79–115 

115TH CONGRESS EXEC. REPT. " ! SENATE 2d Session 115–7 

UNITED NATIONS CONVENTION ON THE ASSIGNMENT OF 

RECEIVABLES IN INTERNATIONAL TRADE, DONE AT 

NEW YORK ON DECEMBER 12, 2001, AND SIGNED BY 

THE UNITED STATES ON DECEMBER 30, 2003 

SEPTEMBER 12, 2018.—Ordered to be printed 

Mr. CORKER, from the Committee on Foreign Relations, 

submitted the following 

R E P O R T 

[To accompany Treaty Doc. 114–7] 

The Committee on Foreign Relations, to which was referred the 

United Nations Convention on the Assignment of Receivables in 

International Trade, done at New York on December 12, 2001, and 

signed by the United States on December 30, 2003 (Treaty Doc. 

114–7), having considered the same, reports favorably thereon with 

six declarations and five understandings, as indicated in the resolution of advice and consent, and recommends that the Senate give 

its advice and consent to ratification thereof. 

CONTENTS 

Page 

I. Purpose ........................................................................................................... 1 

II. Background .................................................................................................... 2 

III. Major Provisions ............................................................................................ 4 

IV. Entry Into Force and Denunciation ............................................................. 6 

V. Implementing Legislation ............................................................................. 6 

VI. Committee Action .......................................................................................... 6 

VII. Committee Recommendation and Comments .............................................. 6 

VIII. Text of Resolution of Advice and Consent to Ratification .......................... 14 

I. PURPOSE

The United Nations Convention on the Assignment of Receivables in International Trade (the ‘‘Convention’’) provides uniform 

rules to facilitate cross-border receivables financing. Receivables financing is an important tool in helping U.S. companies secure 

working capital financing. Within the United States, lenders and 

buyers of receivables are familiar with providing financing based 

upon the use of receivables from debtors located within the United 

States as working capital collateral. Uniform Commercial Code ArFOREI-42327 with DISTILLER

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ticle 9, as adopted by all 50 states, the District of Columbia, and 

the territories of Puerto Rico and the Virgin Islands, provides extensive rules on the use of receivables as to finance operations or 

use as collateral and how to resolve potential conflicts of law. However, U.S. based lenders may be less willing to make loans secured 

by receivables owed by debtors located outside the United States 

because such cross-border transactions may involve countries 

whose laws are not consistent with modern financial practices. 

The Convention, if widely adopted, will establish clear rules for 

resolving conflicts of law with respect to receivables financing. A 

key element of the Convention includes providing clear rules on establishing location under the treaty, allowing commercial parties to 

structure deals and effectively choose the forum that suits their 

needs in many transactions. Further, the Convention requires Parties to establish certain modern commercial finance rules consistent with U.S. Uniform Commercial Code Article 9 practices. 

II. BACKGROUND

In the United States, U.S. companies often rely on receivables financing to secure access to working capital for their business operations. An assignment of receivables occurs when one party (the assignor) transfers to another party (the assignee) the right to receive 

the contractual amount owed by its customers or other third parties (the debtors). Small and medium size businesses in particular 

use these rights to payments from their customers as working capital or operational funding collateral with their local lenders to secure needed cash to finance purchases of raw materials and other 

resources. If the assignor, the assignee, and the debtor are U.S. 

companies, the applicable laws are well understood. 

Receivables financing is governed by the principles found in the 

Uniform Commercial Code (UCC), Article 9 as adopted by the 50 

states, the District of Columbia, and the territories of Puerto Rico 

and the Virgin Islands (referred to herein as ‘‘the states’’). UCC Article 9 is the foundation for U.S. laws on secured finance. For example, the UCC establishes rules on assignee priority rights and 

secured lending. The UCC also provides a framework for U.S. 

courts on resolving conflicts of law between assignors or debtors 

and assignees located in different states. The U.S. modern commercial finance laws, as represented by the UCC, are considered 

among the most advanced in the world. 

Modern receivables financing principles in the UCC, such as 

rules that allow interests in future receivables, receivables in bulk 

financing, and rules on proceeds and other mechanisms protect the 

assignee’s rights. These rules reduce receivables financing risk and 

cost and make receivables financing an attractive option that has 

provided U.S. companies, especially small and medium size enterprises with business finance options that have led to significant 

economic growth and job creation in the United States over the 

past several decades. 

