Expansion of Applicable Sphere A way to Unif

1、Expansion of Applicable Sphere: A way to Unif     這篇Expansion of Applicable Sphere: A way to Unif的關(guān)鍵詞是Ex,xp,pa,an,ns,si,io,on,no,of,fA,Ap,pp,pl,li,ic,ca,ab,bl,le,eS,Sp,ph,he,er,re,e,A,Aw,wa,ay,yt,to,oU,Un,ni,if,f,           &

2、#160; Expansion of Applicable Sphere: A way to UniformityCompare and Contrast between UNIDROIT and UNCITRAL ConventionsBy Dongsheng Lu, Chen YanI. IntroductionFinancing is paramount for the promotion of commerce. It has been noted that “in developed countries the bulk of corporate wealth is locked u

3、p in receivables”. As the economy develops, this wealth increasing is “unlocked by transferring receivables across national borders”. With the prompt and great increases in international trade, receivables financing now plays a more and more important role. Yet under the law of many countries, certa

4、in forms of receivables financing are still not recognized. Even transactions are involved in countries where the form of receivables financing is permitted, determining which law governs will be difficult. The disparity among laws of different jurisdiction increases uncertainty in transactions, thu

5、s constitutes obstacles to the development of assignments of receivables. To remove such obstacles arising from the uncertainty existing in various legal systems and promote the development of receivables financing cross-boarder, a set of uniform rules in this field is required. The international co

6、mmunity has made great efforts in adopting uniform laws. Among those efforts, the United Nations Commission on International Trade Law (UNCITRAL) drafted, on 12 December, 2001, “United Nations Convention on the Assignment of Receivables in International Trade” (hereinafter referred to as the “UNCITR

7、AL Convention”), with its aim to “establish principles and to adopt rules relating to the assignment of receivables that would create certainty and transparency and promote the modernization of the law relating to assignments of receivables”. UNCITRAL is not the first international organization atte

8、mpting to resolve the problems associated with receivables. As early as in May 1988, the International Institute for the Unification of Private Law (UNIDROIT) has already adopted a convention known as the “UNIDROIT Convention on International Factoring” (hereinafter referred to as the “UNIDROIT Conv

9、ention”). When compare and contrast between the UNIDROIT Convention and the UNCITRAL Convention, one might see a lot of inconsistency in detailed regulations, e.g. sphere of application, relations between parties, priorities, and choice of law, etc. Given the limited space available in this article,

10、 the author may only focus on the difference in “sphere of application” of these two conventions, as sphere of application is perhaps the most fundamental issue of a convention. The purpose of an international convention is to create uniformity in its covered matter, thus the broader a conventions s

11、phere of application is, the higher could uniformity reach. This article will try to make compare and contrast the sphere of application between the UNIDROIT Convention and the UNCITRAL Convention, illustrate the differences exist between these two conventions, and demonstrate the expansion of spher

12、e of application in the UNCITRAL Convention and its progress on the way to uniformity.II. Sphere of Application: Subject MatterAs its title indicates, the subject matter of the UNIDROIT Convention is of course international factoring. Article 1(1) says, “this Convention governs factoring contracts a

13、nd assignments of receivables as described in this Chapter.” For “factoring contract”, the UNIDROIT Convention provides the following 4 characteristics: (1) purpose of the contract is to assign receivables;(2) receivables to be assigned arises from contracts of sale of goods made between the supplie

14、r and its customers (debtors), other than those of sale of goods bought primarily for personal, family or household use;(3) the factor is to perform at least two of the four functions: (i) finance for the supplier; (ii) maintenance of accounts (ledgering) relating to the receivables; (iii) collectio

15、n of receivables; and (iv) protection against default in payment by debtors;(4) notice of the assignment of the receivables is to be given to debtors. As about “assignments of receivables as described in this Chapter”, article 2 (1) describes assignments of receivables as assignment of receivables p

16、ursuant to a factoring contract. Factoring is just a subset of the receivables financing, and perhaps the oldest and most basic one. Besides factoring, receivables financing still entail the following forms,(1) Forfeiting, similar to factoring, involves the purchase or discounting of documentary rec

17、eivables (promissory notes, for example) without recourse to the party from whom the receivables are purchased; (2) Refinancing, also known as secondary financing, involves the subsequent assignment of receivables. In its basic form, one bank or financier will assign to another bank its interest, wi

18、th the potential for further assignment; (3) Securitization, in which both marketable (for example, trade receivables) and non-marketable (consumer credit card receivables) asset cash flows are repackaged by a lender and transferred to a lender-controlled company, which will issue securities, sell a

19、nd then use the proceeds to purchase the receivables; (4) Project Finance, in which repayment of loans made by banks or financiers to project contractors for the financing of projects are secured through the future revenues of the project. The first draft of the UNCITRAL Convention has stated to cov

20、er factoring, forfeiting, refinancing, securitization and project finance. Somehow, the working group decides that rather than emphasize the form in which the receivables appear, it would instead concentrate on the way in which the receivables might be transferred (contractual or non-contractual) an

21、d the purpose of the transaction (for financing or non-financing purposes). It decides the contractual receivables and assignment made to secure financing and other related services would be covered. The non-contractual receivables such as insurance and tort receivables, deposit bank accounts, or cl

22、aims arising by operation of law seems are not within the ambits of the UNCITRAL convention.III. Sphere of Application: Special RequirementsBoth of the conventions contain a series of requirements. Only when those requirements are satisfied, could the convention be applied. The higher and stricter t

23、he requirements are, the smaller the chance to apply the convention is.a) Internationality requirementBoth the two conventions indicate their sphere of application is of internationality requirement, but the same word in these two conventions has different legal meaning. The internationality require

