United Nations International Trade Receivables Transfer Convention
The purpose of the United Nations International Trade Receivables Transfer Convention (the “Convention”) is to provide a uniform legal framework for the transfer of trade receivables. This Convention shall serve to simplify, facilitate, and promote the cross-border transfer of trade receivables.
The Convention is applicable to the international transfer of trade receivables, which is defined as the transfer of current or future trade receivables arising out of cross-border sale of goods, services, or software, or out of the provision of credit to a party in another state, on a continuous basis, with the purpose of obtaining payment from the buyer or debtor.
The Convention promotes the transfer of trade receivables by providing a legal framework that can be applied to contracts between transferor (seller or creditor) and transferee (purchaser or debt purchaser). The transferee takes ownership and the risk of not being paid by the debtor for the transferred trade receivables. The transferee also has the right to collect the receivables, subject to certain restrictions.
The transferor is obligated to provide the transferee with sufficient information concerning the debtor and the trade receivables to enable the transferee to make an informed decision as to whether it wishes to purchase such receivables. The transferor is also obligated to provide evidence of title to the transferred trade receivables. The transferor is not to impose any unjustified restriction on the transferee’s access to information on the debtor and the receivables.
The Convention establishes the rights and obligations of the parties for the transfer of trade receivables, including the right of the transferor to receive payment of a commission agreed upon by the parties, the right of the transferee to collect the transferred receivables, the right of both parties to obtain certain documents in connection with the transfer, and the right of both parties to have recourse in case of wrongful transfer.
The Convention also contains provisions relating to the transfer of the risk of nonpayment of the receivables, the assignment of rights and warranties relating to the transfer, the right of compliance with applicable laws and regulations, and the right to dispute resolution mechanisms where necessary.
In addition, the Convention provides for sanctions to be imposed in case of non-compliance by the parties to its provisions. These sanctions are intended to ensure that the obligations under the Convention are respected, and to discourage parties from entering into transactions that would violate the terms of the Convention.
Lastly, the Convention allows states to recognize the validity of transfers made under the Convention and to provide remedies for non-compliance with its provisions. This recognition and the possibility of obtaining remedies for any wrongs committed will further encourage parties to transfer trade receivables under the Convention and contribute to the economic development of states that recognize the Convention.
In conclusion, the United Nations International Trade Receivables Transfer Convention has been designed to provide a legal framework to facilitate the international transfer of trade receivables. The Convention contains a range of provisions that are intended to promote the efficient and secure transfer of receivables and to protect the interests of both the transferor and the transferee. The Convention should contribute to the opening up of new international markets and the expansion of international trade.
