UNIDROIT - Report General Assambly 2013

EN GENERAL ASSEMBLY UNIDROIT 2013 72nd session A.G. (72) 9

Rome, 5 December 2013 Original: English/French December 2013

REPORT

(prepared by the UNIDROIT Secretariat)

Summary For the information of the members of the General Assembly Action to be taken None Related documents None

Contents

Opening of the session by the President of the Institute and the Chairman of the General Assembly 2012 – 2013 paras. 1 - 3 Appointment of the Chairman of the General Assembly 2013 – 2014 paras. 4 - 7 Adoption of the agenda (A.G. (72) 1 rev.) paras. 8 - 9 Election of the members of the Governing Council for the period 2014-2018 (A.G. (72) 2) paras. 10 and 42 Statement regarding the Organisation’s activity in 2013 (A.G. (72) 3) paras. 11 - 21 Adoption of the Organisation’s Work Programme for the 2014-2016 triennium (A.G. (72) 4) paras. 22 - 30 Final modifications to the Budget and approval of the Accounts for the 2012 financial year (A.G. (72) 5) paras. 31 - 32 Adjustments to the Budget for the 2013 financial year (A.G. (72) 6) paras. 33 - 34 Arrears in contributions of member States (A.G. (72) 7 rev.) paras. 35 - 37 Approval of the draft Budget for 2014 and fixing of the contributions of member States for that financial year (A.G. (72) 8) paras. 38 - 41 Any other business para. 43

APPENDIX I: List of participants 10

APPENDIX II: Agenda 19

Approval of the draft Budget for 2014 and fixing of the contributions of member States for that financial year (A.G. (72) 8) paras. 38 - 41 Any other business para. 43

APPENDIX I: List of participants 10

APPENDIX II: Agenda 19

APPENDIX III: Work Programme for the triennial period 2014-2016 202. UNIDROIT 2013 – A.G. (72) 9

Item No. 1 on the Agenda: Opening of the session by the President of the Institute and the Chairman of the General Assembly 2012 – 2013

1. The 72nd session of the General Assembly was held at the seat of UNIDROIT on 5 December 2013 and was attended by the diplomatic representatives in Italy of 59 member States and one observer (cf. the list of participants in Appendix I).

2. The Secretary-General of the Institute welcomed the participants on behalf of the President of UNIDROIT and handed the floor to Ms Esperanza Castro Duque, Minister at the Embassy of the Republic of Colombia in Italy, on behalf of the government of Colombia and of the outgoing President of the General Assembly, H.E. Mr Juan Prieto, former Ambassador of the Republic of Colombia in Italy.

3. Ms Castro Duque expressed her appreciation to the Secretary-General and to the Secretariat for their efforts in 2013. She stressed that UNIDROIT’s most recent work was closely connected to present-day developments in communication, air and space equipment, as well as being much more open to the needs of developing countries through projects such as those on agricultural production contracts and emerging capital markets. She also pointed out the growing importance of co-operation with other bodies, such as the Capital Market Board of Turkey that had hosted a successful meeting of Committee on Emerging Marke ts Issues, Follow -Up and Implementation of the 2009 Geneva Convention on Substantive Aspects regarding Intermediated Securities (thereinafter, “ Emerging Markets Committee”). Finally, she commended the broad geographic and cultural provenance of the

of Committee on Emerging Marke ts Issues, Follow -Up and Implementation of the 2009 Geneva Convention on Substantive Aspects regarding Intermediated Securities (thereinafter, “ Emerging Markets Committee”). Finally, she commended the broad geographic and cultural provenance of the candidates for the upcoming Governing Council elections. Item No. 2 on the Agenda: Appointment of the Chairman of the General Assembly 2013-2014

4. The Secretary-General recalled that traditionally, the Chairmanship of the General Assembly rotated among the four regional groups of UNIDROIT, and that it was accordingly now the turn of the Asian States to nominate the new Chair for the period 2013-2014.

5. Upon nomination by the representative of Australia, seconded by the representatives of the United States of America and the People’s Republic of China, the General Assembly, by acclamation, appointed Mr Hideo Fukushima, Minister, Embassy of Japan in Italy, as Chairman for the period 20132014.

