The concept of carbon credit was introduced in the Kyoto Protocol of 1997 with the purpose of reducing the emission of greenhouse gases (GHG) into the atmosphere. Since then, a number of international treaties and domestic laws have introduced related regulations seeking to fight global warming. Special reference is due to the Paris Agreement of 2015, which provides for carbon trading as a key means of reducing carbon emissions globally.
Instruments such as the Kyoto Protocol and Paris Agreement have encouraged the development of an international market for the creation and trading of carbon certificates. In parallel with the development of compliance carbon markets, demand for carbon credits from entities that are not under an obligation to participate in carbon markets has also grown. Voluntary carbon credits (“VCCs”) represent a certification stating that the holder, either directly or indirectly, has reduced or removed from the atmosphere one metric ton of carbon dioxide equivalent in line with applicable rules and requirements. VCCs typically are constituted outside of any regulatory or compliance framework and are generally chosen by the relevant stakeholders as a means to offset emissions and help meet net-zero emission goals.
Investment and transactions concerning this type of complex asset require legal certainty, something which cannot be taken for granted in unregulated and unsupervised markets. As voluntary carbon markets grow in size and complexity, the trading in VCCs would be significantly enhanced if steps were taken, both nationally and internationally, to better understand the legal nature of VCCs.
The main objective of the UNIDROIT Project on the Legal Nature of Voluntary Carbon Credits (the “VCCs Project” or “Project”) is thus to provide guidance on private law issues so as to enhance confidence in VCC transactions and support the development of a well-functioning market which could play a central role in fighting climate change, achieving the goals of the United Nations Framework Convention on Climate Change (“UNFCCC”), in particular the Paris Agreement, and facilitate the fulfilment of the UN Sustainable Development Goals. Given that a significant share of the projects that generate VCCs are located in developing economies, a reliable carbon credit market also provides an opportunity to increase capital flow to emerging markets and provide funding to projects that may not otherwise receive adequate support.
On 24 January 2022, the International Swaps and Derivatives Association (“ISDA”) submitted a proposal to UNIDROIT recommending that UNIDROIT consider a project to analyse the legal nature of VCCs. ISDA’s proposal was expressly supported by the Government of Paraguay in a letter received by the UNIDROIT Secretariat on 9 May 2022.
At its 101st Session (Rome, 8-10 June 2022), the UNIDROIT Governing Council unanimously recommended the inclusion of the VCCs Project in Unidroit’s 2023-2025 Work Programme, with high priority (see paras 50-60, UNIDROIT 2022 – C.D. (101) 4 rev). While the Governing Council recognised the similarities of the VCCs Project to the UNIDROIT Project on Digital Assets and Private Law (the “DAPL Project”), it identified sufficient distinct features of VCCs to recommend that a separate Working Group be established for the VCCs Project. The Governing Council’s recommendation was unanimously endorsed by the UNIDROIT General Assembly at its 81st session (Rome, 15 December 2022) (see paras 75-78, UNIDROIT 2022 – A.G. (81) 3).
Following receipt of the mandate, the UNIDROIT Secretariat organised a First Exploratory Consultative Workshop (the “First Exploratory Workshop”) in collaboration with the World Bank Group and ISDA, held at ISDA headquarters in London on 27 March 2023. The purpose of the First Exploratory Workshop was that of identifying current issues in the VCC field and delineating the scope of the Project. A preliminary discussion paper was prepared by the Secretariat to guide the discussion. The First Exploratory Workshop was attended by twenty-four participants, including representatives from international organisations, industry and academia, as well as practitioners and members of the UNIDROIT Secretariat. The First Exploratory Workshop sought to consider, among other matters, the following items:
(a) Key concepts;
(b) Key considerations regarding the legal nature of VCCs;
(c) Ownership, creation, and transferability of VCCs;
(d) Secured transactions involving VCCs, including collateralisation;
(e) Custodians/intermediaries;
(f) Applicable law issues;
(g) Treatment in case of insolvency; and
(h) Local market regulatory oversight.
An update on the status of the VCCs Project, drawing on the conclusions of the First Exploratory Workshop as well as on the Secretariat’s own research, was presented to the UNIDROIT Governing Council at its 102nd session (Rome, 10-12 May 2023). On this occasion, the Governing Council confirmed the authorisation to establish a Working Group, in collaboration with the World Bank Group, tasked with developing an international law instrument to provide guidance on the legal nature and other private law aspects of VCCs (the “VCCs Working Group”).