Many countries, however, do not have the kinds of modern commercial finance laws on the assignment of receivables found in 

UCC Article 9. Because of the risk, cost and uncertainty created by 

receivables financing laws in other countries that vary greatly or 

that can be vague or unpredictable, the ability of small and medium sized U.S. enterprises to access financing with lenders using 

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their international accounts receivables derived from exports or 

other cross-border transactions is severely limited. 

The U.N. Convention on the Assignment of Receivables in International Trade (‘‘the Convention’’) solves many of these problems. 

First, the Convention would establish more uniformity with respect 

to receivables financing in cross border transactions. 

Second, the Convention provides a unique benefit to the United 

States in that it closely reflects UCC Article 9 principles. Many 

U.S. commercial, finance and business sectors were participants in 

the development of the Convention and will be familiar with its 

terms. In addition, the Convention was developed in close coordination with the National Conference of Commissioners on Uniform 

State Laws (‘‘Uniform Law Commission’’ or ‘‘ULC’’) and representatives of the American Law Institute (ALI). The Uniform Law Commission, which is composed of representatives of the states, together with the ALI, drafted the Uniform Commercial Code which 

has been adopted by all the states and jurisdictions of the United 

States. 

Importantly, because the Convention closely reflects UCC Article 

9, the administration has assured the committee the Convention 

will have minimal effect on current financing practice. The Convention would help U.S. businesses who rely on receivables financing 

to extend their operations across borders because foreign businesses will also be complying with an agreed upon international 

version of Article 9 of the UCC once their home government has 

ratified the Convention. 

The administration has indicated that the treaty would be selfexecuting. According to the testimony of the State Department’s 

Acting Legal Advisor in testimony given to the committee on December 13, 2017: 

The treaty would be self-executing, which is consistent 

with the recommendation of the ULC Committee. There is 

no need for federal or state implementing legislation. Ratification of the Convention would not change U.S. practice 

in this area in any material respect. The Convention’s 

rules are largely based on U.S. law and will produce 

substantially the same results as those under the UCC 

Article 9. 

The Convention is limited to transactions that are international 

in nature. In addition, the Convention does not create any new 

legal bodies. As with Article 9, the Convention establishes rules 

that would facilitate private transactions that are governed by private contract, enforceable through contract remedies. The Convention does not create any appeal mechanism to a foreign government 

or international body. 

While the Convention requires countries party to the Convention 

to establish minimum standards in some areas such as rules on 

proceeds or priority assignment (rules already highly developed 

within the United States beyond the standards required under the 

Convention), the Convention generally adopts an approach that allows private parties maximum flexibility to develop and adopt their 

own contractual relationships as will be determined by their own 

specific business needs. 

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Finally, the Convention, in Articles 35, 40, 41, and 42, provides 

additional flexibility for countries party to the Convention to make 

future declarations with respect to exemption of businesses, public 

purpose entities, other government entities, or specific transactions 

from application under the Convention, should the need arise. 

Given that the goal is to establish more uniformity with respect to 

these international transactions involving receivables financing 

across borders, the committee does not anticipate the United States 

making such a future declaration at this time. 

The Convention is supported by the Uniform Law Commission, 

the U.S. Chamber of Commerce, the Financial Services Roundtable, 

the Commercial Finance Association, BAFT (Bankers Association 

for Trade and Finance), Equipment Leasing and Finance Association, the International Swaps and Derivatives Association, Inc., the 

National Foreign Trade Council, the National Law Center for 

Inter-American Free Trade, the Small Business & Entrepreneurship Council, the U.S. Council for International Business, Southwestern/Great American, Inc., and the American Bar Association. 

A detailed paragraph-by-paragraph analysis of this treaty may 

be found in the Letter of Submittal from the Secretary of State to 

the President on this instrument, which is reprinted in full in Treaty Document 114–7. What follows is a brief summary of some key 

provisions. 