24、ment of UNIDROIT Convention is exclusively based upon the parties to the underlying contract, i.e. the contract of sale of goods (the supplier and the debtor) having their place of business in different countries. In other words, where the receivables arise from a contract of sale of goods between a

25、 supplier and a debtor whose places of business are in the same State, the UNIDROIT Convention could not apply, no matter the following assignment of receivables is to assignee in the same or different State. Thus leaving the international assignment of domestic receivables untouched. The problem, a

26、t its simplest, is twofold: first, inconsistency. For instance, in the case where a bulk assignment is made and where part of the receivables are domestic (supplier and debtor are in the same State) and part are international (supplier and debtor are in different State), if the supplier assigns the

27、receivables to a party which is located in another State, the bulk assignment between the same supplier and the same assignee will be governed by two sets of laws and regulations: the portion of international receivables may b  3  這篇Expansion of Applicable Sphere: A way to Unif的關(guān)鍵詞是Ex

28、,xp,pa,an,ns,si,io,on,no,of,fA,Ap,pp,pl,li,ic,ca,ab,bl,le,eS,Sp,ph,he,er,re,e,A,Aw,wa,ay,yt,to,oU,Un,ni,if,f,             e governed by the UNIDROIT Convention while the domestic one will be left to the jurisdiction of certain domestic law.

29、Secondly, leaving the international assignment of domestic receivables to the jurisdiction of various law systems of different States can make “commercial practice uncertain, time-consuming and expensive”. The assignee of receivables from a foreign State may not know which States law governs the tra

30、nsaction, and, if the law of the assignors State applies, the assignees rights would be subject to the vagaries of that foreign law. This no doubt would greatly impede the development of such transaction.Cross-boarder receivables assignments call for a uniform law. From this point, the UNIDROIT conv

31、ention does not satisfy this requirement once and for all, for which it has been highly criticized. Based on former experience, UNCITRAL Conventions sphere of application is enlarged. In the first article, it states this convention applies to assignments of international receivables and to internati

32、onal assignments of receivables. And defines in article 3 that a receivable is international if, at the time of conclusion of the original contract, the assignor and the debtor are located in different States and an assignment is international if, at the time of conclusion of the contract of assignm

33、ent, the assignor and the assignee are located in different States. Thus the internationality requirement of UNCITRAL Convention actually contains two internationality criteria, and the result is that this convention could be applied to all assignments of receivables with international elements, inc

34、luding: 1) international assignment of international receivables, where the assignor, assignee, and debtor are in three different countries; 2) domestic assignments of international receivables, where the assignor and assignee are in the same country, and the debtor is in another country; and 3) int

35、ernational assignment of domestic receivables where the assignor and debtor are in one country and the assignee in another country. In other words, the scope of UNCITRAL Convention covers all the assignment of receivables except pure domestic assignment of domestic receivables (i.e. where the assign

36、or, the assignee and the debtor are in the same country) and it may be applied on a wide range of receivables financing in international trade.b) Link to Contracting Party RequirementAlthough internationality is required by both the two conventions, in order for the two conventions to apply, it is n

37、ot sufficient that the internationality requirement is met. Both the conventions require there shall be a link with contracting party. As in the UNIDROIT Convention, article 2(1) stipulates this convention would apply when any of the two requirements of link with contracting party are satisfied,(a)

38、those States and the State in which the factor has its place of business are Contracting States; or (b) both the contract of sale of goods and the factoring contract are governed by the law of a Contracting State.Thus, in the UNDIROIT Convention, the link to contracting party requirement is twofold:

39、 a territorial one and a legal one. The convention would apply whenever either of the two requirements is satisfied.As for the UNCITRAL Convention, it also contains a territorial link requirement for its application in article 1(1), but different from the UNIDROIT Convention, it does not contain a l

40、egal link as article 2(1)(b) of the UNIDROIT Convention. No provisions could lead to the application of this convention when the territorial requirement is not met. If we compar 這篇Expansion of Applicable Sphere: A way to Unif的關(guān)鍵詞是Ex,xp,pa,an,ns,si,io,on,no,of,fA,Ap,pp,pl,li,ic,ca,ab,bl,le,eS,Sp,ph,h

41、e,er,re,e,A,Aw,wa,ay,yt,to,oU,Un,ni,if,f,            for commercial purpose, it cannot be governed by the UNIDROIT Convention, but still could be subject to the UNCITRAL Convention; Under the third situation, where commercial receivables ar

42、e assigned for consumer purpose, logically the UNDROIT Convention shall govern, but considering the UNDROIT Convention is a convention on international factoring, where factors are all banks and other financial institutions, the receivables are not possible to be assigned for consumer purpose, so th

43、is situation does not exist; Under the last situation where commercial receivables are assigned for commercial purpose, both of the conventions may be applied. UNIDROITs attitude is understandable that banks dont want consumer receivables, for pressing for payment from individuals is, in anyway trou

44、blesome and low profit. Thus exclusion of these consumer receivables is a natural choice. UNCITRAL Convention substitute the exclusion of consumer receivables to exclusion of receivables assigned for consumer purpose, regardless of the receivables is consumer or commercial one, thus expand the spher

45、e of application of the convention. This expansion is justified for receivables, once coming into being, shall be separated from the underlying contract for the sale of goods. No matter the goods are bought for personal purpose or for commercial purpose, debt has come into being. The convention put

46、the emphasis on the character of receivables assignment, not the character of underlying contract. (2) The convention does not apply to assignment as part of the sale or change in the ownership or legal status of the business out of which the assigned receivables aroseConsidering the complexity in t

47、he field of business transfer and the great inconsistency among various jurisdictions, the convention thus leave this part untouched. If UNCITRAL Convention insists to regulate on this sector, it would face great difficulty when being ratified by States. For this reason, the convention chooses a careful attitude and excludes this part out of its spher