LEGAL COMMITTEE CONCLUDES EXAMINATION OF REPORT OF UN COMMISSION ON INTERNATIONAL TRADE LAW

Press Release
GA/L/3107

LEGAL COMMITTEE CONCLUDES EXAMINATION OF REPORT OF UN COMMISSION ON INTERNATIONAL TRADE LAW

Delegations underscored the value for their countries of a legislative guide on privately financed infrastructure projects, in a meeting this afternoon of the Sixth Committee (Legal), as it concluded its examination of the report of the United Nations Commission on International Trade Law (UNCITRAL).

The representative of Mongolia said that, as a developing country with an economy in transition and limited sources of internal financing and technology, Mongolia was keenly interested in developing its infrastructure in cooperation with others. Its policy and legislation were directed at creating an appropriate legal environment for foreign investment in that area.

The representative of the Dominican Republic said that, as her country was undertaking a complex process of recapitalization which involved investors from different countries, she was particularly grateful for the progress that had been made on the draft guide which would serve as a valuable instrument for government authorities.

The representative of the United States, however, cautioned that the guide should not be premised simply on a balancing of existing legal systems, since a number of them were not consistent with the requirements of modern capital markets. Completing it correctly was more important than completing it quickly, she stressed.

The representative of Ghana was one of several delegates expressing concern that the Commission had had to turn down requests for technical assistance and training programmes because of lack of sufficient resources. Budgetary controls and efficiency measures should not deprive the Organization of the invaluable services of the Commission, he said.

In closing remarks, the Chairman of UNCITRAL, Reinhard Renger (Germany), said the Commission was always aware of the need to make the most effective use of its limited resources in time, personnel and finances. However, if Member States wanted to retain the global acceptance of UNCITRAL’s work, they must recognize that such acceptance depended upon global participation.

Sixth Committee - 1a - Press Release GA/L/3107 4th Meeting (PM) 12 October 1999

Speaking in the debate were the representatives of Pakistan, Italy, India, Thailand, Colombia, Venezuela, Indonesia, Republic of Korea, Ukraine, United Republic of Tanzania, New Zealand, Nigeria, Ecuador and Belarus. The Observer for the World Intellectual Property Organization (WIPO) also addressed the Committee.

The Committee will meet again tomorrow at 3 p.m. to begin its discussion of the report of the Special Committee on the Charter of the United Nations and on the Strengthening of the Role of the Organization.

Committee Work Programme

The Sixth Committee (Legal) met this afternoon to continue consideration of the annual report (document A/54/17) of the United Nations Commission on International Trade Law (UNCITRAL) on the work of its latest session, held in Vienna from 17 May to 4 June 1999. The 36-member Commission, established by the General Assembly in 1996, promotes the progressive harmonization and unification of the law of international trade. (For background information on the report, see Press Release GA/L/3106 of 11 October 1999.)

Statements

QZI M. ANWAR (Pakistan) said the Commission’s work on the draft legislative guide on privately financed infrastructure projects was of particular importance to his country and others seeking foreign capital to finance such projects. He noted the emphasis placed by the Commission on the need for a balance between the objective of attracting private investment and the protection of the interests of host governments and infrastructure users. Pakistan supported the suggestion that the guide should take account of different legal systems in providing a range of alternative policy options. It also supported the idea of a review of the legislative recommendations being carried out with the assistance of experts, provided the review were transparent and involved experts from Member States.

The elaboration of a convention on assignment in receivables financing was of considerable importance to developing countries, he said. The formulation of clear and unambiguous rules would facilitate the availability of credit financing for the private and public sectors in those countries, at more economical rates. Pakistan welcomed the proposal by Australia for a working group to develop a model law on corporate insolvency. There was a need to reassess, modernize and strengthen existing insolvency laws and practices. Pakistan favoured the idea of an exploratory session of a working group to prepare feasibility proposals for UNCITRAL's consideration at its next session.

MAURO POLITI (Italy) noted that the latest UNCITRAL session had been devoted mainly to the draft texts on privately financed infrastructure projects, electronic commerce and assignment in receivables financing. He expressed confidence that the Commission would complete its work on those texts in the near future. Concerning the suggestion that the guide on infrastructure projects included model legislative clauses, he said – the Commission could identify those issues on which it would be appropriate to do so.

