LINKS BETWEEN COMMERCIAL LAW REFORM AND ‘CULTURE OF RULE OF LAW’ STRESSED IN GENERAL ASSEMBLY’S LEGAL COMMITTEE

20 October 2008
GA/L/3346

LINKS BETWEEN COMMERCIAL LAW REFORM AND ‘CULTURE OF RULE OF LAW’ STRESSED IN GENERAL ASSEMBLY’S LEGAL COMMITTEE

20 October 2008
General Assembly
GA/L/3346
Department of Public Information • News and Media Division • New York

Sixty-third General Assembly

Sixth Committee

9th & 10th Meetings (AM & PM)

LINKS BETWEEN COMMERCIAL LAW REFORM AND ‘CULTURE OF RULE OF LAW’

STRESSED IN GENERAL ASSEMBLY’S LEGAL COMMITTEE

 

UNCITRAL Leader Says Good Governance

In Global Trading Relations Is Necessary Economic Dimension

The link between commercial law reform and a culture based on the rule of law was emphasised today, as the Sixth Committee (Legal) took up the report of the United Nations Commission on International Trade Law (UNCITRAL).  Introducing the report on the work of UNCITRAL’s resumed fortieth and forty-first sessions, its Chairman, Rafael Illescas Ortiz, told the committee that, by laying down the foundations for long-term stability, development, empowerment and good governance, commercial law reforms constituted the economic dimension of building such a culture.

Summarizing the forty-first session, Mr. Illescas Ortiz said that, while much had been achieved in the regulatory framework for air, sea and land transport, the area of private law governing carriage of goods by sea was “obsolete, unpredictable and inconsistent”.  A truly global regime governing door-to-door carriage was essential if loopholes in unregulated areas were to be closed.  Thus, after more than six years of intensive negotiations, the draft Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea had been finalized, ready for adoption by the General Assembly.

The representative of India told the Committee this new legal regime would generate greater commercial confidence in international trade.  The draft convention provided a comprehensive framework for regulating all aspects of international carriage of goods and helped fill gaps in transport regimes.

Iran’s representative acknowledged the importance of the Commission’s work and called for technical assistance to developing countries in implementation.  He said the draft convention would contribute to settling disputes between shippers, carriers and third parties.

The delegate of Cameroon also called for technical assistance to developing countries and said certain provisions of the convention were uneven by remaining silent on issues; some placed an excessive burden on the shipper.

Calling the draft convention the Commission’s “most important achievement of the past year”, Austria’s representative said promoting the rule of law in commercial relations was part of United Nations rule of law activities.  Implementation and effective use of modern international trade law standards were essential to advancing the rule of law, sustained economic development, and the eradication of poverty and hunger.

Noting that a host of general agreements had been negotiated since the end of the apartheid regime, South Africa’s representative said his country had seen, first hand, the importance of international trade as a tool for promoting social and economic development, creating job opportunities, increasing income, reducing poverty, and improving the living conditions of citizens.

The representative of the Netherlands said her country would host a signing ceremony for the convention from 21 to 23 September 2009 in Rotterdam.

Other topics mentioned in the UNCITRAL report were related to the activities of working groups on procurement, arbitration and conciliation, insolvency law, security interests, e-commerce, commercial fraud and monitoring of the implementation of the “New York Convention” related to international arbitration and technical assistance to law reform.  The working methods of the Commission were also under review, particularly in relation to the principle of action by consensus and the participation on non-State observers in its work.

Also today in a summary of the Commission’s resumed fortieth session, Mr. Illescas Ortiz reported on the draft Legislative Guide on Secured Transactions that had been adopted at the resumed session.  He said the Guide was being disseminated to Governments with the recommendation that States use the Guide to assess the economic efficiency of their secured transactions regimes.

Also speaking at the two meetings of the Sixth Committee today were the representatives of Norway (speaking for the Nordic countries), Australia, Belarus, Guatemala, Japan, China, Russian Federation, Singapore, Qatar, Thailand, Mexico, Senegal, France (for the European Union), Spain, Republic of Korea, Venezuela, New Zealand and Slovenia.

Further speaking were the delegates of Algeria, United States, United Kingdom, Greece, Canada, Malaysia, Pakistan, Ghana and Indonesia.

The Committee will meet again at 10 a.m. tomorrow, Tuesday, 21 October, to begin debate on the issue of the nationality of natural persons in relation to State succession.

Background

The Sixth Committee (Legal) met today to take up the reports of the United Nations Commission on International Trade Law (UNCITRAL) on the work of its resumed fortieth and forty-first sessions.

The Committee has before it the Commission’s report on its fortieth session (document A/62/17), for consideration of the proceedings during the resumption of the session ( Vienna, 10-14 December 2007), at which the UNCITRAL Legislative Guide on Secured Transactions was adopted.  The report states that the Commission had before it a complete set of revised recommendations and commentaries on the draft guide from the Committee on the Whole, as well as the reports of Working Group VI on “Security Interests” from its eleventh and twelfth sessions.

Also before the Committee today was UNCITRAL’s report on its forty-first session (New York, 16 June-3 July) (document A/63/17), which states that the Commission decided to recommend that the General Assembly consider at its sixty-third session, with a view of its adoption, the draft convention on contracts for the international carriage of goods wholly or partly by sea.  The 96 articles of the draft convention, based on the activity of its Working Group on transport law, are contained in an annex to UNCITRAL’s current report.

The report also states that the Commission recommended that the Assembly also authorize a signing ceremony, to be held at Rotterdam in the Netherlands in 2009, at which the Convention would be open for State signatures.  In addition, the Commission called on the secretariat to review the text of the draft Convention from a purely linguistic and editorial point of view before its adoption by the General Assembly.

According to the report, other matters taken up by the Commission included:  procurement; arbitration and conciliation; insolvency law; security interests; electronic commerce; commercial fraud; monitoring implementation of the New York Convention; technical assistance to law reform; and the status and promotion of UNCITRAL legal texts.

