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International Law and Practice

Private International Law

By Harold Burman

Three Completed Efforts to Unify Private Law. The unification of private law at the international level moved ahead on several fronts, including completion of three international legal works—the United Nations model national laws on electronic commerce, the Hague Conference’s Convention on the protection of minors, and the UNCITRAL notes on organizing international commercial arbitration.

In June 1996, the Organization of American States (OAS) General Assembly approved a resolution in principle convoking the Sixth CIDIP. The Section has provided input on which of eight topics should be supported. As an indicia of change in 1996, the new OAS Secretary General circulated a document calling for, inter alia, more emphasis on development of the private law infrastructure as a means to promote economic integration in the Americas.

UNCITRAL completed its ground-breaking basic rules on electronic commerce at its 1996 Plenary session. The rules cover functional equivalents of "signature," "original," "writing," etc., and provide default rules on who is bound, where and when messages are deemed to have been made or received allocations of risk, and other matters. The rules favor validation of commitments made by computer messaging, but do not go as far as the proposed new U.C.C. Article 2B, which incorporates the concept of an "electronic agent."

The model national law has a second part, reserved for additional articles on sector-specific concerns, which has two articles on electronic bills of lading. Focused primarily on maritime and admiralty usages, the articles seek to validate electronic documents by resolving some uncertainties that arise from presentment of nonpaper instruments.

The UNCITRAL "Notes on Organizing Arbitral Proceedings" (Notes) were completed and released in the fall of 1996. The Notes, and their checklist of matters to be considered, draw attention to a number of matters such as arbitration rules, language of the proceedings, procedures and evidence, and defining points at issue. Regionally, the Inter-American Commercial Arbitration Commission (IACAC), a quasi-official body established pursuant to OAS resolution that can administer arbitrations under the 1975 Panama Convention, modified its Rules, which are based on the UNCITRAL Arbitration Rules of 1976. The Rules are effective in all fourteen states party to the Conven-tion except the United States. Based in part on recommendations of the Section, the Senate, in granting advice and consent to U.S. ratification, entered several reservations, including a requirement that no change to the Rules could be effective as to the United States until the Secretary of State accepted the changes, following a rule-making process under Title 5, U.S.C.

Promoting International Secured Interests Law. Concurrent efforts progressed in two international bodies, UNIDROIT and UNCITRAL, to draft conventions on secured interests. UNCITRAL seeks to draft a convention for general commercial and inventory financing, based on accounts receivable. While some progress was made, the meetings highlighted the lack of consensus on what purpose private law harmonization should serve. The U.S. view is that it should consciously facilitate economic development and create new pools of commercial credit for underserved markets, and not merely harmonize legal standards between already established markets.

In order to achieve the U.S. goal, UN standards need to support credit on a more modern paradigm than the traditional three-party arrangement. The United States has also urged that interests perfected under the convention must prevail over those perfected under national laws of ratifying states in order to attract foreign credit for new markets, which is a large leap for many countries.

The second closely related project is the UNIDROIT effort to draft rules for mobile equipment, including aircraft, vessels, containers, agricultural and construction equipment, and large trucks. Consensus has not yet been reached on whether the convention would cover equipment that in the normal course of business moves across borders, or apply when only such equipment actually so moves.

1995 UN Convention on Independent Guarantees and Standby Letters of Credit. The Convention bridged a number of differences between American-based letter of credit law and European-based law on independent bank guarantees. It was endorsed for signature at the 1996 annual meeting of the Secretary of State’s Advisory Committee on Private International Law. It was agreed, however, that the Advisory Committee would again review the Convention before it took a position on U.S. ratification. Some issues remain as to the effect of the Convention vis-à-vis applicable domestic law.

Developing Country Project Financing. Focused on the rapidly growing market for "Build, Operate and Transfer" (BOT) contract methods of combining private and public financing of infrastructure projects, proposed projects at UNCITRAL and elsewhere gained momentum in 1996. The International Law Institute in Washington, D.C., the World Bank, and others, prepared a UN survey of legal issues involved in this innovative practice. This will lead to preparation of legislative guidelines, model contract provisions, or other legal tests as well.

Cross-Border Insolvency. 1996 saw the advancement of a draft UN model national law on procedural aspects of cross-border insolvency. With the support of NGOs such as INSOL and the International Bar Association, as well as conferences of bankruptcy judges cohosted by INSOL and UNCITRAL, draft provisions have been prepared on (1) recognition of a foreign main proceeding and its relation to local proceedings, (2) access and rights to participate for foreign administrators and creditors, (3) a mandatory (though not automatic) temporary stay to prevent dissipation, and (4) authority for judicial cooperation across borders, a provision equalizing payout between certain classes of creditors, and other matters.

Convention on the Protection of Children. At the eighteenth Session of the Hague Conference on Private International Law in October 1996, the final text of a convention on the protection of children was adopted by the thirty-five participating countries. The Convention addressed questions of jurisdiction, applicable law, and recognition and cooperation with regard to measures for the protection (custody) of children.

International Child Support Enforcement. Recently enacted federal welfare reform legislation authorizes the government to enter into arrangements with other countries for the reciprocal enforcement of support obligations (42 U.S.C. §§ 659a and 654(32)). In the absence of such authority in the past, many U.S. states, with State Department support, have made arrangements directly with twenty countries and have been negotiating with another eighteen for the reciprocal enforcement of support obligations through parallel policy declarations. The new legislation authorizes the Secretary of State to declare that certain countries are reciprocating nations if they are able to meet specified requirements, with the effect that support obligations originating in such countries would be enforced throughout the United States. A corresponding declaration by the other country would provide for the enforcement in that country of support obligations originating in the United States.

Intercountry Adoption Convention. The State Department is working with the Department of Health and Human Services and the Immigra-tion and Naturalization Service to prepare federal implementing legislation for the 1993 Hague Conven-tion on intercountry adoption. The Convention establishes internationally agreed norms and procedures to safeguard children moving in adoption from one party country to another and to protect the interests of their birth and adoptive parents. The legislation is required to ensure the full and uniform implementation of the Convention throughout the United States.

Future Draft Convention on Jurisdiction and Enforcement of Foreign Judgments. The Hague Conference agreed to prepare a convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters during 1996-2000. The convention may provide different rules for enforcement depending on the bases of jurisdiction and other considerations. The Conference also decided to seek to prepare by 1999 a convention that would address questions of jurisdiction, applicable law, recognition and enforcement, and international cooperation with regard to the protection of incapacitated adults.

Harold Burman is in the Office of the Legal Advisor, U.S. Depart-ment of State in Washington, D.C. He is vice-chair of the Private International Law Coordinating Committee.

This article is an abridged and edited version of one that originally appeared on page 685 in The International Lawyer, Summer 1997 issue (31:2).

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