6. Upon being appointed, the Chairman expressed his gratitude to the members of the General Assembly for their vote of confidence and also proposed a vote of thanks for the excellent work done by the outgoing Chairman of the General Assembly . The Chairman underlined the remarkable achievements of UNIDROIT during 2013, focusing in particular on the work concerning emerging capital markets. He further noted the special significance of this year’s Assembly in view of the impending elections of a new Governing Council.

Item No. 3 on the Agenda: Adoption of the agenda (A.G. (72) 1 rev.)

7. In presenting the agenda of the meeting for adoption by the General Assembly, the Chairman suggested that for reasons of expediency, the Assembly should not suspend its session while the votes for the election of the new Governing Coun cil were counted, but should go forward with the discussion on items 5 and 7 to 9 on the agenda. Item 6 on the Work Programme of the Institute for the period 2014-2016 should be dealt with immediately afterwards.

votes for the election of the new Governing Coun cil were counted, but should go forward with the discussion on items 5 and 7 to 9 on the agenda. Item 6 on the Work Programme of the Institute for the period 2014-2016 should be dealt with immediately afterwards.

8. The General Assembly adopted the agenda as proposed (see Appendix II).UNIDROIT 2013 – A.G. (72) 9 3.

Item No. 4 on the Agenda: Election of the members of the Governing Council’s for the period 2014-2018 (A.G. (72) 2)

9. The Secretary-General briefly outlined the procedure for the election of the Governing Council which was made up of the President , appointed by Italy, as host country of the Institute, and 25 members elected by the General Assembly. The election procedure was set forth in Article 7 of the UNIDROIT Regulations and had been described in a Note Verbale to the member States dated 15

January 2013. All member States that were not in arrears for more than two years in paying their contributions were entitled to vote. The representatives of Austria, Brazil, and Pakistan were designated to serve on the ballot committee to count the votes. Item No. 5 on the Agenda: Statement regarding the Organisation’s activity in 2013 (A.G. (72) 3)

10. The Secretary-General introduced this agenda item, referring to doc ument A.G. (72) 3 for detail. He first drew the attention of the General Assembly to Annex I of document A.G. (72) 3 which gave information, in financial terms, on the allocation of resources to the Organisation’s various projects and activities in the financial year 2013. The table showed the efforts made by the Secretariat to ensure that a higher proportion of the Organisation’s budget was devoted to projectrelated activities, and that the Organisation’s expenditures on personnel and other resources adhered to the level of priority assigned to each activity (low, medium or high). Finally, he stressed that this

Secretariat to ensure that a higher proportion of the Organisation’s budget was devoted to projectrelated activities, and that the Organisation’s expenditures on personnel and other resources adhered to the level of priority assigned to each activity (low, medium or high). Finally, he stressed that this statement was not intended as a substitute for the annual report, which would be completed in January and submitted to the Governing Council in May 2014 for approval , in accordance with Article 11 (3) of the Unidroit Statute.

11. As regards the Organisation’s activity in 2013, the Deputy Secretary-General indicated that significant work had been undertaken to implement the Space Protocol to the Cape Town Convention on International Interests in Mobile Equipment (hereinafter: the “Space Protocol”) by the Preparatory Commission set up to act with full authority as Provisional Supervisory Authority of the future International Registry for space assets and the promotion of the early entry into force of the Space Protocol. The Preparatory Commission, made up of representatives of Brazil, the People’s Republic of China, the Czech Republic, France, Germany, India, Italy, the Russian Federation, Saudi Arabia, South Africa, the United States of America, as well as observers from the International Telecommunication Union (ITU), the International Civil Aviation Organization (ICAO), the Intergovernmental Organisation for Carriage by Rail (OTIF), and a number of other participants and representatives of the financial and commercial world, held its first session in Rome from 6 to 7 May

2013. Good progress having been made in preparing preliminary draft regulations for the space assets Registry during the inter-sessional period, the Preparatory Commission would now be able to hold its second sessio n in Rome from 27 to 28 January 2014, in order to allow the ITU representatives to present an informed report at the ITU Council Session in May, where the issue of whether the ITU would accept the role of Supervisory Authority would be discussed.