In particular, the Commission agreed that the Model Law on procurement would benefit from being updated to reflect new practices, particularly those which required using electronic communications in public procurement.  The report said that regarding arbitration law, the Commission agreed that it would not be desirable to include specific provisions on treaty-based arbitration in the arbitration rules themselves.  In that regard, the Commission said any work on investor-State disputes should not delay the completion of the revision of the arbitration rules.

Concerning electronic commerce, the report said the Commission was informed that single “windows” could enhance the availability and handling of information, and expedite and simplify information flows.  And on commercial fraud, the Commission agreed that preparing and disseminating the indicators of commercial fraud would be an important and credible addition “to the arsenal of weapons available in the battle against fraudulent practices, which were so detrimental to the commercial world”.

On the needs of developing States, the report noted that the Commission reiterated its appeal to all States, international organizations and other interested entities to consider making contributions to the UNCITRAL Trust Fund for Symposia to enable the secretariat to meet increasing requests from developing countries, and countries with economies in transition, for technical assistance and cooperation activities.  However, when reviewing the proposed strategic framework for 2010 to 2011, the Commission expressed grave concerns that the resources allotted to the secretariat under subprogramme 5 were insufficient to meet, in particular, the “increased and pressing demand” for technical assistance from developing countries, and countries whose economies were in transition, to meet their law reform needs in the form of commercial law.

The report states that the Commission approved the holding of its forty-second session in Vienna from 29 June to 7 July 2009.

Introduction of Report

RAFAEL ILLESCAS ORTIZ (Spain), Chair of the forty-first session of the United Nations Commission on International Trade Law (UNCITRAL), introduced the Commission’s report on the proceedings of the forty-first session (New York, 16 June-3 July) and the resumed fortieth session (Vienna, 10-14 December 2007), where the draft Legislative Guide on Secured Transactions had been finalized and adopted.  On that, he said the Secretary-General had been asked to disseminate the text with the recommendation that States use the Guide to assess the economic efficiency of their secured transactions regimes.  That would promote access to secured credit, which was likely to assist countries, particularly developing and those with economies in transition, in both economic development and in fighting poverty.

Turning to UNCITRAL’s forty-first session, he said the first two weeks had been devoted to the approval of the draft convention on contracts for the international carriage of goods wholly or partly by sea.  The third week had been devoted to a consideration of the Commission’s legislative, technical assistance and other work.

Concerning the draft convention that would be submitted to the Assembly during its current session, he said he had chaired the Working Group that had elaborated the instrument.  More than six years of intensive negotiations on the subject had involved 80 States and observers from governmental and industry organizations.  The comprehensive document represented the interlinking compromises of State experts.

He said transportation was international by its nature, particularly in the modern global economy.  While much had been achieved in the regulatory framework for air, sea and land transport, the area of private law governing carriage of good by sea was obsolete, unpredictable and inconsistent.  The 1924 Brussels Convention known as The Hague Rules had never been uniformly implemented or applied.  The liability system stemming from it was unsatisfactory in the modern economy.  Attempts to modernize the system through the 1968 Visby Protocol and the 1978 Hamburg Rules had been unsuccessful because they had never found the same level of international acceptance as the original Hague Rules.  Some countries had never adopted any international convention and had relied on national law.

The cost to world trade of such a fragmented regime full of legal uncertainty in a field of increasing transaction costs was demonstrated by statistics from the United Nations Conference on Trade and Development (UNCTAD).  In 2006, he went on, seaborne trade accounted for 89.6 per cent of global trade in terms of volume and 70.1 per cent of value.  By contrast, those figures for airborne cargo were 0.27 per cent trade volume and 14.1 per cent of value, while inland and other modes, including pipelines, accounted for 10.2 per cent trade volume and 15.8 per cent of value.  As the largest by far in terms of both volume and value, seaborne trade could least afford the current inefficiencies.

The rapid increase in container transport had further complicated the situation, he continued.  Again, according to UNCTAD, in 2006 the world container port “throughput” had increased by a remarkable 13.4 per cent to reach 440 million containers.  Modern use of container transport made it possible to move goods quickly, inexpensively and efficiently from place of manufacture to final destination, but that required the combination of several modes of transport for door-to-door carriage.  The current legal regime governing port-to-port carriage was clearly inadequate.

A truly global regime governing door-to-door carriage was essential if loopholes in unregulated areas were to be closed up, he said.  For example, the increasing use of paperless transactions called for a reliable legal basis for replacing traditional bills of lading with more efficient electronic records.  The draft convention dealt with a broad range of such issues, many of them novel for a uniform transport law instrument, including detailed rules on delivery and the right to control of goods.  The convention would improve conditions for international trade, enhance efficiency for commercial transactions and reduce the overall cost of doing business internationally.

Moving on to other matters taken up during the Commission’s forty-first session, he said work on the revision of the 1994 Model Law on Procurement to reflect developments had continued, particularly with regard to electronic transactions.  Ongoing discussion in the working group on the matter had concerned the topics of e-procurement and conflicts of interest.  A new aspect now being examined was in the area of the “framework” procurement agreement or “indefinite-delivery-indefinite-quantity” contract.

He said the working group on arbitration and conciliation had made rapid progress in revising the 1976 Arbitration Rules, and it was expected the text would be finalized in 2009.  In revising the rules widely used in commercial disputes, the question of including investor-State dispute settlement or administered arbitration had been considered, and information from capitals was requested.  Arbitrability and online dispute resolution would remain on the agenda.  Appreciation had been expressed for the conference held in honour of the fiftieth anniversary of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, more widely known as the “New York Convention”.

Moving on to insolvency law, he said the working group’s work on the treatment of enterprise groups in insolvency was increasingly important in the current financial climate.  The important subject of facilitating cooperation, communication and coordination in cross-border insolvency proceedings was also progressing.  With regard to security interests, the first session on security interests in intellectual property had been held, and a first draft of the annex to the Guide was being prepared.  On the impact of insolvency on a security right in intellectual property, the working group on insolvency law would be invited to express an opinion, and joint discussions would be held in the future if two working groups were involved on an issue.

He said that an area of interest in relation to e-commerce was the concept of implementing a cross-border single window facility that could lead to a comprehensive international reference document that would promote the use of the Commission’s standards.  Commercial fraud, one of the greatest threats of the present time as an obstacle to international trade, was being addressed through the publication of a document listing 23 indicators that had been well received by Governments.  Work was also continuing with the United Nations Drug and Crime Office on aspects of fraud, including identity fraud.