A Second Exploratory Consultative Workshop was held at the World Bank Group offices in Vienna on 11 July 2023 (the “Second Exploratory Workshop”). The Second Exploratory Workshop was attended by twenty-eight participants, including experts from international organisations, development banks, academia and the private sector, as well as representatives from the UNIDROIT Secretariat. The Second Exploratory Workshop built on the work of the First Exploratory Workshop and discussed, among other things, the following items:
(a) Key concepts;
(b) Main actors involved in the VCC life cycle;
(c) Key considerations regarding the legal nature of VCCs;
(d) Ownership of VCCs;
(e) Transferability of VCCs;
(f) Secured transactions and collateralisation of VCCs;
(g) Retirement of carbon credits;
(h) VCC price;
(i) VCC accounting;
(j) Treatment in case of insolvency;
(k) Local market regulator oversight;
(l) Applicable law issues;
(m) Sector-specific carbon credits; and
(n) Relevant issues not to be included in the Project’s scope.
The Second Exploratory Workshop closed with the participants noting that next steps would be delineated in coordination with UNIDROIT’s sister organizations, including with the United Nations Commission on International Trade Law (UNCITRAL) Secretariat in light of UNCITRAL’s 56th Commission Session held in Vienna on 3-21 July 2023, and with the Hague Conference on Private International Law (“HCCH”).
As consistent with the Institute’s established working methodology, a Working Group has been established, composed of members selected for their expertise in the fields of carbon credit trading, environmental law, property law, contract law, secured transactions, and digital technology. Experts participate in a personal capacity and represent different legal systems and geographical regions. The project is done with the support of the World Bank Group and, at this stage, work is being conducted in cooperation with UNCITRAL. In light of this, World Bank Group and UNCITRAL representatives, as well as UNCITRAL-appointed experts, participated in the Working Group’s First Session.
The Working Group is currently comprised of the following expert members:
In addition, international, intergovernmental, and nongovernmental organisations, as well as individual members of academia and the private sector, have been invited to attend the Working Group sessions as observers. Participation of these organisations and stakeholders will ensure that different perspectives are taken into account in the development and adoption of any future international instrument.
The below organisations have joined the Working Group as institutional observers:
The following individuals have joined the Working Group as observers, in a personal capacity:
José Antonio Moreno Rodriguez, Member of UNIDROIT’s Governing Council, as well as Suzanne Howarth, an UNIDROIT Correspondent for Australia, participate in the Working Group as observers. Professor Louise Gullifer (University of Cambridge) acts as a Senior Advisor to the UNIDROIT Secretariat for this project.
The composition of the Working Group is still an open process and additional members and observers may be added in due course.
First Working Group Session
The First Session of the Working Group on the Legal Nature of Voluntary Carbon Credits was held at the seat of UNIDROIT in Rome on 10-12 October 2023.
Ms Olga Fonotova is an Associate Professor of the Faculty of Law (Department of Legal Regulation of Business) at the Russian National Research University “Higher School of Economics” in Moscow. She holds a PhD degree cum laude in private law / private international law from the Lomonosov Moscow State University (2006). Her academic and teaching interests cover private international law, international and national commercial law, with a focus on unified and non-state legal regulation of cross-border commerce.
Olga is a Russian law qualified practicing lawyer in the sphere of national and international commercial and corporate law with 20+ years’ experience in leading law firms. As part of her legal practice, she has advised multinational corporations on the setting up of multi-jurisdictional commercial relations, on the formation / termination of international joint ventures, restructuring of assets, and financing / refinancing of projects. For her work on commercial and corporate legal matters she was included in the international rating of leading lawyers “The Best Lawyers® in Russia” (2018 – 2022).
She is a UNIDROIT alumna (2011) and a Correspondent of UNIDROIT in Russia (2023 – 2025). From 2016 to 2021 Olga was a member of the ICC Commission on Commercial Law and Practice (ICC CLP) and a member of the Association of European Business (AEB) in Moscow.
Allan M. Mukuki, PhD Candidate (Navarra, Spain), LLM (Groningen, Netherlands), PGDip (KSL), LLB (Hons) (UoN), ACIArb (London), Advocate of the High Court of Kenya.