He said that uniform rules on electronic signatures would be highly beneficial to many governments and legislative bodies that were preparing relevant legislation. Notwithstanding the complexity of some of the questions involved, every effort should be made to ensure that the draft rules were ready for consideration and adoption by the Commission at its next session. Future work in the field of electronic commerce should concentrate on such areas as on-line dispute settlement systems and applicable law and jurisdiction. Italy favoured pursuing work on insolvency matters, especially in light of the recent successful outcome of the Commission’s work on cross-border insolvency. It looked forward to the working group’s feasibility proposal. H

CAROLYN WILLSON (United States) said UNCITRAL had remained non-politicized and was to be commended for taking into account current developments in trade and commerce, and the economic implications of the choices it made, in its recommendations to member states. The draft convention on accounts receivables financing did more than modernize commercial finance law; it opened up the possibility of badly needed credit for commercial enterprises at costs well below

those currently available in many developing countries. She hoped that draft would receive particular support from developing and emerging States, which stood to benefit the most from the treaty regime.

Substantial progress had been made on the guide on infrastructure projects, but more work remained to be done before it could be finalized, she said. It was important that the legislative guidance be made more specific and results- oriented. The process should not be premised simply on a balancing of existing legal systems since a number of pre-existing legal approaches were not consistent with the requirements of modern capital markets. The project could have considerable value for developing States; completing it correctly was more important than completing it quickly.

The United States continued to believe that any work on legal guidance for electronic signature and message authentication systems was premature, she said. It was too soon to know what types of commercial applications would be effective in trade and commerce. It was therefore doubly important to avoid over-emphasis on the particular technologies used today. Possible new ongoing projects in the field of electronic commerce might include electronic transfer of rights to tangible goods, rights in electronic data and electronic transaction contract law. Turning to UNCITRAL technical assistance programmes, she said that Secretariat staff members had performed in a commendable manner; the United States appreciated their dedication and professionalism.

E. BALANANDAN (India) said the legislative guide on infrastructure projects was timely, as build-operate-transfer projects could accelerate infrastructure development by attracting foreign direct investment and up to date technology. He was pleased that UNCITRAL had gathered the knowledge and experience of experts in the field. He assured the Commission of India’s continued cooperation. He also appreciated the efforts made to avoid or minimize the conflicts between the draft convention on assignments in receivables financing and other texts, including drafts under consideration in other forums. Where such conflicts could not be avoided, they should be settled by specifying the precedence of one or the other text.

Considering the major role played by public-key cryptography in emerging electronic commerce practice, the uniform rules should be consistent with the media-neutral approach taken in the UNCITRAL Model Law on Electronic Commerce, he said. They should not discourage the use of other authentication techniques. With respect to certification authorities, the Commission should consider establishing a minimum set of standards to be met, in particular where cross- border certification was involved.

MANOP MEKPRAYOONTHONG (Thailand) endorsed UNCITRAL’s attempt to maintain an equitable balance between attracting private investment for infrastructure projects and the need to protect the interests of host governments and users. He hoped the Working Group on International Contract Practices, now meeting in Vienna, would conclude the drafting of the convention on the assignment in receivables financing in time for adoption at UNCITRAL’s next session.

He reaffirmed that that assignment envisaged under the draft convention would not engender adverse effects on the rights and obligations of debtors. He said the draft should take into account the varying legal principles of Member States to ensure wide acceptability of the instrument.

A draft law on electronic commerce, based on the UNCITRAL model law was almost ready for submission to the Thai Cabinet for approval. Several related laws were being drafted on the same basis. UNCITRAL should provide training and technical assistance in trade law, including seminars. He called for more financial resources from developed countries and the private sector for UNCITRAL’s technical assistance and training programmes.

ANDRES FRANCO (Colombia) expressed his Government’s particular interest in the harmonization and progressive unification of international trade law, and its support for UNCITRAL’s training and technical assistance programmes. The legislative guide on infrastructure projects, in addition to promoting a favourable legal framework for private investment, must also allow for continuity in the provision of services, and for observance of security and ecological norms. Colombia had this year eliminated the practice of administrative expropriation without compensation to ensure reliable guarantees to investors.

