United Nations
Convention on the Assignment
of Receivables in International Trade
Article 2. Assignment of receivables
For the
purposes of this Convention:
(a) “Assignment”
means the transfer by agreement from one person (“assignor”) to another person
(“assignee”) of all or part of or an undivided interest in the assignor’s
contractual right to payment of a monetary sum (“receivable”) from a third
person (“the debtor”). The creation of rights in receivables as security for
indebtedness or other obligation is deemed to be a transfer;
[The
Report to the Senate should explain in connection with the definition of
“receivable”: A “receivable” is a contractual right to payment of a monetary
sum. For example, a licensor’s
contractual right to payment under a license (such as a royalty or license fee)
and an assignor’s or transferor’s contractual right to payment underfor
an assignment or other transfer of an interest in intellectual property are
contractual rights to payment of a monetary sum and so are “receivables.” Accordingly, the Convention applies to
assignments of those rights to payment. HoweverOf
course, not all
contract rights are receivables. The
rights of a party to a license or an assignment or other transfer of an
interest in intellectual property that are not a contractual right to payment
of a monetary sum are not a “receivable” as defined in the Convention. The Convention does not apply to assignments
of those rights.]
Article 4.
Exclusions and other limitations
2. This
Convention does not apply to assignments of receivables arising under or from:
(e) The transfer of security rights in,
sale, loan or holding of or agreement to repurchase securities or other
financial assets or instruments held with an intermediary;
[Understanding: The United States understands
that paragraph (2) of article 4 (with respect to clause (e)) excludes from the
scope of the Convention the assignment of (i) a receivable that is a security,
regardless of whether the security is held with an intermediary, and (ii) a
receivable that is not a security but is a financial asset or instrument, if
the financial asset or instrument is held with an intermediary.]
[The Report to the Senate should explain that
the understanding does not address whether the Convention applies to the
assignment of a receivable that arises from the transfer of (i) a security, or
(ii) a financial asset or instrument that is held with an intermediary. The Report to the Senate should also state
that references to the term “security” and to the phrase “financial asset or
instrument held with an intermediary” should be understood as that term and
phrase are used in other international instruments to be identified in the
Report.]
Article 5. Definitions and rules
of interpretation
For the
purposes of this Convention:
(h) A person is located in the State in which it
has its place of business. If the
assignor or the assignee has a place of business in more than one State, the
place of business is that place where the central administration of the
assignor or the assignee is exercised. If the debtor has a place of business in
more than one State, the place of business is that which has the closest
relationship to the original contract. If a person does not have a place of
business, reference is to be made to the habitual residence of that person;
[Understanding: The United States understands
that the phrase “that place where the central administration of the assignor or
the assignee is exercised” as used in paragraph (h) of article 5 has a meaning
equivalent to the phrase “that place where the chief executive office of the
assignor or assignee is located”.]
[The Report to the Senate should explain
that, for the Convention to achieve its objective of encouraging the greater
availability of credit at lower cost, those extending credit will need to know
with considerable certainty whether the Convention applies and, if it does
apply, the applicable conflict-of-laws rule for determining the priority of an
assignee’s right in the assigned receivables as against the rights of competing
claimants. Those determinations will
depend upon the location of the assignor and also in many cases upon the
location of the assignee. Having a definition of the location of an assignor or
assignee that refers to a single, identifiable place is essential to providing
that certainty. The Report to the Senate
should explain that an assignor’s or assignee’s “chief executive office” is
normally readily identifiable because (i) the factors used to identify that
location are more objective that the factors used to identify a location based
on other possible tests (not used in the Convention) of the kind referred to in
the following sentence, and (ii) the term is used in Article 9 of the Uniform
Commercial Code and there is substantial case law and commentary explaining its
meaning. The Report to the Senate should
further explain that the phrase “that place where the central administration of
the assignor or the assignee is exercised” in paragraph (h) of article 5 does
not mean “registered seat”, “place of organization”, “centre of main
interests”, “principal place of business” or “chief place of business”. In any
particular instance, the location under any of those other terms might be
different from the location of the “chief executive office”.]
