Mr. João Ribeiro serves as the Head of Regional Centre for Asia and the Pacific, United Nations Commission on International Trade Law (UNCITRAL), Incheon, Republic of Korea. He leads the Centre’s efforts in providing advice to Governments in Asia-Pacific region on the development of long-term strategies for the promotion of the harmonisation and of the modernisation of international trade law.
The views expressed herein are his own and do not necessarily reflect the views of the United Nations.
UNCITRAL completed fifty years of its trade law reform activities. In this era of disruptive technologies and smart contracting, what lies ahead for UNCITRAL?
In commemoration of its 50th Anniversary, UNCITRAL is hosting a three-days Congress entitled “Modernizing International Trade Law to Support Innovation and Sustainable Development” on 4-6 July 2017, in Vienna. The congress will engage with leaders in the field of international trade law, including practitioners, judges, academics, international officials and other experts to explore the opportunities that UNCITRAL should seize in the coming years.
The Congress will be open to anyone with an interest in international trade and business, the work of UNCITRAL and the potential of trade law reform and innovation to translate the United Nations sustainable development goals into action to advance business and trade at country level. The Congress will feature sessions on digital and credit economy, addressing blockchain technologies and smart contracting, as well as intellectual property financing and licensing. It will also discuss reform of the investor-state dispute settlement system. The Congress is an opportunity to bring together legislators and end-users, to discuss and identify areas where legal diversity is becoming a barrier to trade and an unbearable transactional cost – to a certain extent, a non-tariff barrier to trade.
How does the Commission decide the scope of its future work?
Every year, the Secretariat submits a report on possible future work for the Member States to discuss and agree on priorities. Such paper gathers suggestions from States but also systematizes contributions coming out of UNCITRAL Symposia. The coming Congress is also forward looking and its proceedings will give ground to discussions on future work. This effort is also replicated regionally through the UNCITRAL Emergence Conference, which is annually organized based on an academic call for papers. The Conference is particularly designed to take stock of contemporary and emerging international developments in harmonization and unification of commercial law and its impact on the regional business environment. The first two editions (2015 and 2016) were hosted in close cooperation with an Academic partner, the University of Macau.
The Commission’s work in the area of dispute settlement has been of enormous influence, especially in arbitration related reforms around the world. What is on its agenda now?
The UNCITRAL Working Group II, on Dispute Settlement, is currently preparing an instrument dealing with enforcement of international commercial settlement agreements resulting from conciliation. All relevant documents are available on our website. It should be noted that one of the first venues where this discussion started was during an event hosted in New Delhi by, among others, UNCITRAL-RCAP and the ABA Dispute Resolution Section: the Asia-Pacific International Mediation Summit, in February 2015.
The coming Commission’ session in July will continue its considerations regarding possible future work, namely on (i) concurrent proceedings; (ii) code of ethics/conduct for arbitrators; and (iii) possible reform of the investor-State dispute settlement system.
One of the UNCITRAL Working Groups is working on Online Dispute Resolution (ODR)? What specific gaps is this working group trying to address? Could a global ODR system be established?
The Working Group has concluded its work and the Commission agreed on the Technical Notes on Online Dispute Resolution, a non-binding descriptive text. The purpose of the Technical Notes is to foster the development of ODR and to assist ODR administrators, ODR platforms, neutrals, and the parties to ODR proceedings. The Technical Notes reflect approaches to ODR systems that embody principles of impartiality, independence, efficiency, effectiveness, due process, fairness, accountability, and transparency. They are intended for use in disputes arising from cross-border low-value sales or service contracts concluded using electronic communications. The private sector is giving significant contributions to the promotion of ODR, with noticeable examples coming out of India and China. I believe that if and whenever the diversity of such rules becomes a tangible obstacle to the flow of cross-border B2B commerce, we may see further legislative developments in this field. That said, it is important to note that all work undertaken by the Commission results from proposals by the Member States and is usually consensually agreed upon.
Some practitioners have suggested that the Mauritius Convention on Transparency can serve as a model for reforms in Investor-State Dispute Settlement (ISDS) such as an appeal mechanism or a permanent international tribunal. What are your views?
It is important to recall that such report was made in the context of a study undertaken by the UNCITRAL Secretariat, precisely to determine whether the Mauritius Convention could provide a useful model for possible reforms in the field of investor-State arbitration. Of course, such effort had to be pursued in conjunction with interested organizations, including the Center for International Dispute Settlement (CIDS), a joint research center of the Graduate Institute of International and Development Studies and the University of Geneva Law School. The CIDS research paper of June 2016 examined the scope, possibilities, and challenges for an instrument similar to the Mauritius Convention, alone or in combination with other instruments, to create (i) a permanent dispute settlement body intended to replace or complement ISDS provisions in existing and future investment treaties; or (ii) an appeal mechanism for awards rendered in ISDS proceedings under existing or future investment treaties. The UNCITRAL Secretariat has further hosted a Government Expert Group Meeting with CIDS, last March, to gather more contributions for the debate. All presented materials are available online. I believe all reasonable solutions have been mapped and now it is up to States to discuss and agree on the way forward. I do have some personal concerns regarding the ability of developing and least-developed states, the ones more in need of rule-based commerce and investment, to juggle with several ISDS systems made available on each different investment agreement, especially if they happen to face simultaneous claims, each using a different system – but again, none of the solutions seems to be exclusive and a number of alternatives will be made available for parties to agree upon.