On monitoring of the implementation of the New York Convention regarding arbitrage, he said the Commission had considered a report on the matter prepared by the International Bar Association, based on the views of 108 States.  Work on a guide to the enactment of the Convention was ongoing in tandem with work being prepared by the International Chamber of Commerce and the Commission on Arbitration of the International Criminal Court.

In the area of technical assistance to law reform, which he said was an indispensable element in the Commission’s work, he said the Commission would be unable to provide such technical cooperation and assistance beyond the current year unless new donations or alternative funding were found for the Trust Fund for Symposia.  Only Singapore and Mexico had provided donations last year, along with Austria, who had provided grant travel assistance to developing country Commission members.  States must be urged to keep alive the Commission’s technical assistance capability in law reform, preferably through multi-year contributions.  Turning to technical assistance resources, he said case law continued to be an important aspect of overall technical assistance activities.  In April, 761 cases had been prepared for publication, mainly in relation to the Sales Convention and the Model Law on International Commercial Arbitration, but also including, for the first time, cases on the Model Law on Cross-Border Insolvency.  A digest on the Convention on contracts for international sale of goods had also been published.

Summing up the coordination and cooperation aspects of the UNCITRAL’s work and proposals regarding its methods of work, he said the Commission hoped the “rule-of-law” initiative would lead to comprehensive and coherent approaches in the United Nations system to building and promoting the rule of law; the current sporadic and fragmented approaches did not achieve sustained results.  The primary focus on criminal and transitional justice was justifiable in the short term, but they overlooked the long-term measures and the economic dimension of building a culture based on the rule of law by laying down the foundations for long-term stability, development, empowerment and good governance.  That was where commercial law reforms and the Commission’s work were relevant.

ASMUND ERIKSEN (Norway), speaking also for the other Nordic countries (Denmark, Finland, Iceland and Sweden), said activities in the working groups established by the Commission, had been characterized by open and inspiring discussions among members, with excellent results.  During this year’s session the Commission had obtained significant progress within the field of transport law.  He noted that the draft convention on contracts for the international carriage of goods wholly or partly by sea was agreed upon.

The working group on procurement had taken important steps on ensuring that the Model Law and its Guide reflected new practices, in particular those results from the use of electronic communications.

Although widely recognized and perceived as successful, the UNCITRAL rules on arbitration had not been amended since their adoption in 1976, and the ongoing work of the working group on arbitration and conciliation to revise those rules was strongly supported by Nordic countries.  He said he welcomed the draft revised text on the matter to be submitted to the Commission next June.

Turning to the activities of the working group on insolvency law, he noted the progress it had made in regard to an analysis of the treatment of corporate groups in insolvency, and the effort by the secretariat to compile practical experience of negotiations and the use of cross-border insolvency agreements.  He said he also noted with satisfaction the progress made in the field of secured transactions, in particular on the annex to the UNCITRAL Legislative Guide of Secured Transactions, which the Commission had finalized and adopted.

GERHARD HAFNER ( Austria) said the Commission’s most important achievement of the past year was undoubtedly the finalization of the United Nations convention on contracts for the international carriage of goods wholly or partly by sea, which would be submitted to the General Assembly for adoption this fall.  This convention covered door-to-door transport operations involving a sea-leg.  Noting that most international transport was carried out by sea, one could easily assess the great significance of this convention; in light of its broad scope, the convention would be important not only for large seafaring nations, but also for landlocked States engaging in international trade.

Also commendable, he added, were the completion and adoption of the UNCITRAL Legislative Guide on Secured Transactions, the progress on the revision of the Commission’s Model Law on Procurement of Goods, Construction and Services and its Arbitration Rules.  He said he shared the Commission’s conviction that the implementation and effective use of modern international trade law standards were both essential towards advancing the rule of law, sustained economic development, and the eradication of poverty and hunger.  Promotion of the rule of law in commercial relations should, therefore, be an integral part of the broader agenda of the United Nations rule of law activities, including through the Rule of Law Coordination and Resource Group, supported by the Rule of Law Unit.

He said Austria regretted that during the last year several members of UNCITRAL were not represented at its sessions and working groups.  In that context, he appealed for contributions to be made to the Commission’s trust fund for travel assistance to developing countries that were Commission members.  Austria had made a voluntary contribution to the fund this year.

He noted this year’s fiftieth anniversary of the adoption of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which he said was a landmark treaty in the area of commercial law and had served as a model for many subsequent international legislative texts on arbitration.  He called on all States that had not yet done so to consider becoming parties to this Convention.

REBEKAH HAMED ( Australia) said her delegation reiterated its support for the important work of UNCITRAL in its efforts to harmonize the law and reduce barriers to trade, and commended the high standard of the report.  Acknowledging the hard work by the chair of the working group on the convention on contracts for the international carriage of goods wholly or partly by sea, she said that, despite differences expressed on the matter, particularly over the volume of contracts, she recognized the efforts that were made to produce a workable and modern instrument on the carriage of goods by sea.

Turning to be work of UNCITRAL, she noted achievements in the areas of procurement and insolvency law, and commended the Commission for its progress on the revision of the Arbitration Rules and on the decision to examine the topic of transparency in treaty-based investor-State arbitration as a matter of priority.

Also taking note of the progress made by UNCITRAL in the areas of security interests and electronic commerce, she said she supported the decision to work consultatively with the World Customs Organization in identifying legal issues arising from the use of single windows in international trade.  Finally, Australia supported the progress made towards identifying and compiling the indicators of commercial fraud and, more generally, promoting the rule of law and providing technical assistance and expertise.

VIKTAR SHAUTSOU ( Belarus), welcoming the work by UNCITRAL on the United Nations convention on contracts for the international carriage of goods wholly or partly by sea, called for maximum adherence to the convention by States.  That would avoid confusion, cover multimodal transport and take the place of the Hague and Hamburg Rules.   Furthermore, he added, the law was important towards harmonizing transport laws throughout the world.