Article 9. Contractual limitations on assignments
1. An
assignment of a receivable is effective notwithstanding any agreement between
the initial or any subsequent assignor and the debtor or any subsequent
assignee limiting in any way the assignor’s right to assign its receivables.
2.
Nothing in this article affects any obligation or liability of the
assignor for breach of such an agreement, but the other party to such agreement may not avoid the original contract or the
assignment contract on the sole ground
of that breach. A person who is not party to such an agreement is not
liable on the sole ground that it had knowledge of the agreement.
3.
This article applies only to assignments of
receivables:
(a)
Arising from an original contract that is a
contract for the supply or lease of goods or services other than financial
services, a construction contract or a contract for the sale or lease of real property;
(b) Arising from
an original contract for the sale, lease or licence of industrial
or other intellectual property or of proprietary information;
(c)
Representing the payment
obligation for a credit card transaction; or
(d)
Owed to the assignor upon
net settlement of payments due pursuant to a netting agreement
involving more than two parties.
Article 10. Transfer of security rights
1. A personal or property right securing payment of the
assigned receivable is transferred to the assignee without a new act of
transfer. If such a right, under the law governing it, is transferable only
with a new act of transfer, the assignor is obliged to transfer such right and any
proceeds to the assignee.
2. A right securing payment of the assigned receivable is
transferred under paragraph 1 of this article notwithstanding any agreement
between the assignor and the debtor or other person granting that right,
limiting in any way the assignor’s right to assign the receivable or the right
securing payment of the assigned receivable.
3. Nothing in this article affects any obligation or
liability of the assignor for breach of any agreement under paragraph 2 of this
article, but the other party to that agreement may not avoid the original
contract or the assignment contract on the sole ground of that breach. A person
who is not a party to such an agreement is not liable on the sole ground that
it had knowledge of the agreement.
4. Paragraphs 2 and 3 of this article apply only to
assignments of receivables:
(a) Arising from an original contract that is a contract
for the supply or lease of goods or services other than financial services, a
construction contract or a contract for the sale or lease of real property;
(b) Arising from an original contract for the sale, lease
or licence of industrial or other intellectual property or of proprietary
information;
(c) Representing the payment obligation for a credit card
transaction; or
(d) Owed to the assignor upon net settlement of payments
due pursuant to a netting agreement involving more than two parties.
5. The transfer of a possessory property right under
paragraph 1 of this article does not affect any obligations of the assignor to
the debtor or the person granting the property right with respect to the
property transferred existing under the law governing that property right.
6. Paragraph 1 of this article does not affect any
requirement under rules of law other than this Convention relating to the form
or registration of the transfer of any rights securing payment of the assigned
receivable.
[The Report to the
Senate should explain that because intellectual property that is the subject of
a license is not a “receivable” (see Senate Report to the Senate with
respect to Articlearticle
2), this article does not make ineffective any agreement between a licensor and
a licensee limiting the licensee’s right to sublicense or assign or otherwise
transfer the intellectual property that is the subject of the license or the
licensee’s rights under the license.]
Article 23.
Public policy and mandatory rules
1. The application
of a provision of the law of the State in which the assignor is located may be
refused only if the application of that provision is manifestly contrary to the
public policy of the forum State.
2. The rules of the
law of either the forum State or any other State that are mandatory
irrespective of the law otherwise applicable may not prevent the application of
a provision of the law of the State in which the assignor is located.
3. Notwithstanding
paragraph 2 of this article, in an insolvency proceeding commenced in a State
other than the State in which the assignor is located, any preferential right
that arises, by operation of law, under the law of the forum State and is given
priority over the rights of an assignee in insolvency proceedings under the law
of that State may be given priority notwithstanding article 22. A State may
deposit at any time a declaration identifying any such preferential right.
[Declaration: Pursuant to article 23, the
United States declares that rights that arise by operation of law under Title
11, United States Code (the “Bankruptcy Code”), Sections 364(d) and 506(c), (as
these provisions may be amended or renumbered from time to time) may be given
priority over the rights of an assignee in an insolvency proceeding in which
the assignor is a “debtor” under and as defined in the Bankruptcy Code. This declaration is not a complete list of
all rights that arise by operation of law that might be given priority over the
rights of an assignee in an insolvency proceeding.]
