Legislative, Customary, Administrative, Dispute Resolution and Judicial Training Work: 1992-2014
A. Legislative Drafting (Treaties, Model Laws, Statutes and Drafts of Statutes).
1. The Inter-American Convention on the Law Applicable to International Contracts.
This treaty was drafted at NLCIFT during the last week of September of 1993 and signed in Mexico D.F. on March 17, 1994. It benefitted from the scholarly writings of Professors Gonzalo Parra (presently a justice on the International Court of Justice in the Hague) Jose Luis Siqueiros, Mexico’s leading private international law expert (now retired) and the late Friedrich Jünger of the University of California at Davis. Their and NLCIFT’s studies showed that Latin American judges were reluctant to implement the parties’ choices of law when their respective civil codes directed them to apply the law of the territory even when it did not contemplate unfamiliar with the transaction in question. Thus many court decisions conflicted with the parties’ intent as reflected in their contractual terms as well as in the usages of their trades; this contributed to legal uncertainty and to the parties’ reluctance to invest and do business. In contrast, the Convention defers to the parties’ choice of law and encourages member states to apply the growing number of international customs and usages. While it was ratified by only a handful of states, it has encouraged many Latin American courts to rely on such important customary sources of commercial law as the Uniform Customs and Practices for Documentary Credits.
2. United Nations Convention on Independent Guarantees and Standby Letters of Credit (1995).
This Convention was adopted by the United Nations Commission on International Trade Law (UNCITRAL) in 1995. It acts as a bridge between the European inspired independent guarantee practice and the United States inspired Standby Letters of Credit practice. Thus, it enables the issuance of an independent guarantee in Country A and its confirmation by a standby letter of credit in Country B, as it also enables the negotiation of drafts drawn pursuant to B’s standby letter of credit in Country C, an independent guarantee country. Dr. Kozolchyk was a member of the United States delegation to UNCITRAL and one of the Convention’s principal drafters. As of 2014, this Convention has been ratified by 8 nations and it is scheduled to be ratified by the United States in 2015. It is expected that after this ratification, the Convention will be the uniform law in the majority of trading nations.
3. Revised Article 5 (on letters of credit) of the Uniform Commercial Code of the United States (1995).
Representing the United States Council on International Banking and NLCIFT, Dr. Kozolchyk participated in the revision of this Article which by now has been adopted in thirty-one states and the District of Columbia.
4. OAS Model Inter-American Law on Secured Transactions 2002.
This model law was adopted unanimously by the plenum of the OAS General Assembly on February 8, 2002. It was based upon Twelve Principles of the Law of Secured Transactions drafted by NLCIFT and on a draft model law also submitted by NLCIFT as a member of the United States delegation for consideration by the General Assembly of the OAS. This Model Law became one of the most successful models of adoption by individual countries in recent hemispheric history. Chronologically, the following eight countries have adopted it albeit in some instances with significant deviations that have required more recent rewriting to bring it closer to the spirit of the Model Law: Mexico, Peru, Guatemala, Honduras, El Salvador, Colombia, Panama and Costa Rica. At this time, Chile has begun its process of adoption. With the exception of Panama, NLCIFT has been actively involved in the adoption of these laws. The adoption, especially in Colombia, Honduras and Mexico is already a significant factor in the economic growth of these countries. This is true not only in Colombia where half a million filings of security interests –many of them securing loans to small businesses – have been filed in less than one year, but also in poverty stricken Honduras an average of six thousand filings per scarcely. Of these projects the Honduran law and registry regulations served as a model for other Latin American and African countries.
5. Banking and Securities
As an addendum to the OAS Model for Secured Transactions, the OAS also adopted the Inter-American Rules for Electronic Signatures and Documents (IAREDS). It was drafted by NLCIFT in 1999-2001. As is customary with NLCIFT legislative work, this project involved working with key representatives of the electronics industries, including giants such as Microsoft, Apple, Oracle and Cisco, as well as lawyers from the Americas. IAREDS has been adopted unofficially by many Latin American countries as part of their laws of electronic commerce.
6. OAS Model Secured Transactions Registry Regulations of 2009.
The Canadian, Mexican and United States delegations were the principal sponsors of these regulations. Relying on NLCIFT’s research and preliminary drafts, these delegations obtained a unanimous approval by the OAS Committee of Experts and thereafter the final approval of the General Assembly of the OAS for the Model Regulations. These regulations have strongly influenced the operations of the registries of Colombia, Honduras, Mexico and are also likely to be the model for the regulations of the Costa Rica, El Salvador and Chile registries.
