CONSIDERING REPORT OF UNCITRAL, SIXTH COMMITTEE (LEGAL) HEARS CALLS FOR CONCLUSION OF GUIDE ON PRIVATELY-FINANCED INFRASTRUCTURE PROJECTS

Press Release
GA/L/3071*

CONSIDERING REPORT OF UNCITRAL, SIXTH COMMITTEE (LEGAL) HEARS CALLS FOR CONCLUSION OF GUIDE ON PRIVATELY-FINANCED INFRASTRUCTURE PROJECTS

The draft legislative guide on privately-financed infrastructure projects should balance the objective of attracting foreign investment with protection of the interests of host governments, the Sixth Committee (Legal) was told this morning as it began a two-day examination of the report of the United Nations Commission on International Trade Law (UNCITRAL).

The representative of Malaysia said the legislative guide, being prepared by the Commission, could be of great assistance, especially to developing countries, by providing advice on the essentials of a favourable legal framework.

Amidst the ongoing global financial crisis, the establishment of the guide represented a significant measure to help, particularly, developing countries and economies in transition, the representative of Viet Nam said. The guide, once adopted, would assist governments in reviewing and modifying their legislations pertaining to privately-financed infrastructure projects.

The representative of Austria, speaking on behalf of the European Union and associated States, urged UNCITRAL to proceed with its preparation of uniform rules on the legal issues of electronic signatures and certification authorities as fast as possible. Such harmonization had become particularly urgent due to the rapid development of electronic commerce, she said.

Dumitru Mazilu (Romania), Chairman of UNCITRAL, introducing the Commission's report, said besides the legislative guide, UNCITRAL and its secretariat were fully occupied with projects on electronic commerce, receivables financing and the implementation of the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards. He appealed to governments to substantially strengthen the secretariat so it could meet the growing requests for training and technical assistance.

__________ * Press Release GA/L/3069 of 16 September 1998 should have been GA/L/3070.

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Also this morning, the Sixth Committee elected the remaining members of its bureau. Phakiso Mochochoko (Lesotho) and Hendrikus Verweij (Netherlands) were elected as Vice-Chairmen; and, Rytis Paulauskas (Lithuania) was elected Rapporteur. Previously, the Committee had elected Socorro Flores Liera (Mexico) as Vice-Chairman and Jargalsaikhany Enkhsaikhan (Mongolia) as its Chairman.

Statements were made by China and Germany.

The Committee will next meet on Tuesday, 13 October at 3 p.m. to continue its examination of the report of the United Nations Commission on International Trade Law.

Committee Work Programme

The Sixth Committee (Legal) met this morning to take up the report of the United Nations Commission on International Trade Law (UNCITRAL) on the work of its thirty-first session (document A/53/17), held at Headquarters from 1 to 12 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 and began its work in 1968.

At its thirty-first session, the Commission approved the structure of a legislative guide on privately financed infrastructure projects and agreed to consider at its thirty-second session whether to entrust further work on the draft guide to a working group. The decision to prepare the guide was taken by the Commission in 1996 to help States which were preparing or modernizing legislation relevant to those projects. Draft chapters of the guide were presented to the Commission at its thirty-first session.

According to the report, the Commission was reminded of the importance of keeping an appropriate balance between the objective of attracting private investment for infrastructure projects and the protection of the interests of the host Government and the users of the infrastructure facility.

On the preparation of draft uniform rules on electronic signatures, the Commission noted that its Working Group on Electronic Commerce had experienced difficulties in reaching a common understanding of the new legal issues arising from the increased use of digital and other electronic signatures. It was also noted that a consensus was still to be found on how those issues might be addressed in an internationally acceptable legal framework. It was, however, felt by the Commission that the progress achieved so far indicated that the draft uniform rules on electronic signatures were progressively being shaped into a workable structure.

The Commission reaffirmed its decision as to the feasibility of the project and expressed its confidence that more progress could be accomplished by the Working Group. It noted with satisfaction that the Working Group had become generally recognized as a particularly important international forum for the exchange of views regarding legal issues of electronic commerce and for the preparation of solutions to them. The Commission noted a proposal made at the close of the Working Group's last session for preliminary consideration to be given to its preparation of an international convention based on provisions of the Model Law on Electronic Commerce and of the draft uniform rules. That conclusion was that the preparation of a convention should be regarded as a project separate from both the work on the uniform rules and any other possible addition to the Model Law.

