Proposed Protocol on Rail Equipment to the Draft Convention Sponsored by UNIDROIT on International Mobile Equipment Finance; Meeting Notice

AGENCY:

Department of State.

ACTION:

The International Finance Study Group of the State Department's Advisory Committee on Private International Law will meet to review a proposed protocol on rail equipment to the draft UNIDROIT convention on equipment finance, and its effect on cross-border financing and trade involving the railway industry. The meeting will be held in Washington, D.C. on Tuesday, November 14, 2000 at the Association of American Railroads Conference Center (4th floor).

Agenda

The meeting will cover the purpose and concepts of the proposed UNIDROIT Convention on international interests in mobile equipment; the application of asset-based financing to railway equipment; the recent meeting of the ICAO Legal Committee at Montreal on the proposed Convention in relation to aircraft and the draft Aircraft Equipment Protocol, and other international developments relevant to rail finance.

Comments will be requested on draft provisions of the proposed Rail Equipment Protocol. The intersection with recent revisions to the Uniform Commercial Code in the United States will be examined, along with personal property laws of Canada, Mexico and other countries as time permits, as well as related draft conventions and model national laws on secured financing, including work underway at UNCITRAL (the United Nations Commission on International Trade Law) on receivables financing and the OAS (Organization of American States) on a model Inter-American national law on secured financing.

Background

The United States has been an active participant in negotiations on a proposed multilateral convention (UNIDROIT Convention) to provide for the creation and enforceability of international secured finance interests in mobile equipment, including, at this stage, aircraft, to be followed by rail equipment and space and satellite equipment. A Rail Working Group authorized by UNIDROIT has undertaken work on the current draft protocol on provisions specific to rail equipment financing. Provision may be made at a future date for protocols on other categories of equipment, such as containers, construction and agricultural equipment, certain types of vessels, etc. Other international bodies participate as appropriate. Completion of the basic Convention and aircraft protocol is expected by mid-2001. Completion of the protocol on rail equipment is expected to follow.

The proposed Convention and equipment specific protocols together are intended to provide comprehensive international rules on financing interests in such equipment and could thus stimulate the development of these industries in many countries as well as increase the capacity of many countries to finance such equipment through private sector capital markets. This can enhance infrastructure growth, as well as reduce reliance on direct government funding or use of sovereign debt, which in turn would facilitate privatization and market development.

Key features of the draft Convention include the creation of internationally enforceable interests pursuant to the Convention; providing for regional or international computer-based registry systems for notice of finance interests; provisions on assignments of such interests; priorities based on filing; and optional provisions on key finance issues such as default remedies, insolvency, etc. Proposed new registration systems for rail finance authorized under the protocol are intended to facilitate processes, equivalent to that utilized in North America, to support asset-based finance in other regions, and may provide for linkage between registration systems to facilitate cross-border finance and the export of such equipment.

Attendance

The meeting will be held on Tuesday, November 14, 2000, from 10 a.m. to 3 p.m. at the offices of the Association of American Railroads (AAR), Conference Center (4th floor) 50 “F” Street, NW, Washington, D.C. 20001. The meeting is open to the public. Persons wishing to attend should contact Peter Bloch, Department of Transportation, Office of General Counsel, (202) 366-9183, fax 366-9188; Louis P. Warchot at AAR at 202-639-2500, fax 639-2868; or Harold Burman, Department of State, Office of Legal Adviser (L/PIL), at 202-776-8421, fax 776-8482, email pildb@his.com, not later than Friday, November 10.

Documents

Basic Convention drafts on mobile equipment and the aircraft protocol are available at www.UNIDROIT.org,, scroll to “news”. Revised versions will be available shortly which reflect recent changes; the changes do not affect the basic structure or the purpose of the operative provisions. The draft Rail Equipment Protocol is available from the AAR or the Office of Legal Adviser, or may be provided to attendees by fax on request.