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Professor Mooney discusses international law reform as first Global Thought Leader

April 27, 2015

As part of the Global Thought Leader series, Penn Law professor Charles Mooney spoke on his experience in international law reform as a delegate for the Cape Town Convention and his recent work with the United Nations Commission on International Trade Law.

For the first session of the Global Thought Leader series, Grant Griffith L’16 spoke with Penn Law’s Charles W. Mooney, Jr., the Charles A. Heimbold, Jr. Professor of Law. Mooney is a leading scholar in the fields of commercial law and bankruptcy law.

Mooney served as U.S. Delegate at the Diplomatic Conference for the Cape Town Convention on International Interests in Mobile Equipment and the Aircraft Protocol and for the Diplomatic Conference for the UNIDROIT (Geneva) Convention on Intermediated Securities.

Most recently, he has been involved with UNCITRAL (the United Nations Commission on International Trade Law), which promotes the harmonization and unification of international trade law.

Grant Griffith: What was your first foray into international law reform? 

Charles W. Mooney, Jr.: I was leaving Shearman & Sterling to come to Penn, and my partner, Ronald DeKoven, had been working with UNIDROIT on a leasing convention. They had held one government experts’ meeting, but he had a conflict and could not continue with the project. So, he recommended me, and I went to the second meeting in May of 1986 in Rome, and that was my first experience. 

GG: Did you see a big difference working with international projects compared to domestic ones?

CM: I did. Domestically, I had been working on lots of commercial law projects because at the time I was chairing the business law section of the ABA’s UCC Committee and was also on various other study committees. It was really a challenge that — literally and figuratively — the legally trained people outside of the U.S. spoke a different language. They were much more theoretically focused than practically focused. The U.S. approach is more or less to say: Here are some facts, what is the right result? Who wins? And then we write it down. Working with the Europeans, it is sometimes really difficult to communicate on the same level. But I learned a lot, and it was a lot of fun. 

GG: Do you want to elaborate on your career in international law reforms and the Cape Town Convention [on International Interests in Mobile Equipment]? 

CM: I attended two expert meetings at UNIDROIT on the leasing convention and the diplomatic conference at Ottawa, in 1988. And that same year, Canada proposed to the governing council of UNIDROIT that they start a new project for a convention on secured financing and leasing of mobile equipment. The governing council approved that. They put together a preliminary study committee and in 1993 I went to the first full study committee meeting.

Cape Town was an ambitious project. It was Boeing’s and Airbus’ and the engine manufacturers’ number one law reform project for a decade. Boeing and the other manufacturers need to sell planes and engines. The sales need to be financed — and most countries did not have a very friendly regime for asset based financing. So, my instructions, as a member of the U.S. delegation, were to come back with a totally transparent instrument. It was supposed to look like UCC Article 9. Our financiers and lawyers shouldn’t have to do anything differently other than dealing with an international registry. But, of course, France had other ideas, as did other countries, but we succeeded. Cape Town is patterned in many respects after UCC Article 9.

GG: Working off of that, what is your view on the pace of reform?

CM: The pace is slow. Fifty-six states have adopted the Cape Town Convention. But that’s because it deals with aircraft, which are expensive and important. All of the Ex-Im banks in the world, if a state makes the right declarations when adopting Cape Town, give a ten percent discount on the otherwise applicable finance charges. That is a real incentive to states. It’s clearly the most successful secured transactions convention and one of the most successful commercial law conventions ever. In addition to the aircraft protocol there is a rail protocol and a space protocol, but they haven’t been adopted. The Geneva Securities Convention has been signed by a couple of states but not ratified by any. It’s very slow. Some states hardly ever join a commercial law convention, such as the United Kingdom. It is frustrating. But I think we are having an impact.

Going to one of those meetings is like teaching a class because a lot of the people there are not truly experts. They’re from ministries of finance or justice. So it’s an interesting process of bringing them along, educating them, and making them see what the rationale of the project is. 

GG: What are some projects you have been involved with recently? Do you see any areas of reform that you are aiming for? Or how do you see some areas developing? 

CM: Recently, I have become much more interested in the international side of insolvency law. For the International Insolvency Institute [III], a membership organization of elected a members, I have been on an NGO delegation as an observer to UNCITRAL [United Nations Commission on International Trade Law], working on a legislative guide for secured transactions and currently converting that into a model law. We probably have another two or three meetings before the model law is finished. And that’s been an interesting experience.

GG: What are views on the importance of improving legal systems as public interest work? 

CM: I said one time to a person doing some pro bono consumer protection related litigation: it’s great that you can represent that consumer, but you know, I can work on a project to lessen the cost of financing for every car loan in the country. And that’s also putting something in consumers’ pockets. So, I just think that there are many, many ways of doing public interest work. Law reform is one of them. But I wouldn’t argue that any approaches should be abandoned. It’s just that different folks get interested in different sorts of things. 

GG: Getting back to your more recent work with insolvency laws, where do you see that going? 

CM: Two things are happening there. The paper I am working on now relates to a formal process for restructuring of sovereign debt, the debt of nations. People thought that idea was pretty much dead a dozen years ago. When the IMF pushed it, the U.S. finally opposed it, and it died. Now states are routinely including clauses in bonds providing for a super majority vote to amend their terms as a way to restructure. But in September of 2014 the United Nations General Assembly, led by the so-called Group of 77, or G-77, which has 134 countries, passed a resolution on the subject. Basically, these emerging markets states, plus China, passed a resolution calling for a formal mechanism. Then there was another resolution in December of 2014 creating an ad hoc committee, and that committee had its first meeting this month, February 3 through 5. I headed a NGO observer delegation of the III at that meeting. 

The other related project is a conference on sovereign debt restructuring. A professor at Wharton and Imperial College, Franklin Allen; a professor at Chicago’s Booth School of Business, Anil Kashyap; and Christophe Paulus, a law professor at Humboldt University in Berlin, and I organized a conference to be held at end of March in London. It is a high-level conference with scholars and practitioners and regulators from all over the world talking about restructuring sovereign debt. The conference is co-sponsored by Imperial College London, the Booth School, and the III.

GG: Looking back at your career, would you say some of your most favorite projects led to successful reforms?

CM: You know, I think probably I wouldn’t have done any of the reform work if I hadn’t really found it interesting. The work has complemented my research and academic agenda. That’s been the same whether it was my initial work on the leasing convention, which went nowhere, or on Cape Town, which is one of the most successful conventions ever. Both were successes as far as I’m concerned. And again, even if the conventions don’t go very far, there is an enormous amount of education that takes place, and a common language develops, even if the law isn’t harmonized. It has been great fun all the way through. 

This interview has been edited for length.