He announced that his President on 18 August had signed a law on electronic commerce, based on the guidelines of the UNCITRAL model law. Colombia was a leader in the implementation of such law in Latin America. It would enter the new millennium with an appropriate legal structure that reflected the new technological and commercial atmosphere. Electronic commerce law, with the participation of public entities, was being regulated, allowing chambers of commerce to act as certification entities.

He said his Congress last June had approved the Convention on Contracts for the International Sale of Goods. The Constitutional Court was currently reviewing that action; ratification was expected to follow in due course.

NORMAN MONAGAS-LESSEUR (Venezuela) commended UNCITRAL and its secretariat for their work on the legislative guide on privately financed infrastructure projects; it would be helpful to countries seeking foreign investment in those areas. The guide should take account of the great diversity of legal systems and focus on models to be used in that context.

He was pleased with the activities of the working group on electronic commerce. Despite the lack of consensus in the preparation of uniform rules on digital signatures, it had made some progress. He hoped it would succeed in coming up with uniform rules. It was important that the final version of the draft convention on assignment in receivables financing be ready for consideration at UNCITRAL’s next session. Venezuela would also be interested in a model law on conciliation.

Further work on the development of a model law on insolvency was justified, he said. The Commission had done well to propose having a working group meet on the subject. He said that more emphasis should be placed on publicizing the Commission’s legal texts. He called on the Assembly and the Secretary-General to ensure that every effort was made to provide the Commission with the necessary resources for its training and assistance programmes. He also called for greater participation by developing countries in the work of the Commission’s secretariat, and for timeless publication of the Commission’s Yearbook.

RICKY SUHENDAR (Indonesia) said Indonesia was pleased to note that UNCITRAL would continue to keep under review the formulation of model legislative provisions on privately financed infrastructure projects, while considering the legislative recommendations contained in the current draft guide. The guide would help achieve a degree of certainty, transparency, and stability while also assuring continuity

of service, adherence to environmental and safety standards, monitoring of project performance and revoking of concessions when certain requirements were not met.

Concerning receivables financing, he said the availability of credit at more affordable rates was crucial in promoting trade. Developing countries in particular were at a disadvantage when trying to gain access to low rates of credit. Indonesia therefore looked forward to the completion of work in that crucial field. It appreciated UNCITRAL’s intention to expand its programmes of seminars and symposia in the near future. Such activities were beneficial to developing countries, especially when they addressed economic integration. He expressed the hope that financial contributions would be sustained and increased to ensure the effective implementation of the Commission’s training and assistance programmes.

HYSUNSOO SHIN (Republic of Korea) said that privately financed projects were of great use in expanding and improving the infrastructural base of countries. He agreed with the prevailing view in the Commission that the Secretariat, assisted by experts, should review all the recommendations made and submit a revised draft guide for adoption as soon as possible.

Internet cyber-business had become an irreversible global trend, he said. According to Forrester Research, the number of Internet users worldwide, which had been 22 million in 1994, had reached 181 million in 1998. Thus, there was a clear and pressing need to set uniform rules to facilitate electronic commerce. He supported the decision to focus on key public infrastructure issues and terminology. Avoiding a focus on any particular model might make it easier to develop a fully media-neutral rule at a later stage. Concerning the draft on receivables financing, he said the different legal systems of each country should be duly respected and fully reflected in the draft.

The Republic of Korea had legislated an electronic commerce act and an electronic signature act based on UNCITRAL’s model law, he noted. Furthermore, a national correspondent had been appointed to monitor implementation of UNCITRAL’s work.

J. ENKHSAIKHAN (Mongolia) said that, as a developing country with an economy in transition and limited sources of internal financing and technology, Mongolia was keenly interested in developing its infrastructure in cooperation with others. Therefore, its policy and legislation were directed at creating an appropriate legal environment for foreign investment in that area. Private investment was playing an important role in communications, road construction and other infrastructure areas. “Our practice has demonstrated that sound legislation is a prerequisite for foreign investment and that legislation in specific fields, in this case in the field of infrastructure, is essential to convince potential investors”, he said. The draft guide was balanced and faithfully reflected the interests of the parties involved. He shared the view that, despite unresolved questions, the draft could be finalized and adopted at the Commission’s next session.

