UNIDROIT - Report General Assambly 2015

EN GENERAL ASSEMBLY UNIDROIT 2015 74th session A.G. (74) 7

Rome, 10 December 2015 Original: English/French December 2015

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 Chairman of the General Assembly 2014 – 2015 2

Appointment of the Chairman of the General Assembly 2015 – 2016 2

Adoption of the agenda 2

Statement regarding the Organisation’s activity in 2015 2

Report of the Finance Committee on its 78th session 5

Final modifications to the budget and approval of the accounts for the 2014 financial year 6

Adjustments to the budget for the 2015 financial year 6

Arrears in contributions of member States 7

Approval of the draft budget for 2016 and fixing of the contributions of member States for that financial year 8

Any other business 9

APPENDIX I: List of participants 10

APPENDIX II: Agenda 152. UNIDROIT 2015 – A.G. (74) 7

Item No. 1 on the Agenda: Opening of the session by the Chairman of the General Assembly 2014-2015

1. The 74th session of the General Assembly of the International Institute for the Unification of Private Law (UNIDROIT) was held at the seat of UNIDROIT on 10 December 2015 and was attended by the diplomatic representatives in Italy of 43 member States and one observer (cf. the list of participants in Appendix I).

2. The Chairman of the General Assembly 2014-2015, H.E. Mr Giancarlo Kessler, Ambassador of Switzerland in Italy welcomed participants and proceeded to open the session.

the diplomatic representatives in Italy of 43 member States and one observer (cf. the list of participants in Appendix I).

2. The Chairman of the General Assembly 2014-2015, H.E. Mr Giancarlo Kessler, Ambassador of Switzerland in Italy welcomed participants and proceeded to open the session.

Item No. 2 on the Agenda: Appointment of the Chairman of the General Assembly 2015-2016

3. The Chairman of the General Assembly 2014 -2015 noted UNIDROIT’s achievements on various projects during 2015, and expressed his best wishes to the Institute for its 90th anniversary in 2016. He recalled that the Chairmanship of the General Assembly had traditionally rotated among the four geographic groups of UNIDROIT. According to that practice, he noted that it was now the turn of the African group to nominate the new Chair for the period 2015-2016.

4. Upon nomination by a representative of South Africa, the General Assembly, by acclamation, appointed Mr Khaled El Taweel, Alternate Permanent Representative of Egypt to the UN Organizations in Rome, as Chairman for the period 2015-2016.

5. Upon being appointed, the Chairman expressed his gratitude to the members of the General Assembly for his nomination to the Chairmanship of the General Assembly. He noted the importance of the work done by the Institute and thanked the member States for placing their trust in Egypt. He also thanked the outgoing Chairman for his efforts as Chairman for the previous year.

Item No. 3 on the Agenda: Adoption of the agenda (A.G. (74) 1 rev. 1)

6. The General Assembly adopted the agenda as proposed (see Appendix II).

Item No. 4 on the Agenda: Statement regarding the Organisation’s activity in 2015 (A.G. (74) 2)

7. The Chairman gave the floor to the Secretary -General to present the Statement regarding the Organisation’s activity in 2015, document A.G. (74) 2.

8. The Secretary-General thanked the Chairman, and noted the importance of having an African

7. The Chairman gave the floor to the Secretary -General to present the Statement regarding the Organisation’s activity in 2015, document A.G. (74) 2.

8. The Secretary-General thanked the Chairman, and noted the importance of having an African member state chair the General Assembly in 2015-2016, during its 90th anniversary celebrations. He emphasised that the Africa region had the least number of member States and hoped that under the African region chairmanship the Institute could increase its number of African member States.

9. He stated that the document followed the practice, introduced by the Secretariat in 2008, of providing an overview of the activities of the Secretariat in a way that linked those activities to the expenditures so that they could be assessed together. He noted that the current work program was reproduced on pages 2 and 3 of document A.G. (74) 2, which also provided the priority assigned to each project on the Work Programme for the triennial period 2014-2016, as agreed by the General Assembly at its 72nd session in 2013 and adjusted during the 73rd session in 2014.