At the outset of its consideration of the report of its Working Group on assignment in receivables financing, the Commission noted that considerable progress had been made on a number of other matters, including the validity of

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assignments of future receivables and of others not identified individually. At the same time, it was noted that a number of issues remained to be resolved, including those relating to the scope of the draft convention, public policy issues arising in the context of the protection of the debtor, conflicts of priority among several claimants and private law issues.

The Commission requested the Working Group on International Contract Practices -- as the group is known -- to proceed with its work expeditiously so as to complete it in 1999 and to submit the draft convention for its adoption at its thirty-third session in 2000.

On the monitoring of the implementation of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the Commission said 54 countries had replied to a questionnaire relating to their legal regime governing the recognition and enforcement of such awards. The Commission again called upon States parties to the Convention to respond to the questionnaire.

The Commission held a special commemorative meeting on 10 June to celebrate the fortieth anniversary of the New York Convention. Leading arbitration experts presented reports on matters relating to the significance of the Convention and legal issues that were not covered by it.

On 11 June, the Commission held the Uniform Commercial Law Information Colloquium at which leading experts presented their insights and assessment of legal issues relating to electronic commerce, privately-financed infrastructure projects, receivables financing and cross-border insolvency.

On coordination and cooperation questions, the Commission welcomed a decision by the International Maritime Committee to carry out exploratory work, in cooperation with the Commission's secretariat, on current practices and laws in the area of international carriage of goods by sea. The Commission was informed during its session about an offer by the United Nations Conference on Trade and Development (UNCTAD) to cooperate on rules relating to electronic commerce. UNCTAD was particularly interested in the question of how better to integrate developing countries in international electronic commerce. The Commission also welcomed cooperation with the Hague Conference on Private International Law on the drafting of a convention on assignment in receivables financing currently being prepared by the Commission's Working Group on International Contract Practices.

The Commission decided to hold its thirty-second session in Vienna from 17 May to 4 June 1999.

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Introduction of UNCITRAL Report

DUMITRU MAZILU, Chairman of the United Nations Commission on International Trade Law (UNCITRAL), introducing the Commission's report, highlighted the various issues dealt with by the Commission during its two-week session in June. It considered several chapters of a legislative guide on privately-financed infrastructure projects, as well as a number of other important matters pertaining to the Commission's current and future work. The purpose of the legislative guide was to assist governments and legislative bodies, at the national, provincial or local level, in reviewing the adequacy of laws, regulations, decrees and similar legislative texts relevant to the execution of privately-financed infrastructure projects.

The Commission agreed to consider the possible need for a working group to work on the draft chapters at its next session. In the meantime, it decided to allow its secretariat to proceed with the assistance from outside experts, as it had done so far. Mr. Mazilu urged governments to assist the secretariat in the preparation of draft materials for the legislative guide.

The Commission also examined reports on the progress achieved by the Working Groups assigned to electronic commerce and receivables financing, as well as on the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, training and technical assistance and other aspects of its work. With regard to the draft convention on assignment in receivables financing being prepared by the Working Group on International Contract Practices, the Chairman said the Commission had noted that the Working Group had adopted the substance of the draft's provisions dealing with the relationship between the assignor and the assignee, and with the issue of the protection of the debtor.

He said, currently, the UNCITRAL secretariat was fully occupied with four major ongoing projects: electronic commerce; receivables financing; private-financed infrastructure protects; and legislative implementation of the Convention on Foreign Arbitral Awards. Moreover, the number of requests for training and legislative technical assistance was growing far beyond what could be reasonably handled by six or seven professionals. He said the Organization should urgently consider substantially strengthening the secretariat.

He said that the economies of Eastern European countries were going through a transition and, like developing countries, were keen to expand their share in world trade and investment, and to attract investment. Better knowledge of the UNCITRAL texts would save their governments time and money, he said. He could not believe that while governments and international organizations spent vast sums of money in bilateral and international law reform programmes, the training and technical legislative assistance programme of the core body of the United Nations in the field of international trade law was being financed with scarce extra-budgetary resources, namely, special

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contributions from very few governments. He would like to see increased efforts by UNCITRAL in training and assistance programmes for Eastern European countries. He hoped governments and international organizations would help to promote awareness of UNCITRAL texts.

