UNIDROIT - Report General Assambly 2022

EN GENERAL ASSEMBLY UNIDROIT 2022 81st session A.G. (81) 9

Rome, 15 December 202 2 Original: English December 202 2

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

Item No. 1: Opening of the session by the Secretary-General and the Chair of the General Assembly 2021-2022 2 Item No. 2: Election of the Chair of the General Assembly 2022-2023 3 Item No. 3: Adoption of the agenda (A.G. (81) 1) 4 Item No. 4: Statement regarding the Organisation’s activity in 2022 (A.G. (81) 2 rev.) 4 Item No. 5: Adoption of the Work Programme of the Organisation for the 2023-2025 triennium (A.G. (81) 3) 12 Item No. 6: Final modifications to the Budget and approval of the Accounts for the 2021 financial year (A.G. (81) 4) 16 Item No. 7: Adjustments to the Budget for the 2022 financial year (A.G. (81) 5) 17 Item No. 8: Arrears in contributions of Member States (A.G. (81) 6 rev.) 17 Item No. 9: Approval of the draft Budget for 2023 and observations submitted by Member States (A.G. (81) 7) 19 Item No. 10: Update on the pension scheme for UNIDROIT staff (A.G. (81) 8) 20 Item No. 11: Any other business 20 APPENDIX I List of participants 21 APPENDIX II Annotated draft agenda 302. UNIDROIT 2022 – A.G. (81) 9

Item No. 11: Any other business 20 APPENDIX I List of participants 21 APPENDIX II Annotated draft agenda 302. UNIDROIT 2022 – A.G. (81) 9 Item No. 1: Opening of the session by the Secretary-General and the Chair of the General Assembly 2021-2022

1. The 81st session of the General Assembly of the International Institute for the Unification of Private Law (UNIDROIT) was held in hybrid format on 15 December 2022 in Rome. A list of participants is included in Appendix I.

2. The Secretary-General welcomed the participants and proceeded to open the session. He highlighted that this session of the General Assembly was an important one, since the new Work Programme for the 2023-2025 triennium would be presented for approval, as recommended by the Governing Council in June 2022 , as well as ordinary matters . Furthermore, he recalled that the coming year would see the election of new, or renewal of existing, Members of the Governing Council by the General Assembly at its 82nd session. He then invited the Chair of the General Assembly 20212022, Minister Plenipotentiary Stefano Zanini, Head of the Service for Legal Affairs, Diplomatic Disputes & International Agreements of the Ministry of Foreign Affairs and International Cooperation

(Italy), to take the floor.

3. The Chair of the General Assembly 2021-2022 thanked the Secretary-General and welcomed the participants to the session. He thanked all those in attendance for the support they had provided to him as Chair of the General Assembly during the past year. He noted that 2022 had been a very important year for UNIDROIT, with the accomplishment of many important projects that carried a longterm impact on the activity of the Institute and its membership. Moreover, it saw the preparation of the very ambitious triennial Work Programme for 2023-2025, which would be discusse d and approved at that session. The Chair expressed his gratitude towards the entire staff of the Institute

term impact on the activity of the Institute and its membership. Moreover, it saw the preparation of the very ambitious triennial Work Programme for 2023-2025, which would be discusse d and approved at that session. The Chair expressed his gratitude towards the entire staff of the Institute for the enormous amount of effort behind the work of UNIDROIT, which demonstrated its outstanding professionalism and preparation. He noted that, during his tenure as Chair, it had been a very intense year also in terms of institutional meetings, with a thorough Governing Council held in June and this General Assembly.

4. Looking back on the achievements of the Institute over the past year, the Chair stated that significant progress had been made with respect to both legislative work and promotion activities.

