Legal integration: the importance of UNCITRAL standards 1 2 3 Adopting UNCITRAL standards: Policy implications CISG: Its influence and scope of applictaion UNCITRAL Model Law on Secured Transactions: Aims, drafting and dissemination policies
Adopting UNCITRAL standards: Policy implications Promotes Rule of Law in commerce Supports Regional Economic Integration Enhances contractual and economic efficiency International nature Business-to-Business Low switching costs Tool for recently epanding economies Global uniform interpretation and application http://www.uncitral.org/clout/inde.jsp 1
Policy implications Promotes Rule of Law in commerce Transparency Equality and nondiscrimination Access to Justice Rule of Law Proportionality Legal Certainity a. Access to Justice: b. Legal certainty a. Simplification, reduction of costs b. Easy access to the law c. Transparency a. Contract-based b. Common language and checklist for international negotiations c. International standard d. Equality and non-discrimination a. reasonableness and equity b. Levels playing field e. Proportionality a. Fleibility, party autonomy 1
Policy implications Promotes Rule of Law in commerce Reputational Effects Legal education Legal services a. Raises the quality of the legal education b. Raises the quality of the legal services c. Incentivizes international judicial cooperation d. Reputational soft power International judicial cooperation 1
Brunei Darussalam Cambodia Indonesia LAO PDR Malaysia Myanmar Philippines Singapore Thailand Vietnam Policy implications Supports Regional Economic Integration ML Public Procurement E NY Convention 1958 R R R R R R R R R R ML Arbitration E 1 E E E E E E CISG R R CISG Limitation E-CC S R ML E-Commerce E E E E E E E ML Electronic Signatures E E ML Cross Border Insolvency E E ML Secured Transactions 1
8 reasons why States should provide businesses with harmonized commercial laws 1. PREDICTABILITY, which helps in efficient contract management, namely in the contet of crossborder supply chains 2. Reduction of transactional COSTS 3. TRUST building among commercial partners 4. Improved VALUE-FOR-MONEY in cross-border transactions, since risk incorporation in the price, is lowered 5. Levelled contractual BARGAINING POSITION for SME s (corresponding to 90-95% of all businesses) by reducing entry cost in foreign markets 6. Redistribution of market WEALTH 7. Effective and affordable means to SETTLE COMMERCIAL DISPUTES, while at the same time 8. Reducing the risk of such disputes. 1
United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980) (CISG) 87 State parties: More than 75% of world trade 2
CISG Supports Regional Economic Integration Argentina Brazil Paraguay Uruguay Venezuela Chile (A) Peru (A) MERCOSUR States Colombia (A) Ecuador (A) European Union CISG 24 Member States Ireland Malta Portugal United Kingdom CISG s APEC Economies Australia Brunei Darussalam Canada Chile People's Republic of China Hong Kong, China Indonesia Japan Republic of Korea Malaysia Meico New Zealand Papua New Guinea Peru The Philippines Russia Singapore Chinese Taipei Thailand The United States Viet Nam CISG X X X One Belt One Road Land Route Germany Iran Italy Kazakhstan Kyrgyzstan Netherlands Russian Federation Tajikistan Turkey Uzbekistan CISG 2
CISG Enhances contractual and economic efficiency Source: SPAGNOLO, L., CISG Eclusion and Legal Efficiency 2
United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980) (CISG) Contracts of sale of goods between parties in different States Party autonomy Formation of the Contract Sale of Goods Parties Obligations Remedies for breach of contract Passing of risk Suspension of performance and anticipatory breach. Eemption from liability to pay damages (hardship/force majeure) Preservation of the goods Duty of cooperation in avoiding/mitigating nonperformance Compensation of damages proportionate to actual loss 2
CISG Scope of Application (1) a contract (2) of sale (3) of goods (4) between parties: Without CISG Foreign law may apply For each contract of international sales of goods a different law may apply (i) who are located in different Convention states, or (ii) where the rules of private international law governing the contract lead to a Convention state. (iii) when parties choose CISG as applicable law (iv) when parties choose the law of a contracting State as applicable law (v) when chosen to govern dispute resolution because of its neutrality With CISG Eposure to CISG without proficient legal capacity CISG applies to all international contracts unless opted-out No effect on domestic contracts