He said a legal climate that facilitated and promoted international trade was a necessary condition for a developed and peaceful world. Governments should be mindful of the importance of the Commission's work and those of its secretariat to ensure the fulfilment of the Commission's mandate, he said.

Statements

LILLY SUCHARIPA (Austria), speaking on behalf of the European Union and the Central and European countries associated with the European Union, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, Cyprus and Iceland, described UNCITRAL as one of the most efficient and successful bodies in the United Nations system. The European Union was very supportive of the Commission's work on a legislative guide on privately-financed infrastructure projects. Those projects were growing in importance as a means of expanding or improving the infrastructural base of a country. Member States of the European Union were looking forward to providing their expertise in the future preparation of a guide. She urged UNCITRAL to proceed with its preparation of uniform rules on the legal issues of electronic signatures and certification authorities as fast as possible, explaining that such harmonization had become particularly urgent to the rapid development of electronic commerce.

Noting the search engine on UNCITRAL's website, she commended the secretariat for its efforts to increase the availability of UNCITRAL documents, saying that all the endeavors of UNCITRAL would be in vain without promoting awareness of its work and dissemination of information on the legal texts it had produced. Concerning international commercial arbitration, she said there should be an examination of whether any work by the Commission on the Convention on Foreign Arbitral Awards would be desirable or feasible.

SHAMSUDIN ABDULLAH (Malaysia) said guidance on essential elements of a favorable legal framework in the guide on privately-financed infrastructure projects could be of great assistance, especially to developing countries, in efforts to attract foreign investment in those projects. However, the Commission needed to maintain an appropriate balance between the objectives of attracting foreign investment and the protection of the interests of the host governments. He supported the inclusion of the "integrity agreement" in the guide, whereby all companies invited to participate in the selection process undertook agreements, including not to unduly influence the decisions of public officials. The guide should also address the importance of a stable tax regime, and the particular interest that a country had in the development of certain sectors of the national industry.

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QU WENSHENG (China) said that as the world economy and trade continued to develop, work on uniform law acquired increasing importance. The active role of UNCITRAL in formulating a series of conventions and model laws had, to a great extent, facilitated international trade. Conventions, such as the one on foreign arbitral awards and the one on contracts for the international sale of goods, had played an indispensable role in international economic exchange.

The Commission's work had, for the most part, been at the initiative of some of the developed countries, and the issues discussed had mainly reflected the needs of those countries, he said. Consequently, some of the Commission's work had no link to the reality of a majority of developing countries. He hoped that UNCITRAL, in the coming year, would take into full account the interests and needs of the developing countries. In that way, the Commission could live up to its reputation as an authority that harmonized international law and reflected legal issues that had a practical purpose and universal concern.

DETLEF BOLDT (Germany) said factual and legal conditions of very different infrastructure projects required individual solutions to their technical, financial and legal problems. It was, therefore, essential that the legislative guide being prepared by UNCITRAL was confined to basic recommendations and comments for national legislators. The guide should not define or regulate legal framework conditions and should also not aim at limiting the freedom of its users to act.

Commenting on the working method of the Commission, he said Working Group meetings were not the appropriate forum to discuss and adopt changes of their mandate. There should be agreement that mandates were a question of legal policy and should be decided by the Commission. His delegation was eager to discuss proposals on questions of international arbitration not governed by the 1958 Convention. For an in-depth discussion of the issues, he said a report on the subject should be sent to governments, well ahead of the Commission's next session.

PHAM TRUONG GIANG (Viet Nam) said the process of globalization would not be healthy, effective and successful unless it was governed by an appropriate international legal system. His Government would support UNCITRAL's work. He said implementation of privately-financed infrastructure projects required a favourable legal framework that could foster confidence and attract private investment. In the ongoing global financial crisis, that effort constituted one of the significant measures that would help many countries, particularly developing ones, as well as those with economies in transition. He said the legislative guide, once adopted, would assist governments in reviewing and modifying their legislations pertaining to privately-financed infrastructure projects.

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Publication of court decisions and arbitral awards relating to the United Nations Convention on Contracts for the International Sale of Goods and the UNCITRAL Model Law on International Commercial Arbitration was very useful to those dealing with international trade, he said. The placement of UNCITRAL case law and documents on the World-Wide Web considerably facilitated the work of businessmen and researchers. Attention should be paid to accommodating the various levels of security in the work on electronic signatures, he said.

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