Welcoming the work carried out by the working groups on procurement and on e-commerce, he said enhancing e-trade would help to reduce time and costs spent on issues of international trade, and would also affect the competitiveness of goods from developing countries.  He called for more participation from developing countries on this topic, and more work on the Model Law on e-trade.  Accordingly, he supported a comprehensive document on e-trade being developed by the Commission.

On arbitration, he said it would be sensible to include non-governmental organizations in the Arbitration Rules, as well.  He said legal protection in dispute settlement would be helpful, adding that work done in this regard should not be politicized.  Making information available and publishing the work of UNCITRAL were also important.  Observers to the work of UNCITRAL were important; they needed a very clear status.

ANA CRISTINA RODRIGUEZ PINEDA ( Guatemala) said the convention on the carriage of goods would contribute to decreasing the costs of international trade, increasing legal uniformity in that regard and promoting trust among States in international relations.  Guatemala had instituted a related law concerning moveable assets.  Implementation was in the early phase, beginning with the establishment of a registry office for recording all transactions of moveable assets.  The work on secured transactions dealing with security rights in intellectual property should be conducted in synergy with the current work on secured transactions in order to avoid overlap.

She said all States should contribute to the Commission’s existing trust funds.  The Commission was the central body of the United Nations system with regard to trade law and the participation of all States was crucial.  A reference paper would set out the need for the decision-making process in the Commission to preserve the rule of consensus.

NAOBUMI YOKOTA ( Japan) said the Convention on the international sale of goods was one of the Commission’s most significant successes.  States should accede to it at an accelerated pace.  Work on the revision of the Commission’s Arbitration Rules was also progressing well in the working group, and would hopefully be completed in the next session.  The draft convention on carriage of goods addressed the long-overdue uniform legal framework in the area.  Reaching agreement on certain controversial issues had been difficult; however, the intensive effort during the difficult negotiations should serve towards the outcome that the draft would be firmer and stronger in the long run.

He said the Commission’s work on the treatment of enterprise groups in the context of insolvency was of great practical significance.  Legislative guidelines on secured transactions dealing with security rights in intellectual property would be beneficial, since intellectual property rights were taking on increased importance throughout the world.  Japan would be providing support and making contributions to the work.

ARJUN CHARAN SETHI ( India) said he valued UNCITRAL’s efforts to establish and promote modern private law standards on international trade.  During its forty-first session, the Commission had approved the draft convention on contracts for the international carriage of goods wholly or partly by sea, and that was an important development, since the law relating to carriage of goods by sea, in most parts of the world, dated back to the 1920s.  The convention provided a comprehensive framework for the regulation of all aspects of international carriage of goods and helped fill gaps existing in transport regimes.  In particular, he added, the convention would regulate the rights and responsibilities of the principal participants in international shipping transactions.  He noted that there were increased limits of liability and extended liability for carriers, which were expected to benefit shippers, particularly those in developing and least developed countries, who were consumers of transportation sources.  The new legal regime would generate greater commercial confidence in international trade.

On the issue of cross-border insolvency, he said he looked forward to the “compilation” on practical experience with negotiating and using cross-border insolvency agreements; it was expected to be a useful source in searching for solutions in the treatment of enterprise groups in insolvency.  In the area of electronic commerce, the Commission had approved a study on the legal aspects involved in implementing a cross-border single window facility, with a view to preparing a comprehensive international reference document.  He supported that study, as it would promote the use of UNCITRAL standards in countries using it.

Turning to the working methods of the Commission, he said he supported inclusiveness and transparency.  The issue of commercial fraud was of growing concern to international trade and was a serious threat to the world economy, particularly because of the spread of technology and use of the Internet.  In that regard, he hoped the information on indicators of commercial fraud, being prepared by the secretariat, would help to combat practices harming the commercial world.

WANG CHEN ( China) said his country took a positive view of the legislative purposes of the convention on the contracts of international carriage of goods wholly or partly by sea and highly commended the efforts made of the working group.  However, he regretted the failure to reach compromise on some individual issues in the convention, and said he thought that might negatively affect its entry into force and application.

Noting that the drafting of other relevant international instruments, model laws and legislative guidelines was progressing smoothly, he said the UNCITRAL secretariat had been devoting itself to examining the new areas of international trade development, and was making strong efforts to develop relevant internationally accepted rules.

Observing that 2008 marked the fiftieth anniversary of the adoption of the New York Convention, he said the implementation of that agreement over the years had fully testified to the indispensable role of UNCITRAL in the unification of international trade laws and rules.  He said China endorsed the “Moot Competition” of law students hosted by UNCITRAL; those young contestants were likely to be the legal authorities of tomorrow.  Their involvement in the contest would deepen their understanding of the significance of unifying global trade laws and rules, and motivate them to make real efforts to boost the unification process, ultimately promoting the smooth development of global economy and trade.

ANDREY KALININ ( Russian Federation) said his country had participated in the work on the convention related to the carriage of goods.  The difficult work had been conducted on the basis of considering existing law applicable in the field.  Technical and legal developments in the area had then been taken into consideration in formulating the approach.  The completed instrument struck an acceptable balance between the interests of carriers and that of shippers.

On other matters, he said it was not advisable to make arbitration treaty-based.  That should be taken under separate consideration once the current revision of the Commission’s Arbitration Rules was completed.  Transparency in investor-States arbitration was highly important and current practice should be examined.  The interests of investor States and transparency were of utmost importance.  The right decision had been made to defer consideration of other issues until revision was complete.  Furthermore, useful work was being carried out in regard to the review of the Commission’s working methods.  Decisions in the Commission should continue to be taken by consensus.  Participation by observers under the existing methods would ensure that the Commission’s work was successful.

DEENA BAJRAI ( Singapore) said the work on the convention related to the carriage of goods had been a costly process.  That could discourage many countries from applying resources, particularly legal resources, into activities other than Commission meetings.  The Commission should, therefore, reconsider its working methods to identify how it could optimize its resources.  The decision to formulate writing guidelines on processes for meetings was welcome.  A common understanding would mitigate the wide divergence of practices in the conduct of Commission meetings, particularly in the manner of reaching decisions.  It would also clarify the roles of chairpersons, member States, observer States, non-governmental organizations (NGOs), trade bodies and the secretariat.