7. Secured Transactions Law at UNCITRAL.
Since 2005, NLCIFT has been an accredited non-governmental organization and participant in UNCITRAL Working Group VI, a group devoted to drafting a legislative guide and subsequently a model law on secured transactions law. Dr. Marek Dubovec, NLCIFT’s Senior Researcher is its representative to UNCITRAL Working Group VI. As such, he was one of the principal drafters of the UNCITRAL Legislative Guide on Secured Transactions and now of its Model Secured Transactions Law.
8. Simplified Corporations Law at UNCITRAL.
Boris Kozolchyk representing NLCIFT as an NGO at UNCITRAL is participating in the drafting of that entity’s Model law of Simplified Corporations. The text of this model law is based upon that of the Colombian law on Sociedades Anónimas Simplificadas (SAS) drafted by Colombian Professor Francisco Reyes, an NLCIFT consultant and distinguished visiting scholar. NLCIFT is particularly interested in developing the creditworthiness aspects of the SAS, including its reliance on reliable accounting records and financial statements and has procured the pro bono services of Morrison, Brown, Argiz & Farra, one of the nation’s up-and-coming international accounting firms with considerable experience with the accounting practices of Latin America.
9. Drafting Work in Africa and Asia under Contract with the World Bank’s International Finance Corporation (IFC) as part of its Global Secured Transaction and Collateral Registries Program.
As part of this program, Dr. Dubovec has provided research and drafting assistance to the following African and Asian countries: Bangladesh, Ghana, Indonesia, Liberia, Malawi, Nigeria, Sierra Leone, South Sudan and Zambia. The following are brief summaries of NLCIFT’s African and Asian work:
- Ghana: assisted with the drafting of the registry regulations adopted in June 2012 and guided the IT team that built its new collateral registry. Assisted with the drafting of amendments to its secured transactions law, the Borrowers and Lenders Act presented to the vice-governor of the Central Bank in November 2011.
- Liberia: prepared an initial draft of registry regulations adopted by the Central Bank in April 2013, guided the IT team that built its new Collateral Registry launched in June 2014 and participated in many workshops to explain the new law.
- Malawi: assisted with the drafting of the Personal Property Security Act adopted in July 2013 and assisted with the drafting of registry regulations which should be adopted in the next few months. The World Bank already approved funding for the registry which should be built within a year. Commented on the insolvency and warehouse receipts bills and made presentations in many workshops explaining the transition from the old English law-based system to a modern secured transactions statute.
- Nigeria: prepared an initial draft of regulations to establish the Collateral Registry which the Central Bank submitted to the Parliament last week Sierra Leone: prepared comments on the draft law which the Central Bank of Sierra Leone based on Dr. Dubovec’s amendments to the Ghanaian Borrowers and Lenders Act.
- South Sudan: prepared an initial draft of the Personal Property Security Act for South Sudan which was presented at a workshop in June 2013.
- Zambia: prepared an initial draft of the Personal Property Security Act which was submitted to the government in July, 2014. Participated in workshops to explain its provisions.
- Pakistan: Reviewed a draft law on secured transactions and provided comments and suggestions for improvements.
NLCIFT is also working with other international development agencies interested in implementing secured transactions laws and regulations. Most recently, it has worked in a program of “Capacity Building of Bank of Mozambique for Developing the Regulatory Framework for the Collateral Registry in Mozambique. This program is sponsored by the Deutsche Gesellschaft Für Internationale Zusammenarbeit (GIZ) Gmbh.
10. Family Law
Since 2002, the NLCIFT has participated as a member of the U.S. Delegation to the Special Commission on the International Recovery of Child Support and Other Forms of Family Maintenance from 2004–2007. The NLCIFT also assisted with research regarding the bilateral agreements between the U.S. and El Salvador, Brazil and Costa Rica and in the drafting of case worker guides to be used in these countries. The NLCIFT is currently working on the development of such a guide for the U.S. and Mexico.