The number and importance of projects and activities demonstrated how much UNIDROIT had gained in visibility and impact on its membership and beyond , and how well the Institute was being administered and directed by its leadership. Regarding legislative work, he began by highlighting the important steps made in the implementation of the Protocols to the Cape Town Convention . The Luxembourg Rail Protocol had recently been signed by South Africa, and the procedure for its ratification was underway. Moreover, the 11th session of the Preparatory Commission of the Protocol had taken place in November 2022 with very positive outcomes, in particular regarding the registrar, which would potentially lead to concrete implementation activities in the year ahead . With regard to the Protocol on Matters Specific to Mining, Agricultural and Construct ion Equipment (MAC Protocol), he highlighted that last September the European Union (EU) had signed the Protocol, which reaffirmed the global importance of the instrument, and opened the instrument for signature to all EU Member States . The Preparatory Commission for the MAC Protocol had been held that November with important results , including the selection of a registrar, and the Secretariat had also made an important effort in the promotion of the Space Protocol. Next, the Chair turned to the Institute’s ongoing high-priority projects. He observed that excellent progress had been made on the Model Law on Factoring and the Model Law on Warehouse Receipts – highlighting that the latter was

also made an important effort in the promotion of the Space Protocol. Next, the Chair turned to the Institute’s ongoing high-priority projects. He observed that excellent progress had been made on the Model Law on Factoring and the Model Law on Warehouse Receipts – highlighting that the latter was a joint activity and a very important cooperation UNIDROIT had undertaken with UNCITRAL – as well as the Digital Assets and Private Law Project. It was expected that the instruments that were being developed under those projects would be delivered in the course of 2023. Furthermore, he referred to the other high-priority projects, namely those on Best Practices for Effective Enforcement , the Legal Structure of Agricultural Enterprises Guide, and Bank Insolvency , the latter with a very important potential impact on international financing . Furthermore, the Chair underscored that UNIDROIT, in partnership with the Italian Government, had held the first edition of the InternationalUNIDROIT 2022 – A.G. (81) 9 3. Summer School in the summer of 2022 . Noting that t his important initiative was aimed at raising awareness on UNIDROIT’s instruments , and that 26 participants from 17 African countries had attended the first edition , he was confident that the second edition would engage an even larger participation.

5. The Chair then addressed the future Work Programme, which had been approved by the Governing Council in June 2022 and was now submitted to the General Assembly for adoption . He noted that the draft Work Programme contained very important and ambitious projects that would have an impact and relevance for the 2023-2025 period. In particular, the Chair highlighted the project on investment contracts, which would strengthen the contractual framework for international investments. He further mentioned the project on the legal nature of Voluntary Carbon Credits (VCC), which aimed at tackling the deficiencies caused by the lack of certainty in VCC trading. Highlighting that VCCs were a cornerstone in the strategy to mitigate greenhouse gas emissions and were based on the Paris Agreement, he stated that the Italian Government attached great importance to the project. Finally, the Chair shared that the administrative preliminary preparation for the important

that VCCs were a cornerstone in the strategy to mitigate greenhouse gas emissions and were based on the Paris Agreement, he stated that the Italian Government attached great importance to the project. Finally, the Chair shared that the administrative preliminary preparation for the important restoration work of the beautiful historical premises of Villa Aldobrandini had been concluded, and that the work was expected to start soon with the renovation of parts of the building. In concluding, the Chair express ed his sincere gratitude to the President, the Secretary-General, the Deputy Secretary-General and all the staff of the Secretariat, as well as to the membership, for their active participation and support during the past year.

Item No. 2: Election of the Chair of the General Assembly 2022-2023

6. The Chair of the General Assembly 202 1-2022 invited Member State delegations to make their nominations for the role of Chair of the General Assembly for 2022-2023, noting that the post of Chair of the General Assembly traditionally rotated among the four geographic regions of UNIDROIT.

Accordingly, it was the turn of the Asian region to nominate the new Chair for 202 2-2023. He then invited the Secretary-General to take the floor.