He said the role of NGOs in the Commission’s work had become a major issue.  The present practice of including NGOs in the Commission’s work should be preserved, particularly with regard to trade and professional bodies that had expertise in the subject under consideration.  That would ensure that the Commission’s deliberations were in line with commercial realities.  However, care must be taken that only those who could contribute be invited; granting participation privileges to NGOs with other agendas could disrupt the Commission’s deliberations and prolong the activities of the working groups.  It must also be kept in mind that States bore the primary responsibility for the Commission’s work.  The preferences of non-State participants should not prevail over the views of States after a certain point.

ALI AL-BAKER ( Qatar), welcoming the work of UNCITRAL in seeking to harmonize rules pertaining to international trade, said the lack of such harmony in national trade law impeded international trade activity.  He said the United Nations played an important role in the codification and development of international trade, which was beneficial to all countries, especially developing ones.  The work of UNCITRAL’s was done by a body representative of developing and developed countries; that would lead to broadly accepted norms.

Welcoming the achievements of the working group on transport, which adopted the final version of the draft convention on contracts for the international carriage of goods wholly or partly by sea, he said the United Nations Hamburg Convention was adopted 50 years ago; since then, many problems had arisen.  Thus, it was necessary to adapt and adopt a new instrument on transport and carriage by sea.  The Commission should hold a series of symposiums in future to modernize the convention, in order to address the new problems and to update a number of its provisions.

He said the working group on procurement should adopt a methodology which would not alter provisions with proven effectiveness; the same applied to UNCITRAL’s Arbitration Rules.  The text should be simplified, not complicated.  There was a need to avoid complexities in seeking to regularize relations between States and investors.  He said he hoped the convention on transport by sea would address the issue of providing technical assistance to developing countries.

DHISADEE CHAMLONGRASDR ( Thailand) said international trade law played a crucial rule in enhancing economic growth in every country.  Thailand recognized the necessity and importance of the harmonization of national laws with the level of global cooperation and economic integration.  As Chair of the Association of South-East Asian Nations (ASEAN), he wished to see closer cooperation between the Association and UNCITRAL.   Recalling that Thailand had hosted the fifth ASEAN Law Forum in Bangkok, he said the meeting was a success in that consideration of adopting the United Nations Convention on Contracts for the International Sale of Goods and the E-Commerce Convention had been proposed.

He said the draft convention on contracts for the international carriage of goods wholly or partly by sea would be a stepping stone to harmonizing the rules and practices in the international carriage of goods.  He also supported the efforts of the working group on the current revision of the UNCITRAL Arbitration Rules of 1976.  It would no doubt provide modernized and practical rules for arbitral proceedings, yet would maintain its simplicity and general nature, based on consent.  He also noted with appreciation the direction taken by UNCITRAL to develop an annex to the UNCITRAL Legislative Guide on Secured Transactions, specifically on security rights in intellectual property issues. He said the efforts of the working group revising the Model Law on procurement of goods to be up-to-date with the development of electronic communication and modern business methods were to be commended.

ALEJANDRO ALDAY ( Mexico) said the Commission’s work was an important contribution towards advancing the rule of law.  The work on the draft convention on transport would provide a useful tool in the area of maritime law.  The current review on the Model Law on procurements was welcome.  Both those instruments provided for flexibility in application without undermining the principles involved.  The fundamental aim of the Commission’s instruments was to provide a traditional framework to help developing countries develop their legal processes and procedures.  The decision to include consideration of the settling of conflicts of interest with regard to procurement was also welcome; transparency and legitimacy were of foremost importance in the procurement process.  Functional equivalence was among the principles to be upheld in UNCITRAL’s work related to procurement.

On arbitration, he said the Commission’s Arbitration Rules were among the most useful of the instruments it had produced, and the review should address the specificity of the language.  More consideration should be given to the question of “arbitrability of issues”.  The commemoration of the fiftieth anniversary of the foreign arbitrable awards Convention had been welcome, since the Convention was a leading instrument in the field of trade law within the United Nations system.  On security rights, he said copyright was among the most important assets of enterprises today.  The work on intellectual property and security interests should continue to go forward on the basis of an annex to the legislative guide on secured transactions, with joint debates held betwe0n the working groups on Security Interest and on Insolvency Law.  For possible future work in electronic trade, a general reference paper would allow for the examination of the principle challenges emerging with use of electronic commerce.

On the Commission’s method of work, he said the need for consensus did not undermine the right to vote on matters.  If the Commission Chair was unable to attain consensus, an in-depth review of the issues should be conducted and a formal vote on the matter taken if that proved inconclusive.  The participation of observers in the Commission’s work should be limited to providing technical support, but should certainly not be extended to the right to vote.  The issue should be further analysed.

VICTOR TCHATCHOUWO ( Cameroon) said that, because of the fragmented nature of rule of law, its commercial aspects had not always been considered.  The Commission had provided a service to the people of developing countries by finalizing the convention related to carriage of goods.  It should now discharge its duty to provide technical assistance to implement the convention, and assessment should also be conducted on the harmonization of trade law.  Regardless of how welcome the new instrument was, it should not have remained silent on some specific matters involved in carriage of goods by water, such as a fire breaking out on a ship in the open.  Certain provisions of the convention, he said, also placed an excessive burden on the shipper.  However, the instrument was important and had been a response to shippers calling for a new regulatory framework; once adopted, the uniform legal framework would open up new markets and would promote trade nationally, as well as internationally.

He said he welcomed the work on procurement.  The Model Law should be revised in view of developments in the field.  In relation to negotiation of security interests, he asked if intellectual property was sufficiently related to other aspects of securities.  A seminar should be organized on e-commerce to identify where the Commission could be useful.  A guide on the New York Convention should be issued, so as to make sure the spirit of the instrument was not lost.  He said the observations on the working methods were useful; the Commission should view the reform of its own working methods within the larger context of overall United Nations reform.  Negotiations in the Commission must be conducted with a spirit of political will towards consensus.  Donors, international organizations and other bodies should make voluntary contributions to enable the Commission to deliver technical assistance and to enable delegations to participate in the Commission’s work.