12. The Secretary-General further referred to the work conducted in the field of transnational and connected capital markets and to the successful and timely completion of the Principles on the

whether the ITU would accept the role of Supervisory Authority would be discussed.

12. The Secretary-General further referred to the work conducted in the field of transnational and connected capital markets and to the successful and timely completion of the Principles on the Operation of Close-Out Netting Provisions, that had been adopted by the Governing Council at its 92nd session (Rome, 8-10 May 2013) . The Council had requested the Secretariat to take steps to promote the wide -spread dissemination and national implementation of the se Principles. He underscored the importance and transparency of the extra -statutory contribution made by the German Banking Federation, which had been obtained through the good offices of the German Ministry of Justice. As to f urther work to promote the Convention on Substantive Rules regarding Intermediated Securities ( hereinafter: the “Geneva Convention”) and its application in emerging markets, this had benefited from the results of the third meeting of the Emerging Markets Committee established by the diplomatic Conference to Adopt the Geneva Convention, held in Istanbul from 11 to 13 November 2013 and hosted by the Capital Market Board of the Government of Turkey. The4. UNIDROIT 2013 – A.G. (72) 9

meeting and adjoining seminar had been instrumental in showing that the Geneva Convention could be implemented using different methods according to the specificities of each legal system. The Secretary-General expressed his gratitude to the Government of Turkey, the Turkish Capital Market Board, as well as the Turkish Embassy in Rome and the Authorities in Ankara.

13. As to the preparation of additional Protocols to the Cape Town Convention, the SecretaryGeneral focused on the proposal to draft a Protocol on agricultural, mining and construction equipment, recalling that this project was considered to be contingent on the completion of the other projects in the field of secured transactions and would also depend on whether sufficient support was forthcoming from representatives of the relevant industries and the financial world. For the first time, numerous expressions of support for the project had been received from various industry

equipment, recalling that this project was considered to be contingent on the completion of the other projects in the field of secured transactions and would also depend on whether sufficient support was forthcoming from representatives of the relevant industries and the financial world. For the first time, numerous expressions of support for the project had been received from various industry representatives , and as a result, the Governing Council had at its 72nd Session agreed to raise the project’s priority ranking, as shown in document G.C. (72) 4. The Secretariat ha d undertaken research and held informal consultations with those experts and industry representatives that might be expected to contribute to this project.

14. In 2013, the UNIDROIT Secretariat had continued to monitor developments in the area of risk management and third party liability for Global Navigation Satellite Sys tem (GNSS) Services. The issue of whether UNIDROIT should become involved in drafting an instrument in this area was, however, still on hold, pending the publication of an impact assessment study currently being prepared by the European Commission so as to evaluate the expediency of and scope for further activity by UNIDROIT.

15. The Secretary-General then turned to the topic of the preparation of a legal guide for contract farming arrangements in the context of private law and development . The first meeting o f the Working Group of experts selected by the Secretariat, with the participation of FAO, IFAD and representatives of the World Farmers Organisation, had been held in Rome from 28 to 31 January 2013, and a second meeting, again in Rome , from 3 to 6 June 2 013. The relatively high level of human resources allocated to this project, as compared to its current priority status, was in response to the high level of interest shown in this project at the 9 1st session of the Governing Council (see UNIDROIT 2012 – C.D. (91) 15, paras. 91 -95), and had been made possible by the availability of extra-budgetary funding for another, higher-priority project (see above, para. 13). The third meeting,

UNIDROIT 2012 – C.D. (91) 15, paras. 91 -95), and had been made possible by the availability of extra-budgetary funding for another, higher-priority project (see above, para. 13). The third meeting, which had originally been scheduled to take place in Rome in November 2013, had been postponed to 3-7 March 2014 so as to allow the experts to prepare first drafts and revised drafts of all chapters of the future legal guide. This should allow the participants to consider an initial draft of the entire document. The Secretary-General of the Institute noted that stepping up co-operation with FAO and IFAD was expected to lead to extra -budgetary funding for this project and to allow for the organisation, together with the World Farm ers Organisation, of seminars in various parts of th e developing world intended to secure input for the preparation of the guide and to promote it at the same time.

