been contributed by the American Foundation which also contributed $ 50,000 for assistance to member States of the European Union for the ratification of the Cape Town Convention. The total contribution in 2009 had thus been in the region of € 90,000.

13. The financial position of the Uniform Law Foundation was very weak, with reserves of € 11,000, most of which represented unsold stock of the Official Commentaries carried at cost. The data base had now been reduced to manageable proportions, and the Governing Board, which had met on 8 May, had agreed that the data base should continue to be funded for the time being at its present levels of roughly € 33,000 a year. This left nothing for the Library, which had been almost

data base had now been reduced to manageable proportions, and the Governing Board, which had met on 8 May, had agreed that the data base should continue to be funded for the time being at its present levels of roughly € 33,000 a year. This left nothing for the Library, which had been almost frozen in its budget for a number of years and needed a major injection of funds. The other two Foundations were financially somewhat better placed. They were planning several conferences on UNIDROIT instruments both to raise money and propagate awareness of these instruments round the world. Preliminary talks had also been held with the President of the Italian Bar to explore theUNIDROIT 2010 – C.D. (89) 17 5. possibility of continuing legal education programmes on U NIDROIT instruments for members of the Italian Bar. The availability of grants was being explored for projects falling within the work of UNIDROIT that might be of interest to NGO’s and other potential grant-giving bodies, in particular in Africa, and attempts were being made to secure one or more major benefactions for the Library.

14. The three Foundations had to date contributed roughly € 250,000 to the work of UNIDROIT. More needed to be done, and there were several ways in which the Governing Council could help in this respect. One was to persuade their Governments to provide additional support for one or more items in the Institute’s regular budget, whether by raising contributions or by donations, which would free the income of the Foundations to contribute to the cost of necessary items not within the regular budget. The second was for members to use their contacts with possible sources of funding and advising Sir Roy of any approaches that the members of other contacts might be willing to make. Sir Roy would be writing to individual members on this.

15. The Secretary-General expressed the Secretariat’s deep gratitude, recognition and appreciation for the support given by the Uniform Law Foundation and the UK and US Foundations to the Institute’s work over the years, much of which would not have been possible without it. Cases in

Roy would be writing to individual members on this.

15. The Secretary-General expressed the Secretariat’s deep gratitude, recognition and appreciation for the support given by the Uniform Law Foundation and the UK and US Foundations to the Institute’s work over the years, much of which would not have been possible without it. Cases in point were the UNILAW data base and the preliminary draft Space Protocol, as well as the research scholarships programme. This sentiment was wholeheartedly echoed by Mr Voulgaris, Mr Gabriel, Mr Govey and the President.

16. The Council took note of the report by the President of the Uniform Law Foundation, expressing its deep gratitude to him for his tireless efforts over the previous year to relieve pressure on the Institute’s budget and to the American Foundation for International Uniform Law and the U.K.

International Uniform Law Foundation for their invaluable support in providing extra-budgetary funding for a number of the Institute’s activities.

Item No. 7 on the agenda: Model Law on Leasing (C.D. (89) 6)

17. In introducing this item, Mr Stanford (Deputy Secretary-General), indicated that the principal activity conducted by the Secretariat in this context since the last session of the Council had consisted in preparation of the Official Commentary on the Model Law on Leasing. An account of the process which led up to completion of the Official Commentary was contained in the Secretariat memorandum now before the Council. The Secretariat wished to express its particular gratitude to the Chairman of the Committee of governmental experts, the Reporter and the representatives of the Governments of Canada, France and the United States of America for their invaluable assistance in the finalisation of the Official Commentary.

18. Mr Stanford recalled that the Official Commentary was not intended to be an exhaustive explanatory report on the Model Law: rather, it was conceived as providing clarification on specific provisions of the Model Law. Its publication was meant to encompass distribution of the Commentary in those jurisdictions that had participated in its preparation, as also, in particular, those developing countries and countries in transition to a market economy for which it was principally designed.

provisions of the Model Law. Its publication was meant to encompass distribution of the Commentary in those jurisdictions that had participated in its preparation, as also, in particular, those developing countries and countries in transition to a market economy for which it was principally designed.

19. Recalling that the Governing Council had, at its previous session, endorsed the Secretariat’s proposal that it hold off from organising promotional seminars for the time being, in particular whilst awaiting completion of the unofficial versions of the Model Law to be prepared in Arabic, Chinese, Russian and Spanish, Mr Stanford noted that the Arabic, Russian and Spanish unofficial versions were now available, and the Chinese unofficial version was being prepared. The Secretariat had sketched a potential programme for promotion in its memorandum, and believed that such promotion could not be put off much longer without seriously compromising the Model Law’s chances of success. It was, however, important to note that the Model Law had already served as the basis of the leasing laws passed in Jordan, Tanzania and Yemen and that it had provided the basis for the laws under6. U NIDROIT 2010 – C.D. (89) 17 consideration by the Afghan Parliament and the Legislative Assembly of the Palestinian National Authority. The Secretariat was proposing that a number of seminars be envisaged over either a longer or a shorter number of years.

