UNCITRAL HAILED IN SIXTH COMMITTEE FOR PROGRESS ON KEY TRADE LAW TEXTS SLATED FOR ADOPTION NEXT YEAR

Press Release
GA/L/3106

UNCITRAL HAILED IN SIXTH COMMITTEE FOR PROGRESS ON KEY TRADE LAW TEXTS SLATED FOR ADOPTION NEXT YEAR

As the Sixth Committee (Legal) took up the annual report of the United Nations Commission on International Trade Law (UNCITRAL), speakers this morning all pointed to the significant progress made in the Commission’s work on three key legal texts that are expected to be finalized during the next UNCITRAL session, in June 2000.

Noting that negotiations on a draft legislative guide on privately financed infrastructure projects, uniform rules on electronic signatures and a draft convention on assignment in receivables financing were all coming to fruition, the United Kingdom’s representative characterized the 1999 session of UNCITRAL as something of a watershed. Meanwhile, the UNCITRAL report notes that the Commission approved a slightly longer session next year in anticipation of at least two of the three texts being concluded.

In introducing the report, the Chairman of UNCITRAL said that private investment in infrastructure had been the main subject discussed. Noting that such investments provided an opportunity for achieving savings in public expenditure and obtaining high standards of service, while enabling the public sector to reallocate resources to meet other pressing social needs, he said that attracting private capital for such projects required a stable and favourable legal framework. Therefore, the guide was aimed at assisting governments and legislative bodies in reviewing the adequacy of laws, regulations and other relevant legislative texts.

The Chairman also drew attention to increasing demands from all over the world for training and technical assistance regarding the legal texts resulting from the work of the Commission. “Unless we support and contribute to UNCITRAL’s training and promotion activities, we may be wasting the considerable effort, time and resources originally invested in the preparation of the many texts elaborated by the Commission”, he said.

Several speakers stressed the need for greater involvement by the developing countries in the work of the Commission. The representative of China said the Commission should take greater account of conditions in the developing countries and incorporate more of their proposals in its work.

Speaking in this morning’s debate were the representatives of Mexico (on behalf of the Rio Group), Japan, Austria, Brazil, Finland (on behalf of the Nordic countries), Malaysia, Iran, France, Russian Federation, Canada and Hungary.

Sixth Committee - 1a - Press Release GA/L/3106 3rd Meeting (AM) 11 October 1999

The Chairman of the Committee announced that a working group had reached broad agreement on the draft text of a convention on suppression of the financing of terrorism. There was also agreement on arrangements for a new round of informal consultations on the draft convention for the suppression of acts of nuclear terrorism.

The Committee will meet again tomorrow, Tuesday, 12 October, at 3 p.m. to continue its discussion of the UNCITRAL report.

Committee Work Programme

The Sixth Committee (Legal) met this morning to begin consideration of the annual report (Document A/54/17) of the United Nations Commission on International Trade Law (UNCITRAL), which reviews the work of its latest session, held in Vienna from 17 May to 4 June. The 36-member Commission was established by the General Assembly in 1966 to promote the progressive harmonization and unification of the law of international trade; it began its work in 1968.

At its latest session, UNCITRAL considered legal issues relating to: privately financed infrastructure projects; electronic commerce; receivables financing; monitoring implementation of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards; and international commercial arbitration. It also discussed case law on UNCITRAL legal texts; training and technical assistance; and the status and promotion of UNCITRAL texts.

For the first time, UNCITRAL had available to it a complete draft of a legislative guide on privately financed infrastructure projects, pursuant to a decision taken in 1996. The Commission generally approved of the guide’s structure, but felt that the document was lengthy and needed to be made more accessible to the reader. It discussed the value of including model legislative provisions and proposed that the legislative recommendations in the current draft be made more uniform. It invited Governments to identify outside experts who might help the Secretariat revise the text. The Commission views the guide as being of particular interest to countries striving to attract foreign investment capital, but stresses the equal importance of protecting the interests of host Governments and infrastructure users.

