Expansion of Applicable Sphere: A way to Uniformity
——Compare and Contrast between UNIDROIT and UNCITRAL Conventions
By Dongsheng Lu, Chen Yan

I. Introduction

Financing is paramount for the promotion of commerce. It has been noted that “in developed countries the bulk of corporate wealth is locked up in receivables”. As the economy develops, this wealth increasing is “unlocked by transferring receivables across national borders”. With the prompt and great increases in international trade, receivables financing now plays a more and more important role. Yet under the law of many countries, certain forms of receivables financing are still not recognized. Even transactions are involved in countries where the form of receivables financing is permitted, determining which law governs will be difficult. The disparity among laws of different jurisdiction increases uncertainty in transactions, thus constitutes obstacles to the development of assignments of receivables. To remove such obstacles arising from the uncertainty existing in various legal systems and promote the development of receivables financing cross-boarder, a set of uniform rules in this field is required. The international community has made great efforts in adopting uniform laws. Among those efforts, the United Nations Commission on International Trade Law (UNCITRAL) drafted, on 12 December, 2001, “United Nations Convention on the Assignment of Receivables in International Trade” (hereinafter referred to as the “UNCITRAL Convention”), with its aim to “establish principles and to adopt rules relating to the assignment of receivables that would create certainty and transparency and promote the modernization of the law relating to assignments of receivables”. UNCITRAL is not the first international organization attempting to resolve the problems associated with receivables. As early as in May 1988, the International Institute for the Unification of Private Law (UNIDROIT) has already adopted a convention known as the “UNIDROIT Convention on International Factoring” (hereinafter referred to as the “UNIDROIT Convention”).

When compare and contrast between the UNIDROIT Convention and the UNCITRAL Convention, one might see a lot of inconsistency in detailed regulations, e.g. sphere of application, relations between parties, priorities, and choice of law, etc. Given the limited space available in this article, the author may only focus on the difference in “sphere of application” of these two conventions, as sphere of application is perhaps the most fundamental issue of a convention.

The purpose of an international convention is to create uniformity in its covered matter, thus the broader a convention’s sphere of application is, the higher could uniformity reach. This article will try to make compare and contrast the sphere of application between the UNIDROIT Convention and the UNCITRAL Convention, illustrate the differences exist between these two conventions, and demonstrate the expansion of sphere of application in the UNCITRAL Convention and its progress on the way to uniformity.

II. Sphere of Application: Subject Matter

As its title indicates, the subject matter of the UNIDROIT Convention is of course international factoring. Article 1(1) says, “this Convention governs factoring contracts and assignments of receivables as described in this Chapter.”

For “factoring contract”, the UNIDROIT Convention provides the following 4 characteristics:

(1) purpose of the contract is to assign receivables;

(2) receivables to be assigned arises from contracts of sale of goods made between the supplier and its customers (debtors), other than those of sale of goods bought primarily for personal, family or household use;

(3) the factor is to perform at least two of the four functions: (i) finance for the supplier; (ii) maintenance of accounts (ledgering) relating to the receivables; (iii) collection of receivables; and (iv) protection against default in payment by debtors;

(4) notice of the assignment of the receivables is to be given to debtors.

As about “assignments of receivables as described in this Chapter”, article 2 (1) describes assignments of receivables as assignment of receivables pursuant to a factoring contract.

Factoring is just a subset of the receivables financing, and perhaps the oldest and most basic one. Besides factoring, receivables financing still entail the following forms,

(1) Forfeiting, similar to factoring, involves the purchase or discounting of documentary receivables (promissory notes, for example) without recourse to the party from whom the receivables are purchased;

(2) Refinancing, also known as secondary financing, involves the subsequent assignment of receivables. In its basic form, one bank or financier will assign to another bank its interest, with the potential for further assignment;

(3) Securitization, in which both marketable (for example, trade receivables) and non-marketable (consumer credit card receivables) asset cash flows are repackaged by a lender and transferred to a lender-controlled company, which will issue securities, sell and then use the proceeds to purchase the receivables;

(4) Project Finance, in which repayment of loans made by banks or financiers to project contractors for the financing of projects are secured through the future revenues of the project.

The first draft of the UNCITRAL Convention has stated to cover factoring, forfeiting, refinancing, securitization and project finance. Somehow, the working group decides that rather than emphasize the form in which the receivables appear, it would instead concentrate on the way in which the receivables might be transferred (contractual or non-contractual) and the purpose of the transaction (for financing or non-financing purposes). It decides the contractual receivables and assignment made to secure financing and other related services would be covered. The non-contractual receivables such as insurance and tort receivables, deposit bank accounts, or claims arising by operation of law seems are not within the ambits of the UNCITRAL convention.