10. He discussed the work on international commercial contracts and the progress achieved by the Working Group on issues related to long -term contracts, which held two productive meetings in January and October 2015. At these meetings the Working Group members agreed to make discrete amendments to the UNIDROIT Principles of International Commercial Contracts and its commentary, toUNIDROIT 2015 – A.G. (74) 7 3. better address contracts to be performed over a period of time. He noted that the level of resources allocated to the project were consistent with its designation as a medium priority project.

11. The Secretary-General then discussed, in the area of secured transactions, the work on the implementation of the Luxembourg Protocol to the Convention on International Interests in Mobile Equipment on Matt ers Specific to Railway Rolling Stock and the Protocol to the Convention on International Interests in Mobile Equipment on matters specific to space asset (hereforth the “Space

implementation of the Luxembourg Protocol to the Convention on International Interests in Mobile Equipment on Matt ers Specific to Railway Rolling Stock and the Protocol to the Convention on International Interests in Mobile Equipment on matters specific to space asset (hereforth the “Space Protocol” and “Rail Protocol” respectively). As a general matter, he noted that the implementation of the Cape Town Convention and its Protocols retained a high level of priority for the Institute. He noted a meeting of the Space Protocol Preparatory Commission for the establishment of the International Registry for Space Assets was scheduled to follow directly after the conclusion of the General Assembly meeting, and that work had progressed on the development of the regulations. Regarding the Rail Protocol, he noted that the Secretariat was actively involved in the promotion of the Protocol, and thanked the Government of Luxembourg for supporting the promotional activities. In particular, he noted a meeting held at the Embassy of Luxembourg in Paris on 9 December which promoted ratification of the Rail Protocol among European Union m ember States. He further noted that the informal Ratification Task Force continued to work hard to encourage ratification of the Protocol, and added that he personally would be participating in missions promoting ratification in Africa and Asia in 2016.

12. The Secretary-General discussed the work the of Secretariat on the future fourth protocol to the Cape Town Convention on matters specific to a gricultural, construction and mining e quipment

(the “MAC Protocol”). He noted that the second and third meetings of the Study Group had been held in April and October 2015 respectively, and the meetings continued to make good progress in resolving the outstanding legal issues faced by the project. He noted that there would be one more meeting of the Study Group in March 2016, and that a draft of the MAC Protocol would be presented to the Governing Council at its 95th session in May 2016, where it would be decided to either convene a Committee of Intergovernmental Experts, or conduct further consultation.

13. He noted that, as consistent with its assigned low priority status, the Secretariat continued to monitor developments in relation to a possible Protocol on ships and maritime transport equipment.

a Committee of Intergovernmental Experts, or conduct further consultation.

13. He noted that, as consistent with its assigned low priority status, the Secretariat continued to monitor developments in relation to a possible Protocol on ships and maritime transport equipment.

He noted that the Secretariat participated in the African Maritime Confer ence in Lagos, Nigeria in September 2015 on invitation by the African Shipowners Association.

14. Transitioning to the work regarding transactions on transnational and connected capital markets, the Secretary-General noted that the Legislative Guide on Principles and Rules capable of enhancing trading in securities in emerging markets project was progressing well. He reported that an informal meeting of experts who were involved in the drafting of the UNIDROIT Convention on Substantive Rules for Intermediated Securities (the” Geneva Securities Convention“) had been held in October 2015 to discuss the partial initial draft of the Legislative Guide. He noted that the project was moving forwards on the basis of pro-bono assistance from the experts and through the utilisation of informational technology which allowed the experts to participate in meetings remotely, minimising the costs to the Secretariat.

15. He noted that the Secretariat continued to follow developments in the area of risk management and third party liability for Global Navigation Satellite System Services (GNSS) Services. He reported that little additional work had been completed by the Secretariat , as the project had not experienced much external activity by the European Union.