[The Report to the Senate should explain: (i)
this article does not contemplate that a State would list avoidance powers
arising in insolvency proceedings, such as the power to avoid a preference or a
fraudulent transfer, and (ii) there may be other priority rights arising by
operation of law that might be given priority over the rights of an assignee in
proceedings under the Bankruptcy Code or under other insolvency proceedings
under the law of the United States or a territorial unit of the United States.]
Article 24. Special rules on
proceeds
1. If proceeds are received by the assignee,
the assignee is entitled to retain those proceeds to the extent that the
assignee’s right in the assigned receivable had priority over the right of a
competing claimant in the assigned receivable.
2. If proceeds are received by the assignor,
the right of the assignee in those proceeds has priority over the right of a
competing claimant in those proceeds to the same extent as the assignee’s right
had priority over the right in the assigned receivable of that claimant if:
(a) The assignor has received the proceeds under
instructions from the assignee to hold the proceeds for the benefit of the
assignee; and
(b) The proceeds are held by the assignor for the
benefit of the assignee separately and are reasonably identifiable from the
assets of the assignor, such as in the case of a separate deposit or securities
account containing only proceeds consisting of cash or securities.
3. Nothing in paragraph 2 of this article
affects the priority of a person having against the proceeds a right of set-off
or a right created by agreement and not derived from a right in the receivable.
[Understanding: The United States understands
that article 24 provides rights and benefits to an assignee with respect to
proceeds and does not derogate from any additional rights or benefits that an
assignee may have with respect to proceeds under law other than the Convention.]
[The Report to the Senate should explain that
articles 9 (Contractual limitations on assignments) and 10 (Transfer of
security rights) make ineffective certain restrictions on or requirements
concerning assignments that would otherwise be effective and that these
articles do not make effective restrictions on assignment that are made
ineffective under law other than the Convention (e.g. under Uniform Commercial
Code §§ 9-406 – 9-408).]
CHAPTER VI. FINAL PROVISIONS
Article 33. Depositary
The Secretary-General of the United Nations is the
depositary of this Convention.
Article 34. Signature, ratification, acceptance,
approval,
accession
1.
This Convention is open for signature by all States at the
Headquarters of the United Nations in New
York until 31 December 2003.
2.
This Convention is subject to ratification,
acceptance or approval by the signatory States.
3.
This Convention is open to accession by all
States that are not signatory States as from the date it is open for
signature.
4.
Instruments of ratification, acceptance,
approval and accession are to be deposited with the Secretary-General of
the United Nations.
Article 35. Application to territorial units
1.
If a State has two or more territorial units
in which different systems of law are applicable in relation to the matters
dealt with in this Convention, it may at any time declare that this Convention
is to extend to all its territorial units or only one or more of them, and may
at any time substitute
another declaration for its earlier declaration.
2.
Such declarations are to state expressly the territorial units to
which this Convention extends.
3.
If, by virtue of a declaration under this
article, this Convention does not extend to all territorial units of a State
and the assignor or the debtor is located in a territorial unit to which this
Convention does not extend, this location is considered not to be in a Contracting State.
4.
If, by virtue of a declaration under this article, this Convention
does not extend to all territorial units of a State and the law governing the
original contract is the law in force in a territorial unit to which this
Convention does not extend, the law governing the original contract is
considered not to be the law of a Contracting State.
5. If a
State makes no declaration under paragraph 1 of this article, the Convention is to extend to all territorial units of
that State.
Article 36. Location in a territorial unit
If a
person is located in a State which has two or more territorial units, that person is located in the territorial unit in
which it has its place of business. If the assignor or the assignee has a place
of business in more than one territorial unit, the place of business is that
place where the central administration
of the assignor or the assignee is exercised. If the debtor has a place
of business in more than one territorial unit, the place of business is that which has the closest relationship to the
original contract. If a person does not have a place of business, reference is
to be made to the habitual residence
of that person. A State with two or more territorial units may specify by declaration at any time other rules for
determining the location of a person within that State.
[Declaration: see Declaration made pursuant
to articles 36 and 37 (shown after article 37).]
