UNCITRAL Adopts Insolvency Practice Guide At Commission

UNCLAS SECTION 01 OF 03 UNVIE VIENNA 000356 DEPT FOR IO/T, EB/IFT/ODF AND L/PIL EMBASSIES FOR ECON/POL SIPDIS E.O. 12958: N/A TAGS: ABUD AORC EAID EINV ETRD KCRM KUNR UNCITRAL AU UN SUBJECT: UNCITRAL Adopts Insolvency Practice Guide At Commission Session REF: A) UNVIE VIEN 000347 B) UNVIE VIEN 129 ¶1. (U) Summary and Background. The United Nations Commission on International Trade Law (UNCITRAL) held its forty-second session in Vienna from June 29 to July 17, 2009. UNCITRAL is composed of 60 member states, including the United States. The session was also attended by 26 observer states, and several observer organizations, such as the FAO and the World Bank. The most significant accomplishment during the session was the adoption of the UNCITRAL Practice Guide on Cross-Border Insolvency. The Commission also authorized continued work on revisions to the 1994 UNCITRAL Model Law on Procurement and the 1976 UNCITRAL Arbitration Rules, as well as finalization of a Supplement to the Legislative Guide on Secured Transactions specific to security rights in intellectual property. End summary. -------------- Insolvency -------------- ¶2. (U) The Commission adopted a UN Practice Guide on the use of cross-border "Protocols" between national courts and other authorities as well as parties to cases and authorized the Secretariat to transmit it to Governments with the request that it be made available to relevant authorities so that it becomes widely known and available. In insolvency proceedings where debtors have assets or subsidiaries in more than one state, there is generally an important need for cross-border cooperation in, and coordination of, the supervision and administration of the assets, including as applicable multiple parallel insolvency proceedings. The decision adopting the Practice Guide noted that cooperation and coordination in cross-border insolvency cases could help rescue financially troubled individuals and enterprises, as well as avoiding unnecessary delay and costs. The Commission previously adopted the UNCITRAL Model Law on Cross-Border Insolvency that provides a legislative framework for effective cross-border coordination and cooperation, which has been enacted in the U.S. as part of the federal Bankruptcy Code. -------------- Procurement -------------- ¶3. (U) Per Ref A, the Commission began, but did not complete, a second reading of a revised UNCITRAL Model Law on Procurement. For the past several years, the Working Group on Procurement has been engaged in an effort to update UNCITRAL's 1994 Model Law on Public Procurement and its accompanying Guide to Enactment (widely used by developing countries, the World Bank and others) to reflect new practices and technological developments, in particular those resulting from the use of electronic communications in public procurement. New issues included coverage of military procurement and use of socio-economic factors. The Committee of the Whole did not complete the reading of the model law, and the Commission urged the Working Group to complete its work as soon as possible in light of the impact that the revised Model Law would have on ongoing procurement law reforms at the local and regional levels, especially in developing countries. -------------- Arbitration and Conciliation -------------- ¶4. (U) The Commission reaffirmed that Working Group II (arbitration and conciliation) should continue work on revision of the 1976 UNCITRAL Arbitration Rules, which are widely accepted internationally, with the hope that the final review and adoption of the revised rules would take place at the forty-third session of the Commission in 2010. The Commission also decided that Working Group II should take up work on transparency in treaty-based investor-state disputes immediately after it completes it current work on revising the Arbitration Rules. The Commission also decided that the existing mechanism on designating and appointing authorities under the 1976 UNCITRAL Arbitration Rules should not be changed. In September 2008 Working Group II had discussed a proposal whereby, if the parties were unable to agree on an appointing authority, the Secretary General of the Permanent Court of Arbitration (PCA) would act directly as the appointing authority. UNVIE VIEN 00000356 002 OF 003 Under the existing Rules, the PCA Secretary-General is the default designating authority, responsible for designating the appointing authority. ¶5. (U) The Secretariat questioned the proposed expanded role for the PCA under the Arbitration Rules, pointing out inter alia that the PCA was neither a UN body, nor a body created to deal with commercial, non-governmental disputes. The majority of delegations that spoke, including the United States, supported the position of the Secretariat. -------------- Rotterdam Rules -------------- ¶6. (U) The Commission authorized the Secretariat to prepare a brief introductory note explaining how the UN Convention on Contracts for the International Carriage of Goods Wholly or Party by Sea (Rotterdam Rules) came into being, along with an index to the lengthy trauvaux preparatoires. Strong reservations were expressed regarding the preparation of any explanatory note or commentary to the Rotterdam Rules, as any interpretive document could delay ratification. Therefore, the preparation of such a document was not authorized. The Rotterdam Rules were adopted by the Commission at the forty-first (2008) session, and endorsed by the UNGA. A special signing ceremony will be held at The Hague in September 2009, and the United States is expected to sign the Convention at that time. -------------- E-Commerce -------------- ¶7. (U) The Commission requested that the Secretariat remain engaged in the World Customs Organization-UNCITRAL Joint Legal Task Force on Coordinated Border Management, which is considering the legal aspects involved in implementing a cross-border "single window" facility for trade facilitation. The Commission further requested that the Secretariat convene a Working Group session should the progress of the Task Force warrant it. The Commission also requested that the Secretariat conduct studies and hold colloquiums, resources permitting, on two proposals by the United States: (1) the electronic transferability of rights to goods in transit, as well as on electronic transportation of electronic documents for bills of lading, letters of credit, insurance and other trade in and transportation of goods; and (2) online dispute resolution in cross-border electronic commerce transactions. -------------- Secured Finance -------------- ¶8. (U) Working Group VI continues to work on a supplement to the 2007 Legislative Guide on Secured Transactions (already endorsed by the UNGA) addressing the intersection of intellectual property (IP) law and secured finance law. The Commission expects this work to be ready for final adoption at its Plenary session in 2010. -------------- Rules of Procedure and Methods of Work -------------- ¶9. (U) Little progress was made on the review of a Secretariat reference document setting forth proposed guidelines for UNCITRAL's chairpersons, delegates, and the Secretariat. There was contentious debate on issues such as the definition of consensus, the treatment of dissenting member states, and the role of voting during a two-day informal session and during the formal Plenary session. The U.S. again opposed changes that would impose more rigid rules and thereby significantly curtail the productive work done in UNCITRAL over the past decades. The text will be reviewed again at a future session of the Commission. -------------- Next Commission Session -------------- ¶10. (U) The Commission approved the holding of its forty-third session from June 21 to July 9, 2010. The priorities for the next Commission session will be determined after the fall 2009 sessions UNVIE VIEN 00000356 003 OF 003 of the various working groups. The Commission in 2010 is also expected to decide the future work program of the UNCITRAL for the next several years. PYATT