Activities and Priorities Dept. Justice Private International Law 2007

3. LOW PRIORITIES

a. Convention on Independent Guarantees and Stand-by Letters of Credit (UNCITRAL)

[108]This Convention was finalised in 1995 and is in force with 8 States party. It aims at establishing greater uniformity in the law relating to independent guarantees and stand-by letters of credit in international commercial transactions. A study reviewing the Convention rules in relation to current law in Canada was prepared for the ULCC and its recommendations were adopted in 2006.

[109]A ULCC Working Group will prepare a uniform act and commentaries to implement the Convention and will be working with NCCUSL and the Mexican Uniform Law Centre should they wish to do so.

[110]Action required in Canada: Complete uniform implementing legislation for 2008.

b. Convention on International Bills of Exchange and International Promissory Notes (UNCITRAL)

[111] This Convention, which was finalised in 1988, is not yet in force. Canada, which actively participated in its drafting, the Russian Federation and the United States have signed it; Gabon, Honduras, Mexico, Guinea and Liberia have acceded to it. The Convention will enter into force after ten ratifications or accessions. Canada signed the Convention on December 7, 1989. In order to implement it in Canada, federal legislation would be required.

[112] The UNCITRAL Secretariat has prepared a draft Protocol that would bring the Convention into force among NAFTA countries, with provision for additional State parties as required. The objective of this Protocol would be to encourage other States to ratify the Convention and to provide the benefit a uniform set of rules for at least one group of States without having to wait for ten ratifications.

[113] The Convention is the result of nearly 20 years of work by UNCITRAL to devise a unifying law for international bills and notes. It will create a new international regime based on a compromise between the civil and common law traditions. It addresses and regulates a number of complex and difficult issues such as the rights of a holder of a bill or note; forged endorsements; fraud, theft; guarantors; presentment for payment and non-acceptance; notice of dishonour and discharge. When the Convention comes into force, it will therefore introduce more predictability for financial institutions and businesses that use these methods of payment for international transactions.

[114]Action required in Canada: None at this time.

c. Convention on Contracts for the International Sale of Goods (UNCITRAL)

[115] The Sales Convention to which 67 States are party establishes uniform rules for the international sale of goods, which apply in the absence of any expression to the contrary by the parties to the sales contract. While the Convention applies to contracts for the sale of goods, it excludes the sale of goods for personal use, sale by auction, judicial sales, and the sale of stocks, ships, aircraft or electricity. The provisions of the Convention deal with the formation of the contract and the rights and obligations of the seller and buyer. The Convention does not govern the validity of the contract or its terms, nor does it deal with the seller's liability outside the contract.

[116] The Convention came into force for Canada on May 1, 1992, and applies uniformly across all of Canada since February 1, 1993. A declaration was made with regard to Nunavut, and the Convention entered into force there on January 1, 2004.

[117] The ULCC has recommended that the Sales Convention implementing legislation be amalgamated with legislation on other conventions on the international sale of goods. To that end, it adopted the Uniform International Sales Conventions Act in 1988.

[118] Action required in Canada: Pursue consultations on the suitability of adopting the Uniform International Sales Convention Act at the federal, provincial and territorial levels.

d. Inter-American Convention on the Law Applicable to International Contracts (OAS)

[119] This Convention, which was finalised under the auspices of CIDIP-V in Mexico in 1994, has entered into force with the ratification of two States: Mexico and Venezuela. Bolivia, Brazil and Uruguay are signatories. It provides for the recognition of the parties’ choice of law applicable to an international contract, a rule which is in general conformity with the existing rules both in common law and civil law regimes in Canada. The Convention also establishes subsidiary rules for determination of the law applicable.

[120] When members of the Department of Justice’s Advisory Group on Private International Law reviewed the Convention, the members were of the view that without improvement in the English version in particular, there would not be sufficient support in Canada for signature and ratification.

[121] When the Convention was discussed at the preparatory meeting to CIDIP-VI in December 1998, it was agreed that those States interested in changing the text should bear the responsibility of proposing changes. It was agreed that a proposal for changes would be submitted to the Secretariat which would then circulate it to the States which had signed and ratified the Convention in order to obtain their agreement to a revised text.

[122] Canada is still not party to any of the CIDIP conventions, a situation which does not go unnoticed by other Member States. Given the substantial compatibility of the Convention with Canadian law, Canada might consider accession to it if the language problems were satisfactorily resolved.

[123] Action required in Canada: Consult with provincial and territorial authorities and other interested parties on proposed changes to the English and French versions of the Convention. Arrive at an agreed proposal with other concerned States to be submitted to the OAS Secretariat for distribution to interested States.

e. UNCITRAL Working Group on Insolvency Law

[124] The subject of corporate groups in insolvency law arose in the context of the development of the UNCITRAL Insolvency Guide. The treatment of this topic in the Insolvency Guide was limited to a brief introduction. Therefore, the Commission, at its 39th session in July 2006, agreed that the subject of corporate groups in insolvency law should be referred to the Working Group on Insolvency Law for consideration in 2006 and that the Working Group should be given the flexibility to make appropriate recommendations to the Commission regarding the scope of its future work and the form it should take. The Commission also agreed that the topic of post-commencement finance should initially be considered as a component of work to be undertaken on insolvency of corporate groups. The Working Group was given sufficient flexibility to consider proposals for work on additional aspects of post-commencement finance.

