Assembly’s legal committee, beginning work for session, applauds

 

Activities of United Nations trade law commission

States Are Urged to Modernize Insolvency Law Regimes

By Applying Legislative Guide Newly Adopted by UNCITRAL

The Sixth Committee (Legal) began the substantive work of its fifty-ninth session this afternoon and heard an appeal for States to modernize their insolvency law regimes by utilizing the newly adopted Legislative Guide on Insolvency Law prepared by the United Nations Commission on International Trade Law (UNCITRAL).

Wisit Wisitsora-At (Thailand), Chairman of UNCITRAL’s thirty-seventh session, told the Committee, examining UNCITRAL’s report, that the Legislative Guide would encourage economic development and investment, as well as corporate and economic recovery.  It would also help the development of entrepreneurial activity, the preservation of employment and the availability of finance in the capital market.  Work on the Legislative Guide on Insolvency Law began in 2000 and its completion was the main achievement of UNCITRAL’s session, which took place from 14 to 25 June in New York.

The Guide provided flexible approaches to implementing key objectives and core features of a strong insolvency and debtor-creditor regime, Mr. Wisitsora-At also said.  Together with the UNCITRAL Model Law on Cross-Border Insolvency, he said the Guide would be useful as a reference both for States that did not have an effective and efficient insolvency regime and for those reviewing and modernizing laws on the subject.

Addressing the Committee formally since his appointment as the United Nations Legal Counsel and Under-Secretary-General for Legal Affairs last May, Nicolas Michel said this was a time of great strain to the international legal system and that international law was eroding.  The Committee played an important role in promoting and enhancing the rule of law in international relations and reaffirming the universality of international law.

He announced that more than 100 actions had been taken on the various international legal instruments during the recent treaty event of the General Assembly’s high level segment.  There had been three ratifications of the International Criminal Court raising the number to 97, or more than half the United Nations membership.  The 100th ratification could be in sight.  Just today, the Secretary-General and the President of the Court had signed the agreement governing relations between the United Nations and the Court.

Also speaking today, generally applauding the recent work of UNCITRAL, were the representatives of Austria, China, Canada, United States, Australia, United Kingdom, France, Morocco, Japan, India and Guatemala.

Two Working Groups were established today -– one on terrorism, headed by the Chairman of the Ad Hoc Committee on Terrorism, Rohan Perera (Sri Lanka), and the other on the scope of legal protection under the Convention on the safety of United Nations-associated personnel, headed by the Chairman of the Ad Hoc Committee on the matter, Christian Wenaweser (Liechtenstein).

Also this afternoon, the Committee paid tribute to the late Robert Rosenstock, who served as a United States delegate to the Committee for over thirty years.  Recalling his career that included 10 years with the International Law Commission, the Committee Chairman said the jurist had been a forceful advocate for his country, at the same time that he had been pragmatic in searching for solutions to seemingly intractable political and legal problems.  Mr. Rosenstock had been an institutional memory from the height of the cold war to the dawn of the new century, a great jurist and friend always ready to share his experience and knowledge with younger delegates.

The Committee Bureau was elected by the General Assembly on 10 June.  The Chairman is Mohamed Bennouna (Morocco).  Vice-Chairs are Ram Babu Dhakal (Nepal), Carlos Fernando Diaz Paniagua (Costa Rica) and Csaba Simon (Hungary).  Anna Sotaniemi (Finland) will serve as Rapporteur.

The Committee will meet again at 10 a.m. tomorrow, Tuesday, 5 October, when it will continue considering the Commission’s report.  It is also expected to hear the introduction of draft resolutions requesting observer status in the General Assembly for non-governmental organizations.

Background

The Sixth Committee (Legal) met this afternoon to begin a two-day debate on the report of the United Nations Commission on International Law (UNCITRAL) on the work of its thirty-seventh session (document A/59/17) which took place from 14 to 25 June 2005.  The session was chaired by Wisit Wisitsora-At of Thailand.

The highlight of the session was the adoption of the UNCITRAL Legislative Guide on Insolvency Law by the Commission, which recommended its utilization by States to assess the economic efficiency of their insolvency law regimes.  Another recommendation was that States should consider using the Guide when revising or adopting legislation relevant to insolvency.  Work on the instrument began in 2000.