7. The Secretary-General expressed his gratitude to the Chair for his kind words, as well as to the Government of Italy , not only for the restoration of the beautiful Villa Aldobrandini and the International Summer School, but generally for the ceaseless support provided to the UNIDROIT Secretariat over the past year. He then addressed the election procedure, and confirmed that it was the turn of the Asian region to assume the Chairmanship. I n the absence of nominations from the floor, he suggested that India might be nominated as the Chair of the General Assembly for the year

2022-2023.

8. The Chair opened the floor for comments.

9. A representative of South Africa took the floor and supported the nomination of I ndia as Chair for the General Assembly for 2022-2023.

10. A representative of Japan seconded the nomination.

2022-2023.

8. The Chair opened the floor for comments.

9. A representative of South Africa took the floor and supported the nomination of I ndia as Chair for the General Assembly for 2022-2023.

10. A representative of Japan seconded the nomination.

11. A representative of Indonesia joined in supporting the nomination of India as Chair for 2022-2023. He emphasised the importance of the General Assembly and expressed his gratitude to the Chair of the General Assembly 2021-2022 and to the Italian Government for the leadership during the past year.

12. The General Assembly, by acclamation, appointed Her Excellency Ambassador Neena Malhotra (India) as the Chair of the General Assembly 2022-2023.

13. The Chair of the General Assembly 202 2-2023 expressed her profound gratitude for the confidence placed in India by the M ember States and accepted the appointment as Chair for the4. UNIDROIT 2021 – A.G. (81) 9 period 2022-2023 on behalf of India. She expressed gratitude to the Secretariat, as well as to the Governments of South Africa, Japan and Indonesia for supporting India’s nomination. Likewise, she expressed h er sincere appreciation for the important role of the outgoing Chair of the General Assembly, Minister Plenipotentiary Zanini . She emphasised that India was deeply honoured to represent the Asian region as Chair for the period 2022 -2023, noting that this concurred with a special time as India was celebrating the 75th anniversary of their independence and assuming the G20 presidency, as well as celebrating, together with the outgoing Chair Italy, the 75th anniversary of the establishment of their diplomatic relations. She was c onfident that all this w ould provide additional opportunities to further strengthen the relationship between India and UNIDROIT. She further emphasised that India had been a Member of UNIDROIT since 1950 and had always supported its work. UNIDROIT’s sophisticated and pragmatic set of instruments had helped achieve coherence

additional opportunities to further strengthen the relationship between India and UNIDROIT. She further emphasised that India had been a Member of UNIDROIT since 1950 and had always supported its work. UNIDROIT’s sophisticated and pragmatic set of instruments had helped achieve coherence between different kinds of approaches in traditional laws, and several important and useful instruments drafted by the Institute had been adopted by diplomatic conferences, such as the Cape Town Convention and its Protocols.

14. Looking ahead, the Chair gratefully noted that India would serve as Chair of the G eneral Assembly for an important year in the Institute’s work , which would see the finalisation of many impactful projects under the 2020 -2022 Work Programme , and the first phase of the new Work Programme for the 2023-2025 triennium. Regarding the Institute’s ongoing projects, she highlighted that the year ahead would see further dissemination of the MAC Protocol. Furthermore, she noted that three high priority projects should be finalised in the first half of 2023, all of them initiated under the 2020-2022 Work Programme. These were the Model Law on Factoring, a comprehensive text for the joint UNCITRAL/ UNIDROIT Model Law on Warehouse Receipts , and an instrument containing principles and legislative guidance in the area of Digital Assets and P rivate Law. Moreover, the following year would see the first phase of implementation of the triennial Work Programme for the 2023-2025 period, to be considered by the General Assembly for adoption at the current session.

The recommended new Work Programme contain ed several highly relevant and topical projects, addressing, among other topics, investment contracts , the legal nature of VCCs, Corporate Sustainability Due Diligence in global value chains , and private law and medicine. The Chair concluded her remarks with a pledge to strive towards cooperation for a fruitful and successful General Assembly and opened the floor for comments.

15. The Secretary-General thanked her excellency Ambassador Malhotra as well as India for accepting the role of Chair of the General Assembly , stating that the Secretariat was proud and

concluded her remarks with a pledge to strive towards cooperation for a fruitful and successful General Assembly and opened the floor for comments.