20. While only too aware of the serious constraints on the Institute’s budget, the Secretariat nevertheless felt it was necessary to weigh the negative consequences of a failure by the Secretariat to assume its responsibilities in this regard, notably in respect of a project undertaken specifically at the behest of African member States concerne d that the Institute’s work programme did not adequately reflect the needs of such countries.

21. The Secretariat recommended that it work, wherever possible, with other Organisations for the promotion of the Model Law, and in particular with the Commonwealth Secretariat and the

International Finance Corporation.

22. In the debate that followed, Mr Voulgaris recalled that the 18 th International Congress on Comparative Law that was to be held in Washington 2010, at which the former Secretary General,

promotion of the Model Law, and in particular with the Commonwealth Secretariat and the International Finance Corporation.

22. In the debate that followed, Mr Voulgaris recalled that the 18 th International Congress on Comparative Law that was to be held in Washington 2010, at which the former Secretary General, was the general rapporteur on leasing and who had prepared a detailed questionnaire on the issue, would provide an excellent opportunity to promote the Institute’s work in this area. It had been thanks to this questionnaire that Greece, which had not ratifi ed the 1988 Ottawa Conventions because its shipowners feared confusion with charterparties, might now change its mind, and others might follow suit.

23. Support for publication of the Official Commentary was voiced around the table. Mr Gabriel pointed out that it was an important ancillary part of the Model Law, and its publication would have particular significance for developing economies. Mr Tricot added that in helping to re-write the OHADA Uniform Acts, under World Bank auspices, he had noted unmistakable signs that some OHADA member States stood in need of just the type of leasing contract contemplated by the Model Law and that the time therefore seemed ripe for a Uniform Act based on the Model Law. The promotional effort should target the right kind of audience, focusing on lawyers and civil servants rather than university professors, in both the French and English-speaking member States of OHADA.

Ms Sabo for her part injected a note of financial caution as to the promotion activities proposed by the Secretariat, warning against any significant outlay of the Institute’s funds. She also pointed out that in addition to the possible partners specifically mentioned in the Secretariat memorandum, the Institute should be looking at opportunities for promotion and co-ordination with UNCITRAL, so that the latter’s legislative guide on security interests and the UNIDROIT Model Law could be promoted and used most efficiently. Mr Opertti Badán urged that the text be published in as many languages as possible. Mr Carbone wondered whether some specification might be needed to underline the difference between leasing and the charterparties.

the latter’s legislative guide on security interests and the UNIDROIT Model Law could be promoted and used most efficiently. Mr Opertti Badán urged that the text be published in as many languages as possible. Mr Carbone wondered whether some specification might be needed to underline the difference between leasing and the charterparties.

24. In reply, Mr Stanford took Mr Tricot’s point about getting in touch with OHADA, not least since the African countries were particularly seen as the beneficiaries of the Model Law. Another way of reaching out to the North African States was th rough the Union pour la Méditerranée. Given the Institute’s straitened financial circumstances, he suggested that an appeal might once more be made to the well-proven willingness of the UNIDROIT correspondents, in particular Mr DeKoven, to help the Institute in this task at their own expense, and to look to Governments actually to provide the resources for the holding of seminars. He agreed with Ms Sabo that whatever was done should be done in conjunction with UNCITRAL. There was no intention to limit teamwork to the Organisations mentioned in the memorandum. As Mr Opertti-Badán of course was aware, Uruguay had already asked for a Spanish version of the Model Law, possibly with the preparation of a national law in mind.

As to Mr Carbone’s comment on charterparties, he recalled that the Ottowa Convention actually contained a provision on these but that this had, as Mr Voulgaris had mentioned, led to trouble with the shipowners. He suggested that the Governing Council might agree to set up a small draftingUNIDROIT 2010 – C.D. (89) 17 7. group including Messrs Carbone and Gabriel to draft such an amendment for inclusion in the introductory part of the Official Commentary.

25. Subject to consideration of the most appropriate means of indicating that the Model Law on Leasing covered charter-parties, the Council authorised publication of the Official Commentary on the Model Law, with the rectification proposed by the Secretariat. The Council also approved the holding of seminars in those regions of the world for which it was principally designed, in particular

Leasing covered charter-parties, the Council authorised publication of the Official Commentary on the Model Law, with the rectification proposed by the Secretariat. The Council also approved the holding of seminars in those regions of the world for which it was principally designed, in particular developing countries, subject to the availability of supplementary funding for that purpose.