It has been recognized that it is in the public interest for States to have a functioning insolvency regime for economic development and investment, to preserve employment and foster the development of entrepreneurial activity.  The Commission coordinated its work on the legislative guide with a wide range of organizations, including the World Bank, the International Monetary Fund, and the International Bar Association.

The Commission also considered progress reports of its working groups on arbitration, transport law, electronic commerce and security interests.  It also decided to carry out a review of its coordination function and training and technical legislative assistance programme.

The Commission noted that its Working Group II on arbitration had continued its discussions on a draft text for a revision of article 17 of the UNCITRAL Model Law on International Commercial Arbitration, which covered the power of an arbitral tribunal to grant interim measures of protection.  The Working Group discussed a draft provision on the recognition and enforcement of those measures.

The Working Group on Transport Law proceeded with its second reading of the draft instrument on the carriage of goods by sea.  The Commission agreed that 2006 would be a desirable goal for completing the project.

The Working Group on Electronic commerce continued its consideration of a preliminary draft dealing with selected issues of electronic contracting.  It reaffirmed its belief that an international instrument on the topic would be a useful contribution that would facilitate the use of modern means of communication in cross-border commercial transactions.  The Commission supported the Working Group’s efforts to incorporate into the draft text provisions aimed at removing possible legal obstacles to electronic commerce that might arise under existing international trade-related instruments.  The Commission was informed that the Working Group aimed to complete its work in 2005.

The Commission’s Working Group I was given the task of drafting proposals for the revision of the Model Law on Procurement of Goods, Construction and Services.  The Commission heard an oral progress report from the Secretariat that, as at 8 April, there were 134 States parties to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 (also known as the New York Convention).

The Commission agreed to hold its thirty-eighth session in Vienna from
4 to 22 July in 2005.

The Commission was established at the General Assembly’s twenty-first session, in 1966, and began work in 1968.  Its purpose is to promote the progressive harmonization and unification of international trade law.  The Commission originally consisted of 29 Member States representing the various geographic regions and the principal legal systems of the world.  Membership has been increased twice to the present 60 States who are members.

Statements

MOHAMED BENNOUNA (Morocco), the Committee Chairman, made introductory remarks on the Committee Work Programme.

NICOLAS MICHEL (Switzerland), Under-Secretary-General of the Office of Legal Affairs and United Nations Legal Counsel since May, addressed the Committee.  He said this was a time of great strain to the international legal system.  International law was eroding.  He recalled the Secretary-General’s call for strengthening the rule of law so, it would prevail both internationally and internally.  The Committee played an important role in that regard, as a crucial collegial forum to promote and enhance the rule of law in international relations and reaffirm the universality of international law.

He said he was pleased that more than 100 actions had been taken on the various international instruments during the recent treaty even during the Assembly’s high level segment.  Three ratifications had been made in regard to the International Criminal Court to raise the number to 97 ratifications, amounting to more than half the Organization membership.  The 100th ratification could be in sight.  Just today, the Secretary-General and the Court had signed the agreement governing relations between the United Nations and the Court.

He said his Office would continue to provide advice and substantive support to the Committee with the same deep sense of commitment, professionalism and independence that had marked its work in the past.  It would make sure that unified legal services were provided to all the principal and other United Nations organs.

WISIT WISITSORAT-AT (Thailand), Chairman of the thirty-seventh session of the Commission, introducing its report, said the session’s major achievement was the adoption of the UNCITRAL Legislative Guide on Insolvency Law, work on which had begun in 2000.  The Commission proved that it could deal with even the most complex of projects in an expeditious and efficient way, he said.  The Legislative Guide was to encourage economic development and investment as well as corporate and economic recovery.  It would also help the development of entrepreneurial activity, the preservation of employment and the availability of finance in the capital market.

The Guide contained flexible approaches to the implementation of key objectives and core features for a strong insolvency, debtor-creditor regime, Wisit Wisitsora-At also said.  Together with the UNCITRAL Model Law on Cross-Border Insolvency, he said the Guide would be useful as a reference both for States that did not have an effective and efficient insolvency regime and for those reviewing and modernizing their laws on the subject.

