Federal Report on Private International Law 1996

UNIDROIT

The International Institute for the Unification of Private Law, known as Unidroit, is an inter-governmental organization based in Rome. Canada has been a member since 1968. There are (fifty-six or fifty-seven; Jacqueline Caron will confirmed this later) member States, including the United States, China, Australia, and States from Eastern and Western Europe, South America and Africa. The mandate of Unidroit is to examine ways of harmonizing and coordinating the private law of States. Unidroit drafts conventions and model laws on various private law subjects including the law of sale and related matters, credit law, the law of carriage, security interests, franchising and cultural property. Canada is an active participant in Unidroit.

Leasing and Factoring Conventions

In May, 1988, Canada hosted a Diplomatic Conference, organized by the Department of Justice, for the purpose of adopting two conventions prepared under the auspices of Unidroit, namely, the Convention on International Financial Leasing and the Convention on International Factoring. Both Conventions were adopted at the Conference. Thus far, France, Italy and Nigeria have ratified both Conventions, and Hungary has acceded to them. The United States may ratify them both soon. The Conventions came into force on May 1, 1995. Eight other States have signed both Conventions: Belgium, the former Czechoslovakia, Finland, Ghana, Guinea, Morocco, the Philippines, and Tanzania. (Both Slovakia and the Czech Republic, as successor states to the former Czechoslovakia, will consider ratifying conventions to which Czechoslovakia was a signatory.) Germany and the United Kingdom have signed the Convention on International Factoring, whereas Panama is a signatory to the Convention on International Financial Leasing.

In 1991, 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 recent coming into force of the Conventions, consultations have been renewed with a view to making a recommendation as to whether Canada should become a party to the Conventions. At the request of the Department, the Uniform Law Conference has prepared draft uniform legislation for the implementation of the Conventions which may be adopted by interested jurisdictions should there be sufficient interest in Canada's becoming a party.

Convention on the Form of an International Will

The purpose of the Convention is to establish an international form of will, additional to the forms in use in Contracting States, which is to be recognized as valid in all Contracting States, with the result that to some extent one may dispense with the search for the applicable law. Article I of the Convention stipulates that each Party undertakes to introduce into its law the rules regarding an international will set out in the Annex to the Convention. Testators who choose the international form of will are guaranteed that it will be recognized in all Contracting States without reference to the conflict of law rules concerning the validity of wills.

The Convention Providing a Uniform Law on the Form of an International Will was acceded to by Canada in 1977. Other States parties are Ecuador, Niger, Portugal, Libya, Belgium, Cyprus, Italy, Slovenia, France, and Bosnia and Herzegovina.

The Convention has been extended to six Canadian provinces: Manitoba, Newfoundland, Ontario, Alberta, Saskatchewan and Prince Edward Island.

International Protection of Cultural Property

Unidroit convened a Diplomatic Conference in Rome, Italy, in June, 1995, to consider a Draft Unidroit Convention on the International Return of Stolen or Illegally Exported Cultural Objects. The draft was prepared by a Committee of Governmental Experts, on which Canada was represented. The Diplomatic Conference adopted the Convention on Stolen or Illegally Exported Cultural Objects on June 23, 1995. Twelve States signed the Convention: Burkina-Faso, Cambodia, Croatia, Finland, France, Georgia, Guinea, Hungary, Italy, Ivory Coast, Lithuania and Zambia. The Convention will enter into force after five ratifications, acceptances, approvals or accessions. No State has ratified the Convention yet.

The purpose of the Convention is to set out rules for the restitution or return of stolen or illegally exported cultural objects, as defined in the Convention, provided that certain conditions are met. The questions of compensation for bona fide purchasers and limitation periods for bringing actions are addressed, as is the issue of the proper jurisdiction in which to bring a claim.

The Department of Justice will undertake consultations with a view to determining whether Canada should become a party to the new Convention.