The report further states that UNCITRAL’s Working Group on Electronic Commerce -- which in two previous sessions had experienced “manifest difficulties” in reaching a common understanding of the new legal issues arising from the increased use of digital and other electronic signatures –- has made significant progress this year in its efforts to draft a set of uniform rules for uniform signatures. The report observes that the Working Group faced difficulties in reaching consensus as to the legislative policy on which the uniform rules should be based. Although no specific time frame was set, UNCITRAL urged the Working Group to proceed expeditiously with the completion of the draft rules and made appeal for consensus on their scope and content.

The Commission asked its Working Group on International Contract Practices, which has been working since 1995 on a draft convention on assignment in receivables financing, to submit a text in time for it to be circulated among Governments for comment before being considered for adoption by UNCITRAL at its June 2000 session. The Commission is expecting also to decide at that time whether to recommend that the draft convention be adopted by the General Assembly or by a diplomatic conference specially convened by the Assembly for that purpose. The Commission generally felt that this text had the potential of increasing the availability of credit at more affordable rates. It welcomed it in the light of the current situation, whereby credit on the basis of international receivables was either not available at all or available only at a high cost, as this placed developing country parties at a competitive disadvantage and gave rise to serious obstacles to international trade.

According to the report, UNCITRAL looks forward to discussing the desirability and feasibility of further development of the law on international commercial arbitration. It agreed, however, that, pending the clarification of the substantive issues to be addressed, it could only make tentative conclusions at this time as to the form that such future work might take. Possible topics proposed at the session included: mechanisms for having third persons or arbitral tribunals fill gaps left in contracts by the parties, or adapt contracts in the light of changed circumstances; the degree of freedom to be allowed to parties with respect to their choice of representation in arbitral proceedings; and conflicts arising from a foreign court judgement and an arbitration proceeding being invoked with respect to the same case.

In addition, UNCITRAL decided that a working group on international commercial arbitration should consider the following priority areas: conciliation as a method of dispute resolution; the requirement that arbitration agreements be in written form; enforceability of interim measures of protection; and possible enforceability of an international award that had been set aside in the State of origin.

The Commission also decided that a working group on insolvency law should hold an exploratory session in Vienna from 6 to 17 December 1999, to prepare a feasibility proposal for consideration by UNCITRAL at its next session.

Finally, UNCITRAL decided to hold its next session in New York from 12 June to 7 July 2000. It approved a slightly longer session in anticipation of having two, or possibly three, draft legal texts before it for finalization and adoption.

Statements

The Chairman, PHAKISO MOCHOCHOKO (Lesotho), said he understood that there was broad agreement on the text of the Convention for the Suppression of the Financing of Terrorism prepared by the Committee's working group on that subject. He understood also that there was agreement on arrangements for a new round of informal consultations at this session on the draft International Convention for the Suppression of Acts of Nuclear Terrorism. He announced that Cate Steains (Australia) had agreed to coordinate those consultations.

REINHARD RENGER (Germany), Chairman of UNCITRAL, described the Commission’s work on the draft guide on privately financed infrastructure projects as the main focus of its 1999 session. The Commission was aware that private investment in infrastructure provided an opportunity for achieving savings in public expenditure and obtaining high standards of service, while at the same time enabling the public sector to reallocate resources to meet other pressing social needs. Attracting private capital for such projects required a stable and favourable legal framework. Therefore, the guide would be aimed at assisting governments and legislative bodies in reviewing the adequacy of laws, regulations and other legislative texts relevant to the execution of privately financed infrastructure projects.

He said that the time and attention given by the Commission to the guide was a reflection of the considerable significance of that type of investment in the growth of developing economies as well as the so-called economies in transition. The revised guide would be taken up again by the Commission at its next session, with the aim of finalizing it at that time.

He also reviewed Commission’s work on draft uniform rules on electronic signatures and on the elaboration of a draft convention on assignment in receivables financing. He gave an overview of the Commission’s discussion of possible future work on insolvency law.