III. MAJOR PROVISIONS

As noted above, the Convention focuses generally on secured finance rules and is largely consistent with U.S. law, specifically Article 9 of the Uniform Commercial Code, which the Convention is 

largely based on. Therefore, according to administration testimony 

before the Foreign Relations Committee, not only would the Convention require little change in current practices within the United 

States with respect to receivables financing, the Convention would 

help promote U.S. UCC rules on receivables financing to the benefit of both U.S. and foreign exporters as well as businesses using 

foreign receivables for financing or collateral. 

It is the considered opinion of the committee that ratification of 

the Convention is in the interest of the United States. The Convention will support U.S. exports and related cross-border transactions 

and job growth by facilitating cross-border trade. In particular, 

among countries ratifying the Convention, the Convention establishes a framework for reconciling conflicts of laws with respect to 

cross-border receivables financing. Among countries that ratify the 

Convention, the Convention will also establish new baseline standards, modeled on U.S. modern commercial finance rules, regarding 

proceeds, priorities, and future and bulk receivables. 

III.A. ESTABLISHING RULES FOR RECONCILIATION OF CONFLICTS BETWEEN COUNTRIES ON CROSS-BORDER RECEIVABLES TRADE FINANCE

Establishing clear rules on what law governs competing priority 

claims over a receivable is one of the key benefits of the Convention. With respect to an assignment of a receivable in international 

transactions, competing claimants to the receivable could include 

the other assignees of the same receivable, bankruptcy trustees in 

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an insolvency proceeding, or creditors of the assignor who intend 

to make claims on the receivable assigned to an unrelated assignee. 

With high degrees of uncertainty and without a clear pathway as 

to how to resolve potential competing claims, a potential assignee, 

concerned with the status of the priority of their claim to the assignment, may be inclined to avoid an otherwise favorable transaction due to the risks and costs associated with the assignment. 

Convention Article 22 provides clear rules for determining which 

country’s substantive law may apply with respect to the priority of 

an assignee’s rights over other claimants to the receivable. The 

Convention applies to cross-border or international receivables or 

assignment of receivables. The laws governing receivables may 

vary greatly from country to country. Further, the laws governing 

questions as to which nation’s substantive law should apply may 

also vary greatly. The Convention would provide a clear path for 

determining which countries’ laws should apply and for determining what that law is and how it might apply to the particular 

receivables transaction. 

III.B. ADOPTION OF MODERN PRIORITY RULES

Convention Article 42 allows countries to declare that they intend to be bound by one of three sets of priority rules as set out 

in the Annex of the Convention. The first option parallels the system in the United States, and the committee recognizes that the 

United States is already in compliance with these provisions in the 

Annex. In fact, the U.S., in several areas, is including understandings and declarations to ensure that the Convention works 

seamlessly with the Uniform Commercial Code and that U.S. law 

can continue to lead the world in the development of modern finance rules. 

Because the Convention provides conflict-of-law rules to determine which country’s law applies to priority conflicts rather than 

providing substantive rules of priority itself, the substantive rules 

for resolving priority are generally determined by the domestic law 

of individual States. The committee notes that the State Department and the Uniform Law Commission have taken the position 

that current U.S. law reflected in state enactments of the Uniform 

Commercial Code is consistent with the priority system in sections 

1 and 2 of the Annex. 

Convention Article 8 (consistent with U.S. UCC Article 9) provides clear, modern finance rules on the assignment of existing and 

future receivables to secure current and future advances, the bulk 

assignment of receivables, and allows for the assignment of partial 

and undivided interests in receivables. For some countries, adoption of the Convention may require changes to current law, but the 

State Department has informed the committee that current U.S. 

law and practice is wholly consistent with these provisions of the 

Convention, a position also supported by the Uniform Law Commission. 

Convention Article 24 provides for the adoption of rules on proceeds. As discussed below, the United States has advanced rules on 

proceeds and intends to offer an understanding that U.S. laws will 

go beyond the basic standards offered in the Convention. The committee believes that establishing a firm foundation of law with respect to the rights of assignees, as they relate to proceeds, is an 

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important part of developing modern commercial finance laws and 

practices. The committee is encouraged to believe that other nations that adopt the Convention will establish these important 

principles in their laws. 

Finally, it is the hope of the committee that other nations seriously consider adoption of the Convention. The committee believes 

that developing countries in particular could benefit from the anticipated better credit availability and rates that adoption of the 

modern commercial finance rules of the Convention would generate. 