16. As to the legal aspects of social business, the Secretary-General noted that this topic had been included in the Work Programme following a suggestion by the International Development Law Organisation (IDLO), on the understanding that the latter would undertake to raise the necessary funding through an appeal to external donors. No progress had been made on this in 2013.

17. Regarding the promotion of the UNIDROIT Principles of International Commercial Contracts 2010, the Secretariat had, in response to a specific request by the Governing Council at is 91 st session (see UNIDROIT 2012 – C.D. (91) 15, paras. 20 and 29), convened an expert meeting in Rome from 11 t o 13 February 2013 to develop model clauses, followed by appropriate explanations, to assist parties in incorporating the Principles into the terms of their contract, or in choosing them expressly as the rules of law governing their contract . The Model Clauses had been adopted by the Governing Council at its 92nd session (Rome, 8-10 May 2013) and had since been published in EnglishUNIDROIT 2013 – A.G. (72) 9 5.

expressly as the rules of law governing their contract . The Model Clauses had been adopted by the Governing Council at its 92nd session (Rome, 8-10 May 2013) and had since been published in EnglishUNIDROIT 2013 – A.G. (72) 9 5. and French, with a Spanish translation under way. The Model Clauses had been presented at an international seminar jointly organised by UNIDROIT, the International Chamber of Commerce (ICC) and the Italian Arbitration Association (AIA) in Rome on 8 November 2013.

18. Finally, the Secretary-General noted that the Institute had continued in 2013 to be actively engaged in promoting the 1995 UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects and the UNESCO-UNIDROIT Model Provisions on State Ownership of Undiscovered Cultural Objects , in co-operation with UNESCO, through participation in seminars and working groups and publication of a booklet containing the texts both of the model provisions and the Convention.

19. The Chairman thanked the Secretary-General for his presentation. He recalled that it was the General Assembly’s role to take note of this statement, and opened the floor for questions. The representative of Germany requested information on developments, if any, concerning the implementation of the 2007 Luxembourg Protocol to the Convention on International Interests in Mobile Equipment on Matters spe cific to Railway Rolling Stock . The Deputy Secretary -General referred to the work carried out by the negotiating committee established by the Preparatory Commission to conduct contract negotiations with SITA SA as the prospective Registrar. The negotiating committee was expected to finalise the contract with SITA by the end of the current year, so as to enable the International Registry to be implemented as soon as possible . Implementation was a necessary condition for any meaningful promotion of the Protocol. The representative of Italy announced that Italy, in accordance with its statement made during the 71st Session of the General Assembly (see A.G. (71) 10, para. 50), had sponsored a request for observer status for UNIDROIT with

was a necessary condition for any meaningful promotion of the Protocol. The representative of Italy announced that Italy, in accordance with its statement made during the 71st Session of the General Assembly (see A.G. (71) 10, para. 50), had sponsored a request for observer status for UNIDROIT with the United Nations at the 68th Session of the United Nations General Assembly, 6th Committee, and that UNIDROIT had been granted observer status with the United Nations.

20. The General Assembly took note of the Secretary -General’s statement regarding the Organisation’s activity in 2013.

Item No. 6 on the Agenda: Adoption of the Organisation ’s Work Programme for the 2014 -2016 triennium (A.G. (72) 4)

21. The Secretary-General introduced this item, referring to document A.G. (72) 4 for full detail before looking more closely at selected topics. He recalled that the Organisation’s Work Programme for the 2014-2016 triennium was submitted by the Governing Council to the General Assembly for adoption, approval of the insertion of new subjects, and determination of their priority.