Article 37. Applicable law in territorial units
Any reference in this Convention to the law of a State
means, in the case of a State which has two or more territorial units, the law
in force in the territorial unit. Such a State may specify by declaration
at any time other rules for determining the applicable law, including rules
that render applicable
the law of another territorial unit of that State.
[Declaration: Pursuant to articles 36 and 37,
the United States declares that any reference in the Convention to the law of
the United States means the law in force in the territorial unit determined in
accordance with article 36, subject to the following. To the extent that, under the
conflict-of-laws rules in force in that territorial unit, a particular matter
would be governed by the law in force in a different territorial unit of the
United States, the reference with respect to that matter is to the law in force
in the different territorial unit. The
conflict-of-laws rules referred to in the preceding sentence include related
rules that determine where a person is located.]
[The Report to the Senate should explain
that, because under article 5(i) references in the Convention to “law” mean
substantive law, references to “law” in the declarations and understandings
likewise mean the substantive law in force in a State or a territorial
unit. The Report to the Senate should
also explain that the second sentence of the declaration to articles 36 and 37
will bring about a result under the application of the Convention’s
conflict-of-laws rules that conforms as closely as possible to the result that
would follow from application of otherwise-applicable domestic conflict-of-laws
rules.
The Report to the Senate should
also explain that, for transactions not covered by the UCC, if the location of
a person is relevant, the Convention’s rule that an assignor is located at its
place of central administration might be given effect as a result of the
application of the non-UCC conflict-of-laws rules in force in the territorial
unit determined under article 36. The
Report to the Senate should also explain that the next-to-last sentence of the
declaration uses the phrase “to the extent that” rather than “if” because
separate aspects of a matter (for example, separate aspects of “priority” as
that term is defined in the Convention)
may be governed by the laws of different territorial units in the United
States. The Report to the Senate should
also explain that the last two sentences of the declaration primarily refer to
the conflict-of-laws rules in UCC § 9-301(1) (referred to in the UCC as
“choice-of-law rules”) and the rules in UCC § 9-307 that determine where a
party is located for purposes of UCC § 9-301.]
The Report to the Senate should also
explain that articles 22, 36 and 37 should be read together.]
Article 38. Conflicts with other international agreements
1. This Convention does not prevail over any international
agreement that has already been or may be entered into and that specifically
governs a transaction
otherwise governed by this Convention.
2. Notwithstanding paragraph 1 of this article, this
Convention prevails over the Unidroit Convention on International Factoring
(“the Ottawa Convention”). To the extent that this Convention does not apply to
the rights and
obligations of a debtor, it does not preclude the application of the Ottawa
Convention with respect to the rights and obligations of that debtor.
Article 39. Declaration on application of chapter V
A State may declare at any time that it
will not be bound by chapter V.
[Pursuant
to article 39, the United States declares that it will not be bound by chapter
V.]
Article 40.
Limitations relating to Governments
and other public entities
A State may declare at any time that it will not be bound
or the extent to which it will not be bound by articles 9 and 10 if the debtor
or any person granting a personal or property right securing payment of the
assigned receivable is located in that State at the time of conclusion of the
original contract and is a Government, central or local, any subdivision
thereof, or an entity constituted for a public purpose. If a State has made
such a declaration, articles 9 and 10 do not affect the rights and obligations
of that debtor or person. A State may list in a declaration the types of
entity that are the subject
of a declaration.
[No declaration. The Report to the Senate should explain that
there is no need for a declaration to exclude application of article 9 of the
Convention (the override of contractual anti-assignment
terms in “trade receivables”) to contracts with governmental debtors located in
the United States because restrictions on assignment with respect to those
receivables are typically statutory (such as
those restrictions arising under the Federal Assignment of Claims Act) and,
thus, are not affected by article 9 of the Convention.]
1.
A State may declare at any time that it will not apply this
Convention to specific types of assignment or to the assignment of specific
categories of receivables clearly described in a declaration.
2.
After a declaration under
paragraph 1 of this article takes effect:
(a)
This Convention does not apply to such types
of assignment or to the
assignment of such categories of receivables if the assignor is located at the
time of conclusion of the contract of assignment in such a State; and
(b)
The provisions of this Convention that affect the rights and
obligations of the debtor do not apply if, at the time of conclusion of the
original contract, the debtor is located in
such a State or the law governing the original contract is the law of
such a State.
