Loosen legal ties that bind international trade, says ICC at UN ‘Receivables’ convention

News | 12 January 2015

ICC.rec_.finance jpg.jpg

The International Chamber of Commerce (ICC) announced its endorsement of the UN Convention on the Assignment of Receivables in International Trade, held in November 2014, which outlined increased movement of goods across borders by facilitating low-cost credit.

The convention quoted bank members as having faced situations “where financings had to be reviewed or abandoned as a result of laws considering the assignment of future receivables or bulk assignments of receivables as ineffective.”

ICC supported the convention's purpose to establish principles and rules to create clarity and transparency in the receivable finance legal regime, while aligning itself to promoting modernisation of the existing legal framework.

Stating that existing legal regime was vague over the content and its applicability, the report felt that the “[confusion] over regime applicable to the assignment of receivables constitutes an obstacle to international trade.”

The Convention removes legal obstacles to receivables financing transactions by validating assignments of future receivables and bulk assignments, and by partially invalidating contractual limitations to the assignment of receivables.

It also looks to enhance certainty with respect to a number of issues, such as the effectiveness of an assignment as between the assignor and the assignee and as against the debtor.

Touted as a major step towards the globalisation of asset-based lending, the Convention unites the United Nations Commission on International Trade Law (UNCITRAL) and ICC on their common goal of removing obstacles for international trade.

UNCITRAL also provided an important bridge to those countries that were, at the time, unable to participate directly in the work of ICC. Other ICC rules, such as Incoterms Rules, have also been endorsed by UNCITRAL, contributing to their international acceptance.

Give Feedback