ENFORCEMENT: BEST PRACTICES

Background of the project

In December 2018, the Secretariat received a proposal for the 2020-2022 Work Programme by the World Bank regarding a project on the “Development of a Working Paper to Outline Best Practices on Debt Enforcement”, which the Secretariat presented in the context of the discussion of the 2020-2022 Work Programme at the 98^th Session of the Governing Council. The proposal was discussed as a continuation, and a refinement, of the scope of the  “Principles of Effective Enforcement” project, which was already part of the 2017-2019 Work Programme. The project was included in the new Work Programme by the General Assembly (A.G. (78) 12, paras. 41 and 51, and A.G. (78) 3), confirming the recommendation of the Governing Council (C.D. (98) 17, para. 245). While there was consensus on the importance of the topic and on the legal, social and economic impact of the work to be conducted, the Secretariat was asked to produce a more refined scope of the project to be presented at the 99^th  session of the Governing Council in 2020.

Consultation procedure

During the first meeting of the 99th session of the Governing Council held remotely in April/May 2020, Council Members commented on the revised Secretariat’s document (C.D. (99) A.3) and authorised the setting up of a consultation procedure to receive expert feedback on the questions raised (C.D. (99) A.8).

In response to this mandate, the UNIDROIT Secretariat developed a Consultation document containing, in its Part V, a set of questions based on the comments received during the Council remote session. The document was designed to better define the most appropriate guidance for the future Working Group in determining the type of envisaged instrument and the scope of the project, and formed the basis for a first round of remote consultations with selected international experts and organisations.

All participants in the consultation process recognised the fundamental importance of procedures and mechanisms for effective enforcement of creditors’ claims, both in transnational situations as well as in domestic civil proceedings, taking the need to ensure an effective legal protection of contractual rights into account. They also agreed on the existence of numerous challenges for enforcement in most jurisdictions, and on the lack, at present, of a comprehensive and sufficiently detailed international instrument providing for guidance for national legislators to overcome such challenges. Some experts expressly referred to the need of ensuring not only the right of creditors to effective enforcement but also a sufficient legal protection for debtors, which was also seen as a precondition of well-functioning lending and financial markets. Finally, experts generally supported the basic approach embodied in the Consultation Document presented by the Secretariat while providing very useful input in relation to the specific questions posed.

Internal Exploratory Workshop – 21 September 2020

The Secretariat organised an internal Workshop on 21 September 2020, prior to the second (hybrid) meeting of the Governing Council at its 99^th session. The Workshop sought input from experts with different backgrounds, international organisations working in the field and members of the UNIDROIT Governing Council, particularly on the determination of the most appropriate guidance to a future working group on the scope for the project and on the impact of technology on enforcement. The agenda of the Workshop is available here.

Second meeting of the 99^th session of the Governing Council (23-25 September 2020)

At the second meeting of its 99^th session, the Governing Council discussed the document presented by the Secretariat (C.D.(99) B.3) and approved the guidelines provided by the Secretariat regarding the proposed scope of the project, confirmed the high priority status assigned to the project, and authorised the establishment of a Working Group.

The Best Practices for Effective Enforcement Working Group is composed of:

• Ms Kathryn SABO (Chair) – Deputy Director General & General Counsel, Constitutional, Administrative and International Law Section, Department of Justice (Canada)
• Mr Jason Grant ALLEN – Senior Research Fellow, Humboldt-Universität zu Berlin Centre for British Studies, Berlin (Australian National)
• Mr Neil COHEN – Jeffrey D. Forchelli Professor of Law, Brooklyn Law School (USA)
• Mr Fernando GASCÓN INCHAUSTI – Professor Procedural and Criminal Law Department, Faculty of Law Universidad Complutense de Madrid (Spain)
• Ms Carla L. REYES – Assistant Professor of Law, SMU Dedman School of Law, Dallas (USA)
• Mr Fábio ROCHA PINTO E SILVA Pinheiro Neto Advogados, São Paulo (Brazil)
• Ms Teresa RODRIGUEZ DE LAS HERAS BALLELL Associate Professor of Commercial Law, Universidad Carlos III Madrid (Spain)
• Ms Geneviève SAUMIER – Peter M. Laing Q.C. Professor of Law, Faculty of Law, McGill University (Canada)
• Mr Felix STEFFEK – University Senior Lecturer, Faculty of Law, University of Cambridge, Co-Director of the Centre for Corporate and Commercial Law, Senior Member & Director of Studies, Newnham College (German National)
• Mr Rolf STÜRNER – Emeritus Professor of Law, Albert-Ludwigs-Universität Freiburg (Germany)