He said the Commission also considered progress reports of its working groups on arbitration, transport law, electronic commerce and security interests. It also decided to undertake the revision of its 1994 Model Law on Procurement of Goods, Construction and Services.  The Commission discussed the practical means to enhance its coordination function and training and technical legislative assistance programmes.  Related discussion was held on possible implications of developments with respect to partnerships between United Nations and non-State actors, in particular the private sector, for the Commission’s work.

He emphasized the importance of the work of the Commission’s secretariat on digests of case law relating to UNCITRAL’s texts for their better dissemination, adoption and uniform interpretation.  The digest had been found to be useful and valuable for countries without specific literature on them.

He said that no adequate harmonization and unification of international trade law was possible without a high level of coordination and cooperation among international organizations active in that field.  An increasing number of organizations were becoming involved in the area of international trade law reform with the consequent risk of duplication of efforts and inconsistent results.  Furthermore, the complexity of the Commission’s coordinating task was increasing with the growing number of issues in trade and commerce relevant to the Commission’s work.  He cited commercial fraud as an example, adding that it was the subject of a colloquium organized by the secretariat last April.  The event proved to be useful for the Commission as it helped to identify matters that could be coordinated or harmonized in such areas of practice directly linked to the Commission’s work as cyber fraud, finance, procurement, transport and insolvency.

He noted that 2005 would mark two important anniversaries related to UNCITRAL’s work:  the 25^th anniversary of the adoption of the United Nations Sales Convention and the 20^th anniversary of the adoption of the Model Law on International Commercial Arbitration.  Conferences were planned in different regions of the world to consider the experience of courts and arbitral tribunals with those texts, he stated.

HELMUT TUERK (Austria) expressed satisfaction with UNCITRAL’s enlargement and the strengthening of its secretariat.  He said the broadening of resources was highly needed to meet UNCITRAL’s ever-increasing workload in legislative and coordinating activities as well as in providing technical legislative assistance and disseminating information.

Turning to UNCITRAL’s work during the past year, he said the Legislative Guide on Insolvency would contribute significantly to establishing a harmonized legal framework in that area.  Also of particular importance was the work on a draft legislative guide regarding security interests.  He welcomed the decision to set up a Working Group on public procurement to update the Model Law already elaborated.

He touched on UNCITRAL’s successes, such as the upcoming twenty-fifth anniversary of the Vienna Conference that had led to adoption of the Convention on international sale of goods.  He said the broader context showed UNCIRAL as having a great impact on the ability of persons all over the world to participate in international trade, which in turn played an important role in enhancing the well-being of societies.  It was an important factor in achieving sustainable development, peace and social stability.  Adoption of international commercial laws played an important role in post-conflict situations as part of the reconstruction process to restore the rule of law.  As such, UNCITRAL’s work was not an area for only legal specialists and business people.  Its function in restoring and extending the rule of law “must not be underestimated”, he stressed.

GUAN JIAN (China) said his government attached great importance to UNCITRAL’s work and supported it.  China took an active part in UNCITRAL’s activities and helped publicize and disseminate the fruitful results of its work.  The Chinese Government regarded the Commission as one of the most important United Nations bodies entrusted with the discussion and formulation of norms and international trade law.  The conventions and model laws drafted by the Commission had been widely applied in many countries, contributing greatly to the development of international trade.

China urged the Commission to step up its assistance and training programme, especially for developing countries.  The Commission should be more open to the views and suggestions of all countries and should take account of their different situations.  He called upon the General Assembly to support the Commission’s work in all possible ways to enable it to sustain its highly effective and efficient work.

HUGH ADSETT (Canada) noted UNCITRAL’s work in the areas of electronic commerce, arbitration, procurement and secured interests as particularly timely and important.  Further, he noted UNCITRAL’s important role in assisting States to implement UNCITRAL instruments and to disseminate information about its products throughout the world.  While that work was less visible than the elaboration of instruments, he said the importance of UNCITRAL’s mandate in that regard could not be overstated.