There were increasing calls and demands from all over the world for training and technical assistance regarding texts resulting from the work of the Commission, he said. The CLOUT system (a database established for the collection and dissemination of Case Law on UNCITRAL Texts) was growing in volume and reputation. Serious attention should be given to finding ways to assist the Commission and its Secretariat to ensure that such valuable programmes continued and were strengthened. He hoped that Governments and international organizations would see the need for increased awareness of UNCITRAL texts and would promote expanded training and assistance activities, which were highly beneficial and badly needed in developing countries. Achieving that would require comparatively modest resources, in fact minimal resources, compared with the initial investment that had gone into the preparation of the texts in the first place. “Unless we support and contribute to UNCITRAL’s training and promotion activities, we may be wasting the considerable effort, time and resources originally invested in the preparation of the many texts elaborated by the Commission.”

SOCORRO FLORES LIERA (Mexico) speaking on behalf of the Rio Group, said that the Group would continue to lend its efforts to promote the uniformity of trade law. Significant progress had been made on the draft legislative guide on private financing of infrastructure projects; it was important that the final version strike an appropriate balance between the interests of the investor and those of the host country. The guide should be drafted with enough flexibility to allow its incorporation into different kinds of national legislation.

The Rio Group attached particular significance to the draft convention on receivables financing and hoped that despite the difficulties surrounding certain aspects of that text, the Commission could complete its work on the draft by next year. She expressed concern over delays in the publication of UNCITRAL Yearbooks; the Rio Group endorsed the Commission’s call for their timely publication and punctual distribution in all languages.

HIROSHI KAWAMURA (Japan) said that UNCITRAL’S tradition of considering issues from both the legal and technical points of view should be maintained, and that its work should never be politicized. Japan was satisfied with the progress made in the preparation of the legislative guide on privately financed infrastructure projects. It hoped that by cooperating closely with other international organizations, UNCITRAL could arrive at a text that would gain wide acceptance and be adopted during its next session. He also hoped that progress could be made in the preparation of uniform rules on electronic signature, in the light of rapid developments in the field of electronic commerce. His government supported the elaboration of a uniform law on assignment in receivable financing to facilitate the development of international trade and promote the availability of credit, but it had a reservation about the option substantive law priority rules. Attempts should be made to prepare a uniform law as far as possible. He hoped that discussions could be concluded in the year 2000, which was the target year for adoption of a convention.

One lesson learned from the Asian financial crisis was the necessity of having a strong insolvency regime and consistency among the insolvency laws of various countries, he said. However, it would not be easy to prepare a uniform rule in that field; the feasibility of such a uniform regime should be carefully studied to clarify what was expected to be achieved. He made a number of proposals to rationalize UNCITRAL’S work within available resources. He cited the example of the International Court of Justice which operated under similar resource constraints. It would be useful for UNCITRAL to consider having more meetings in Vienna instead of New York. It would also be advisable for UNCITRAL not to seek new topics, but to finalize ongoing projects before embarking on new ones. Steps should be taken to ensure against duplication of work between UNCITRAL and other bodies of the United Nations system.

GERHARD PFANZELTER (Austria) said his country hoped that the importance of the Commission’s work would receive the acknowledgement it deserved, before the chronic lack of resources for its secretariat affected the output and quality of its work. In a world moving closer together, privately financed projects were becoming increasingly important. An essential prerequisite for any private investment was a sound legal framework. Thus, the Commission’s work on a legislative guide on privately financed infrastructure projects was vital to States striving to attract private investment for them. The Commission must also proceed expeditiously with its work on electronic signatures and certification authorities.

Austria welcomed the significant progress achieved by the Commission’s working group on a draft convention on assignment in receivables financing. It also supported the establishment of a working group to explore future work on international commercial arbitration. Austria shared the concerns of other States that both UNCITRAL and the Economic Commission for Europe (ECE) were working on the review and possible revision of the 1961 European Convention on International Commercial Arbitration. In its view, the regional specificities of international arbitration, even if they existed, were negligible. The UNCITRAL should address the issue from a global perspective, he said.

He expressed regret that, due to the lack of resources, an increasing number of requests for seminars and technical assistance had to be turned down. He observed that the annual William C. Vis International Commercial Arbitration Moot, in which 70 law schools from 28 countries had competed this year, was an excellent method of bringing international trade law closer to the public. The broad participation in that event, held in Vienna from 27 March to 1 April 1999, underlined the increasing interest that law students and faculties around the world were devoting to international trade law and arbitration.