Though Mongolia was not yet directly involved in electronic commerce, studies were being made to develop that promising form of commerce in his country, which was located far from world markets and major trade routes, he said. The uniform rules would be very useful to such countries to create a sound legal basis of electronic commerce and to harmonize their legislation with emerging patterns and practices. He said the adoption of a convention on receivables financing would result in an increase in predictability and availability of credits and thus promote international trade.

The recent financial crisis underlined the importance of strengthening the international financial system in such areas as transparency, accountability and domestic legislation, he said. Strong insolvency and debtor-creditor regimes were important for preventing or limiting financial crisis. Mongolia agreed that there was need to modernize and update insolvency laws and practices, but was concerned that duplication of work be avoided. He said that CLOUT (the database of case law on UNCITRAL texts) should be supported and further strengthened by various means, including strengthening the UNCITRAL secretariat. He called for the resources of the Commission to be increased to adequate levels in the proposed biennium 2000- 2001 budget.

CRISTINA AGUIAR (Dominican Republic) said her country was undergoing a process of reform and reinsertion into the world economy and international arena. The Dominican Republic was particularly grateful for the considerable progress made on the draft guide on privately financed infrastructure projects, as her country was undertaking a complex process of recapitalization which involved investors from different countries. The guide would be a valuable instrument for government authorities. Likewise, as a tourist destination located in a strategic geographical region, it hoped that the uniform rules on electronic commerce would inspire greater customer confidence in the use of credit or banking cards, which in the past had often been forged or subject to illegal trafficking.

She said the Commission’s conclusions on international commercial arbitration were important, although they had yet to meet with the appropriate success. She also concurred with the view that there was a need for greater participation by developing countries in the work of the Commission. More funding should be allocated to the Commission to further its work and facilitate dissemination of its publications and texts among Member States. She supported the holding of regional seminars that would include the participation of academics and business executives.

HENRY HANSON-HALL (Ghana) said that his country, itself seeking to attract capital benefit from build-operate-transfer projects, welcomed work on the draft legislative guide on infrastructure projects. To be successful, national legislation on such projects must be fashioned on the principles of fairness, transparency, openness and fair competition. He welcomed the Commission’s analysis of the possible discrepancies likely to arise, and the modifications it proposed. Ghana agreed with the cautious approach the Commission had taken on several of the sensitive areas, including termination of projects, compensation and dispute settlement.

Ghana supported the UNCITRAL’s decision to reaffirm the feasibility of preparing uniform rules on electronic commerce. There was need for a consensus on how uniform rules on electronic signatures might be addressed in an internationally accepted legal framework. It might be possible for work to be finalized during the Commission’s session next year. Ghana supported the preparation of a uniform law on assignment in receivables financing, since it would lead to increased availability of credit at more affordable rates. As for future work on insolvency law, he said it had become imperative for efficient ways to be found to strengthen the international financial system from the standpoint of transparency, accountability and management of international financial crises by domestic legal systems. The Commission was an appropriate forum in which to work on strengthening and modernizing insolvency law.

Ghana was concerned that the Commission had had to turn down requests for technical assistance and training programmes due to insufficient resources. It endorsed the Commission’s recommendation for a substantial increase in both human and financial resources for the UNCITRAL secretariat. Budgetary controls and efficiency measures should not deprive the Organization of the invaluable services of the Commission.

VASYL KORZACHENKO (Ukraine) said his country supported the work on the guide on infrastructure projects. As a country undergoing profound economic and legal reforms, it was very much interested in the guides successful completion. The Commission had rightly chosen a balanced approach. Ukraine also attached great importance to the Commission’s work on the law of international commercial arbitration. He welcomed the fact that it had decided to consider several new issues in that area. Issues related to conciliation and enforceability of settlement agreements should be identified as priorities.