B. Harmonization of Trans-Pacific Commercial Law.
The most exciting and challenging modernization and harmonization task faced by NLCIFT since its inception is about to commence. Following the University of Chile’s conferral of an Honoris Causa degree to Boris Kozolchyk on October 17, 2013, NLCIFT and the Universidad Mayor hosted the First Pacific Rim Colloquium on the harmonization of commercial law in Pacific Rim countries and their economic development. The participants in this colloquium were commercial law specialists and legal advisers to the governments of Chile, China, Colombia, Costa Rica, Japan, Mexico, United States and Vietnam.
The main purpose of the colloquium was to obtain the participants’ agreement on a joint agenda of modernization and harmonization of commercial laws and practices with a highly likely positive impact on the region’s economic development. The participants agreed to a joint agenda of modernization and harmonization on the following four topics: 1) Simplified corporations, especially for micro and small businesses; 2) Secured transactions laws especially to make credit available to micro and small companies; 3) Negotiable electronic warehouse receipts, capable to best facilitate the spot and future sales and collateralization of agricultural commodities; 4) Insolvent debtors’ rehabilitation.
The Chinese delegation consisted of the dean and professors of the law school at Shanghai University of International Business and Economics (SUIBE) offered to act as hosts of the Second Pacific Rim Colloquium at their Shanghai campus. In subsequent communications SUIBE, requested the addition of electronic commerce as a fifth topic. SUIBE also announced the conferral of an Honorary Life Professorship Honoris Causa to Professor Kozolchyk and offered to create a comparative legal research facility for NLCIFT at its Shanghai campus.
Meanwhile, with the support of the Corporación Andina de Fomento (CAF) NLCIFT has started the research on the topics in the above list together with the participants in the first colloquium. The date of the second colloquium has been set for January 8th – 10th of 2015. The drafting of topics 1 and 2 are being coordinated with similar drafting that has already started at Working Groups 1 and 6 of UNCITRAL.
C. Drafting of International and National Customary Law.
1. ICC Uniform Customs and Practices for Documentary Credits (UCP 500, 1993).
Dr. Kozolchyk was one of the principal drafters of UCP 500 (the “living law” of letters of credit worldwide). Article 13 of UCP 500 introduced a new standard for the examination of letter of credit documents based on the contextual research and drafting methodology of NLCIFT: The customs and practices in the examination of trade documents of an archetypal “Reasonable Document Checker.” UCP 500 and banking associations in 180 nations adopted this standard as the “International Standard Banking Practice.” It replaced the “mirror image” standard referred to in previous versions of the UCP and in many court decisions as the “strict compliance” standard; the application of this standard caused voluminous and costly litigation. In contrast, the UCP 500 standard drastically reduced the volume and cost of litigation (see B. Kozolchyk, Strict Compliance and the Reasonable Document Checker; and also Toward New Customs and Practices for Documentary Credits: The Methodolgy of the Proposed Revision).
2. The Mexican Association of Bankers (MAB) and the United States Council on International Banking (USCIB) Standard for the Examination of Letter of Credit Documents.
During the period of 1992-1994, NLCIFT together with the USCIB and the Mexican Associations of Bankers (MAB) drafted a set of uniform customary rules on the examination and payment of the letter of credit documents that were most commonly used in U.S. – Mexico trade. This compilation was the first to implement the “international standard banking practice” of Article 13 of UCP 500 (see USCIB and NLCIFT Standard Banking). Subsequently, the International Chamber of Commerce adopted The International Standard Banking Practice for World Wide Use (ICC Publication 645) which adopted many of the practices present in the MAB/USCIB Standard.
3. NAFTA Guidelines and Practices for the Deposit, Endorsement, Clearing and Return of Checks.
While NAFTA was in the final stages of negotiation and ratification during the fall of 1992, NLCIFT coordinated the drafting of Guidelines for the Deposit, Endorsement, Clearing and Return of Checks deposited in NAFTA countries with the Canadian Bankers Association (CBA), the USCIB and the MAB. The guidelines were adopted by the bankers in these associations and were responsible for a smoother and at times seamless process of deposit, collection, clearance and return of checks during the crucial first two years of NAFTA cross border transactions until they became standard, albeit informal, practices in the NAFTA region (see Toward Seamless Borders).