PAUL BADJI ( Senegal) said adoption of the convention on contracts for the international carriage of goods wholly or partly by sea would lead to the modernization of rules in that regard, by providing greater legal security.  It was time for similar efforts on issues such as electronic documents, the limited liability of shippers (in particular, in cases of delay), jurisdiction, arbitration and the relationship between the draft convention and other pertinent conventions.  He said he supported examining the text of the draft convention for adoption during this session and convening, in 2009, in Rotterdam a ceremony for its signature by States.

On procurement, he said progress made on the revision of UNCITRAL Model Law on the procurement of goods and services would result in the establishment of a modern instrument, especially in the field of new technologies, which had revolutionized modern trade.  He said Senegal was closely following work to revise UNCITRAL’s Arbitration Rules, in particular towards the settlement of disputes between investors and States.  However, any review of those Rules must not alter their spirit.

Concerning the working methods of UNCITRAL, he said he welcomed the initiative for a review, and noted the need to confirm the right to vote among UNCITRAL members.  As for the Commission’s secretariat, he said further efforts must be made to disseminate working documents in the two official languages of the Commission and then six official languages used by the Organization.  He spoke of the leading role UNCITRAL continued to play as the legal body in the modernization, harmonization and unification of international trade law, and said its work was essential to the economic development of States.  The Commission must, therefore, be equipped with the necessary human and material resources to carry out its work.

HUBERT RENIE ( France), for the European Union, said the convention on contracts for the international carriage of goods wholly or partly by sea was an important instrument towards unifying a legal regime on transport of goods by sea.  He was especially pleased that the final version of the convention contained safeguards in the regime for the liability of the carrier.  He expressed support for progress made by the working group convened to update the Commission’s Arbitration Rules. Their spirit must be conserved, since they were so widely used throughout the world.  Revisions were especially important to settling disputes between investors and states.

On the working group on insolvency law, he said the right of societies to uphold the autonomy of their citizens had to be respected.  He noted progress in the working group on international property rights and said swift completion of work was paramount.

Overall, the increase in UNCITRAL members, from 36 to 60, was an indication of growing interest in the work of the Commission, he added.  Increased participation should be accompanied by the spelling out of UNCITRAL’s mission.  On particular issues of concern, he called for clarifying the meaning of consensus in working groups; determining the rights and obligations of non-governmental organizations admitted as observers; and ensuring the broader use of languages in working groups of all kinds.

ALBERTO VIRELLA ( Spain) said the convention on carriage of goods was of prime significance in legal and economic terms.  The law in that regard had been fragmented and long in need of being modernized and consolidated to address emerging concerns and developments.  The increased use of electronics in the fields related to transport and maritime law had made it imperative to unify existing laws, and to provide legal security in the important area of transport and its central role in international trade.  The new convention would promote trade and reduce transaction costs.  The necessary follow-up steps must now be taken to ensure it was adopted.

YONG SOO YUNG ( Republic of Korea) said his country was a leader in the area of electronic commerce, and it supported the work of UNCITRAL in that regard.  The convention on carriage of goods would enhance legal certainty in that important area of commerce.  In his country, a basic electronic commerce act had been introduced based on the Commission’s instruments.  Guidelines were being implemented domestically.  The Commission’s new guide on secure electronic transactions was welcome.

He said the convention on carriage of goods would contribute to the unification of maritime law and would help facilitate transport in international trade, but care must be taken so that the new instrument did not place too much of a burden on carriers.  Increasing the carrier’s liability, for example, would automatically impact on insurance.  Another article was too vague and could leave big shippers to derogate from their responsibilities, while placing burdens on small shippers.  A cost-benefit analysis should be carried out.  Also, since security interests and insolvency were two sides of one coin, the best way to go forward on the matter was to conduct a joint session of the working groups involved.

ESHAGH AL-HABIB ( Iran) acknowledged the Commission’s work in providing technical assistance to developing countries, and called for intensified efforts to that end, with special attention to the needs of developing and least developed countries, enabling them to upgrade national legal capacities and to benefit from advances in communication and other technologies for the fostering of trade and commercial interactions.

He said the draft on the convention related to carriage of goods was expected to contribute to the settlement of potential disputes between shippers, carriers and third parties.  It was regrettable, however, that certain parts of the instrument did not reflect the views of many States.  For example, many had supported the call to make a real balance between carrier and shipper interests.  Due diligence concerning limits of liability should also have been exercised.

The revision of the Arbitration Rules, he said, should not alter the structure of the text, its spirit or its drafting style.  The flexible character of its provisions should be retained.  The decision not to include specific provisions on treaty-based arbitration in the Rules was welcome.  Generally speaking, confidentiality as opposed to publicity constituted a cornerstone of arbitration, including in investor-States arbitrations.  The liability of arbitrators was a matter of public policy that was dealt with in different ways in different jurisdictions, and could not be prescribed in a multilateral document.  The proposal to omit the writing requirement for arbitration agreements would create confusion.

ALEJANDRO MORENO ( Venezuela) commended the Commission for progress made on its Model Laws, which had allowed States to modernize their laws, strengthen their jurisdiction and contribute to work done on international trade law.  Expressing support for the work done by the Commission’s six working groups, he noted new provisions formulated on procurement methods and on arbitration regarding the settlement of disputes.  He welcomed the adoption of the draft convention on contracts for the international carriage of goods wholly or partly by sea.  Those had also been important work towards developing the draft legislative guide on secured transactions.

SCOTT SHEERAN (New Zealand),noting that the draft convention on contracts for the international carriage of goods wholly or partly by sea was the result of many years of work by experts, said it had been negotiated for six years by UNCITRAL, and before that it was negotiated by the Comité Maritime International.  Those who had worked on the draft could be proud that it consolidated the law relating to the carriage of goods by sea, and introduced practical improvements catering to modern supply chain methods and the advent of electronic commerce.  He said he was, however, unsure whether the contracting-out provisions were an improvement on the current situation, as set out in The Hague Visby rules.  The wide level of contracting-out that was possible under the draft convention could result in “dis-aggregation” rather than harmonization, and power imbalance in contractual negotiations.