[125] At the 31st session of the Working Group in December 2006, initial discussions took place with respect to corporate groups on such issues as definitions (e.g., corporate group and other terms), commencement proceedings, effects of commencement (e.g., insolvency representation, joint administration, disposal of assets, post-commencement finance), reorganization, remedies and international issues (e.g., centre of main interest, jurisdiction, recognition, harmonization). During the session, keeping in mind that the Working Group was free to consider proposals for work on additional aspects of post-commencement finance, it was decided that because discussions with respect the scope of the work on corporate groups were still in their initial stages, it was too early to more substantively discuss post-commencement finance outside the context of corporate groups and beyond the Working Group’s immediate mandate.

[126] The Working Group resumed its work at its 32nd session in May 2007, with much of the same issues being discussed as listed above. Overall, work progressed well, with NGOs providing helpful commentary. Some states remain uncomfortable with the notion of corporate groups and with recommendations proposed by the Secretariat in its most recent working document.

[127] Consultations with Canadian stakeholders are ongoing. Canada adopted amendments to its insolvency legislation that incorporate some aspects of the Model Law on Cross-Border Insolvency with Bill C-55. However, these new provisions have not been given force of law. The government is currently reviewing the legislation that implemented those aspects of the Model Law taking into account comments made by stakeholders and the committee of insolvency experts, which was created by the Minister of Industry to advise department officials.

[128] The Canadian delegation includes Natalie Giassa, International Private Law Section, Justice Canada, Matthew Dooley, Corporate and Insolvency Law Policy, Industry Canada, Rob Sutherland-Brown, Justice Canada, Sheila Robin, Office of the Superintendent of Bankruptcy, and Terry Czechowskyj, Canadian Bar Association.

f. Case Law on UNCITRAL Texts (CLOUT)

[129] UNCITRAL has established a system for collecting and distributing judicial and arbitral decisions on the New York Convention, the Model Law on International Commercial Arbitration, the Sales Convention and other UNCITRAL instruments in force. Designated national correspondents contribute summaries of the decisions, which can be found on the UNCITRAL website. Professor Geneviève Saumier from the Faculty of Law of McGill University, Canadian National Correspondent for CLOUT for both civil and common law cases, submits Canadian decisions to UNCITRAL.

[130] UNCITRAL is also preparing a case law digest for international sales cases and arbitration cases.

[131] Action required in Canada: Support the work of the national correspondent; attend annual meetings of national correspondents.

g. Model Franchise Disclosure Law (Unidroit)

[132] In 2002, the Governing Council of Unidroit adopted the Model Franchise Disclosure Law. The purpose of the Model Law is to establish obligations on the part of franchisors regarding disclosure of information and in particular, to determine the information to be disclosed in the disclosure document. Some exceptions from the obligation to disclose are also mentioned. Finally, the Model Law creates remedies for the franchisee.

[133] Action required in Canada: Provide information on the Model Law where required.

h. Convention on International Financial Leasing and Convention on International Factoring (Unidroit)

[134] These Conventions, which are also known as the Ottawa Conventions since they were finalised in Ottawa in 1988, have been in force since May 1, 1995. The Leasing Convention is in force in nine States and the Factoring Convention is in force in six States. They provide uniform international rules to facilitate the financing of international commercial transactions.

[135] Canada is not yet party to either of the Conventions. In 1991, however, the Department of Justice consulted with the provinces, territories and interested private sector groups and experts on the desirability of Canada becoming a party to the Conventions. The responses received indicated that there was some support for Canada becoming party to both Conventions. Because of changes in the leasing industry and in light of the coming into force of the Conventions, however, consultations may be renewed with a view to making a recommendation as to whether Canada should become a party to the Conventions.

[136] The Uniform Law Conference has prepared draft uniform legislation that may be adopted by interested jurisdictions.

[137] Action required in Canada: Confirm the views of the leasing industry and of the provinces and territories to determine Canada’s interest in joining these Conventions.

i. Protocol on Matters specific to Railway Rolling Stock to the Convention on International Interests in Mobile Equipment (Unidroit / OTIF)

[138] The Railway Rolling Stock Protocol adapts to railway rolling stock equipment the mechanisms set out in the Convention on International Interests in Mobile Equipment.

[139] Given the integration of the rail industry on the North American continent and the existence of national security interest regimes for rolling stock, solutions are usually found on the continental level and not at the international level. However, an electronic registration system, as opposed to the current paper registration of security interests, could have economic benefits. Also, financiers based in Canada but active outside North America could also benefit from Canadian participation in an international registry.

[140] A diplomatic conference to adopt this protocol was held in Luxembourg from February 12-23 2007. Canadian experts and stakeholders participated. The latter have expressed a degree of interest in the Rail Protocol to the extent it could reduce their costs in terms of fees payable upon registration of security interests and by moving to a paperless environment.

[141]A Preparatory Commission will now be focussing on creating the necessary international registry to make the Protocol operational.

[142] Action required in Canada: Consult on the desirability of Canadian ratification.

j. Draft Model Law on Leasing (Unidroit)

[143] Unidroit is currently preparing a model law on leasing. The proposed text is intended to cover both what are commonly referred to as financial leases and operating leases. It provides uniform rules governing the effects of the leasing agreement, the performance of the leasing agreement and remedies in the case of default. The parameters of this project are to be set with reference to the needs of developing countries and countries in transition.

[144] Discussions have taken place between Unidroit and UNCITRAL to ensure consistency between UNCITRAL’s Legislative Guide and the Unidroit project..

[145]Action required in Canada: Monitor developments.

Next Annual Meeting

2018 Conference (Centennial)

Delta Hotel

Québec City, QC

August 12 - 16, 2018