UNIDROIT delegation attends HCCH Expert Group on Carbon Markets

From 8 to 10 October a delegation of UNIDROIT experts made up of Professor Matthias Lehmann, Professor Antonio Leandro, and UNIDROIT Legal Officer Giulia Previti participated as observers to the second meeting of the HCCH Experts’ Group on Carbon Markets.

UNIDROIT’s sister organisation the HCCH has been tasked by its Council on General Affairs and Policy to establish an Expert Group to study the private international law issues arising from carbon markets with an initial focus on the possible inclusion of an applicable law provision in the draft UNIDROIT Principles on Verified Carbon Credits (the UNIDROIT VCC Principles). In pursuit of this mandate, the HCCH Experts’ Group on Carbon Markets has been providing valuable input to draft Principle 4 on applicable law drafted by UNIDROIT’s Working Group on the Legal Nature of Verified Carbon Credits.

In a show of extraordinary effort and cooperation, at the close of its October session the HCCH Expert Group reached consensus on an initial suggested iteration of the current text of draft Principle 4 to be shared with the UNIDROIT Working Group for its consideration. The HCCH and UNIDROIT will continue their close collaboration through the end of the year with the goal of developing an applicable law provision that provides important clarity to the VCC market, thus supporting the use of VCCs as a critical tool of climate finance.

The UNIDROIT VCC Principles are a soft law instrument being developed by a Working Group composed of experts selected for their expertise in the fields of carbon credit trading, environmental law, property law, contract law, secured transactions, and digital technology. Their scope is confined to the private law relating to VCCs. The draft Principles focus on proprietary rights and specifically where VCCs are the object of dispositions and acquisitions, and where rights and interests in VCCs are to be asserted against third parties. The prospective instrument builds on UNIDROIT’s work in the context of digital assets but adapts the proprietary framework to the specificities of VCCs. Like the UNIDROIT Principles on Digital Assets and Private Law, the draft VCC Principles are not meant to displace existing private law frameworks but rather are intended to assist jurisdictions in taking a common approach by providing guidance on how to adapt existing law to account for the idiosyncrasies of VCCs.

The close collaboration between UNIDROIT and the HCCH on this important topic underscores the significant role transnational private law can play in developing necessary legal infrastructure to reduce uncertainty in cross border transactions and support efforts at fighting climate change.

For more information visit: https://www.unidroit.org/work-in-progress/verified-carbon-credits/.

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