3. This article does not apply to assignments of
receivables listed in article 9, paragraph 3.
[No
declaration. The Report to the Senate
should explain that under some circumstances it may not be desirable for a
governmental debtor located in the United States to be bound by the provisions
of the Convention, such as those requiring the governmental debtor to pay an
assignee who has done no more than give a notice of assignment and payment
instruction to the governmental debtor, as provided in article 13 of the
Convention.
However,
three independent considerations suggest that an exclusionary declaration under
article 41 for governmental debtors located in the United States would not be
necessary or appropriate to address this issue.
First, to the extent that receivables owed by governmental debtors that
are located in the United States are
securities or are financial assets or instruments
held with an intermediary, the assignment of
the receivables is already excluded from the Convention under article
4(2)(e). Second, non-contractual (e.g.,
statutory) restrictions on assignments of governmental receivables (such as
those statutory restrictions arising under the Federal Assignment of Claims
Act) remain effective under the Convention.
Third, by reason of article 41(3), a declaration under article 41 cannot
in any event apply to “trade receivables” (the broad category of receivables
listed in article 9(3)).]
Article 42. Application of the annex
1. A State may
at any time declare that it will be bound by:
(a)
The priority rules set forth in section I of the annex and will
participate in the international registration system established pursuant to
section II of the annex;
(b)
The priority rules set forth in section I of the annex and will
effectuate such rules by use of a
registration system that fulfils the purposes of such rules, in which case, for
the purposes of section I of the annex, registration pursuant to such a
system has the same effect as registration pursuant to section II of the annex;
(c)
The priority rules set forth in section III of
the annex;
(d) The priority rules set forth in section IV of the annex; or (e) The priority rules set forth in articles 7 and 9 of the annex.
2. For the
purposes of article 22:
(a)
The law of a State that has made a
declaration pursuant to paragraph 1 (a)
or (b) of this article is the set
of rules set forth in section I of the annex, as affected by any declaration
made pursuant to paragraph 5 of this article;
(b)
The law of a State that has made a
declaration pursuant to paragraph 1 (c)
of this article is the set of rules set forth in section III of the annex,
as affected by any declaration made pursuant to paragraph 5 of this article;
(c)
The law of a State that has made a
declaration pursuant to paragraph 1 (d)
of this article is the set of rules set forth in section IV of the annex,
as affected by any declaration made pursuant to paragraph 5 of this article; and
(d)
The law of a State that has made a
declaration pursuant to paragraph 1 (e)
of this article is the set of rules set forth in articles 7 and 9 of the annex,
as affected by any declaration made pursuant to paragraph 5 of this article.
3.
A State that has made a declaration pursuant to paragraph 1 of
this article may establish rules pursuant to which contracts of assignment concluded before the declaration takes effect become
subject to those rules within a reasonable time.
4.
A State that has not made a declaration pursuant to paragraph 1 of
this article may, in accordance with
priority rules in force in that State, utilize the registration system
established pursuant to section II of the annex.
5. At the time a State makes a declaration pursuant to
paragraph 1 of this
article or thereafter, it may declare that:
(a)
It will not apply the priority rules chosen under paragraph 1 of
this article to certain types of assignment or to the assignment of certain
categories of receivables; or
(b) It will apply those priority
rules with modifications specified in that declaration.
6. At
the request of Contracting or Signatory States to this Convention comprising not less than one third of the
Contracting and Signatory States, the depositary shall convene a conference of
the Contracting and Signatory States to designate the supervising authority and
the first registrar and to prepare or revise the regulations referred to
in section II of the annex.
[Declaration: The United
States declares that, for assignments of receivables within the scope of
Article 9 of the Uniform Commercial Code in force in a territorial unit of the
United States, the territorial unit through its adoption of Article 9 of the
Uniform Commercial Code has substantially implemented the principles of the
priority rules set forth in section I of the annex and the registration system
set forth in section II of the annex.
