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 Senate Report will explain in
connection with the definition of “receivable”: Except as provided in the following sentence, the
rights of eitherA “receivable” is a contractual right to payment of a
monetary sum. However, 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, and, accordingly. Accordingly, the
Convention does not apply to assignments of those rights. A licensor’s contractual
right to payment under a license or(for example, a royalty or license fee) and an
assignor’s or transferor’s contractual right to payment under an
assignment or other transfer of an interest in intellectual property, including, for example, a licensor’s
right to payment of a royalty or license fee under a contractual license of
intellectual property, is a “receivable,” and, accordingly are
contractual right rights to payment of a monetary sum and are
“receivables.” Accordingly, the
Convention does apply to assignments of those rights to payment.]
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 Senate Report will 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 Senate Report will 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 Senate Report will 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 choice-of-law 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 Senate Report will
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 Senate Report will 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 Senate Report
will explain that because intellectual property that is the subject of a
license is not a “receivable” (see Senate Report with respect to Article 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 Senate Report will 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 Senate Report will 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 sentence.
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 Senate Report will 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 Senate Report will 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 choice-of-law rules that
conforms as closely as possible to the result that would follow from
application of otherwise-applicable domestic choice-of-law rules.
The Senate Report will 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 choice-of-law rules in force in the territorial unit determined
under article 36. The Senate Report will
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 Senate
Report will also explain that the last two sentences of the declaration
primarily refer to the conflict of laws rules in UCC § 9-301(1) and the rules in UCC § 9-307 that determine where a
party is located for purposes of UCC § 9-301.]
The Senate Report will 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 Senate
Report will explain that there is no need for a declaration to exclude
application of Article 9 (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 overridden by Article
9.]
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 Senate Report will
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, the Convention does not render ineffective any non-contractual
(e.g.,
statutory) restrictions on the
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 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
Senate Report will (i) explain that the Convention is substantially consistent
with Article 9; (ii) explain that the Convention rules differ from Article 9 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 categories or 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; (iv) explain through the use of
examples how the Convention works; and (v) observe that any future changes
in Article 9 are expected to arise at the level of the territorial units ofas
amendments to uniform state law in the United States. The Senate Report will 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 UCC 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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