MARCEL BIATO (Brazil) said UNCITRAL had been playing a growing role in the United Nations system. It dealt with some of the fastest changing and most innovative aspects of today’s digital economy and complex legal world. As international trade flows increased by the day with the improvement of transportation, communications and the availability of markets, legislation became a true infrastructure need. Thus, Brazil was particularly appreciative of UNCITRAL’S pioneering role in fostering the debate on electronic commerce and its related legal aspects.

He welcomed the recent holding of three UNCITRAL seminars in Brazil on electronic commerce issues, saying that the work of the Commission did indeed help with the drafting of domestic legislation. He encouraged UNICTRAL to continue its work on the drafting of model laws as impartially as possible. Such laws must reflect the neutral character of technology in its trade application.

SUSAN DICKSON (United Kingdom) said that UNCITRAL’s recent session marked something of a watershed. A number of the Commission’s current projects were coming to fruition, she noted. She welcomed the decision to begin fresh work on international commercial arbitration. Referring to the decision to give priority to work on conciliation and on requirements for written arbitration agreements, she said the United Kingdom did not view conciliation as a high priority but would play a constructive role in the discussions. It would want to ensure that the main features of conciliation -- its flexibility and adaptability -- were recognized and preserved.

She was less certain about future work on insolvency, given that important work was being undertaken on the issue in such other forums as the World Bank and the International Monetary Fund (IMF), she said. She agreed, however, with the Commission’s decision to arrange a single working group meeting to consider the wider developments and the feasibility of UNCITRAL’s involvement.

KARI HAKAPAA (Finland), on behalf of the Nordic countries, said the legislative guide for privately financed infrastructure projects was envisaged to have an extensive scope. That was presumably required to respond to the diverse needs of national legislatures. On the other hand, he said, an overly detailed guide might not encourage States to enter into appropriate projects. It was important that work on the guide, as well as UNCITRAL’s other projects, were completed in the near future. The general approach adopted by the Commission was appropriate.

He said that delays in finalizing the uniform rules on electronic signature were likely to diminish the prospects for their global acceptance. Rules of arbitration constituted a central and ever-growing part of the legislative infrastructure of international trade. UNCITRAL’s role was pivotal in the development of such rules; the Nordic countries urged it to continue with its activities in that field.

Those countries were also concerned over the growing importance of international regulation of cross-border insolvencies and welcomed the preparation of a study on that matter by an UNCITRAL working group.

ABDILLAH HAJI ABDUL RAHIM (Malaysia) said modifications were necessary to make the draft legislative guide more readable. The guide was a useful tool for Governments in reviewing and modernizing their legislation on privately financed infrastructure projects. Given the different legal systems of States, the guide should provide a range of alternative policy options. Malaysia supported the Commission’s method for finalizing the draft legislative guide, and agreed that the Secretariat should enlist the assistance of experts to review the legislative recommendations. It should take account of the views of outside experts from both developed and developing countries.

The Working Group on Electronic Commerce should pursue its work on electronic signatures on the basis of its original mandate, he said. The uniform rules it was preparing should be consistent with the media-neutral approach taken in the UNCITRAL model law on that subject. No time frame should be set for the working group to formulate universally acceptable draft uniform rules.

He commended the Commission’s technical assistance and training programmes and said some members of the Association of South-East Asian Nations (ASEAN) would benefit from them. His Government joined in the appeal for financial contributions to those programmes to enable developing countries to participate in them.

SAEID MIRZAEE YENGEJEH (Iran) expressed satisfaction at the progress made on the draft guide on infrastructure projects and looked forward to its completion. While generally satisfied with the structure of the guide, he said it was important to preserve an appropriate balance between the objective of attracting private investments and the protection of the interests of host governments and facility users, so as to make the project appealing to both Governments and private sectors. He favoured the continuation of an approach that recognized that each State had a unique legal culture. Nevertheless, he agreed with UNCITRAL that it was necessary to review the recommendations in their entirety, in order to make them more coherent and harmonious.

He supported the recommendation to increase both the human and financial resources of the UNCITRAL secretariat. He expressed concern regarding insufficient participation of developing countries in the activities of the Commission and its working groups. Their active engagement was necessary in the era of globalization. He expected that efforts to promote their participation would be renewed in both the Commission and the General Assembly.