In light of UNCITRAL’s importance in promoting the development and harmonization of international commercial law, he said he was concerned with the manner in which measures to limit the cost of documentation were to be applied to it.  UNCITRAL was charged with developing legal instruments based on various legal systems and traditions.  Full reporting of deliberations, including the reasoning behind choices made in drafting texts, helped States understand the policy considerations behind the provisions of an instrument.  These detailed preparation reports were essential documents for later interpreting and applying the instruments.

He said he’d be interested in discussing with other delegations how best to meet the need for economy and efficiency in producing UNCITRAL documentation while ensuring the tremendous benefit of detailed reporting was retained.

ERIC ROSAND (United States) said UNCITRAL succeeded in producing technically focused and non-politicized work that reflected modern transactions, market realities and new trends in dispute resolution.  It was a source of pleasure that more than 50 States had participated in the first meeting of the Commission’s newly expanded membership of sixty states, in addition to more than 10 observers, intergovernmental bodies and nongovernmental organizations (NGOs).

Reviewing UNCITRAL’s achievements, he said nearly all international financial institutions held that progress in the two related fields of insolvency law and secured finance were key to upgrading the world’s economies.  UNCITRAL had now completed the second of its two major texts on insolvency law.  Its application would be a coordinated effort between the Commission, the International Monetary Fund (IMF), the World Bank and others.  The recommendations in the Legislative Guide would cover all aspects of a modern business insolvency law regime, including financial rescue and reorganization of businesses.

He said the Commission’s first insolvency law instrument, the Model Law on Cross-Border cases, was pending now before his country’s Congress.  He said other States should also take legislative action since it was in the interest of all States seeking to facilitate financial activity while avoiding systemic risk.

BEN PLAYLE (Australia) said UNCITRAL’s work, with its focus on harmonization of international trade law, was crucial in a world where commercial relations and technological developments transcended physical borders.  UNCITRAL was in many ways a model citizen in the United Nations family with its broad representation and outward looking focus, seeking items for its work agenda of relevance to the international community.  Australia, with its long involvement in the Commission’s work dating back to its inception in 1968, remained committed to its central goals.

Australia was grateful for its election to the Commission this year and was pleased about the creation of the International Law Division within the Office of Legal Affairs in the Secretariat.  It welcomed the Division’s work to provide enhanced training and technical legal assistance to developing countries and those with economies in transition.

It welcomed the adoption of UNCITRAL’s Legislative Guide on Insolvency which was his country’s initiative, and commended the working group on the topic for its preparatory work.  He strongly endorsed the move to create a modern international instrument on the carriage of goods by sea being undertaken by a working group of the Commission. He expressed support for work being done on electronic commercial shipping documents, the abolition of the nautical fault defence and allowing access to the temperature records held by the carrier for temperature–controlled goods.

He said Australia looked forward to the update of the 1994 UNCITRAL Model Law on Procurement of Goods, Construction and Services and would seek greater consideration of the issues that dealt particularly with confidentiality and security, and authentication as well as registration through the Internet of tender management systems.

HUW LLEWELLYN (United Kingdom) said the draft UNCITRAL Legislative Guide on Insolvency Law was an excellent product, the result of well-informed, constructive and cooperative debate.  On the work of the Working Group on Arbitration, the United Kingdom endorsed the Commission’s views that the issue of ex parte interim measures remained an important one.  It was a point of controversy that should not be allowed to delay progress on the revision of the UNCITRAL Model Law on International Commercial Arbitration.

The United Kingdom welcomed the opportunity to participate in the inaugural meeting of the Working Group on Procurement last August. There was a useful exchange of views, especially on electronic communication, reverse auctions and frameworks.  The United Kingdom endorsed the Commission’s request that the General Assembly reconsider the application of page limits in connection with the Commission’s work.  It recognized the need to achieve economies wherever possible but believed it was important that detail and high quality documentation were necessary to assist individual States in the understanding and interpretation of the legal rules prepared by the Commission.

BRIGITTE COLLET (France) congratulated the Commission for its work.  He said the draft UNCITRAL Legislative Guide on Insolvency Law would be useful for investors and States which wished to attract investors.  His delegation welcomed the successful completion of work on the Guide and the compromises that were achieved between civil and common law.