Item No. 5 on the agenda: International Interests in Mobile Equipment

(a) Implementation and status of the Cape Town Convention, Aircraft Protocol and Luxembourg Protocol (C.D. (89) 4(a))

26. Mr Atwood (U NIDROIT Secretariat) referred the members of the Council to the Secretariat memorandum before them, before looking more closely at some of the points raised therein. Turning first to the status of the Convention and its Protocols, he indicated that Gabon had since the memorandum was finalised become a Contracting State of the Convention. Further accessions were expected by European Union member States, while several States, particularly in Asia and Oceania, were moving towards ratification of or accession to the Convention and the Aircraft Protocol. The European Union had signed the Luxembourg Protocol in December 2009, and an instrument had been received from one State for accession to that Protocol.

27. As to the Convention and the Aircraft Protocol, Mr Atwood referred, first, to the Secretariat’s involvement in some expert consultations with States to assist them both in their understanding of technical issues involved in accession and in the accession process itself, particularly as regarded declarations. It had thus hosted delegations from the Russian Federation and the Republic of Latvia, consisting of both ministry officials and industry representatives. It was only due to the complexities of the accession process in the Russian Federation that its instrument of accession had not yet been deposited, the final outstanding issue with the decla r a t i o n s o n in s o l v e n c y h a v i n g i n t h e m e a n t i m e

been resolved. The Secretariat had also had discussions with a representative of the United Arab Emirates to resolve a difficulty with one of the declarations posted to the Registry, and this problem was now well on its way to being successfully resolved.

28. There having been some questions and uncertainty about the scope available to EU member States in making their declarations on some of the key issues under the Convention and the Aircraft Protocol, including that of insolvency, UNIDROIT had hosted a seminar to promote and in some cases introduce or re-introduce the Convention and the Protocol, as well as its economic models and benefits, to the EU member States and to examine the situation with the declarations and possible options. The conclusions of that seminar dovetailed with another initiative that the Secretariat had been contemplating independently, which was to enable Contracting States on a voluntary basis to provide information about how they had been implementing the Convention and Protocol. Moreover, the Secretariat would also be looking at some changes to the explanatory memorandum that provided guidance to States on the issue of declarations. Finally, Mr Atwood indicated that a number of minor grammatical discrepancies in the official texts of the Convention and the Aircraft Protocol had been identified in the course of translation, and a rectification process involving ICAO would have to be initiated.

29. Moving on to the Luxembourg Rail Protocol, following the breakdown of the previous year’s negotiations with a potential operator of the Registry, he briefly recalled the various stages of the procedure that had been followed since that time to undertake a second tender process. The preparatory commission convened in Berne in October had endorsed some revisions to the8. U NIDROIT 2010 – C.D. (89) 17 documentation with a view to ensuring that the issues that had arisen during the first process did not recur, and agreed to hold an information session to which prospective bidders would be invited. That meeting had been well attended by over 20 entities and sufficiently positive feedback had been received to suggest that there would be a competitive process for the position of Registrar of the Rail Registry. The tender documentation now needed to go through a process of review and enhancement

meeting had been well attended by over 20 entities and sufficiently positive feedback had been received to suggest that there would be a competitive process for the position of Registrar of the Rail Registry. The tender documentation now needed to go through a process of review and enhancement following questions, concerns, and comments raised at the information session, specifically the need to elaborate the business case of operating the Registry, with a September of October deadline to arrange a selection process in mind.

30. In the ensuing discussion, Mr Bollweg expressed his satisfaction at the success of the Aircraft Protocol. The Cape Town Convention was now well on its way to becoming one of the Institute’s most successful Conventions to date. He also felt more confident about the fate of the Luxembourg Protocol following the positive outcome of the Berne meeting. Ms Broka indicated that Latvia was on its way to ratifying the Convention, and stressed how helpful the meeting organised for EU member States had been, in particular as regarded the issue of declarations which had been the main stumbling block. Latvia was also looking very carefully at the Rail Protocol with a view to possible accession.

31. The Council took note of the progress that had been achieved in implementing the Institute’s Depositary functions under the Convention and its Protocols.

(c) Preparation of other Protocols to the Cape Town Convention, in particular on matters specific to agricultural, mining and construction equipment (C.D. (89) 4(c))

32. Mr Atwood (U NIDROIT Secretariat) reported on the follow-up to the decision taken by the Council the previous year to mandate the Secretariat to sound out industry and business interests on the possible development of a Protocol covering agricultural, mining and construction equipment, and on ways to narrow down the scope of such a Protocol. The Secretariat had initially worked with two of the members that had presented and reported the strongest l