International Interests in Mobile Equipment - The Council took note of the information supplied by the Secretariat and recommended that work on this item should proceed apace, in collaboration with the various organisations interested in the specific types of equipment envisaged (see below as to progress made to date).

UNIDROIT Principles of International Commercial Contracts - The Council took note of the information supplied by the Secretariat as to work on the second enlarged edition of the Principles. It also approved the addition, as a footnote to the Preamble of the Principles, of the text of a model clause to assist parties in incorporating the UNIDROIT Principles into their contracts.

Model law on franchising - The Council took note of the conclusions of the drafting committee of the study group on franchising which was held in Rome from 14-16 January 1999. It agreed on the procedure to be adopted regarding future work, i.e. the model law is to be drafted by a study group (whose first session is to be held in Rome from 9-12 December 1999) which will include members of the academic community, before it is submitted to a committee of governmental experts. As to the scope of the prospective model law, it was agreed that for the time being, it should be limited to disclosure, although the scope might be broadened in the future in the light of a study to be undertaken by the Secretariat.

Transnational rules of civil procedure - This item was included in the UNIDROIT Work programme by decision of the Council (at its 77th session, Rome, February 1998) in follow-up to a proposal by the American Law Institute (United States of America) to collaborate on the drafting of transnational rules of civil procedure. At the time, the Council asked Mr Rolf STÜRNER, Professor of civil procedure and comparative law at the University of Freiburg (Germany) to prepare a feasibility study on this proposal.

In the light of the results of this study and of the recommendations which it formulates, the Council asked the President of UNIDROIT to set up, together with the Director of the American Law Institute, a study group made up of representatives of different legal systems to explore the possibility of drafting general principles of civil procedure as a first step towards the drafting of transnational rules of civil procedure.

Uniform rules for transport - In this connection, the Council decided that the Secretariat should make known UNIDROIT's interest in participating in the work of the United Nations Economic Commission for Europe aimed at regulating problems in connection with computerised documentation within the ambit of the CMR Convention.

Panama has recently adopted new arbitration legislation (Decree No. 5 of 8 July 1999) establishing a general legal framework for arbitration, conciliation and mediation. The new law repeals the relevant provisions in the judicial code, in Act No. 8 of 1982 and Act No. 6 of 1988, as well as any other provisions which would be inconsistent with the new law. The new law also contains express rules applying to international commercial arbitration (Article 6).

The new law is set out in two parts (Title I: Arbitration - this includes the following chapters: general provisions, arbitration agreement, arbitral tribunal, arbitral awards, recourse against award, and recognition and enforcement of award. Title II is sub-divided into two chapters dealing with conciliation and mediation).

Of particular interest are the provisions contained in Articles 26 and 27 in the chapter on arbitral award, as well as those in Article 43: (translation)

"Article 26: The arbitral tribunal shall apply the rules of law if the arbitration is to be decided in accordance with the terms of the law, and follow its own reasoning if the arbitration is to be decided ex aequo et bono.
Cases of international commercial arbitration shall be subject to the provisions of Article 43 of the present Decree.
In all cases, account shall be taken of the terms of the contract and of the usages of the trade deemed applicable.

"Article 27: The arbitral tribunal shall rely on the terms of the contract in applying the law governing contractual relations, and shall take account of trade usages and practices and of the UNIDROIT principles of international commercial contracts."

"Article 43: As concerns international commercial arbitration [...] In arbitration to be decided in accordance with the terms of the law, the tribunal shall decide in accordance with the law designated by the parties, relying on its own decision or on such of the rules of an arbitration institution that might be applicable; failing this, it shall decide in accordance with the law freely determined by the arbitrators, if need be by means of a conflicts rule, without however distorting the will of the parties.
Account shall be taken of the usages of trade, and where appropriate, of the terms of the contract and the rules of international private contracts.
As concerns international commercial arbitration, the public policy intended is the international public policy.
As to other matters involving an international or foreign element, the provisions of the Civil Code shall apply subsidiarily.
The tribunal may refrain from applying the conflicts rules of international private law and apply directly the substantive law, conventional law or uniform law that may have been designated by the parties in a clear and unequivocal manner.