15. The Secretary-General thanked her excellency Ambassador Malhotra as well as India for accepting the role of Chair of the General Assembly , stating that the Secretariat was proud and grateful to partner with India in view of the challenges of next year.

Item No. 3: Adoption of the agenda (A.G. (81) 1)

16. The Chair invited any comments on the revised draft agenda and proposed it for adoption.

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

Item No. 4: Statement regarding the Organisation’s activity in 2022 (A.G. (81) 2 rev.)

18. The Chair introduced the item and invited the Secretary -General to present the statement regarding the Organisation’s activities in 2022.

19. The Secretary-General drew the Assembly’s attention to document A.G. (81) 2 rev ., which contained the summary of UNIDROIT’s activities over the year 202 2. He began by stating that the Secretariat, together with the States and experts involved in the projects , had accomplished an extraordinary amount of work in a very difficult situation. As a small organisation, this document was a testament to all that UNIDROIT had been able to achieve in the current year. There were six ongoing legislative projects, which were twice the maximum number of projects UNIDROIT had ever conductedUNIDROIT 2022 – A.G. (81) 9 5. simultaneously. As the Secretariat was working very efficiently, t hree of those projects were approaching completion, namely the Model Law on Factoring, the first iteration of the Model Law on Warehouse Receipts, and the guidance document on Digital Assets and Private Law . These three instruments would be finalised by the next session of the Governing Council, with some follow up, complementary work that would continue afterwards. The other three projects had also made very good progress.

20. Concerning legislative activities, the Secretary-General first addressed the work on secured

instruments would be finalised by the next session of the Governing Council, with some follow up, complementary work that would continue afterwards. The other three projects had also made very good progress.

20. Concerning legislative activities, the Secretary-General first addressed the work on secured transactions, highlighting that a lot of work had been done in the implementation and completion of several existing instruments. The past year had been particularly challenging for the Aircraft Protocol to the Cape Town Convention , which had 81 Contracting Parties, because of the situati on resulting from the war in Ukraine . This situation had put the Cape Town Convention to the test. He recalled that, due to the COVID-19 Pandemic, the Aircraft Protocol had just overcome the most difficult economic crisis the sector had ever experienced. Airplanes had not been able to fly for almost two years, which was obviously problematic in such a capital-intensive, low-margin sector as the aircraft sector. The Cape Town Convention had been instrumental in allowing many of the airlines to survive, protecting the rights of creditors while at the same time preserving value for airlines . It had proven to be an extremely efficient instrument in this situation.

21. Addressing the Luxembourg Rail Protocol, he reported that the Preparatory Commission had held two sessions in 2022. The Secretariat had received a notice from the ownership of the company running the registry of the Protocol stating their intention to exit the business, and consequently transfer the shares of the company. The Secretariat of the Preparatory Commission had therefore convened a first meeting to mandate a negotiating team to identify a successor to the selling shareholder and, following almost a full year of negotiations with potential candidates , th e negotiating team had identified a suitable candidate. That candidate had been confirmed in the second session of the Preparatory Commission, which had taken place very recently, and thus the Rail Protocol registry would soon have a new owner. The identified Registrar was deemed an excellent candidate, both technically and financially, and the change of ownership had been effected in a very timely manner in view of the imminent entry into force of the Rail Protocol.

Rail Protocol registry would soon have a new owner. The identified Registrar was deemed an excellent candidate, both technically and financially, and the change of ownership had been effected in a very timely manner in view of the imminent entry into force of the Rail Protocol.

22. The S ecretariat had also continued its promotional activities with regard to the Space Protocol. Notably, the Secretariat had strengthened the relationship with the United Nations spacerelated agencies and was partnering with new important institutions in the sector.