The UNCITRAL Regional Centre for Asia-Pacific is one of its kind institution. What were the reasons behind establishing a separate centre for Asia-Pacific region?
This was the first, and remains the only, UNCITRAL regional centre, in 50 years of UNCITRAL history. It was set-up in 2012, and its operation is possible due to the generous support of the Republic of Korea, in particular the Incheon Metropolitan City and the Ministry of Justice, and of the Government of Hong Kong, China. RCAP was meant to be a 5 years’ pilot project. The main challenges we faced were (1) lack of regional awareness on the work of UNCITRAL; (2) relatively moderated political priority by regional governments on harmonizing business law; (3) the complex and unavoidable long-term approach required for meaningful legal reforms. The Regional Centre was established to:
(a) provide capacity building and technical assistance services to States in the Asia-Pacific region, including to international and regional organizations, and development banks;
(b) support public, private and civil society initiatives to enhance international trade and development by promoting certainty in international commercial transactions through the dissemination of international trade norms and standards, in particular those elaborated by UNCITRAL;
(c) build and participate in regionally-based international trade law partnerships and alliances, including with other appropriate United Nations funds, programmes and specialized agencies;
(d) strengthen information, knowledge, and statistics through briefings, workshops, seminars, publications, social media, and information and communication technologies, including in regional languages; and
(e) function as a channel of communication between States and UNCITRAL for non-legislative activities of the Commission.
We are now seeing some results of having a dedicated regional centre to promote UNCITRAL texts and assist in its implementation. In 2012, 15 out of 56 States had arbitration legislation based on the UNCITRAL Model Law on International Commercial Arbitration (MLICA). Today, we have 23 (a 53.3% bump, in 5 years). Also, since 2012, we had 4 new ratifications of the New York Convention, doubling the pace of regional ratifications of the previous 5 years. Again, we are working actively to assist several States in the Region to ratify it in the near future. On CISG, from 2000 to 2012, only 3 States in the region ratified the Convention. Since 2013 Bahrain and Viet Nam became parties and Fiji’s parliament also ratified it last month. And we are currently working with several States in the Region to assist in their ratification process.
The CISG has now become a ‘worldwide success’. From your experience, what advantages would India derive from adopting this uniform sales law?
We have been actively promoting the CISG in India, by delivering and supporting many events around the country. 3 Indian Universities participated in the UNCITRAL Asia Pacific Day, namely the National Law University which organized a symposium “Adopting the CISG is likely to improve ‘Ease of doing Business’ and ‘Enforcing Contracts’ in India” with two public lectures “Is the CISG the Perfect Tool to Manage Cross-Border Legal Risks?” and “Towards a Regime of Uniform Transnational Commercial Laws for India: Contracts of International Sale of Goods” (New Delhi, 17 October 2016); the Gujarat National Law University, which delivered a lectures’ series on “Issues of Harmonisation of Laws on International Trade from the Perspective of UNCITRAL” (Gujarat, India, 11 November 2016); and KIIT University which held a seminar on “Quest Towards Harmonization of Global Trade Rules” (Odisha, India, 20-21 December 2016). And what better proof we need for the rising interest on CISG than the remarkable performance of Indian teams at the Vis East Moot in Hong Kong and at the Vis Moot in Vienna?
We believe that adopting the CISG offers 8 Advantages for businesses, that States cannot afford to ignore: efficient contract management, namely in the context of cross-border supply chains; reduced transactional costs; trust-building among partners; improved value for money in cross- border transactions, since risk incorporation in transactions price is lowered; levelling the contractual bargaining position for SME’s, reducing their entry cost in global markets; a noticeable effect on redistribution of market wealth; effective and affordable means to settle commercial disputes, while at the same time potentially reducing the risk of disputes.
Furthermore, CISG seems to be on the right side of history and to be unstoppable, consistently having an average of two new parties per year. China ratified the CISG in 1986, at the very beginning of the opening-up policy engineered by Deng Xiaoping. This was 5 years after France or Egypt ratified it, and 5 years before Canada, Guinea and Romania did it. China transposed it into domestic law, providing a platform of trust and common contractual language with business partners from all over the world, enhancing familiarity of its practitioners with recognizable international contract law. The CISG was also a model for the new Hungarian Civil Code, the civil and commercial code of Argentina and the draft commercial code of Spain; and has inspired the draft civil code of Japan, though actual influence remains to be assessed. It was also a decisive step towards contract law modernization in Brazil. Azerbaijan modelled its civil code after the Model Civil Code of the Community of Independent States, in turn inspired by the CISG. This shows the quality of the standards and how they are compatible with every legal system.
Two additional points must be taken into consideration. Firstly, many international contracts for the sale of goods with Indian parties already fall under the CISG, when the contracts are silent on governing law and one of the parties is from a CISG jurisdiction, even if in most cases Indian parties are not aware of it. This means that Indian parties and legal services are at a disadvantage because they are exposed to a standard they are not familiar with. Secondly, the more businesses in India engage with cross-border trade, the more they will be concerned with contract management. Not being party of the CISG means that businesses, lawyers and in-house legal counsels must be aware of several different foreign governing laws, since in many cases the parties won’t agree to Indian law. With CISG, the number of governing laws to be aware of would be dramatically reduced. With 85 State parties, CISG would be easily accepted as governing law, tangibly reducing transactional costs for the international sale of Indian goods.