Research Paper (undergraduate), 2007
21 Pages, Grade: 1.7
5. Important Achievements
a. UNIDROIT Principles of International Commercial Contracts
b. Convention on International Interests in Mobile Equipment
6. Criticism and Setbacks
Today international trade is still a both difficult and complex matter. One does not even have to be a businessperson anymore to realize that. In this age everyone can browse the internet and with just a few clicks have almost everything delivered right to one’s doorstep from all around the world. Due to this simplicity it is often overlooked that ordering goods from the other side of the globe or even just a few steps beyond the closest border involves many differences and problems that need to be taken care of. But while a small order from a private person causes enough trouble, still far more legal issues arise from trade from businesses to business (B2B) contracts over borders. The reason for this is that every state has its own laws, rules and customs and it needs to be clarified which is to be prioritized and obeyed. As the cross-border trade has grown dramatically during the last decades, it therefore has become essential that organizations fight for unifying the laws and regulations for international trade against. One of the most famous and most important institutions is the International Institute for the Unification of Private Law or UNIDROIT. Its main tasks consist of harmonizing and coordinating international private law. Currently (July 8, 2007) the organization has 61 members, including the majority of the leading industrial nations like the United States, Germany, India and China. (Member States of UNIDROIT, 2007) (International Institute for the Unification of Private Law, 2007) (UNIDROIT, 2007).
In the following paper I am going to analyze and explain the UNIDROIT and its achievements in detail. Therefore I am going to start with a brief summary of its Andreas Giese history and evolvement since its foundation. After this I will concentrate on the goals and objectives the organization has been founded upon. Then I will concentrate on the structure and working principles of it, followed by UNIDROITS certainly most important achievements concerning what they say and what importance they have. Before ending with a brief conclusion of what has been discussed, I will also come to setbacks in the organizations history and structure.
The roots of the International Institute for the Unification of Private Law go back as far as to 1926. Then it was founded by vote of the League of Nations, the predecessor of the United Nations, in Rome. Two years later it started its work, but already in 1940 it split from the League of Nations to become an independent international organization. Its most important achievements, which are going to be analyzed and discussed later in detail, are the “ UNIDROIT Principles of International Commercial Contracts ” and the “Convention on International Interests in Mobile Equipment”. The first one published in 1994 with a revised and extended version ten years later. The latter was signed in 2001. Both are also to be updated and rereleased in the future. During it’s more than 75 years of existence UNIDROIT has all together published more than 70 studies and drafts. (International Institute for the Unification of Private Law, 2007) (UNIDROIT, 2007) (UNIDROIT’s Achievements, n.d.).
If one takes a look at the Statue of UNIDROIT, the first article states, that the organization’s general aims are to analyze possibilities to abolish differences and problems connected to private law involving different nations. In the long run it should lead to a state in which its members, ideally the whole world, can agree on a single international private law system.
But since this is just a vision which still lies far in the future, if at all, the Statute also list various minor objectives to gradually approach the overall goal. First UNIDROIT certainly shall work on bills of international law or conventions. Through each signing and ratification of conventions the member states legal systems always get a bit closer together to eventually reach the general aim. Additionally, it is important for the International Institute for the Unification of Private Law to construct agreements to improve the affairs between countries with respect to private law. Another self set field of work is supposed to be the investigation of differences and commonalities between states with respect to private law. Besides doing all this, UNIDROIT also demands from itself to study and support current and past initiatives by similar institutions and organizations. Finally, they want to inform about and distribute their works to the public, if they see a benefit for the public or other organizations. (Statue of UNIDROIT, n.d.)
Internally UNIDROIT is divided up into 3 parts: the Secretariat, the Governing Council and the General Assembly. Each of these divisions has distinctive tasks and objectives. The executive power belongs to the Secretariat and therefore they are committed to routine work on the set tasks. On top of this organ is the Secretary- General. Currently this position is held by the German Professor Dr. Herbert Kronke. Besides him several civil servants from various backgrounds and other employees belong to the Secretariat. The second organ of the UNIDROIT is the Governing Council. Among its task is also the appointment of the Secretary-General after he or she has been nominated by the President. At the moment Professor Dr. Berardino Libonati of Italy is the institute’s President. Who is to be president is decided by the Italian government. Besides him the organ consists of additional 25 members. They are elected for a period of 5 years. The organ also has the task to draw up the so called Work Program and supervise the work of the Secretariat on it. The last of the three organs is the General Assembly. It consists of one representative from each of members of UNIDROIT. Therefore it currently has 61 representatives. They elect the members of the Governing Councils and also vote on their Working Programs.
Besides, it fixes the budget for the upcoming year. Due to all this power it is considered to be the organ with most decision making power of UNIDROIT.
(Structure, legislative policy, working methods of UNIDROIT, n.d.).
All work is done in English or French, but also German, Italian and Spanish are official languages. If a subject is decided to enter into the Working Program, it still Andreas Giese has a long way to go and plenty of barriers to overcome until it will become an international convention. At the beginning of this process stands either a feasibility study or a preliminary comparative law report, possibly also both. This is carried out by the Secretariat and intended to analyze, if the whole issue is both achievable and needed. A report will then be presented to the Governing Council, which decides upon creating a preliminary draft of whatever instrument is to be used, for example a preliminary draft convention, general principles or legal guide. This will be done by a study group under the leadership of a General Council’s member. The other members are selected by the Secretariat to represent different jurisdictions and regions of the world. These first steps of a subject are called the preliminary stage.
Following this is the intergovernmental negotiation stage: Since the study group set up earlier also is to outline a preliminary draft, this has to be consented and to suggest the further steps. These steps always depend on which instrument is to be achieved. With exception of the instrument of the Convention, the draft will subject to a final vote if UNIDROIT should publish it. But if a Convention is the intended result, the Secretariat is instructed to arrange for a committee of governmental experts, which will then decide if to present it to a diplomatic conference. (Structure, legislative policy, working methods of UNIDROIT, n.d.).
Its first voluntary ground rules for international trade were published by UNIDROIT in 1994. Since then they can be considered to be very successful. As they were prepared as general basic regulations for international trade, they have soon been put into practice. Besides they are also an important part in the university education of comparative law all around the word, since they are considered as basic knowledge for lawyers and judges specialized in private law. Therefore the principles are also an important part of studies and working papers. Additionally they have even been partly included in the civil law of some countries and it is even considered possible that those principles will be incorporated by the European Union as reference. (Heutger, 2005) (UNIDROIT, 2007) (UNIDROIT Grundregeln für internationale Handelsverträge, 2007)
But who needs the Principles and in which fields does it clarify matters? According to Fabrizio (2003) it does offer clarification in several areas, especially concerning institutional arbitration. Arbitration is a way to handle disagreements outside of courts, but still all the parties involved agree that the decision of the arbitrator will be binding for them. It is most common in international commercial matters.
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