16. Shifting to p rivate law and development, the Secretary-General reported that the UNIDROIT IFAD FAO Legal Guide on Contract Farming had been successfully launched in July 2015 as a joint publication between UNIDROIT, the Food and Agriculture Organization (FAO), and the International Fund for Agricultural Development (IFAD), all Rome-based international organisations. He noted that there had been a very good level of cooperation and engagement between the organisations in4. UNIDROIT 2015 – A.G. (74) 7

producing the Legal Guide. He noted that the Legal Guide had been translated into Spanish by the

there had been a very good level of cooperation and engagement between the organisations in4. UNIDROIT 2015 – A.G. (74) 7

producing the Legal Guide. He noted that the Legal Guide had been translated into Spanish by the FAO, and that the project had also benefitted from a $500,000 grant from IFAD to FAO to fund the promotion and implementation of the Legal Guide , which was par ticularly targeted at small holder farmers engaged in contract farming operations in developing countries. He noted that UNIDROIT continued to be directly involved in the promotion of the Legal Guide through the development of a Community of Practice on Legal Aspects of Contract Farming, within the framework of the World Bank Global Forum on Law, Justice and Development.

17. The Secretary-General briefly discussed the Secretariat’s work on a feasibility study on land investment contracts to determine whether there would be benefit in UNIDROIT working on a soft law instrument that examined legal issues relating to private investment in land for agricultural purposes.

18. In regards to the project in the area of transnational civil procedure, the Secretary -General reported on the progress made under the joint European Law Institute (ELI)/ UNIDROIT project for the development of regional rules of European civil procedure. He noted that t his project was based on the previous joint project between UNIDROIT and the American Law Institute on the development of similar rules for North America. He noted that the Working Groups to the project were progressing well, and that little expenditure had been devoted by UNIDROIT during 2015 due to the ELI covering costs, although higher costs would be incurred by UNIDROIT in 2016.

19. Finally, the Secretary-General remarked that the non-legislative activities, including the work of the Library, the Scholarship Programme, and the Publications Programme, had continued as usual.

20. The Chairman thanked the Secretary-General for his detailed report on the document and then opened the floor for discussion and questions.

21. A representative of South Africa congratulated the Chairman on his appointment, and

of the Library, the Scholarship Programme, and the Publications Programme, had continued as usual.

20. The Chairman thanked the Secretary-General for his detailed report on the document and then opened the floor for discussion and questions.

21. A representative of South Africa congratulated the Chairman on his appointment, and thanked the Secretary-General for his report on the Institute’s activities. She also noted South Africa was pleased that the Space Protocol Preparatory Commission was meeting after the General Assembly to finalise the baseline regulations, and expressed her support of the resumption of the financial markets project following the appointment of a new professional member of staff in October

2014. She then noted that South Africa considered the Principles of International Commercial Contracts as a key project, and suggested that consideration of issues related to multilateral contracts could have its priority increased from low to medium priority. The Secretary-General thanked the representative of South Afri ca for her comments, and noted that the level of priority assigned to the multilateral contracts project conformed with the General Assembly’s earlier decision, on the advice of the Governing Council. He further noted that while the Principles of Internatio nal Commercial Contracts would always remain an active project for the Institute, it was envisioned that with the conclusion of the long-term contracts project that there would be no further amendments to the Principles for a few years. Immediate further w ork could be detrimental to the image of the Principles as they could be perceived as a continuous work in progress.

22. The representative of Pakistan extended his congratulations to the Chairman, and looked forward to the Institute’s productive work under his leadership. He thanked the Secretary-General for his report on the Institute’s activities. He noted that Pakistan was happy with the progress made on the Long Term Contracts project, the implementation of the Space and Rail Protocols to the Cape Town Convention, the development of the MAC Protocol and Legislative Guide on Principles and Rules capable of enhancing trading in securities in emerging markets and the release of the Legal Guide on

Contract Farming.