Allan Mukuki is an Advocate of the High Court of Kenya as well as a Commissioner for Oaths. He is presently a PhD Candidate at the University of Navarra in Spain. He is also a holder of an LL.M in International Law and the Law of International Organizations, from the University of Groningen in the Netherlands. He has an LL. B (Hons) from the University of Nairobi, he is a Member of the Cha
rtered Institute of Arbitrators (London). He further holds a post-graduate diploma in law from the Kenya School of Law. Allan is also a scholar from the Hague Academy of International Law.
Some of his many roles in the legal profession include Director of International Partnerships; a Doctoral Fellow; member of the Management Committee and moot court coordinator, all for Strathmore Law School; Research Fellow for the African Region (Kenya), for the European Research Council Grant Project on the interpretation of customary international law; and Acting Director for the Strathmore Institute of Advanced Studies in International Criminal Justice (SIASIC)
Allan has previously worked at A.F Gross Advocate; in various legal institutes; in governmental agencies and in the Judiciary of Kenya. He was also a Legal researcher in the Office of the Solicitor General, Kenya, for the Maritime Delimitation in the Indian Ocean (Somalia v. Kenya), a case that was before the International Court of Justice. His main areas of specialization include Public International Law, The Law of International Organizations, International Humanitarian Law, International and Regional (EAC) Refugee Law and Legal Policy Development.
Further, Allan has been involved in various national and international legal consultancies and projects; he has published several peer reviewed legal articles, a legal monograph and presented several legal papers in international conferences around the world. He has also developed several policy documents for Strathmore University as well as (currently operational) manuals and laws for the operation of the Judiciary as well as governmental agencies and regional agencies such as IGAD.
ANDREA SANTACOLOMA
Director
PROFESSIONAL PRACTICE
Andrea Santacoloma is a Panamanian lawyer that focuses her practice on international commercial arbitration.
Prior to joining Adell & Merizalde, Andrea was the Deputy Director for Latin America of the ICC International Court of Arbitration for 5 years. In this role, she gained vast experience in the internal functioning of the ICC’s Secretariat and Court and saw first-hand the work of hundreds of arbitrators and ICC Court Members in the region. Andrea was also in charge of identifying new opportunities and potential users of the ICC Dispute Resolution Services (ICC DRS) in Latin America, in liaison with the ICC National Committees and other institutions in the region. She also worked as a lawyer advising local and international clients on business and corporate law and M&A in 3 Panamanian law firms.
She is currently the Executive Director of the Latin American Arbitration Association (ALARB), one of Latin America’s leading associations gathering practitioners and arbitrators, which seeks to encourage the use of arbitration and foster initiatives for the development of international arbitration in the region.
In July 2022, the G
overning Council of the International Institute for the Unification of Private Law (UNIDROIT) appointed Andrea as a Correspondent for Latin America. Namely, Andrea was appointed as a Correspondent for the Republic of Panama for the period 2022-2025.
EDUCATION
• American University Washington College of Law, LL.M. in International Arbitration and Business Law
• International Training Centre of the International Labor Organization (ILO) jointly with the United Nations Commission on International Trade Law (UNCITRAL), Università degli Studi di Torino, and University Institute of European Studies (IUSE), LL.M. in International Trade Law & Dispute Resolution
• Universidad Católica Santa María La Antigua, LL.M. in Corporate Law
• Universidad Católica Santa María La Antigua, Degree in Law and Political Science
• Centro de Estudios Regionales de Panamá, Diploma in Entrepreneurship and Management of Small and Medium Enterprises
Bar admissions
Republic of Panama
Languages
Spanish, English, Italian (intermediate)
asantacoloma@adellmerizalde.com
+507 370 4155
NAME: PROF. DR. HERNANY VEYTIA (LL.M. YALE)
AFFILIATION DIRECTOR BNM-CAMBRIDGE STUDY CENTRE ON SUSTAINABLE INVESTMENTS
PRESENTATION
Professor of law, international strategic consultant, arbitrator, and entrepreneur. Hernany Veytia is very comfortable with complex, high-profile and confidential transactions. Her consulting experience as partner of BNM and Deloitte enables her to focus on and add value to the sustainable and commercial aspects of each deal. Frequently she leads transdisciplinary teams to deliver fact findings and legal opinions, feasibility studies and turn-key projects for banks, governments, international organisations, and corporations willing to expand or withdraw operations in other jurisdictions.
In Prof Veytia’s experience UNIDROIT works have been very useful to understand not only the foreign law, but also to recognise the cultural, political, and economic factors at play, and the way national and international regulators operate-and cooperate. In her opinion, UNIDROIT instruments have been of utmost importance for the legal strategies she designed for:
• DANPREIT (Dispute Analytics Platform for Real Estate Investment Trusts in the Agriculture, Construction and Mining industries).