Principles for International Commercial Contracts

The Unidroit Working Group that was established to develop an international instrument on principles for international commercial contracts completed its work in 1994 with the publication by Unidroit of the "Principles for International Commercial Contracts". The Working Group was a non-governmental body composed of 13 experts representing various legal systems, including Professor Paul-André Crépeau of McGill University.

The Unidroit "Principles for International Commercial Contracts", which contains over 100 principles as well as commentary on each of them, is now available in English and French. The "Principles" are designed to serve as a kind of model regulation of international commercial contracts, and contain rules relating to the formation, interpretation, validity, performance and non-performance of contracts. The "Principles" are expected to have many practical applications including the following: parties may choose them as the law governing a contract between them; arbitrators may wish to refer to them in settling disputes; and legislators may draw on them in developing national legislation.

Unidroit's Work in Progress

Unidroit has a number of interesting projects on its current Work Programme, some of which include the following:

Security Interests in Mobile Equipment

The subject of security interests in mobile equipment is of particular interest to Canada. Following on the momentum established at the 1988 Diplomatic Conference

on Leasing and Factoring, Canada proposed that Unidroit look into the desirability and feasibility of developing uniform laws on security interests in mobile equipment. Unidroit agreed and requested Professor Ronald Cuming of the University of Saskatchewan to prepare a report on the subject.

In his report, Professor Cuming stated that the conflict of laws rules of Western European and North American jurisdictions are inadequate to meet the needs of those who engage in modern financing transactions involving collateral in the form of mobile equipment (such as trucks and construction equipment). He concluded that there is a need to establish a legal framework within which the financing of high-value mobile equipment can function effectively, although it would not be necessary to develop a complete code on international secured transactions law.

A Unidroit questionnaire circulated in commercial and financial circles elicited numerous responses demonstrating widespread support for the drawing up of an international convention or set of uniform rules as a means of recognizing security interests in movables at the international level. Unidroit has convened a study group to draw up a draft Convention on international interests in mobile equipment.

Unidroit is also studying the possibility of preparing a model law in the general field of secured transactions.

The Franchising Contract

Unidroit is continuing to examine the feasibility of drawing up uniform rules on certain aspects of international franchising. Unidroit has pursued its cooperation on this matter with the international franchising committee of the business law section of the International Bar Association. Unidroit has set up a study group to prepare an international instrument on franchising, beginning with laying down rules relating to disclosure requirements and then considering the issues of choice of law and forum and the tripartite relationship of master franchise agreements.

At its first session, the study group concluded that international franchising does not lend itself to an international convention but that a guide on international franchising would be invaluable. The study group is developing an outline for the proposed guide.

Civil Liability Connected with the Carrying Out of Dangerous Activities

At the urging of the government of India, Unidroit proposed to undertake a study designed to identify issues that might be dealt with as a basis for possible measures designed to ensure compensation for personal injury to the victims of industrial accidents resulting from the carrying out of dangerous activities. The Unidroit Secretariat is currently engaged in exploring the possibility of obtaining special external financing for the study. Once the study is completed, Unidroit may recommend to its members that Unidroit seek to formulate norms for compensation for victims of industrial accidents resulting from dangerous activities.

WORLD BANK

Convention on the Settlement of Investment Disputes Between States and Nationals of Other States

The International Centre for Settlement of Investment Disputes (ICSID) is a public international organization created pursuant to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States. The Convention was formulated by the Executive Directors of the World Bank and submitted by them on March 18, 1965, to member States of the Bank for consideration with a view to signature and ratification.

In accordance with the provisions of the Convention, ICSID provides facilities for the conciliation and arbitration of investment disputes between Contracting States and nationals of other Contracting States. The Centre's objective in making such facilities available is to promote an atmosphere of mutual confidence between States and foreign investors conducive to increasing the flow of private international investment.

Since the Convention does not contain a federal state clause allowing the Convention to be implemented in some but not all jurisdictions within a federal state, the support of all of the provinces and territories is necessary for Canada to ratify the Convention. The project has not yet obtained the support of all the provinces and territories.

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