4. Best Practices on Banking Transparency and Disclosure (Argentina, Brazil, Chile, Mexico, Venezuela, 2000).
Starting in 1999, and at the request of the United States Department of the Treasury and of Chile’s Ministry of Finance, NLCIFT undertook an analysis of the transparency and disclosure of the banking practices of representative Latin American countries (Argentina, Brazil, Chile, Mexico and Venezuela). Its main goal was to increase the transparency and accuracy of banking reports on the safety and soundness of their assets. By evaluating this data and making suggestions on their qualitative and quantitative improvements, the requesting nations and NLCIFT hoped to reduce the frequency and seriousness of banking crises in Latin America. The adoption of NLCIFT’s recommendations by the participating nations (with the exception of Venezuela) has been credited by banking regulators in Latin America and the United States with reducing the number and seriousness of these crises (see NLCIFT’s Transparency and Disclosure).
5. Best NAFTA Truck Transportation Practices (1992-2000).
One of the first NLCIFT working groups for the drafting of best sectoral practices was created upon the ratification of NAFTA was on truck transportation. It was named the North American Committee on Surface Transportation Law and Practice. Its main participants were the governmental trucking agencies of the three NAFTA countries plus the American Trucking Association, Transport Canada, the Mexican Trucking Association and transportation lawyers’ associations of the three countries.
By 1995, the trucking associations had agreed on a harmonized prototype of a truck bill of lading which contained most of the standard terms and conditions except for the limits of liability for negligent handling of cargo which remained undecided to this day. In 2001, the working group produced a set of customary rules that covered every aspect of the transaction from the packing of the goods to their delivery and collection of fees. It was labeled the North American Standard Transportation Practices (NASTRAPS), has continued to be used by various trucking companies in the three countries to this day, but still awaits official sanction.
6. Manual of Labor Laws and Practices in the Maquila Industry (1997).
As a result of frequent labor management disputes at the onset of NAFTA and their effect on the Mexican maquila industry, the United States Department of Labor contracted with NLCIFT for the creation of a comprehensive practical manual of Mexican laws and practices involved in that industry. This manual was designed for the use of U.S. investors, human resource managers and legal practitioners involved in the hiring of Mexican or U.S. citizens who worked in Mexican maquilas and were likely to be parties to complaints of violation of fair labor standards.
D. Administrative Statutes/Regulations; Adopted and Proposed
1. Real Estate Transactions.a. Standards for the Qualification of Real Estate Brokers in Arizona and Sonora (1996).
Starting in 1993 NLCIFT hosted meetings consisting of Arizonan and Sonoran real estate brokers, developers and state officials; on the development legal structures to facilitate the securitization of Mexican real estate assets in order to increase the availability of real estate financing in Mexico. These meetings led to the drafting of an administrative statute for the State of Sonora that adjusted its requirements for real estate licensing to those of the State of Arizona. This harmonization of professional licensing requirements in NAFTA countries was one of the first of a handful to this day. In 1996, the text of a Sonoran statute, harmonized with its Arizona counterpart, was introduced to the Congress of the State of Sonora. When it was enacted in 2002 it created a registry for real estate brokers (see Ley que Crea el Registro Estatal de Agentes Inmobiliarios, B.O. 41, 23 de Mayo 2002 and also http://www.binmueble.com/corredores/de-bienes-raices-en-sonora-26.aspx).b. Improvements of ICRESON and a Sonora-Arizona Securitization Program (2005).
As a result of a grant by the United States Trade Development Agency, NLCIFT undertook to explore the feasibility of the securitization of Mexican real estate mortgages in United States’ and other financial marketplaces. This required a study done in conjunction with Mexico’s Housing Development Agency (CONAFOVI), Mexico’s Mortgage Bank (Sociedad Hipotecaria Federal) and Sonora’s Land and Cadastral Registry (Instituto Catastral y Registral, ICRESON). It resulted in recommendations for the modernization of INCRESON and on Mexico’s federal and state laws affected by the enactment of securitization statute. Of the recommended changes, those for ICRESON were the one’s adopted almost immediately, the one’s involving the Mexican registry of security interests in mortgage certificates were adopted gradually and in piecemeal fashion until the adoption process was completed in 2013.
2. Customs Law
In 2001 – 2002, the NLCIFT conducted a customs study regarding IP infringement through the U.S. and Canada or Mexico (2001 – 2002). This study reviewed the laws and practices that impact unauthorized imports directly into the U.S. of goods infringing IP rights. The NLCIFT conducted a study in 2001 focusing on the impacts of the changed Mexican Customs laws and procedures that were made to implement the provisions of NAFTA Art. 303 and the manner in which these will affect the Maquiladora and Pitex industries.
