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Stanford presentation financial-leasing_20-09-2012
 

Stanford presentation financial-leasing_20-09-2012

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    Stanford presentation financial-leasing_20-09-2012 Stanford presentation financial-leasing_20-09-2012 Presentation Transcript

    • 10TH ANNIVERSARY OF COMPANY LAW (Riga, 20-21 September 2012) THE UNIDROIT MODEL LAW ON LEASING by Mr M.J. Stanford Immediate past Deputy Secretary-General Unidroit
    • Objectives• Potential of leasing as an engine of growth• Particularly serious shortfall in infrastructure financing in Africa• Link between establishment of modern legal framework for leasing and attracting of foreign investment
    • Background• Unidroit’s preparation of 1988 Convention on International Financial Leasing• Provision of a model for countries contemplating drafting of national law• International Finance Corporation’s efforts to establish national leasing industries as a means of creating sustainable private sector development
    • Procedure• Initial Advisory Board: – three sessions (October 2005 / February 2006 / April 2006) for preparation of first draft – manned by leasing law experts from all parts of the world, facilitated by Unidroit’s network of expertise
    • Procedure (continued)• Intergovernmental negotiations – Committee of governmental experts • two sessions (May 2007 and April 2008), held in Johannesburg and Muscat – Joint session of Unidroit General Assembly and Committee of governmental experts • adopting Model Law in Rome in November 2008 – attended by 44 States
    • The Model Law: some general points• Enacting States free to take this or that part - and dispense with this or that part - to respect special national exigencies• Compactness and flexibility: almost total freedom of contract• Fair and balanced legal framework suitable for countries at all levels of economic development
    • Sphere of application• What is not covered? – areas seen as particularly sensitive at the domestic law level • fiscal, accounting and supervisory aspects of leasing; consumer leases – neighbouring areas of the law covered by other international instruments • leases that function as security rights under the UNCITRAL Legislative Guide; leases of large aircraft equipment under the Cape Town Aircraft Protocol
    • Sphere of application (continued)• What is covered? – principal types of leasing covered • financial leases • leases other than financial leases (bailment) – types of asset covered • all property used in the craft, trade or business of the lessee, including immovables, capital assets, equipment, future assets, specially manufactured assets, plants and living and unborn animals
    • Sphere of application (continued)• Financial leases distinguished from other leases – criteria common to both: • a transaction in which one person provides another with the right to possess and use an asset for a specific term in return for rentals – additional criteria peculiar to financial leases • lessee specifies the asset and selects the supplier • lessor acquires the asset in connection with a lease and the supplier knows this • rentals take into account or do not take into account the amortisation of the whole or a substantial part of the lessor’s investment
    • Rights and duties of the parties• To be distinguished according to whether – rights and duties are common to both financial lease and non-financial lease – rights and duties differing according to whether the lease is in the nature of a financial lease or a non- financial lease – rights special to financial leases
    • Rights and duties common to financial leases and non-financial leases• Duty of lessor to provide lessee with right to possession and use of asset for a specific term / duty of lessee to pay lessor rentals• Duty of lessee to take proper care of leased asset and to keep it in the condition in which it was delivered, subject to fair wear and tear• Duty of lessee at end or termination of lease to return asset to lessor in a reasonable condition
    • Rights and duties differing according to whether the lease is a financial lease or a non-financial lease• Warranty of quiet possession• Warranty of suitability for purpose• Rule on the irrevocability and independence of the duties of the lessor and the lessee• Risk of loss
    • Rights special to financial leases• Lessee is treated as the beneficiary of the supplier’s duties vis-à-vis the lessor under the supply agreement• Lessor, in its capacity of lessor, will not be liable to the lessee or third parties for death, personal injury or damage to property caused by the leased asset or use of that asset
    • Other issues covered by the Model Law• Default• Damages (including liquidated damages)• Termination
    • Follow-up and implementation• Preparation by the Unidroit Secretariat of an official commentary on the Model Law• Organisation of seminars in different parts of the world – first seminar held in Beijing in May 2011• Model Law has been implemented in Latvia• Model Law being used by the I.F.C. in its work (Jordan, Tanzania, Yemen, Afghanistan and West Bank)
    • THANK YOU FOR YOUR ATTENTION