22. The Deputy Secretary-General first looked at the Institute’s legislative activities in the field of international commercial contracts. Referring to document A.G. (72) 4, paras. 5-10, for more detail, she presented two possible areas for future work: issues relating to long-term contracts, in particular termination for just cause, and issues relating to multilateral contracts, in particular corporate contracts. As to the first topic, while the UNIDROIT Principles of International Commercial Contracts covered virtually all the most important areas of general contract law, it remained to be seen to what extent they provided adequate solutions also for contracts to be performed over a period of time, with particular regard to investment contracts. The Secretary-General stressed the practical impact of the latter topic and referred to dispute resolution concerning investment contracts, where a growing number of cases referred to the UNIDROIT Principles to give concrete substance to the applicable

extent they provided adequate solutions also for contracts to be performed over a period of time, with particular regard to investment contracts. The Secretary-General stressed the practical impact of the latter topic and referred to dispute resolution concerning investment contracts, where a growing number of cases referred to the UNIDROIT Principles to give concrete substance to the applicable “principles of international law”. At its 92 nd session, the Governing Council had taken note of the report concerning possible future work on long -term contracts and had invited the Secretariat to undertake preliminary in-house steps to identify the issues related to investment and other long-term contracts not adequately addressed in the 2010 edition of the UNIDROIT Principles of International Commercial Contracts. The Deputy Secretary-General further addressed the topic of the promotion of these Principles, which was being given high priority in the 2014-2016 Work Programme, announcing an international conference celebrating the 20 years of the UNIDROIT Principles of International6. UNIDROIT 2013 – A.G. (72) 9

Commercial Contracts to be held in Rome in May 2014, as well as an international conference for the launch of the Arabic version of the 2010 Principles to be held at the Sultan Qaboos University of Muscat, Oman in March 2014. The latter was being organised with the logistical and financial support of the Johns Hopkins University School of Advanced International Studies.

23. Turning to the topic of secured transactions, she referred first to the steps taken to implement the 2007 Luxembourg Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Railway Rolling Stock and to establish the Registry under the 2012

Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Space Assets (see above, paras. 13 and 20).

24. On the issue of the preparation of other protocols to the Cape Town Conve ntion, the Secretary-General referred for more detailed background information to Doc. A.G. (72) 4 and recalled that the possible expansion of the Cape Town model was being considered in view of the successful

24. On the issue of the preparation of other protocols to the Cape Town Conve ntion, the Secretary-General referred for more detailed background information to Doc. A.G. (72) 4 and recalled that the possible expansion of the Cape Town model was being considered in view of the successful experience with the Aircraft Protocol, in order to understand whether other lines of industr y might enjoy the same economic advantages brought by the Convention system. At its 92 nd session, the Governing Council had agreed to proceed with preliminary work on a potential fourth protocol on agricultural, mining and construction equipment, assigned it medium priority – with the possibility of increasing it to high priority should additional resources become available -- and invited member States to assist the Secretariat in obtaining external funding for this work (for current work on this topic see above, para. 14). Concerning the proposal of another protocol on ship and maritime transport equipment, the Deputy Secretary-General noted that in the wake of the resounding success of the Cape Town Convention system, the Secretariat had raised the issue at the 91st session of the Governing Council in May 2012 (see UNIDROIT 2012 – C.D. (91) 15, paras. 43 and 138). At its 92nd session, the Governing Council had taken note of the report submitted by the Secretaria t and requested the Secretariat to prepare a feasibility study on whether satisfactory conditions existed to move forward with this work, including whether market practice had found or could find alternative solutions in the absence of internationally harmonised rules and whether the extension of the Cape Town Convention system to ships could be a suitable response to the legal challenges in this respect.