I. PRELIMINARY DRAFT CONVENTION/AIRCRAFT PROTOCOL: SECOND JOINT SESSION

(a) Preparatory meetings

As indicated in a previous issue,¹ the First Joint Session of the UNIDROIT Committee of governmental experts for the preparation of a draft Convention on International Interests in Mobile Equipment and a draft Protocol thereto on Matters specific to Aircraft Equipment and of the Sub-Committee of the ICAO Legal Committee on the study of international interests in mobile equipment (aircraft equipment), held in Rome from 1 to 12 February 1999, threw up a number of issues requiring special attention.

(i) Informal Insolvency Working Group

The complexity of the issues and the shortness of the time available meant that the Working Group was only able to complete a review of the insolvency-related provisions of the preliminary draft Convention and some of the insolvency-related provisions of the preliminary draft Aircraft Protocol. Particular problems were identified with Article XI of the latter. It was agreed that the work commenced by the Informal Insolvency Working Group in Rome would need to be carried forward at the Second Joint Session as a matter of priority.

(ii) Registration Working Group

(b) Work accomplished at the Second Joint Session

(i) General features

The work of the Joint Session was opened by a series of presentations on the current structures employed in asset-based aircraft financing, in particular as these were dealt with in the preliminary draft Convention and the preliminary draft Aircraft Protocol. The Joint Session was also given progress reports on the work of R.W.G. and S.W.G. since the First Joint Session by the co-ordinators of those groups.

Pursuant to the request made by one delegation at the conclusion of the First Joint Session, there was discussion during the Second Joint Session of the structure of the instruments under preparation. While three delegations indicated their support for the idea of an aircraft only Convention, the majority view was that it was premature to take a decision on this matter at the present time and that it was therefore preferable to keep an open mind on the subject and to continue to work on the basis of a multi-equipment Convention for the time being. It was nevertheless agreed that an integrated text of the preliminary draft Convention and the preliminary draft Aircraft Protocol could be an working tool worthy of preparation for the Third Joint Session.

(ii) Insolvency Working Group

The Insolvency Working Group agreed not to reopen discussion on those issues on which the Informal Insolvency Working Group had been able to reach consensus in Rome: its efforts accordingly concentrated essentially on Articles XI and XII of the preliminary draft Aircraft Protocol. The solution it proposed to the Joint Session on Article XI was based on the idea of States being given two options: the "hard" approach set out in Article XI of the text as submitted to the First Joint Session (with a set period being provided for the giving of possession of the aircraft object to the obligee, should all defaults by the obligor not be cured by the end of such period), or the softer approach (providing for judicial control and discretion in the obligee's realisation of his security in the aircraft object) submitted by the French delegation at the Informal Insolvency Working Group meeting.

(iii) Jurisdiction Working Group

(iv) Registration Working Group

(v) Drafting Committee

(c) Work to be carried out after the Second Joint Session

(i) Completion of drafting work commenced during the session

(ii) Work of the Public International Law Working Group

The terms of reference of the group were to consider: (1) the relationship between the preliminary draft Convention/Aircraft Protocol and other existing or future Conventions (for example, the Geneva Convention on the International Recognition of Rights in Aircraft and the future UNCITRAL Convention on Assignment in Receivables Financing); (2) the legal relationship between the preliminary draft Convention and the preliminary draft Aircraft Protocol and other future Protocols; (3) final provisions; (4) transitional provisions; and (5) international liability, immunity and privileges of the Supervisory Authority and the Registrar. The group held a number of informal meetings during the Joint Session to organise its work.

The Working Group is to prepare a paper for distribution to Governments in preparation for the Third Joint Session. The preparation of this paper is to be the subject of a meeting to be organised, if possible, by the end of November 1999.

(d) Holding of the Third Joint Session

A third Joint Session is to be held at a date and venue to be announced in due course. The aim will then be, first, to submit the texts resulting therefrom to a Joint Session of the UNIDROIT Committee of governmental experts and the ICAO Legal Committee and then to lay the resultant draft Convention/Aircraft Protocol before a diplomatic Conference of adoption as soon as possible.

II. PRELIMINARY DRAFT RAIL AND SPACE PROTOCOLS

(a) Preliminary draft Rail Protocol

The work of the R.W.G. on the preparation of a preliminary draft Protocol to the preliminary draft Convention on Matters specific to Railway Rolling Stock,¹⁴ was completed at the conclusion of the fifth meeting of that group, held in London on 5 July 1999. Previous meetings had been held in Brussels on 30 September 1997, in Zürich on 15 December 1998 and 4 March 1999, and in Brussels on 11 May 1999. The R.W.G., the work of which is co-ordinated by Mr H. ROSEN, brings together representatives of manufacturers, financiers and operators of railway rolling stock and the interested international Organisations.¹⁵

It will be recalled that O.T.I.F. was authorised by the fourth General Assembly of that Organisation, held in Athens from 8 to 11 September 1997, to co-ordinate with UNIDROIT the intergovernmental consultation process in respect of the preliminary draft Rail Protocol.