Ukraine also appreciated the promotion of the uniform application of UNCITRAL texts. Countries with economies in transition, such as his own, should take advantage not only of the availability of instruments elaborated by the Commission but also of opportunities for greater participation in its work. The activities of the Commission must be encouraged; many countries were interested in utilizing its expertise in the field of international trade law on a long-term basis. It was thus appropriate to increase both the financial and human resources available to the Commission's secretariat.

TUVAKO N. MANONGI (United Republic of Tanzania) said that the result of the Commission’s work had often been a source of valuable reference in his country’s own legislative practice in trade law. He hoped that the plea made yesterday by the UNCITRAL Chairman for support of its programmes would not go unheeded. That support was critical if the Commission was to fulfil its mandate, he said.

On the draft convention on assignment in receivables financing, he noted that one of the outstanding issues related to the principle of debtor-protection in the relationship between the assignee and the debtor. Another related to whether anti-assignment clauses contained in public procurement contracts should be treated differently from such clauses in other types of contracts. In a least developed country high-value procurement would most often be undertaken by the government or an enterprise in which the government had a significant interest. The government was therefore more likely to end up as a debtor than a creditor. While it could not be denied that the draft convention was meant to facilitate availability of financing, the wariness of governments to have their obligations to pay assigned to the party with whom they might least want such a relationship must not be dismissed. Tanzania would wish to prevent that happening. He urged the working group preparing the draft to seriously consider the ramifications existing between assignee and debtor -– especially when the debtor was a sovereign entity.

VICTORIA HALLUM (New Zealand) said that as a measure of its keen interest in the Commission’s work, her country had previously adopted as part of its domestic law the UNCITRAL model laws relating to arbitration and the international sale of goods. This year the New Zealand Law Commission had recommended the adoption of the UNCITRAL Model Law on Cross-Border Insolvency.

New Zealand supported the view that the legislative guide on privately financed infrastructure projects should be sufficiently broad-based to be useful to governments from a range of constitutional and legal traditions. It also welcomed a decision by the working group on electronic commerce to focus its efforts on public key infrastructures, particularly on the three functions common to all such infrastructure models. New Zealand hoped that the change in approach would create an internationally-acceptable framework in which the draft rules might be prepared. She reiterated her country’s preference for a set of rules that did not seek to over-regulate the use of electronic signatures.

She announced that the New Zealand Law Commission would shortly release its second report on electronic commerce, proposing a domestic legal framework for the broad implementation of UNCITRAL’s Model Law on Electronic Commerce. The report would propose the enactment in New Zealand of an Electronic Transactions Act, to facilitate electronic commerce by removing any legal barriers to that method of trading. The report would acknowledge the importance of consistency, as far as possible, with similar legislation being considered by New Zealand’s trading partners.

OLUSEGUN AKINSANYA (Nigeria) said UNCITRAL’s secretariat should be strengthened and provided with enough resources to enable it to cope with its obligations. Nigeria agreed with the Commission that the text on privately financed infrastructure projects was not meant to supplant national legislation but rather to provide a guide for domestic legislation in order to guarantee fairness and transparency. Nigeria hoped the guide would be fully operational by the end of the Commission’s next session.

Nigeria had not lost sight of the difficulty inherent in the formulation of rules on electronic signatures, he said. In a globalized world, the recognition and use of electronic signatures would be advantageous to international trade. The legislative infrastructure of international trade could not be complete without recourse to arbitration; the establishment of the Commission’s working group on arbitration was thus a right step in the right direction.

He said Nigeria was not opposed to some sort of collaboration between UNCITRAL and other international bodies such as the World Bank, the International Monetary Fund and the Economic Commission for Europe, either in the area of insolvency regimes or of international commercial arbitration. The Commission, however, should not allow such collaboration to dilute its identity or independence. It should not be oblivious to the fact that Member States, especially developing countries, placed much confidence precisely because of its independent identity.

MARCELO VAZQUEZ (Ecuador) agreed with the statement made by the representative of Mexico on behalf of the Rio Group. Ecuador was satisfied with the considerable progress made on the preparation of the legislative guide for infrastructure projects. The draft would have to be reviewed to ensure that the right balance was struck between the interests of governments, investors and users. The text was of considerable importance to developing countries seeking foreign investment in infrastructure projects. The guide would be a very useful instrument for the modernization of domestic law in that area; he hoped it would be adopted at the Commission’s next session.