23. A representative of the United States congratulated the Chairman on his election and thanked

Town Convention, the development of the MAC Protocol and Legislative Guide on Principles and Rules capable of enhancing trading in securities in emerging markets and the release of the Legal Guide on Contract Farming.

23. A representative of the United States congratulated the Chairman on his election and thanked him for guiding the General Assembly’s deliberations. He congratulated the Secretariat on a productive year. In particular, he noted the launch of the Legal Guide on Contract Farming, and was pleased to hear of the follow up and implementation work on the project, which would be key to theUNIDROIT 2015 – A.G. (74) 7 5. long term success of the Legal Guide. He also commended UNIDROIT on its collaboration with IFAD and FAO and hoped that the Institute would continue to provide private law expertise for food securityrelated projects, and noted with interest the research being conducted on possible future work on land investment contracts and the recognition of customary land rights. He noted the progress on the MAC Protocol and the impleme ntation of the other Protocols to the Cape Town Convention, and concluded that the United States was strongly in support of the current Work Programme.

24. The representative of Canada congratulated the Secretary-General and Secretariat staff for their work in 2015. He noted Canada’s support of the Legal Guide on Contract Farming, which had utilised a good collaborative model of cooperation with IFAD and FAO and produced a practical and useful legal tool. He noted that the Legal Guide would assist farmers in negotiating their contracts, especially in relation to large agribusiness relationships. By providing legal analysis and practical examples, the Legal Guide empowered producers and would ultimately increase agricultural productiveness worldwide. He finally noted that the document would be an additional tool available for international organisations and bilateral cooperation agencies engaged in strategy and capacity building programs for contract farming in developing countries.

25. The Chairman, noted that there were no further requests for the floor and proposed that the comments made by member States constituted a strong approval of the Secretariat’s work in 2015.

for international organisations and bilateral cooperation agencies engaged in strategy and capacity building programs for contract farming in developing countries.

25. The Chairman, noted that there were no further requests for the floor and proposed that the comments made by member States constituted a strong approval of the Secretariat’s work in 2015.

26. The General Assembly took note, which appreciation, of the S tatement regarding the Organisation’s activity in 2015.

Item No. 5 on the Agenda: Report of the Finance Committee on its 78th session (F.C. (78) 8)

27. In the absence of the Chair of the Finance Committee, the Chairman invited the SecretaryGeneral, to present the Report.

28. The Secretary-General presented the report of the Finance Committee on its 78th session. He noted that the Finance Committee had considered the financial documents that were now before the General Assembly, and had taken a favourable view of the documents. He noted that it had been a financially uncontentious year, with no large overhauls of the financial management of the Institute or member state contributions.

29. He explained t hat the only extra -ordinary matter was the ongoing issue related to the compensation and pension scheme. He noted that this was a complex and difficult matter which remained a problem for the Institute, as the existing compensation and pension system lead to significant inefficiencies and would continue to create problems in hiring new staff in the future. He noted that the current system led to considerable disparity in the treatment of staff, especially in relation to the different treatment of profession al and general service staff, and the different treatment of local and in ternational staff. He noted that staff members received inconsistent treatment under the pension scheme, and highlighted that while a large proportion of the staff were part of the It alian domestic pension system, other staff members were variously part of the Australian, German, Swiss and United States systems, each with their own rules and regulations. He noted the only benefit from the current ad hoc arrangements was that allowing s taff members to choose their domestic systems actually lowered the Institute’s contributions for pension and health

Australian, German, Swiss and United States systems, each with their own rules and regulations. He noted the only benefit from the current ad hoc arrangements was that allowing s taff members to choose their domestic systems actually lowered the Institute’s contributions for pension and health insurance for those staff members as compared the contributions required under the Italian domestic system. He noted that the Finance Commit tee had established an informal working group on the matter, which was currently considering the review of the UN common system compensation by the International Civil Service Commission (ICSC) . He noted that the ICSC review had just been submitted to the UN General Assembly and concluded that the informal working group would reconvene in early 2016 to continue working on the matter.6. UNIDROIT 2015 – A.G. (74) 7