IV. ENTRY INTO FORCE AND DENUNCIATION

Convention Article 45 provides that the treaty will enter into 

force on the first day of the month following the expiration of six 

months from the date of the deposit of the fifth instrument of ratification, acceptance, approval or accession with the depository. Currently, the Republic of Liberia has acceded to the treaty. Because 

it is widely recognized that the Convention reflects uniform state 

laws of the United States, the State Department has informed the 

committee that it expects other countries to consider the Convention once the United States ratifies the treaty. With deposit of its 

instrument of ratification, the United States would be the second 

State to join the Convention. Under Article 46, a Contracting State 

may denounce the Convention at any time by written notification 

addressed to the depositary. Such denunciation would take effect 

on the first day of the month following the expiration of one year 

after the notification is received by the depositary. The Convention 

would continue to apply to certain assignments concluded before 

the date of denunciation. 

V. IMPLEMENTING LEGISLATION

The executive branch has indicated its view that the treaty is 

self-executing. Accordingly, federal or state implementing legislation is not necessary. The Resolution of Advice and Consent to 

Ratification includes a declaration stating that the Convention is 

self-executing. 

VI. COMMITTEE ACTION

The committee held a hearing to consider the treaty on December 

13, 2017. Senator Risch chaired the hearing. The committee considered the treaty on March 20, 2018, and ordered the treaty favorably reported by voice vote, with a quorum present and without objection, with the recommendation that the Senate give advice and 

consent to its ratification, as set forth in this report and the accompanying resolution of advice and consent to ratification. 

VII. COMMITTEE RECOMMENDATIONS AND COMMENTS

The committee believes the Convention would provide significant 

benefits for U.S. companies, particularly small and medium sized 

enterprises that rely on receivables financing to generate working 

capital and, therefore, recommends the Senate give its advice and 

consent to ratification. The Convention closely follows UCC Article 

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tices. In fact, the committee believes that, because the Convention 

is based so closely on the United States Uniform Commercial Code, 

widespread adoption will extend U.S. commercial financing practices globally. 

The committee believes that the Convention will reduce legal 

risks and costs associated with cross-border receivables financing, 

as other countries become party to the Convention. With such risk 

and cost reduction, U.S. lenders will be more willing to provide financing to exporters and businesses using foreign receivables for financing or collateral, thereby facilitating growth in exports and related cross-border transactions, improving U.S. global competitiveness, and creating U.S. jobs. 

The committee also notes the testimony of the State Department 

that ratification by the United States will have a beneficial effect 

with respect to ongoing efforts to modernize commercial finance 

rules in other countries: 

U.S. ratification could have a particularly important leadership impact [in encouraging other countries to ratify the 

Convention.] There are currently a number of regional initiatives underway focused on reforming the law of secured 

transactions, including in Latin America, Africa, and the 

Asia-Pacific region. Expanded ratification of the Convention in the near term has the potential to influence these 

initiatives and to expand the acceptance and use of the 

Convention’s framework for receivables financing in these 

regions. In addition, the European Union (EU) is currently 

involved in an effort to develop an internal legal framework concerning the law applicable to third party effects 

of the assignment of receivables. While there is significant 

support in the EU for the approach taken in the Convention (and thus under U.S. law), there is also some support 

for alternative choice of law rules in some cases that would 

be inconsistent with the Convention and would thus introduce uncertainty into receivables financing governed by 

the alternative rules. U.S. ratification could helpfully influence the EU process to ensure that the framework adopted 

is consistent with the Convention. 

The committee has included five understandings and six declarations in the resolution of advice and consent. 

VII.A. UNDERSTANDINGS INCLUDED IN THE

RESOLUTION OF ADVICE AND CONSENT

Section 2, Understanding (1) 

It is the understanding of the United States that paragraph (2)(e) of Article 4 excludes from the scope of the 

Convention the assignment of (i) receivables that are securities, regardless of whether such securities are held with 

an intermediary, and (ii) receivables that are not securities 

but are financial assets or instruments, if such financial 

assets or instruments are held with an intermediary. 

The committee believes this technical understanding is necessary 

to clarify the scope of paragraph (2)(e) of Article 4. Article 4 deals 

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with the limitations and exclusions from the scope of the receivables covered by the Convention. 