Jurisdictions Top 10 trading partners (2017) % CISG jurisdictions 1. Brunei 2. Indonesia 3.Lao PDR 4.Malaysia 5.Philippines 6.Singapore 8.Thailand 10.Vietnam 11. Cambodia 1. Japan; 2.South Korea; 3. Malaysia; 4. Singapore; 5. Thailand; (5a. EU); 6. India; 7. China; 8. United States; 9. New Zealand; 10. Australia 1. China; 2. Japan; 3. Singapore; 4. USA; (4a. EU); 5. South Korea; 6. Malaysia; 7. India; 8. Thailand; 9. Australia; 10. Saudi Arabia 1. Thailand; 2. China; 3. Vietnam; 4. Japan; (4a. EU);5. South Korea; 6. India; 7.Germany; 8. Singapore; 9. USA; 10. UK 1. China; 2. Singapore; 3. USA; 4. Japan; (4a. EU); 5. Thailand; 6. Indonesia; 7. South Korea; 8. Hong Kong; 9. India; 10. Australia 1. Japan; 2. China; 3. USA; 4. Singapore; (4a. EU); 5. Thailand 6. Hong Kong; 7. South Korea; 8.Chinese, Taipei; 9. Indonesia 10. Malaysia 1. China; 2. Malaysia; 3. USA; (3a. EU); 4. Indonesia; 5. Hong Kong; 6. Japan; 7. South Korea; 8. Thailand; 9. Vietnam; 10.Australia 1. China; 2. Japan; 3. USA; (3a. EU); 4. Malaysia; 5. Singapore; 6.Indonesia; 7. Australia; 8. Hong Kong; 9.Vietnam; 10. UAE 1. China; 2. USA; (2a. EU); 3. South Korea; 4. Japan; 5. Thailand; 6. Singapore; 7. Malaysia; 8. Germany; 9. Hong Kong; 10. Australia 1. China; 2.USA; 3.Thailand; 4.Vietnam; 5.Japan; 6.UK; 7.Hong Kong; 8.Germany; 9.Korea; 10.Canada; (10a. EU) 80% 70% 80% 60% 70% 60% 60% 70% 60%
3 UNCITRAL tets on secured transactions UN Convention on the Assignment of Receivables in International Trade (2001) UNCITRAL Legislative Guide on Secured Transactions (2007) Supplement on Security Rights in Intellectual Property (2010) UNCITRAL Guide on the Implementation of a Security Rights Registry (2013) UNCITRAL Model Law on Secured Transactions (2016) Guide to Enactment of the UNCITRAL Model Law on Secured Transactions (2017)
Allow debtors to use the full value of their assets to support credit 3 Transfer or retention of title Monopoly for the creditor/transferee Various theoretic and practical concepts Germany: epectancy of title Possessory pledge Business gives its equipment or inventory to the lender Treating title devices serving security purposes as security devices Consistent with the systematic and rational Civil Code approach How is it going to produce the income necessary to repay the loan?! There is a clear economic need for legal systems to permit non-possessory pledge types of security interests
Provide equal treatment of diverse forms of secured transactions Law of security interest Result: gaps and inconsistencies Unitary, Functional and Comprehensive Dispersed in various statutes or case law Out of date Uncoordinated Avoid problems Treat equally 3 Promote competition Availability Cost of credit
UNCITRAL Model Law on Secured Transactions: Aims, drafting and dissemination policies The overall objective of a modern secured transactions law is to promote the availability of lower-cost credit (lower cost because the security reduces the risk of non-payment) 3 Harmonization Easy creation Transparency (Registry) Predictable & certain priority Enforceability Insolvency compatibility Predictable applicable law Unitary approach: one term to reflect all types of security interests Functional approach: all types of transactions that fulfil security purposes are covered Comprehensive approach: all types of creditors, debtors, encumbered assets and secured obligations are covered Simple agreement between the parties Simple identification and description Simple writing (including in electronic form) Public registry of security interests Notice enough Registration makes security interest effective Records searchable by debtor name Fully electronic and inepensive registration and searching Easy determination of priority Comprehensive set of priority rules Time- and costefficient enforcement of security interests Court proceedings must be time- and cost-efficient; Without court, rights of borrower and others must be protected Respect security interest in case of insolvency Respect priority Set of applicable law rules Ensure security interest will be recognized in another State
3 Quebec and Louisiana, Colombia, Meico To avoid touching the Civil Code, over a 10-year period Quebec adopted one statute after the other to deal with various types of secured transactions Finally, Quebec adopted a Personal Property Security Act like the Common Law jurisdictions of Canada Louisiana is another civil law jurisdiction that adopted art. 9 UCC Civil law jurisdictions: Colombia and Meico: Modern laws Russian Federation, Czechia and Slovak Republic, Hungary, Poland, Vietnam Towards modern and efficient secured transactions laws Germany Secured transactions law reform: civil law jurisdictions Germany regime mies civil and common law: main non-possessory security interest is retention of title, created by case law! Japan Not oriented for access to credit, for economic and cultural reasons
Australia, Canada, India, New Zealand, USA Modern secured transaction codes United Kingdom Sir Roy Goode: our security law presents gaps and inconsistencies But no big impact because of stable judicial system, sophisticated lawyers, developed markets, etc. English Law Reform Commission: recommendations Oford University: Secured Transactions project Financial Law Committee, Law Society of the City of London: Secured Transactions Code Secured transactions law reform: common law jurisdictions 3
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