The working group on the revision of the Model Law on International Commercial Arbitration was pursuing its work effectively. The increased membership in the Commission was a sign of growing interest in its work.  It was up to the Commission to sustain that interest.

She said UNCITRAL was irreplaceable because of the technical nature of its work.  She observed that the Commission was the best forum for legal multilateralism, and that was why France affirmed its full support of the Commission.  She called for more resources for the Commission to enable it carry out its work.  She noted that the Commission was drafting more laws and legislative guides which were in no way binding on States but served as guidance.  She expressed the need for the translation of the Commission’s texts in all principal languages, including French.

KARIM MEDREK (Morocco) said UNCITRAL was called upon more and more to develop, harmonize and eventually unify trade law.  The Legislative Guide on insolvency was important for the use of all countries to strengthen modern commercial law.  Also important was the draft on secured transactions.  The Working Group on this should facilitate its work to present the first recommendations in 2005.  It should also consider developing other provisions to cover issues such as deposit accounts, letters of credit and intellectual property rights.

Noting the Commission’s work in the area of international carriage of goods and the inclusion of elements such as civil liability, he said that in light of how important the issue was a third reading should be considered with an eye toward finalizing the work in 2006.  Work in the area of electronic commerce should focus on removing legal obstacles to such activities and on electronic contracts.

His country and the Commission had held an international event on commercial arbitration, he said, adding that neighbour countries as well as the private sector had participated.  He then noted UNCITRAL’s work in compiling case law and said the documents should be made available in all official languages.  Additional efforts should also be made to facilitate the involvement of African States in the Commission’s work.

HIROSHI TAJIMA (Japan) said the Model Procurement Law and its legislative guide contributed significantly to unifying and coordinating domestic laws on procurement and therefore to the development of international trade.  However, any changes to the Model Law should reflect new circumstances, such as the use of electronic communication in the procurement process.

He said his country had amended its Arbitration Law in accordance with the UNCITRAL Model Law.  It had come into force on 1 March.  The Alternative Dispute Settlement document had become important as a means of facilitating swift dispute settlement.  The Working Group discussions on the written form of an arbitration agreement and on interim measures were of particular interest.  In light of the importance of amending the Model law, the process should not be prolonged by discussion of ex parte interim measures.

On transport law, he said the uniformity of laws with respect to international carriage of goods by sea was very important.  He looked forward to progress in the Working Group but deliberation should be careful.  The draft instrument was composed of numerous articles and presented difficult issues, including the scope of application.  The correspondence group established during the Commission’s session to facilitate discussion in inter-sessional periods was welcome.

Finally, he touched on the areas of electronic commerce, insolvency law and security interests.  He said his country had enacted a special law on consumer contracts concluded through electronic means and would like to contribute to the work in that field.  Work in security interests entailed addressing the difficult question of how to treat rules of private international law.

R. SHUNMUGASUNDARAM (India) welcomed the adoption of the UNCITRAL Legislative Guide on Insolvency Law and said he expected it to serve as an important reference text for all countries engaged in evolving an effective legislative framework for insolvency proceedings.  He also expected that the Guide would fulfill its objective of contributing to socio-economic development, promoting investments and expanding employment.

He said all efforts should be made to reconcile differing positions in the work of the Working Group on Arbitration.  As regards possible areas of future work, he advised caution in the revision of the UNCITRAL Arbitration Rules of 1976 which enjoyed widespread recognition  and had served as a model for many dispute settlement mechanisms under various bilateral agreements.

ROBERTO LAVALLE-VALDES (Guatemala) said that for the Legislative Guide on Insolvency to take root, help must be provided for implementation, especially in the developing countries.  The importance of the insolvency regime must be stressed, both through legislative actions and to the people as a whole so that they would support the legislative process without which the important instrument couldn’t be effective.  Hopefully, third world countries would be given that help.

Furthermore, he said the Legislative Guide could be augmented by Model Rules as they had been with other instruments.  However, the variability of legislation across countries in this regard could make it impracticable to develop Model Rules to go with the Legislative Guide.

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