DIEGO COLAS (France) underlined his country’s concern about the lack of financial resources afforded the Commission, which had prevented it from performing its tasks to the full. That problem was affecting its technical assistance programmes and organization of seminars. France was also concerned about the delays in submission of documents in all languages to the Commission to enable it to carry out its tasks.

He drew attention to the observation in the Commission’s report that in view of the limited resources available to its secretariat, the view had been expressed that UNCITRAL could not fully implement its mandate regarding training and technical assistance. Adequate resources should therefore be provided to the Commission; otherwise, it might be forced to seek assistance from private sources, and that might be detrimental to its independence.

VLADIMIR TARABRIN (Russian Federation) said his Government had a positive assessment of the Commission’s work and that of its working groups. It was one of the bodies of the United Nations whose work was yielding tangible results. Russia advocated continuation of work on the legislative guide, which was of great significance to countries within the context of the establishment of favourable investment climate.

He said the establishment and development of international legal norms governing electronic commerce was of great importance. Russia supported the work of UNCITRAL and its working group on electronic signatures. It was pleased that the draft rules prepared by the Commission were gradually being adapted for use by countries.

His Government would contribute towards ensuring that the draft text on assignment in receivables financing was completed in time for adoption at the Commission’s next session, he said. Russia appreciated the work of the UNCITRAL secretariat in the area of publishing and organization of seminars and training programmes. It supported the provision of more resources for that secretariat. He stressed the central role of the Commission in the unification of international trade law and hoped it would continue its work for the benefit of the entire world community. GAO FENG (China) said that the work of the Commission reflected the host of emerging issues in the field of international trade that urgently required unification and coordination among countries and regions. China was satisfied with the results of the latest session and highly appreciated the efficiency of the UNCITRAL secretariat.

The huge achievements of UNCITRAL were acknowledged by all countries, he said. The conventions and model rules drafted under its aegis had been widely adopted in many countries, vigorously propelling the development of international trade. So that norms of international trade law could attain greater prominence, in formulating international conventions and model rules in the future, UNCITRAL should take more account of the concrete conditions in the developing countries and incorporate more proposals from those countries.

The Commission should also strengthen its assistance and training targetted at developing countries, he said.

GILES NORMAN (Canada) said that the reality of globalization underscored the importance of UNCITRAL’s work. The Commission was uniquely positioned to contribute to global economic development, as the core legal body within the United Nations system with the mandate to further the progressive harmonization and unification of the law in international trade. Canada commended the Commission and its secretariat for the progress made over the last year in its work on receivables financing, on privately financed infrastructure and in the area of electronic commerce. It also recognized the great value of the Commission’s work in promoting acceptance and the uniform application of its conventions and model laws.

Canada considered that the work proposed to be carried out by the UNCITRAL working group on arbitration was both necessary and timely. It was confident that, given the expertise demonstrated by the Commission in previous projects, the result would be most useful. The Commission’s work on insolvency law was of great interest to Canada; it intended to participate in that process. Canada continued to support and participate actively in the Commission’s work in the field of electronic commerce. Its own Uniform Electronic Commerce Act drew on UNCITRAL’s model law. Discussions in the Commission’s Working Group on Electronic Commerce were informative for Canada’s domestic legislative initiatives in that field.

ZSOLT HETESY (Hungary) said the revised guide on infrastructure projects maintained a delicate balance between the goals of attracting private investments, ensuring government interests and protecting the users of the infrastructure facilities. Hungary was expecting in the future to participate more frequently in the financing of build-operate-transfer projects (BOT). The Commission had painstakingly analysed a vast number of possible discrepancies that could arise with regard to the BOT process in different legal systems, and the Commission had proposed modifications accordingly. He supported the Commission's cautious approach concerning sensitive areas, including the issues of termination of projects, compensation and dispute settlement.

Stating that the draft convention on receivables financing had the potential to eliminate, or at least limit, the competitive disadvantages experienced by parties from developing countries and also by some countries with transitional economies, he called for rapid progress on the text. He shared the view that, because of its universal membership, UNCITRAL was an appropriate forum in which to work on the strengthening and modernization of insolvency laws.