He also called for greater clarity on the competing interpretations of the scope of the convention, including the period of responsibility of the carrier.  With comprehensive guidance and practice over time, and a deliberate and well-supported approach to its implementation, the draft convention on sea transport could be successful, and inspire the confidence of the international trading community.

MARKO RAKOVEC ( Slovenia) said he highly valued the work of UNCITRAL to further the harmonization of trade, and he highlighted this year’s fiftieth anniversary of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards that was negotiated in the framework of the Commission and was ratified by as many as 142 States.  He welcomed the adoption of the draft convention on contracts for the international carriage of goods wholly or partly by sea, the Legislative Guide on Secured Transactions, and the decision of the Commission to address its role in promoting the rule of law at the national and international levels.  The implementation and effective use of modern private law standards on international trade was an important element towards the promotion of good governance and the rule of law.

When the Committee met again this afternoon, ELHADJ LAMINE (Algeria), noting the Commission’s goal of harmonizing and unifying international trade law, said that, after long and difficult negotiations, the Commission had adopted the convention on the contract for the international carriage of goods wholly or partly by sea.  The adoption of those uniform rules on international contracts and transport of goods by sea would favour the jurisdictional authority of States, and would offer new opportunities to those that were commercially isolated.  It would also play a fundamental role in the promotion of commerce and of economic development, nationally and internationally, most notably with regard to container transport.

He welcomed the activity of the working group on the finalization and adoption of the Legislative Guide on Secured Contracts, and also spoke of the need to modernize and reform existing legal instruments to unify certain rules.  He said he agreed with the view of UNCITRAL on revising arbitration rules in a generic form that could be the basis for all sorts of disputes; those rules could come in a variety of forms, including as Model Laws, Guidelines or in an annex to the rules.  They could also be developed as separate clauses for inclusion in treaties.

Turning to insolvency law, he said he welcomed the compilation of practical negotiation experiences and the utilization of international insolvency agreements.  Coordination and cooperation based on insolvency agreements would be important in researching solutions on the international treatment of enterprising groups in unsolvable cases.

RYIA MILLER ( United States) said UNCITRAL, in its technical and non-politicized approach to commercial and economic law reform and its focus on the promotion of commerce in all geographical regions, helped close the gap between the liberalization of trade through international agreements and the failure to upgrade commercial law.  The completion of the draft convention on contracts for the international carriage of goods was a significant development and would help bring about a much-needed modernization and harmonization of law in the field.  Before the commencement of negotiations on that issue, six years ago, United States shipper and carrier interests were prepared to join together to establish new legislation to replace the 1936 Carriage of Goods by Sea Act, which was the governing legal regime in the country.

Recognizing the benefits of a new global regime, she went on, those interests agreed instead to support Government participation in the UNCITRAL negotiation of a new carriage of goods convention, so long as it was consistent with certain key objectives.  Those objectives included:  the replacement of the current “port-to-port” scope of application with a modified “door-to-door” scope; the inclusion of a two-part rule on jurisdiction and forum selection clauses; and the inclusion of a provision allowing the parties to certain types of contracts of carriage containing various safeguards to derogate from the terms of the convention.  Although the text approved by UNCITRAL achieved all of those objectives, that did not mean that the United States supported all of the provisions of the convention.  However, based on the belief that the positive parts of the convention outweighed the negative, the United States accepted even the parts of the convention that it did not like, as part of an overall compromise.  The convention was a major improvement over the current situation and was an opportunity to unify and update maritime law and practice.

JESSICA GLADSTONE ( United Kingdom) said that, in general, the United Kingdom supported the draft convention and was currently working with key stakeholders in the maritime and financial services industries, with a view to achieving consensus on ratification.  Her delegation had participated in the latest session of the procurement working group in Vienna, during which discussion continued on proposals for the review of the Model Law, with a particular focus on procedures for framework agreements, review procedures and remedies.  It had also participated in the working group on international arbitration and conciliation and the current project on the revision of the UNCITRAL Arbitration Rules; that was an important project and the group should continue its focus on updating only those elements of the rules that, in light of experience, needed amendment.  She said it was also important for the work to be taken forward in a timely manner, with a view to completion in time for the 2009 Commission meeting.

In addition, she went on, the United Kingdom continued to play an active role in the working group on security interests.  In its thirteenth session, held in May in New York, the group had begun work on an annex to the Legislative Guide on Secured Financing, to cover intellectual property issues.  The group should ensure that the key objective of promoting secured credit was achieved in a way that did not interfere with the objectives of intellectual property law, to prevent unauthorized use of intellectual property and to protect the value of intellectual property.  Further innovation and creativity should be encouraged.  The United Kingdom, she said, also actively supported the activity of the working group on insolvency law, and the current review of the treatment of corporate groups in insolvency.  Her delegation was pleased to continue in that work with a view to establishing international guidelines and best practice.

EVANGELOS TSANTZALOS ( Greece) said he supported the purpose of the new convention on carriage of goods in principle, as a means of harmonizing and unifying international trade law for such carriage.  Lack of uniformity because of the proliferation of conventions and domestic legislations in force in different jurisdictions inevitably detracted from commercial and legal certainty.  That was a factor of paramount importance to all parties engaged in the international carriage of goods.  The new convention should be broadly accepted to provide for a stable legal framework that balanced rights and liabilities and fairly allocated risk between all parties concerned.  Emphasis should be assigned to liabilities and respective increase of limits.  As a leading maritime nation of the world, he said, Greece would make its decision about ratification in due time, taking into consideration the need for an updated regime of trade rules on the international carriage of goods by sea.

ERIC KENDRICK ( Canada) applauded the work of UNCITRAL and noted, with satisfaction, the progress that had been made on the issues of framework agreements and conflicts of interest in the context of the revision of the Model Law on procurement.  Progress from the results of the first session of the working group on security interests, dealing with security in intellectual property rights, was also to be welcomed.  Those rights constituted an important potential source of financing for many businesses, and the Commission’s work would, therefore, be of great benefit for the global business community.  He said the Commission’s decision to undertake work on transparency in the resolution of investor-State disputes was also particularly welcomed, especially given the strong level of support expressed by the vast majority of States at the Commission session, and the importance of the issue for all States.