23. Work on the completion of the MAC Protocol had also continued to make progress. The Secretary-General recalled that the work on the Protocol had involved over 15 Working Group meetings, five Preparatory Commissions, dozens of Drafting Committee and intersessional meetings over the past 12 years , involving hundreds of experts from all over the world . This had all taken place at very little cost to the Institute, as demonstrated by the financial accounts. Two Preparatory Commission meetings had taken place during the year: one to finalise the procedure of preparing a request for proposals for the new registry, and another to complete the procedure. Having completed the selection procedure, negotiations would now be initiated with the preferred candidate. Further, in addition to completing a full version of the regulations for the registry, work had also progressed concerning the appointment of a Supervisory Authority. This role had initially been accepted by the International Finance Corporation (IFC) o f the World Bank Group. However, following a change of leadership, the IFC was no longer allowed to assume this function under the new strategy. In order to find an alternative, the Secretariat had presented two options to the Governing Council: either to have UNIDROIT act as Supervisory Authority, or provide for the creation of a new organisation for that purpose. The Governing Council had mandated the Secretariat to establish a committee of experts to consider the options, which had already been convened once and would hold its second meeting on the day following the General Assembly. The aim of this committee was to prepare a final proposal

purpose. The Governing Council had mandated the Secretariat to establish a committee of experts to consider the options, which had already been convened once and would hold its second meeting on the day following the General Assembly. The aim of this committee was to prepare a final proposal to be discussed by the Governing Council in May 2023 at its 102nd session. Finally, the signature by6. UNIDROIT 2021 – A.G. (81) 9 the European Union of the MAC Protocol had been an important step towards implementation, as had been the signature by the United States of America.

24. Turning to ongoing projects, the Secretary-General first addressed the project on Model Law on Warehouse Receipts, which UNIDROIT had jointly undertaken with the United Nations Commission on International Trade Law ( UNCITRAL). He highlighted that the Model Law’s aim was to ensure access to credit in the agricultural sector, and would be key to agricultural development. The Working Group had met twice over the past year, and a number of Drafting Committee meetings and special workshops had also taken place. He explained that the project was particularly complex given that warehouse receipts were negotiable instruments, and as such there was a strong divide between countries following the Geneva system and those following the approach adopted in the US Uniform Commercial Code. Both approaches had reached the same solutions, albeit in differ ent ways, and the Model Law had to reach a balanced solution accommodating both approaches in an integrated and efficient manner. This was extremely challenging , especially in such a technical area, yet progress had been extraordinary. The Secretariat woul d be able to present the Governing Council with a full draft of the Model Law for approval in May 2023 at its 102nd session. The Model Law would then be submitted to UNCITRAL for intergovernmental negotiations, while UNIDROIT would develop a Guide to Enactment, addressed to state legislators, to facilitate implementation at domestic level.

25. Remaining in the area of agriculture and private law, the Secretary-General addressed the project on the Legal Structure of Agricultural Enterprises, which was being carried out in partnership with the Food and Agriculture Organization of the United Nations (FAO) and the International Fund

25. Remaining in the area of agriculture and private law, the Secretary-General addressed the project on the Legal Structure of Agricultural Enterprises, which was being carried out in partnership with the Food and Agriculture Organization of the United Nations (FAO) and the International Fund for Agricultural Development (IFAD) . He noted that the project was at an earlier stage because of the additional time that had been spent on the definition of its scope. In general terms, the Institute’s approach would be to focus on instruments that concern the entire supply chain. This project analysed the transformations in the agricultural food supply chain and the effects of such changes on the choice of legal forms for efficient commercial collaboration among agricultural enterprises , both from a horizontal and a vertical standpoint. He reported that progress had been made and the Secretariat was currently in the process of collecting data, which was a method of the Secretariat to ensure that its best practice instruments were not only exclusively based on the input provided by experts, relying on the assistance provided by FAO and IFAD and their regional offices worldwide.