He noted the difficulties faced by the working group on electronic commerce in its preparation of uniform rules on digital signatures. He hoped those would be overcome so that the rules could be finalized. He also hoped work would be completed on the draft convention on assignment in receivables financing because of its potential to facilitate access by developing countries to credit at low cost. Ecuador regarded with great interest the elaboration of a model law to promote effective national corporate insolvency regimes. He welcomed the proposed meeting of a working group on the subject.

Noting that various tasks assigned to UNCITRAL were coming to fruition, he said it was necessary to an evaluate and assign priorities among new topics the Commission could undertake. It would be useful for it to explore the juridical aspects of the financing of international trade, especially taking into account the recurrence of international and regional financial crises, which had had negative effects on international trade, particularly the external trade of developing countries. Finally, he called for more human and financial resources to be provided to the Commission, to enable it continue carrying out its mandate.

VALERY ZHDANOVICH (Belarus) urged rapid progress on outstanding issues concerning the draft convention on accounts receivables financing so that the text could be adopted at the Commission’s next session. Once it became law, credit would become more accessible, at more affordable rates. The structure of the legislative guide on privately financed infrastructure projects was cumbersome, he said. It should be made more user-friendly. The guide would be very useful for countries that were trying to attract foreign investment to finance such projects.

Turning to the issue of monitoring the legislative implementation of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, he said that Belarus had sent in its completed questionnaire on time and awaited the results of the Secretariat’s analysis. He appealed to other Member States to return their questionnaires.

Greater attention should be given to publicizing the work of UNCITRAL so that there could be greater awareness of the work being done by the Commission, he said. For example, it was important to hold briefings for legislators, judges and other end-users of UNCITRAL texts.

S.RAMA RAO of the New York Office of the World Intellectual Property Organization (WIPO), said that in the past year WIPO had undertaken global consultations on the subject of Internet domain names and made recommendations to the Internet Corporation for Assigned Names and Numbers. For the present, the three principal recommendations mainly concentrated on generic top level domains designated as “com”, “net” and “org”. Accordingly, applicants for registration of domain names should conform to certain best practices.

Those practices included agreement to make public contract details and cancellation of such registration for reasons of inaccurate or unreliable or inaccessible information; and administrative procedures including a uniform and mandatory dispute resolution system to compel “cyber-squatters” to relinquish the illegally acquired names. Another practice was earmarking an exclusion mechanism in favour of owners of famous or well known marks so that others could not register them. He said the Internet Corporation had adopted the thrust of the WIPO’s recommendations and was considering the other outstanding issues.

The WIPO had last month convened a global conference on electronic commerce in Geneva at which a ten-point agenda had been proposed by its Director-General, Kamil Idris. It outlined the Agency’s programme in the field of electronic commerce. The WIPO Digital Agenda covered such areas as broadening the participation of developing countries through the use of WIPONET in intellectual property assets in electronic commerce. Another area was adjustment of the international legislative framework to facilitate electronic commerce.

REINHARD RENGER (Germany), Chairman of UNCITRAL, in his closing remarks, said the endorsement of the Commission’s work by the Committee was essential, as UNCITRAL viewed itself as the only body within the United Nations system to take a global approach to the unification and harmonization of trade and commercial law. One of the secrets of UNCITRAL’s success was the fact that it worked on the basis of consensus. To build that consensus was not an easy task, as there were many legal traditions and legal cultures in the various Member States. The process could only be successful if all were willing to compromise. “Miraculously up to now, in the end we have always achieved this consensus.” He observed that an overwhelming number of speakers in the debate had supported UNCITRAL’s request for sufficient resources. The Commission was always aware of the need to make the most effective use of its limited resources in time, personnel, and finances. However, if Member States wanted to retain the global acceptance of UNCITRAL’s work, they must recognize that such acceptance depended upon global participation. The delay that sometimes resulted from a lack of translation capabilities had always been a serious concern and frustrated UNCITRAL’s efforts to keep its work transparent, which was vital to its global acceptance.

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