With respect to the rules and working methods of UNCITRAL, he spoke of the usefulness of the documents that had been prepared by the secretariat to inform State and non-State participants.  Canada strongly supported the decision of the Commission to have a reference document prepared for use by chairpersons, delegates, observers and the secretariat itself.  In consulting with experts, he added, efforts should be made by the secretariat to increase the availability of working drafts and other preparatory materials in languages other than English.  In terms of new areas of work, his delegation would welcome the development of a guide for the New York Convention as a tool to promote uniform interpretation and application of the Convention and to avoid uncertainty and limit the risk of States practices which diverged from the essence of the Convention.

BAIZURA KAMAL ( Malaysia) said his country had participated in the working groups on a selected basis, in particular those on international arbitration and conciliation, insolvency law and security interests.  Malaysia was also committed to its obligations under the New York Convention, since becoming a member in 1985, to ensure that foreign arbitral awards were recognized and enforced without difficulty.

He said the work of experts was critical so that the working group on arbitration could finish its work for the Commission’s 2009 session.  The legislative guide on secured transactions was also important for encouraging uniformity and consistency among national laws concerning such international transactions.  Malaysia, he said, had been among the first countries to take part in the discussions on intellectual property that had led to the legislative guide annex dealing with security rights in such property.  His country did not have specific laws relating to that matter, and participation in the working group had presented an opportunity to develop expertise in defining the interrelation between secured transactions and intellectual property regimes at the national level.

SIVUYILE MAQUNGO ( South Africa) said that, since the end of apartheid in the early 1990s, international trade in South Africa had expanded dramatically.  A host of general agreements had been negotiated since 1994 as part of the process of normalizing trade relations with international trading partners after the sanctions that had been imposed on the apartheid regime.  Thus, the country had seen at first hand the importance of international trade as a tool for promoting social and economic development, creating job opportunities, increasing income, reducing poverty and improving the living conditions of citizens.

Commending the draft convention on carriage of goods for bringing harmony and legal certainty to a facet of international trade that was integral to trade itself, he said his country had taken part in the negotiations on the instrument and would voice its support when the draft was presented to the General Assembly.  Further, modern private law standards on international trade should be implemented in a manner that was acceptable to States with different legal, social and economic systems.  The interests of all people should be served and cooperation among States strengthened through the rule of law in commercial relations.  The Commission should lead capacity-building in developing countries through training and dissemination of model laws and international trade case laws.

He said the guide linking secured transactions with security of interests in intellectual property was encouraging, since much value resided in intellectual property and the value was usable as security in accessing credit, which should be made available to developing countries.  Those countries must have the ability to use both tangible and intangible property, as recognized security for access to credit, particularly in the current economy of banker caution in extending loans.  The draft legislative guide, however, did not provide sufficient guidance on adjustments to be made.  That work should be undertaken quickly to ensure that the guide gave complete and comprehensive guidance in that regard.

MUHAMMAD RAFIUDDIN SHAH ( Pakistan) expressed his appreciation for the work of UNCITRAL, especially its recent report on the forty-first session of the Commission, and noted the work made necessary by the ever-increasing container transportation business as it pertained to door-to-door delivery.  The draft convention on the carriage of goods by sea, now up for adoption, had elements addressing pertinent issues, including the responsibility, obligation and liability of the carrier and the obligation of the shipper.  He said he hoped this convention would reduce costs and fill existing legislative gaps in the law governing the transportation of containers.

Turning to arbitration and conciliation, he encouraged the progress made by the working group on this matter.  He said all work on the Arbitration Rules should be guided by the principle of consensus.  He said the New York Convention was important to the unification of international trade law; the persistent efforts of the Commission had promoted a better understanding of that Convention. However, to ensure the “smooth growth” of international law, the removal of international obstacles and legal impediments to developing countries was a “must”.  Although the Commission had played an important role in the development of legislation and capacity-building, that capacity-building for developing countries had to be enhanced.

EBENEZER APPREKU ( Ghana) said he was grateful to the UNCITRAL secretariat for participating in the capacity-building seminar held in Accra last June for legal experts from the 15 countries of the Economic Community of West African States (ECOWAS), as well as for officials of the secretariat of the West African Monetary Institute.  This institute would need technical assistance from agencies such as UNCITRAL to review the recently adopted supplemental acts of business laws in the ECOWAS subregion.

He said UNCITRAL might also serve as an impartial facilitator in “bridging the cleavage” between the commercial legal regime applicable to members of the organization to harmonize business law in Africa and non-members of that group.  On the recommendation by UNCITRAL on expanding the scope of the definition of the term “agreement” in the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, he said Ghana appreciated that the forms of agreement specified in article II, paragraph 2, of that Convention were not exhaustive.  Because it enhanced the right of an interested party to seek the validity of an arbitration agreement, he also found the recommendation of the Commission with respect to paragraph 1 of article VII acceptable.

He said he looked forward to participating actively in the consideration of the draft convention on contract for the international carriage of goods wholly or partly by sea.

CETA NOLAND ( Netherlands) said the draft convention on the carriage of goods was one of the most important results of the Commission’s work.  It was a modern framework for regulating maritime transport in relation to international trade.  She said her country would be pleased to host a signing ceremony from 21 to 23 September next year in Rotterdam.

ANDREANO ERWIN ( Indonesia) said he was pleased that the Commission had finalized and approved the draft convention on contracts for the international carriage of goods by sea; it was also gratifying that the important document had been adopted by consensus before being presented to the General Assembly during the current session.  However, the question of the Commission’s working methods was of concern, particularly in light of its growing membership and agenda, and with particular reference to its decision-making process and the participation of non-State entities in its work.  The discussions during the last two Commission sessions had been helpful, as had the note on current practices.  Decision-making by consensus was an important principle to uphold, but its operation in practice should be clarified.  The questions of observers should be considered in light of the principles of flexibility and inclusiveness.  Only Commission members should vote.

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For information media • not an official record
For information media. Not an official record.