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 98th 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 99th session of the Governing Council in 2020.
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 99th 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 99th session of the Governing Council (23-25 September 2020)
At the second meeting of its 99th 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:
The Working Group also counts on a number of Institutional Observers:
1st Working Group Meeting
The first meeting of the Working Group was held in Rome and on Zoom on 30-November – 2 December 2020.
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:
2nd 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.
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.
4th Working Group Meeting
On 26-28 April 2022, 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 third session.
Following a presentation on the progress of the project and a summary of the intersessional meetings and workshops that had taken place, the Working Group addressed draft best practices regarding enforcement by way of authority, enforcement on digital assets, issues regarding online auctions, and an update on draft best practices regarding enforcement of security rights. The Working Group also addressed the organisation of future work and the way forward.
5th Working Group Meeting
On 12 – 14 December 2022, 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 fourth session.
The Working Group continued to address draft best practices to render enforcement of creditors’ rights more effective, focusing on enforcement by way of authority, extrajudicial enforcement of secured claims, enforcement on digital assets, and issues regarding online auctions. The session was enriched with a presentation on the use of ADR and ODR in enforcement, provided by the World Bank Group.
The Working Group also addressed the organisation of future work and the way forward, including the work of the Drafting Committee, tasked with finalising the drafts on which the WG has reached an agreement as a matter of policy.
6th Working Group Meeting
On 14-16 March 2023, Members and Observers of the Working Group on Best Practices for Effective Enforcement met at the seat of UNIDROIT in Rome and via videoconference to work on draft best practices to render enforcement of creditors’ rights more effective.
In this session, the Working Group focused on best practices regarding enforcement of security rights, including the possibility of special expedited procedures; enforcement by way of authority; and enforcement on digital assets, as well as on a presentation on online auction best practices delivered by Special Reporter Massimiliano Blasone, an international expert in the “Cyberjustice” Working Group developing the guidelines for judicial e-auctions for the Council of Europe.
The Working Group established the way forward for the Drafting Committee’s continuing work leading up to the next session of the Working Group.
7th Working Group Meeting
The next session of the Working Group is scheduled for 29 November-1 December 2023.