26. Turning to the area of transnational civil procedure, he noted the extraordinary importance of the project on Best Practices for Effective Enforcement for developing and developed economies alike. The enforcement of judicial decisions , as well as contracts and secure d transactions, was a challenge for many countries. Excessive delays in the enforcement of judicial decisions resulted in a loss of much of the value and confidence in judicial systems, and this project had an extraordinary potential to provide guidance at a global level. Two Working Group meetings and, given that use of technology was considered one way in which enforcement could be streamlined and made more efficient, two workshops on technology and enforcement had also been held during the year. It was seen as a potential tool to minimise corruption, and was an important focus of the project accordingly.

Joint workshops had also been organised with UNIDROIT’s Digital Assets Project to ensure the matter of enforcement of digital assets was adequately addressed. In summary, this project had made very good progress, and it was expected that a final instrument could be presented to the Governing Council in 2024 at its 103rd session.

Joint workshops had also been organised with UNIDROIT’s Digital Assets Project to ensure the matter of enforcement of digital assets was adequately addressed. In summary, this project had made very good progress, and it was expected that a final instrument could be presented to the Governing Council in 2024 at its 103rd session.

27. The Model Law on Factoring project had also made very good progress . The SecretaryGeneral explained that the project had initially been labelled the ‘Model Law on Factoring, Reverse Factoring, and Supply Chain Financing’, and although the title had been shortened to the ‘Model Law on Factoring’, the scope had remained identical. The fifth session of the Working Group had taken place in May 2022, which had advanced so well that a full draft for the Model Law had been presented to the Governing Council in June. The Council had considered that the draft was ready for a public consultation, involving stakeholders and experts from all over the world. The consultation had been held over three months, from July to October, and had gathered many comments. Another WorkingUNIDROIT 2022 – A.G. (81) 9 7.

Group meeting had been held to discuss and incorporate those comments, and the final draft Model Law would be presented to the Governing Council and to the General Assembly for approval in 2023 at their respective 102nd and 82nd sessions. The Secretary-General underlined that factoring was key for growth, particularly for micro and small businesses that were usually not able to access credit for want of material assets to provide as collateral. The Model Law on Factoring provided a streamlined, highly efficient system, which allowed entrepreneurs to use receivables to fund their activities, linking financing to their performance. The entrepreneurs could provide receivables as collateral, thereby aligning access to credit with the viability and successful activity of the entrepreneur, which was the future of financing for micro businesses.

28. The Secretary -General reported that e xcellent work had also been done on the Bank Insolvency project. The project, carried out in partnership with the Basel institutions, had a special focus on small and medium financial institutions, falling outside the realm of the Financial Stability

future of financing for micro businesses.

28. The Secretary -General reported that e xcellent work had also been done on the Bank Insolvency project. The project, carried out in partnership with the Basel institutions, had a special focus on small and medium financial institutions, falling outside the realm of the Financial Stability Board’s Key Attributes. The Working Group counted on ten experts, but it worked with thirty-seven observers, eight international financial organi sations (including the World Bank, the International Monetary Fund and the European Central Bank among others ), twenty-three central banks and financial authorities from all over the wo rld, as well as eight deposit insurance organi sations. He emphasised that it was probably the first time that the Basel institutions ha d agreed to work on an instrument outside of Basel which was partly private law and partly of a regulatory nature. During the past year, two Working Group meetings had taken place, one of them hosted by the single Resolution Board of the Banking Union of the European Union in Brussels in October.

29. Turning to the Digital Assets and Private Law project, the Secretary General reported that it had garnered so much interest, with over 70 participants present in the Working Group meetings , that a parallel body had had to be created. The fifth session of the Working Group had been held in March and a sixth in August 2022. A Drafting Committee had been set up, which had met twelve times to advance the work on the principles and commentary. The documents had been presented for comments twice to the Steering Committee , which was an additional body working in parallel which provided sectorial and country analysis of the instrument that the Working Group was producing. These two bodies working together , one providing national views, and the other the international perspective, ensured that the final instrument would be based on comprehensively gathered information. Another Working Group meeting was scheduled to take place the following week, followed by a consultation especially targeted at the industry, to ensure that the instrument that had been d