• TELEKAIROS, innovative methodology that incorporates the use of space assets.
• Corporate art collections, restitutions, including donations, sponsorships, and loans to museums.
• Contracts used by a German waterworks company willing to grow in all the Caribbean and Central American countries.
• Liquidation of commercial and investment banks
• IPOs and reverse mergers for companies in the extraction industries (Canadian stock exchange), ILS listed in Bermuda and African sovereign funds listed in London.
• Franchising and other commercial contracts in the food & drinks, health, aero-space, and automotive industries.
In the last three decades Prof. Veytia has lived, and successfully completed investments and disinvestments in more than forty countries in the five Continents. She is frequently appointed as arbitrator and invited as speaker on risk transfers at international industry conferences in fields of her expertise: energy (both renewable and traditional), artificial intelligence, infrastructure, mining, real estate, agriculture, rail, space, automotive, and franchising. She sits in the board of directors of companies in Europe including the United Kingdom.
Anna Veneziano is the Deputy Secretary General of the International Institute for the Unification of Private Law (UNIDROIT). She is a Professor of Comparative Law at the University of Teramo, Italy, where she was formerly the Director of the Department of Private Law. She has also formerly been a tenured Professor of European Property Law at the University of Amsterdam (UvA). Her education includes a Law Degree with honours from the University of Rome La Sapienza, an LL.M degree from the Yale Law School funded by a Fulbright scholarship, and a PhD degree from the University of Florence (Italy).
Her main research and publication areas are on secured transactions as well as international, comparative, and European contract and sales law. Before joining UNIDROIT she was a member of the Italian delegation with respect to the Cape Town Convention on International Interests on Mobile Equipment and its Aircraft Protocol as well as its Space Protocol. She was also a member of the Study Group on a European Civil Code and of the Compilation and Redaction Group on a Draft Common Frame of Reference on European Private Law (DCFR), and of the restricted Expert Group set up by the European Commission on a common European law on sales.
P
rofessor Ignacio Tirado was appointed Secretary-General by the Governing Council at its 97th session, and officially took office on 27 August 2018. A national of Spain, Professor Tirado (Commercial, Corporate and Insolvency Law, Universidad Autónoma of Madrid, Spain) holds a PhD from the Universities of Bologna and Autónoma de Madrid and an LLM from the University of London. Professor Tirado has been a Senior Legal Consultant at the World Bank’s Legal Vice-Presidency and Financial Sector Practice for more than nine years, having also consulted for the IMF on insolvency related matters as well as for the Asian Development Bank on commercial legal reform.
Amongst other accolades to his professional experience, Professor Tirado is a founding member of the European Banking Institute, an International Fellow of the American College of Bankruptcy and has been Director and Academic Co-Chair of the International Insolvency Institute.
A Swedish national, Ms Lena Peters grew up in Italy where she attended an English school. In 1978 she took her Juris Kandidatexamen at Stockholm University followed by a Master of Laws from King’s College, London (1979). Since 1985 she has been with UNIDROIT, first as Research Officer, lastly as Principal Legal Officer, her main duties being Secretary to the Working Group for the Preparation of Principles of International Commercial Contracts, Secretary to the Study Group on Franchising, Secretary to the Committee of Governmental Experts on Franchising.She also collaborated on the project for the preparation of the ELI-Unidroit Model European Rules of Civil Procedure. She is currently Managing Editor of the Uniform Law Review and responsible for publications at UNIDROIT.
Hamza Hameed is a Pakistani lawyer who works as a Legal Consultant at the International Institute for the Unification of Private Law (UNIDROIT) in Rome, Italy. He is also the Co-Chair of the Space Generation Advisory Council (SGAC). He holds an Advanced Master’s LLM Degree in Air and Space Law from Leiden University and an LLB from the University of London. His work mostly involves the development and promotion of international instruments in the areas of spacecraft financing, secured transactions law, and law & technology. At UNIDROIT, he is responsible for the Space Protocol of the Cape Town Convention, and also manages the activities of the Cape Town Convention Academic Project and the UNIDROIT Foundation. He is a member of the International Institute of Space Law (IISL) and INSOL International.