III. Sphere of Application: Special Requirements

Both of the conventions contain a series of requirements. Only when those requirements are satisfied, could the convention be applied. The higher and stricter the requirements are, the smaller the chance to apply the convention is.

a) Internationality requirement

Both the two conventions indicate their sphere of application is of internationality requirement, but the same word in these two conventions has different legal meaning. The internationality requirement of UNIDROIT Convention is exclusively based upon the parties to the underlying contract, i.e. the contract of sale of goods (the supplier and the debtor) having their place of business in different countries. In other words, where the receivables arise from a contract of sale of goods between a supplier and a debtor whose places of business are in the same State, the UNIDROIT Convention could not apply, no matter the following assignment of receivables is to assignee in the same or different State. Thus leaving the international assignment of domestic receivables untouched. The problem, at its simplest, is twofold: first, inconsistency. For instance, in the case where a bulk assignment is made and where part of the receivables are domestic (supplier and debtor are in the same State) and part are international (supplier and debtor are in different State), if the supplier assigns the receivables to a party which is located in another State, the bulk assignment between the same supplier and the same assignee will be governed by two sets of laws and regulations: the portion of international receivables may be governed by the UNIDROIT Convention while the domestic one will be left to the jurisdiction of certain domestic law.

Secondly, leaving the international assignment of domestic receivables to the jurisdiction of various law systems of different States can make “commercial practice uncertain, time-consuming and expensive”. The assignee of receivables from a foreign State may not know which State’s law governs the transaction, and, if the law of the assignor’s State applies, the assignee’s rights would be subject to the vagaries of that foreign law. This no doubt would greatly impede the development of such transaction.

中国政府 罗马尼亚政府


中华人民共和国政府和罗马尼亚社会主义共和国政府科学技术合作协定


（签订日期１９７８年８月２１日 生效日期１９７８年１２月２９日）
　　中华人民共和国政府和罗马尼亚社会主义共和国政府，为了进一步发展两国的科学技术合作，加强两国人民的友谊，决定缔结本协定，条文如下：

　　第一条　缔约双方本着友好合作精神，在尊重主权、民族独立、权利平等、不干涉内政和互利原则基础上，通过交流有助于两国经济发展的科学技术成就和经验，开展科学研究和设计工作，促进两国科学技术合作的发展。

　　第二条　缔约双方将根据两国的需要与可能，努力促进实施下列各种方式的科学技术合作：
　　一、相互派遣专家考察科学技术成就和经验；
　　二、相互邀请科学家和其他技术专家传授科学技术知识和经验或讲学；
　　三、相互派遣实习生进行生产技术实习；
　　四、就双方感兴趣的项目在两国有关的科研和设计单位之间进行共同科研和设计；
　　五、就双方感兴趣的项目组织双边科学技术讨论会；
　　六、相互交换科学技术资料、科技情报、科技刊物、样品、种子苗木等；
　　七、双方同意的其他科学技术合作方式。

　　第三条　为了保证顺利执行本协定的规定，缔约双方同意：
　　一、一九五三年成立的中罗科学技术合作联合委员会继续工作。
　　二、双方可根据各自的机构情况，委托专门指定的部门进行联系，以便讨论和商定有关具体的合作项目计划。

　　第四条　在科学技术领域内，双方商定共同科研和设计项目后，由双方指定的对口合作单位共同编制具体的合作计划，并根据各自国内规定的程序，审核批准后付诸实施。

　　第五条　缔约双方将另行商订为执行本协定的共同条件。

　　第六条　缔约双方保证，根据本协定相互提供的技术资料与情报以及双方的科学技术合作成果，未经缔约另一方的书面同意，不得向第三方转让。

　　第七条　本协定自缔约双方履行各自的法律手续并相互通知之日起生效。
　　本协定有效期为五年。如缔约任何一方在期满前六个月未以书面通知另一方终止本协定，则本协定的有效期将自动延长五年。
　　自本协定生效之日起，一九六三年六月八日在北京签订的中华人民共和国和罗马尼亚人民共和国科学技术合作协定即行失效。

　　第八条　本协定期满时，根据本协定签订的议定书、合同和合作计划所规定的义务如尚未完成，应继续履行，直至全部完成为止。
　　本协定于一九七八年八月二十一日在布加勒斯特签订，共两份，每份都用中文和罗文写成，两种文本具有同等效力。
　　注：缔约双方相互通知已完成各自法律程序，本协定自一九七八年十二月二十九日起生效。

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