Article 9 of the Uniform Commercial Code differs in only a limited way
from the priority (as defined in article 5) rules set forth in section I of the
annex and the registration system set forth in section II of the annex in that,
among other things, Article 9 of the Uniform Commercial Code sets forth
different priority (as defined in article 5) rules for assignments of
"chattel paper", "instruments", "payment
intangibles" (as these terms are defined in Article 9 of the Uniform
Commercial Code) and other particular types of receivables.]
[The Report to the Senate
should (i) explain that the Convention is substantially consistent with Article
9
of the Uniform Commercial Code; (ii) explain that the
Convention rules differ from Article 9 of the Uniform Commercial Code to a limited
extent, primarily with respect to (a) certain conflict-of-laws rules and (b)
priority rules for assignments of "chattel paper",
"instruments", "payment intangibles", or other particular
types of receivables; (iii) discuss, on a section-by-section basis, how the
rules of the Convention are similar (where they are) with Article 9 of the Uniform Commercial
Code; (iv) explain through the use of
examples how the Convention works; and (v) observe that any future changes in
Article 9 of
the Uniform Commercial Code are expected to arise as
amendments to uniform state law in the United States. The Report to the Senate should also explain
with respect to the last sentence of the declaration that the meanings of
“priority” in the Convention and in Article 9 of the UCCUniform
Commercial Code are not identical.]
Article 43. Effect of declaration
1.
Declarations made under articles 35, paragraph
1, 36, 37 or 39 to 42 at the time of signature are subject to confirmation upon
ratification, acceptance
or approval.
2.
Declarations and confirmations of declarations
are to be in writing and to be formally notified to the depositary.
3.
A declaration takes effect simultaneously
with the entry into force of this Convention in respect of the State
concerned. However, a declaration of which the depositary receives formal
notification after such entry into force takes effect on the first day of the
month following the expiration of six months after the date of its receipt by the depositary.
4.
A State that makes a declaration under
articles 35, paragraph 1, 36, 37 or 39 to 42 may withdraw it at any time by a
formal notification in writing addressed to the depositary. Such withdrawal
takes effect on the first day of the month following the expiration of six months after the date of
the receipt of the notification by the depositary.
5. In the case of a declaration under articles 35,
paragraph 1, 36, 37 or 39 to 42 that takes effect after the entry into force of
this Convention in respect of the State concerned or in the case of a
withdrawal of any such declaration, the effect of which in either case is to cause a rule
in this Convention, including any annex, to become applicable:
(a) Except as provided in paragraph 5
(b) of this article, that rule is
applicable only to assignments for which the contract of assignment is concluded on or after the date when the declaration
or withdrawal takes effect in respect
of the Contracting State referred to in article 1, paragraph 1 (a);
(b) A rule that
deals with the rights and obligations of the debtor applies only in respect of
original contracts concluded on or after the date when the declaration or
withdrawal takes effect in respect of the Contracting State referred to in
article 1, paragraph 3.
6. In the case of a declaration under articles 35,
paragraph 1, 36, 37 or 39 to 42 that takes effect after the entry into force of
this Convention in respect of the State concerned or in the case of a
withdrawal of any such declaration, the effect of which in either case is to cause a rule
in this Convention, including any annex, to become inapplicable:
(a)
Except as provided in paragraph 6 (b) of this article, that rule is inapplicable to assignments for
which the contract of assignment is concluded
on or after the date when the declaration or withdrawal takes effect in
respect of the Contracting State referred to in article 1, paragraph 1 (a);
(b) A rule that deals with the rights
and obligations of the debtor is inapplicable in respect of original contracts
concluded on or after the date when the declaration or withdrawal takes effect
in respect of the Contracting State referred to in article 1, paragraph 3.
7. If a rule rendered applicable or inapplicable as a
result of a declaration or withdrawal referred to in paragraph 5 or 6 of
this article is relevant to the determination of priority with respect to a
receivable for which the contract of assignment is concluded before such
declaration or withdrawal takes effect or with respect to its proceeds,
the right of the assignee has priority over the right of a competing
claimant to the extent that, under the law that would determine priority
before such declaration or withdrawal takes effect, the right of the assignee would have priority.
No
reservations are permitted except those expressly authorized in this
Convention.
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