30. A representative of South Africa thanked the Secretariat and the Finance Committee for their work.

31. The General Assembly took note of the Report of the Finance Committee.

Item No. 6 on the Agenda: Final modifications to the Budget and approval of the Accounts for the 2014 financial year (A.G. (74) 3)

32. The Secretary-General reminded the General Assembly that the Institute’s financial year followed the calendar year (1 January - 31 December), however the accounts we re closed on 28

February the following year and then examined by the Finance Committee at its first session. He noted that over the past few years the Finance Committee meetings had been scheduled in the spring to ensure that the account s documents from the previous year were ready for their consideration, as well as the draft budget documents for the following year. Having been reviewed by the Finance Committee, he noted that the final budget and accounts document were now being presented to the General Assembly for approval.

33. Referring to document A.G. (7 4) 3, he noted that UNIDROIT’s accounts balance at 31

December 2014 was € 36.557,82. He further explained that the Finance Committee had agreed that

presented to the General Assembly for approval.

33. Referring to document A.G. (7 4) 3, he noted that UNIDROIT’s accounts balance at 31

December 2014 was € 36.557,82. He further explained that the Finance Committee had agreed that this balance should be carried over to the 2015 for utilisation for capital investment in the premises, repairs and new office equipment. He explained that the UNIDROIT premises were owned by the Italian State and while Italy was responsible for structural work, UNIDROIT was responsible for the upkeep of the facilities. He noted that using the balance for capital works allowed the Institute to complete urgent repair work without asking member States for additional funds. Finally, the Secretary-General noted that if there was a similar budget surplus in 2015, it is anticipated that the funds could be used to cover additional costs associated with the 90th anniversary celebration and other meetings in 2016.

34. The General Assembly took note of the document and approved the Accounts for the 2014 financial year.

Item No. 7 on the Agenda: Adjustments to the Budget for the 2015 financial year (A.G. (74) 4)

35. The Secretary-General introduced this agenda item, and noted that the item was more of a financial progress report for 2015 rather than an amendment of the Institute’s Budget or a request for additional funds. He noted that the document A.G. (74) 4 provided the Budget for 2015, including the expenditure estimates calculated in September 2015.

36. He noted that when the document had been written in September 2015 i t had been anticipated that there might have been a shortfall in contributions of € 144,805.50 due to arrears in contributions of member States. To address the slightly higher projected shortfall, the Institute had lowered its expenditures accordingly. He noted that the financial situation was not as bleak as initially anticipated, and the Institute had benefitted f rom extra -ordinary contributions, including the generous € 20,000 additional contribution that China continue d to make on an annual basis to

lowered its expenditures accordingly. He noted that the financial situation was not as bleak as initially anticipated, and the Institute had benefitted f rom extra -ordinary contributions, including the generous € 20,000 additional contribution that China continue d to make on an annual basis to support the scholarship program, which was not reflected in document A.G. 74 (4) as it was received after the document’s publication. He also noted savings that had resulted from the secondment of one professional staff member to the United Nations Educational, Scientific and Cultural Organization (UNESCO) and the retirement of one longstanding staff member. He concluded by stating that due to these savings, the anticipated shortfall in the budget for 2015 was now lower than the figure suggested in the document prepared for the Finance Committee in September.

37. The representative of China congratulated the Chairman for his election. He noted that due to domestic fiscal rules in China, China had been unable to make their extra -ordinary contributionUNIDROIT 2015 – A.G. (74) 7 7. relating to the scholarship program in time to be included in the budget document , however China always made the payment in full.

38. The Chairman thanked the Secretary-General for his report, and reaffirmed the SecretaryGeneral’s point that the anticipated shortfall in the budget for 2015 would not require any supplementary funding by member States.