The Working Group also counts on a number of Institutional Observers:

• European Bank for Reconstruction And Development (Ms Catherine BRIDGE ZOLLER, Senior Counsel, and Ms Veronica BRADAUTANU, Principal Counsel – Corporate Governance, EBRD)
• European Commission (DG JUST)
• European Law Institute (Professor Xandra KRAMER, University of Rotterdam, Professor Paul OBERHAMMER, University of Vienna, representing the ELI)
• Hague Conference on Private International Law (Ms Ning ZHAO, Senior Legal Officer HCCH)
• International Association of Legal Science (Prof. dr. J.H.M. (Sjef) van Erp, Professor (em.) of Civil Law and European private law, Maastricht University (Netherlands), Visiting professor, Trento University (Italy) and Secretary-General International Association of Legal Science, IALS)
• Max Planck Institute Luxembourg for International, European and Regulatory Procedural Law (Professor Burkard HESS, Founding and Executive Director, Professor of Civil Law, Civil Procedure, Private International Law, and Ms Wiebke VOSS, Senior Research Fellow)
• Organization of American States (Jeannette Tramhel, Senior Legal Officer, Department of International Law, Secretariat for Legal Affairs, OAS)
• Secured Finance Network (Mr Richard KOHN, Goldberg Kohn Ltd.)
• Union Internationale Huissiers de Justice (Mr Jos UITDEHAAG, Secretary, UIHJ)
• United Nations Commission on International Trade Law (Mr Jose Angelo ESTRELLA-FARIA, Principal Legal Officer and Head, Legislative Branch, International Trade Law Division, Office of Legal Affairs, and Mr Alexander KUNZELMANN, Legal Officer, UNCITRAL)
• World Bank Group (Ms Nina PAVLOVA MOCHEVA, Senior Financial Sector Specialist, Finance, Competitiveness & Innovation Global Practice, and Mr Klaus DECKER, Senior Public Sector Specialist, WBG)
• Zemgale Regional Court (Ms Līna LONTONE, Latvia)

1^st Working Group Meeting 

The first meeting of the Working Group was held in Rome and on Zoom on 30-November – 2 December 2020.

• Study LXXVIB – W.G.1 – Doc. 1 rev.: Draft Agenda
• Study LXXVIB – W.G.1 – Doc. 2: Issues Paper
• Study LXXVIB – W.G.1 – Doc. 4: Report

Intersessional Work

As established in the 1st meeting of the Working Group, the Secretariat has involved members and observers of the Working Group into informal sub-groups, which have planned meetings and exchanges throughout the intersessional period organised with the support of the Secretariat. The provisional subgroups are as follows:

• Subgroup 1 “post-adjudication” enforcement
• Subgroup 2 on enforcement of secured claims (collateral)
• Subgroup 3 on the impact of technology on enforcemen

2^nd Working Group Meeting 

On 20-22 of April 2021, the Working Group on Best Practices for Effective Enforcement, chaired by Governing Council member Kathryn Sabo, met via Zoom to discuss the results of a very productive intersessional work undertaken by its members and observers since the first session (30 November – 2 December 2020). After a general presentation on the progress of the project, the three subgroups on  “post-adjudication” enforcement, enforcement of secured  claims (collateral), and on  the  impact  of  technology  on  enforcement, presented their reports, which elicited very fruitful discussions. The report of the second session will be available online in due course, with the third session tentatively planned for 29 November to 1 December 2021.

• Study LXXVIB – W.G.2 – Doc. 1: Draft Agenda
• Study LXXVIB – W.G.2 – Doc. 2: Secretariat’s Report
• Study LXXVIB – W.G.2 – Doc. 6: Report of 2nd meeting

3rd Working Group Meeting 

On 29-30 November and 1 December 2021, the Working Group on Best Practices for Effective Enforcement, chaired by Governing Council member Kathryn Sabo, met at UNIDROIT’s Headquarters in Rome and via Zoom to discuss the outcome of the intersessional work undertaken by its members and observers since the second session.

After a general presentation on the progress of the project, the Working Group addressed issues of enforcement of monetary claims by third party debt orders including tentative best practices regarding to the impact of automation. It then discussed charging orders on land and some aspects of complex enforcement relating to special types of assets. In relation to enforcement of security rights, the Working Group considered draft best practices on security rights over receivables, disposition of collateral and variation by parties of the rules regarding realisation of the collateral.

Study LXXVIB – W.G. 3 – Doc. 1: Agenda