United Nations Convention on the Assignment
of
Receivables in International Trade
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)) (i) excludes from the scope of the Convention the assignment of the
assignor’s rights as against the intermediary, to the extent that the rights
are receivables, with respect to the following, when such property is held by
the assignor with an intermediary: securities, other financial assets, and
instruments, (ii) does not exclude from the scope of the Convention the
assignment of the following rights, to the extent that the rights are
receivables, when held by the assignor other than with an intermediary:
securities, other financial assets, and instruments, and (iii) except as
described in clause (i), does not exclude from the scope of the Convention the
assignment of a receivable owing to the assignor and arising out of the
transfer by the assignor of a security, other financial asset, or an
instrument, even if the security, other financial asset, or instrument is held
with an intermediary.]] [Note to drafting
group: I have left in the understanding for the moment, in case we change our
collective minds again]
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 “the chief
executive office of the assignor or assignee”.]
[Note
in Senate explanation: (i) the phrase in paragraph (h) of article 5 does
not mean the “principal place of business”, “chief place of business”,
“registered seat”, “place of organization”, or “centre of main interests” of
the assignor or the assignee, and (ii) the phrase “chief executive office” is
used in Article 9 of the Uniform Commercial Code and there is
substantial case law and commentary onexplaining its meaning. ]
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.
[Note in Senate explanation in connection with
definition of “receivable”: The rights of a licensee of intellectual property
(e.g. copyrights, patents, and trademarks) are not a “receivable” as defined in
the Convention. However, a contractual right to the payment of a monetary sum
arising from a license, assignment, or other transfer of intellectual property
is a “receivable” as defined in the Convention.]
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 the following provisions of the United States Bankruptcy
Code, 11 U.S.C.A. §§ 101 et seq., 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: Bankruptcy Code §§ 364(d) and 506(c). 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.]
[Note
in Senate explanation: (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 minimum 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
with respect to proceeds.]
[Note
in Senate explanation: The Senate explanation will note that similarly
articles 9
(Contractual Limitationslimitations on assignments), and 10 (Transfer of security rights),
and invalidate
certain restrictions on or requirements concerning assignments that would
otherwise be valid and do not limit any similar rules of invalidation that an
assignee may have under law other than the Convention. The Senate explanation will note that
similarly article 13 (Right to
notify the debtor) provideprovides minimum rights and benefits to an
assignee and dodoes not derogate from any additional rights
or benefits that an assignee may have under law other than the Convention.]
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:
Pursuant to article 36, the United States declares that for purposes of the
Convention an assignor that is located inof the United States under article 5 is located in the territorial
unit determined under article 36 without regard to this declaration. However, if, under the law as provided under
Article 9 of the Uniform Commercial Code in force in that territorial unit, the
assignor is located in a different territorial unit inof the United States, then for purposes of the Convention and with
respect to transactions governed by the Article 9 of the Uniform Commercial Code in force in
the relevant territorial unit, the assignor is located in the different
territorial unit.]
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 article 37, the United States declares that for purposes of the
Convention the law of the United States means the law in force in the
territorial unit determined under article 36 without regard to the declaration
of the United States made pursuant to article 36. However, to the extent that, under the choice-of-law rules in force
in that territorial unit as provided under Article 9 of the Uniform Commercial
Code in force in that territorial unit, the law of a different territorial unit
inof the United States would govern as to the
relevant matter, then for purposes of the Convention and with respect to
transactions governed by Article 9 of the Uniform Commercial Code in force in
the relevant territorial unit, the law in force in the different territorial
unit shall apply to that extent.].]
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.
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.
[Declaration:
Pursuant to article 41, the United States declares that it will not apply this
Convention to the assignment of receivables so as to affect the rights and
obligations of a debtor if the debtor is located in the United States at the
time of conclusion of the original contract and the debtor is a Government,
central or local, any subdivision thereof, or an entity constituted for a
public purpose.]
[Note to drafting group: the “government” list is
taken from article 40, which provides for a declaration declaring that articles
9 and 10 do not apply to the debtor. A
declaration under that article does not seem sufficient to protect the government
debtor from notices given under articles 16 and 17. We have to consider further (including
getting input from Sandy Rocks) how much we need this declaration, given (i)
the exclusion of securities held with an intermediary, and (ii) 9 and 10 only
override contractual anti-assignment clauses (and not those in a law). In addition, one may question the usefulness
of this declaration because it cannot apply to assignments 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 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 through the adoption by the
territorial unit of the United States of Article 9 of the Uniform Commercial
Code as in force in the territorial unit, except to the extent that Article 9
sets forth different priority rules for assignments of "chattel
paper", "instruments", "payment intangibles", or other
particular categories or types of receivables.]
[Note for Senate report: the report
will (i) generally indicate that the Convention is highly comparable and
consistent with Article 9, (ii) the Convention differs in only a limited way
with Article 9, primarily with respect to certain conflict of laws rules, (iii)
discuss, on a section-by-section basis, how the rules of the Convention are
similar (where they are) with Article 9, and (iv) explain how the Convention
works. In addition, the Senate report can
give many examples (with full explanations), such as the chart that Steve W.
did, of where the Convention yields the same or different results than would
Article 9 under the Convention’s conflict of laws rules.]
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.
Preliminary list
of UCC Article 9 sections where there would be a Comment that refers to the
Convention and/or explains how the Convention interacts with Article 9:
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