In 1997, the NLCIFT conducted a study addressing what would happen in the event of a major hazardous chemical release along the border and the pertinent laws and regulations. Additionally, from 1995 – 1997 the NLCIFT performed a practical study examining disparities between hazardous waste facility regulations in the US and Mexico. As well as another study that included interviews with more than 60 regulators, waste management and citizen groups to gain the most current information possible regarding cross-border waste management practices in the U.S. and Mexico.
E. Dispute Resolution: Alternative Dispute Resolution in the NAFTA Countries.
The NLCIFT has provided continual aid in the fulfillment of the Mandate of the NAFTA Advisory Committee on Private Commercial Disputes (NAFTA 2022 Committee), particularly in the area of outreach to provide additional opportunities for businesses (and their lawyers) to learn more about how they can benefit from the use of ADR in their operations. As part of these efforts, the Committee and the NLCIFT have coordinated panel presentations on ADR in various locations and for various participants. In these presentations, government and private sector representatives from all three NAFTA countries have addressed the importance and benefits of resorting to alternative dispute resolution mechanisms. While reliance on these mechanisms has increased substantially in the NAFTA countries, NLCIFT and the Legal Advisor’s office have put forward a method for reducing the cost of ADR and rendering it more influential and precedential by making ADR rely increasingly on compilations of best practices for each of the main economic sectors (as compiled by NLCIFT for NAFTA for the banking and transportation sectors).
F. Oral Trial Training and Judicial Advocacy
1. Criminal Oral Trial Trainings
International Narcotics and Law Enforcement Agency of the US Embassy, Mexico and UNAM (March 2014 and May 2013). Two separate two-week litigation workshops in Mexico City organized with the Universidad Nacional Autónoma de México as the last part of an eight-month long certificate program on Human Rights and the New Criminal Adversarial Trial of Mexico. The workshops were attended by groups of about 80 members of the legal and judicial community.
2. Commercial Oral Trial Training with Acceso Capacitación
Cal Western School of Law (December 2012 and August 2013). Practical course in San Diego teaching oral trial advocacy and skills to lawyers and law professors from Latin America. Course design featured both lecture and practice sessions, focused on the resolution of hypothetical case, and included examples of reform interpretation based on Mexico’s recent legislation introducing oral trials.
3. Oral Trial Training for Bankruptcy Judges
Colombian Superintendencia de Sociedades (December 2012). Practical course teaching oral trial advocacy and skills to Bankruptcy judges in Colombia. Course design featured both lecture and practice sessions and focused on the resolution of hypothetical case.
4. Competition Law Training for Mexico’s Federal Judiciary
Support of USAID Mexico and ABT Associates (May 14-16, 2012 – Mexico City, Mexico). Assisted in the organization of the first training for judges in Mexico in the area of Competition Law (Antitrust). The workshop was held on May 14-16, 2012 at the Auditorium of the Federal Court, which is located in the main building where the administrative courts in charge of antitrust cases are located and had a particular focus on anti-competitive agreements.
5. Commercial and Mercantile Oral Trial Trainings
Support of USAID Mexico and in Collaboration with the Federal Judiciary (Multiple trainings January 2011–November 2012, various Mexican States). Almost 2,000 individuals were trained in oral trial skills under this contract. The oral trial trainings that were completed in Mexico were held in the states of Tabasco, Yucatan, Queretaro, and Guanajuato, and at the Federal level in Mexico City. Attendees included trial and appellate level judges, public defenders, attorneys, notaries, law professors and law students. Many of these training sessions were attended not only in person but were also available in real-time online through the network of the Federal judiciary. Additionally, the NLCIFT provided one train-the-trainers program in Yucatan.
6. Enhancement of the business and legal environment and trade capacity through legal reform and improvements in the administration of justice by commercial courts in Mexico
U.S. Agency for International Development (USAID) (2007–December 2012). Promoting effective and timely adjudication of commercial disputes to enhance greater certainty and predictability in the marketplace and increase the climate of competitiveness in Mexico. The project included not only the practical oral trial trainings listed above but also included advocacy sessions leading up to these trainings emphasizing the expedited and predictable enforcement of commercial disputes to state and federal-level judges including programs on alternative dispute mechanisms.