Depending on the outcome of this study and on further consideration by the Governing Council, these issues would then have to be examined in greater depth in a feasibility study to be conducted in close co-operation with the relevant bodies of the shipping industry. Finally, reference was made to the proposal for an additional protocol on off-shore power generation and similar equipment, submitted by the Federal Ministry of Justice of Germany on 10 September 2011. This proposal had sprung from

co-operation with the relevant bodies of the shipping industry. Finally, reference was made to the proposal for an additional protocol on off-shore power generation and similar equipment, submitted by the Federal Ministry of Justice of Germany on 10 September 2011. This proposal had sprung from an expression of interest of German industry sectors in the possibility of arranging for registered security rights in particular for wind-energy equipment. At its 92nd session, the Governing Council had taken note of the preliminary study conducted by the Secretariat and of the report submitted to the Council (see UNIDROIT 2013 – C.D. (72) 5(c) and (d)) and, after a discussion where different points of view on the international relevance of this issue and on the suitability of the Cape Town model to address it had been expressed, it had encouraged the Secretariat to maintain a potential Protocol on off-shore wind power generation and similar equipment on its Work Programme, but at a low level of priority.

25. On the topic of private law and development , the Secretary-General underlined that the Working Group on the preparation of a Legal guide on contract farming (a topic t o which the Governing Council had given high priority at its 92nd session) had in 2013 enjoyed the strong support of the FAO as co-author of the Guide, of IFAD in the framework of their co-operation programmes in developing countries, and of the World Farmers’ Organization. Two further sessions of the Working Group were considered necessary to complete the preparation of the envisaged Legal Guide in the course of 2014, while consultancy meetings of representatives of agricultural producers and the private sector were also planned. The Secretary-General envisaged that at the end of a process of editing under the supervision of the Chairman of the Working Group, the future UNIDROIT Guide might be formally adopted by the Governing Council at its 93rd session in 2015. He then briefly addressedUNIDROIT 2013 – A.G. (72) 9 7. additional subjects that might be developed in the area of private law and agricultural development,

be formally adopted by the Governing Council at its 93rd session in 2015. He then briefly addressedUNIDROIT 2013 – A.G. (72) 9 7. additional subjects that might be developed in the area of private law and agricultural development, and to which the Governing Council had, for the time being, assigned low priority pending the completion of the work on co ntract farming arrangements: the possible preparation of an international guidance document on land investment contracts; possible future work on the reform and modernisation of land tenure regime, on the legal structure of agricultural enterprises and on an international guidance document to agricultural financing.

26. Finally, turning to the topic of the formulation of regional rules on transnational civil procedure, the Deputy Secretary-General, referring to Doc. A.G. (72) 4 for fu ll details, briefly presented the proposal to resume work on the development of regional “Rules of Transnational Civil Procedure” based on the ALI/ UNIDROIT Principles of Transnational Civil Procedure prepared by a joint American Law Institute/UNIDROIT Study Group and adopted by th e Governing Council of UNIDROIT in

2004. The Governing Council had approved the proposal of a joint European Law In stitute/UNIDROIT project on the development of regional rules based on the adaptation of the ALI/ UNIDROIT Principles, assigning it medium pr iority. Such a project would be a useful tool to avoid the fragmentary and haphazard growth of European civil procedural law, while at the same time responding to the interest expressed by ELI in co -operating with UNIDROIT in areas of common interest, supporting the promotion of the ALI/ UNIDROIT Principles and representing a potentially first attempt towards the development of other regional projects in this area.

27. In the ensuing discussion , the representative of Australia announced that, contrary to the more favourable position previously taken by its Government, it would not be supportive of immediate work on a Cape Town Protocol on ship and maritime transport equipment, and asked for a

development of other regional projects in this area.

27. In the ensuing discussion , the representative of Australia announced that, contrary to the more favourable position previously taken by its Government, it would not be supportive of immediate work on a Cape Town Protocol on ship and maritime transport equipment, and asked for a reduction of its priority status in the Work Programme so as to be ab le to conduct further consultations with the concerned industry sector. The representative of Canada , for his part, maintained that agricultural, mining and construction equipment would not be a suitable type of collateral for a Cape Town-based Protocol since there was little evidence of its cross-border mobility, but would be more aptly covered by an instrument containing general rules on secured transactions.

The representative of Sweden questioned the priority status of the project regarding the development of European Rules on Civil Procedure based on the 2004 ALI/UNIDROIT Principles. Taking into account the comments received, the Secretary-General suggested that the priority status of the projects relating to the preparation of a future Cape Town protocol on ship and maritime transport equipment and to