Priscila Pereira de Andrade works as a Legal Officer at UNIDROIT. She is mainly responsible for the Agricultural Development and Private Law projects jointly developed with IFAD and FAO (Legal Structure of Agricultural Enterprise, Agricultural Land Investment Contracts and Contract Farming). Priscila holds a Ph.D. in International Law from the University Paris I Panthéon-Sorbonne (France), a Master Degree in International Relations from the University Center of Brasília (Brazil), and a specialisation degree in International Environmental Law from the United Nations Institute for Training and Research (UNITAR). Before joining UNIDROIT, she worked for the International Institute for Sustainable Development (IISD) and was an assistant professor at the University of Pisa (Italy), as well as an associate professor at the Master in Law Program of the University Center of Brasília.
Philine Wehling has over ten years of experience in food and agriculture law as well as international trade law. Before joining UNIDROIT in 2019 she worked as a Legal Specialist at the Legal Office of the United Nations Food and Agriculture Organization (FAO) in Rome for almost 8 years, providing guidance to Member States on the development of sound legal frameworks and contributing to the standard setting work of the Organization on trade in agro-food products, agricultural finance, sustainable agricultural production and development, and responsible natural resources management. She supported Governments in legal reform in more than 20 countries. Philine Wehling further served as a Legal Advisor at the German Federal Ministry of Justice in Berlin, where she was in charge of international cooperation in consumer law and policy. She completed her doctoral dissertation in international law at the Max-Planck-Institute for Comparative Public Law and International Law in Heidelberg, for which she received a doctoral degree summa cum laude from Heidelberg University as well as the Prize for excellence in research of the Margot-und-Friedrich-Becke Stiftung zu Heidelberg in 2018. Philine Wehling is admitted to the German Bar .
Marina Schneider is Principal Legal Officer and Treaty Depositary at UNIDROIT. She studied law at the University of Strasbourg (France) and Paris I – Panthéon Sorbonne. She joined the UNIDROIT in 1987 and was involved in the elaboration and French versions of most UNIDROIT instruments since. She is in charge of the 1995 UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects and of the UNESCO-UNIDROIT Model Provisions on State Ownership of Undiscovered Cultural Objects. She is the author of the Explanatory Report of the 1995 Convention and many articles on the Convention and other international instruments in the field. Ms Schneider is also responsible for the project on private collections and for the UNIDROIT Convention Academic Project (UCAP). She is member of the Board of the International Society for Research on Art and Cultural Heritage Law (ISCHAL).
Professor of Commercial Law, Carlos III University of Madrid. Currently, Sir Roy Goode Scholar at UNIDROIT, Rome, 2021-2022. Chair of Excellence 2017-2018 at University of Oxford (Uc3m- Santander Program), affiliated to Harris Manchester College. Previously Distinguished Visiting Professor and fellow of a number of Academic Institutions. Arbitrator of Madrid Court of Arbitration. Member of ELI (European Law Institute) Council and Executive Committee. Member of the Expert Group of the European Commission on Liability and New Technologies and member of the Expert Group of the European Observatory of Platform Economy; the International Academy of Commercial and Consumer Law; the expert group of the Inclusive Global Legal Innovation Platform for Online Dispute Resolution – UNCITRAL and Hong Kong Department of Justice. Expert of the UNIDROIT Study Group on the MAC Protocol of the Cape Town Convention on International Interests. Delegate of Spain to UNIDROIT for the adoption of the Protocol, delegate of Spain in Working Group VI of UNCITRAL on secured transactions and in Working Group IV on Electronic Commerce. Member of UNIDROIT Working Groups on Enforcement and Warehouse Receipts.
William Brydie-Watson is an Australian lawyer who specialises in secured transactions law and private international law. Before joining UNIDROIT, William was a government lawyer in the Private International Law and International Arbitration section of the Australian Attorney-General’s Department, where he worked primarily on treaty negotiation and the implementation of private international law treaties in Australia. At UNIDROIT, he is primarily responsible for the implementation of the Mining, Agriculture and Construction (MAC Protocol) to the 2001 Cape Town Convention on International Interests in Mobile Equipment and the development of a Model Law on Factoring. William also serves as UNIDROIT’s liaison with the Asia Pacific Economic Cooperation (APEC) forum and as manager of the Institute’s Scholarship and Internship Programme. Admitted to practice in New South Wales and the High Court of Australia, he has a Bachelor of Arts (honours), a Bachelor of Laws and a Master of Laws from the Australian National University. William also lectures on International Secured Transactions Law at the Eotvos Lorand Faculty of Law in Budapest.
