In a previous issue of TSL Express, we noted that, on January 2, 2019, the United States Senate gave its advice and consent to the United Nations Convention to the United Nations Assignment of Receivables in International Trade.  At the time, we noted that all that remained to complete the ratification process was for the White House to authorize the deposit of the Convention with the United Nations Treaty Office.  We are pleased to report that this step has finally occurred, 16 years after the Convention was signed by the United States. The SFNet is proud to have played a role in the drafting of the Convention and its adoption

The United States is the second country to adopt the Convention, the other being Liberia.  Three more countries must adopt the Convention in order for it to become effective in any country.  However, it is anticipated that U.S. adoption will encourage other countries to follow suit.

The Convention is designed to facilitate the financing of receivables by exporters of goods and services.  Thus, it focuses on cross-border transactions, covering international receivables (where the buyer and seller of the goods and services are located in different countries) and international assignments of receivables (where the borrower and lender in a receivables financing transaction are located in different countries). 

The Convention represents the culmination of a six-year project by the United Nations Commission on International Trade Law (UNCITRAL), and codifies legal principles widely accepted in the U.S. and other countries where receivables financing flourishes.  By adopting the Convention, countries can make their laws much more conducive to receivables financing.  As a result, lenders in the U.S. would be more likely to lend against receivables owing by customers located in those countries.  This will provide a tremendous benefit to U.S. small and medium-sized businesses engaged in exporting, because it will make it easier for them to obtain financing for their foreign receivables.

The SFNet is now embarking on efforts, along with other interested parties, to encourage other countries to adopt the Convention.