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;

[Declaration: Pursuant to article 4, the United States understands that paragraph 2(e) of article 4 (i) applies only to securities held with an intermediary or other financial assets held with an intermediary, (ii) does not apply to securities directly-held by the assignor or other financial assets directly-held by the assignor, and (iii) does not apply to a receivable owing to the assignor arising out of the assignment of a security or financial asset, even if the security or financial asset is held with an intermediary.]

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;

. . .

[Declaration: Pursuant to article 5, the United States understands that the phrase “central administration” in paragraph (h) of article 5 will be interpreted in a manner consistent with (i) the phrase “centre of main interest” as that phrase is used in the UNCITRAL Legislative Guide on Insolvency Law, the UNCITRAL Model Law on Cross-Border Insolvency, and Council (EC) Regulation No. 1346/2000 of 29 May 2000 on Insolvency Proceedings, and (ii) the phrase “chief executive office” as that phrase is used in the Uniform Commercial Code as enacted in the various territorial units of the United States.]

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 the following rights under the 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: . . .  This declaration does not identify any preferential rights arising under other insolvency proceedings, especially those for which the assignor is not eligible to be a “debtor” under and as defined in the Bankruptcy Code..]

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.

[Declaration: Pursuant to article 24, the United States understands that article 24 does not derogate from any rights to proceeds and the priority of any rights to proceeds that an assignee may have under the law applicable under articles 35 and 36 and the declarations of the United States pursuant to those articles.]

[If this approach is adopted, repeat for other articles, such as article 9 (assignability) and article 10 (automatic rights in security rights that secure a receivable)]

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.

[No declaration]

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 in the United States under article 5 shall be located in the territorial unit determined under article 36 without regard to this declaration unless, under the law as stated in Article 9 of the Uniform Commercial Code in force in that territorial unit, the assignor is located in a different territorial unit in the United States.  In that case the assignor is located in the different territorial unit for purposes of transactions governed by Article 9 of the Uniform Commercial Code in force in the relevant territorial units.]

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 to article 36 unless and to the extent that, under the rules in force in that territorial unit as stated in Article 9 of the Uniform Commercial Code in force in that territorial unit, the law of a different territorial unit in the United States would govern.  In that case the law in force in the different territorial unit shall apply to that extent for purposes of transactions governed by Article 9 of the Uniform Commercial Code.]

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.]

Article 41. Other exclusions

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]

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.

[No declaration.]

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.

Article 44. Reservations

No reservations are permitted except those expressly authorized in this Convention.