39. The General Assembly took note of the adjustments to the B udget for the 201 5 financial year.

Item No. 8 on the Agenda: Arrears in contributions of member States (A.G. (74) 5)

40. The Secretary-General referred to document A.G. (7 4) 5 and not ed that the policy for estimating shortfalls in contributions had been changed to make it more accurate. He explained that in previous years, the estimate in shortfalls was calculated based upon the historical average in the shortfall in contributions, which was never more than 3% of the overall bud get for the Institute. He further explained that due to the significantly higher shortfall in contributions in 2014, the estimate in

previous years, the estimate in shortfalls was calculated based upon the historical average in the shortfall in contributions, which was never more than 3% of the overall bud get for the Institute. He further explained that due to the significantly higher shortfall in contributions in 2014, the estimate in shortfalls in contributions for 2015 was now based upon the shortfalls from the previous year, rather than the historical average, resulting in a higher estimated shortfall.

41. The Secretary-General then described the status of outstanding contributions for several member States. He noted that the only country which had not made any of its contributions for two consecutive years was Nigeria, who were €24,900 in arrears. Finally, he pointed out that the UNIDROIT working capital fund had a healthy balance and that the current levels of arrears did not threaten the implementation of the work program.

42. The representative of Pakistan reaffirmed that, while Pakistan was on the list of member States in arrears, Pakistan took its contributions to UNIDROIT very seriously. He noted that Pakistan’s past record showed that Pakistan had paid its contributions every year and that Pakistan was only appearing on the list because its financial year, running from 1 July to 30 June of the following year, was out of step with that of UNIDROIT. He further noted that, because of the different financial years, Pakistan’s contribution lagged by several months but was ultimately always made despite budgetary constraints, and that differing amounts received by UNIDROIT were due to unfavourable exchange rates. He then expressed appreciation for the understanding of this situation by the Secretariat and other member States.

43. The representative of Italy congratulated the Chairman on his election and thanked the representative of Switzerland for his good work in 2015. Regarding arrears, she noted that in recent weeks Italy had contacted Iran concerning their issues in paying contributions, and wanted to convey that Italy was ready to discuss the details of the problem and wanted to work towards a resolution.

44. The representative of Iran thanked the representative of Italy for her intervention, and

weeks Italy had contacted Iran concerning their issues in paying contributions, and wanted to convey that Italy was ready to discuss the details of the problem and wanted to work towards a resolution.

44. The representative of Iran thanked the representative of Italy for her intervention, and confirmed that Iran had met with the Italian Ministry of Foreign Affairs. He noted that unfortunately Iran had not been able to pay their 2014 contribution because they could not transfer the funds due to existing sanctions, however Iran was ready to discuss and work together to determine how Iran can pay their membership contributions. The representative of Iran also recognised the key role that the Secretary-General had played in attempting to resolve the situation.

45. The representative of Germany congratulated the Chairman on his appointment and thanked the Secretary-General for his comments on the arrears situation. He noted that UNIDROIT can only function effectively where membership contributions we re being reliably paid, a nd noted that the total level of arrears of €178,019.32 was concerning, despite the fact that there reasonable reasons behind certain arrears. He invited members of the General Assembly to think about possible solutions8. UNIDROIT 2015 – A.G. (74) 7

for member States who had been in arrears for several years to find a reasonable solution to address the outstanding payments.

46. The representative of Mexico congratulated the Chairman on his election. He expressed his support of the Secretariat in its prudent management of its operational costs. He noted his concern that the level of arrears had created a hole in the Institute’s budget, and expressed his support of the efforts being made by the Secretariat to address the arrears issue.

47. The representative of Canada echoed the concerns of Germany and Mexico, and noted that the Finance Committee had expressed its concern about the level of arrears in the contributions of member States. Canada noted that the timely p ayment of member contributions wa s key to the operation of the Institute and that delays in the payments of these contributions, eve n of smaller amounts, was disruptive for t