The UNIDROIT Secretariat having been authorised by its Governing Council, at its 78^th session (Rome, 12-16 April 1999), to convene a Steering and Revisions Committee meeting to consider the preliminary draft Rail Protocol from the point of view of its compatibility and consistency with the preliminary draft Convention should work thereon be completed before the 79^th session of the Governing Council, it is the Secretariat's intention to convene such a meeting early in 2000. Thereafter, subject to the Governing Council's approval, it will be for UNIDROIT and O.T.I.F. to move the preliminary draft Rail Protocol forward to intergovernmental negotiations.

In the meantime, the reflections made in the context of the development of a rolling stock registry for the purposes of the future UNIDROIT Convention have persuaded some of the leading players in the rail sector as to the need to create a system that would permit the registration of such equipment on a multi-purpose basis, that is, not only for the special needs of the future Convention but also to respond to the more general needs of Organisations like O.T.I.F. and the International Union of Railways (I.U.R.). Eurofima and I.U.R. are therefore currently examining the possibility of creating such a multi-user rolling stock registry, in association with other interested Organisations, like O.T.I.F. and the American Association of Railroads.

Exposure continues to be given, wherever possible, to the efforts of the R.W.G. at international conferences addressing the rail sector. Thus, a session of the European Rail Finance & Leasing Forum, held in Brussels on 10 and 11 May 1999, was devoted to consideration of the future UNIDROIT Convention in relation to railway rolling stock. Presentations were given both by Mr ROSEN and by Mr R. REINHOLD (Switzerland), an R.W.G. member.

(b) Preliminary draft Space Protocol

The work of the S.W.G. on the preparation of a preliminary draft Protocol to the preliminary draft Convention on Matters specific to Space Property, ¹⁶ continues on the basis of a working draft prepared in January 1999 by Mr P.D. NESGOS, co-ordinator of the S.W.G.

This draft was the subject of presentations by Mr M.J. STANFORD (UNIDROIT) both at the international colloquium on International Organisations and Space Law: their Role and Contributions, organised in Perugia (Italy) on 6 and 7 May 1999 in preparation for the Third United Nations Conference on the Exploration and Peaceful Uses of Space (UNISPACE III), and at the Workshop on Space Law in the 21st Century, organised in Vienna (Austria) from 20 to 23 July 1999 on the occasion of UNISPACE III, where Mr Stanford issued a call for the Conference to signal the importance of the Institute's work in the context of the commercialisation of space and to underscore the desirability of the early holding of an informal ad hoc meeting of member Governments of the Committee on the Peaceful Uses Space and the intergovernmental Organisations active in the regulation of matters pertaining to Outer Space, inter alia with a view to identifying the most appropriate means of moving the preliminary draft Space Protocol forward to intergovernmental negotiations.

These calls may be considered to have been heeded in that the draft Report of UNISPACE III contains references both to the need for member States of the United Nations to pay attention to "the various aspects of the issues of ... and security of ownership in order to arrive at a coherent global framework" and for the "international organizations concerned [to] make arrangements for effective and focused joint forums" and to the need for the Committee on the Peaceful Uses Space to address "the issue of security of ownership regarding spacecraft".

Both UNIDROIT and the S.W.G. tend in principle to believe that the most appropriate intergovernmental Organisation in collaboration with which Unidroit should be aiming to move the preliminary draft Space Protocol forward to intergovernmental negotiations would be the United Nations, in particular in view of the fact that the Outer Space Treaty and the Convention on the Registration of Objects Launched into Outer Space were both concluded under its auspices. The UNIDROIT Secretariat and the United Nations Office for Outer Space Affairs have been in regular touch on this issue over the last 18 months.

The Convention was ratified by Bolivia on 13 April 1999 (entry into force: 1 October 1999), by Finland (with declarations) on 14 June 1999 (entry into force: 1 December 1999), and by Italy on 11 October 1999 (entry into force 1 April 2000); Brazil acceded on 23 March 1999 (entry into force: 1 October 1999), and El Salvador on 16 July 1999 (entry into force 1 January 2000). [status]