This understanding is intended to clarify that with respect to the 

Article 4(2)(e) exclusion, the phrase ‘‘held with an intermediary’’ 

modifies only the phrase ‘‘other financial assets’’ and does not modify the term ‘‘securities.’’ As a result, the assignment of securities 

is excluded from the scope of the Convention regardless of whether 

the assigned receivables are held with an intermediary. The assignment of other financial assets is excluded from the Convention 

when the assigned financial assets are held with an intermediary. 

The administration has informed the committee that a possible alternative reading—that assignments of securities are not excluded 

from the Convention if the securities are not held with an intermediary—was not the intention of the Convention’s negotiators. 

Nor was the provision intended to refer to ‘‘repurchase securities’’ 

as if this were a limited class of financial assets being addressed 

specifically and separately from other securities. 

Section 2, Understanding (2) 

It is the understanding of the United States that the 

phrase ‘‘that place where the central administration of the 

assignor or the assignee is exercised’’ as used in Articles 

5(h) and 36 of the Convention has a meaning equivalent 

to the phrase ‘‘that place where the chief executive office 

of the assignor or assignee is located.’’ 

Article 5 of the Convention is the main provision that provides 

definitions of terms used in the Convention, including the definition of determining location for the assignor and assignee. Because 

of the important role of location of parties in determining both the 

scope of the Convention and the applicable laws, the State Department and the Uniform Law Commission recommended further clarification to ensure the definition is clear under U.S. law. 

Under the Uniform Commercial Code, as adopted by the states, 

location is determined by reference to the place where the ‘‘chief executive office’’ of the assignor is located. Under the Convention, the 

phrase ‘‘central administration office’’ is used for determining location. Understanding (2) further makes clear that the United States 

will treat the two phrases as equivalent. 

Section 2, Understanding (3) 

It is the understanding of the United States that the reference in the definition of ‘‘financial contract’’ in Article 

5(k) to ‘‘any other transaction similar to any transaction 

referred to above entered into in financial markets’’ is intended to include transactions that are or become the subject of recurrent dealings in financial markets and under 

which payment rights are determined by reference to (a) 

underlying asset classes or (b) quantitative measures of 

economic or financial risk or value associated with an occurrence or contingency. Examples are transactions under 

which payment rights are determined by reference to 

weather statistics, freight rates, emissions allowances, or 

economic statistics. 

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Article 5(k) sets out the definition of a ‘‘financial contract.’’ As 

drafted, Article 5(k) is intended to cover both current and future 

developments in market usage. 

Under the Convention, the Article 5(k) definition of financial contracts covers a wide range of financial instruments, including ‘‘any 

other transaction similar to any transaction referred to above.’’ 

With respect to ‘‘other transactions similar to any transaction referred to above,’’ the committee understands that the Convention’s 

drafters recognized that the industry is continually developing new 

instruments in response to industry needs and circumstances. 

This understanding is intended to provide greater clarity regarding the application of this provision to evolving usages. This understanding notes that ‘‘financial contracts’’ could include a variety of 

transactions that involve recurrent dealings whereby payment 

rights may be influenced or determined by reference to particular 

asset class valuations or contingent events that may affect the underlying contract. For further guidance, a non-exclusive list of examples is given in the understanding. 

Section 2, Understanding (4) 

It is the understanding of the United States that because 

the Convention applies only to ‘‘receivables,’’ which are defined in Article 2(a) as contractual rights to payment of a 

monetary sum, the Convention does not apply to other 

rights of a party to a license of intellectual property or an 

assignment or other transfer of an interest in intellectual 

property or other types of interests that are not a contractual right to payment of a monetary sum. 

This understanding clarifies the application of the Convention to 

assignments of receivables involving intellectual property. It clarifies that the Convention’s coverage of an assigned right to payment 

extends only to the right to the payment and does not extend to 

rights in the underlying intellectual property that is generating the 

revenue that is the subject of the right to payment. 

Section 2, Understanding (5) 

The United States understands that, with respect to Article 24 of the Convention, the Article requires a Contracting 

State to provide a certain minimum level of rights to an 

assignee with respect to proceeds but that it does not prohibit Contracting States from providing additional rights 

in such proceeds to such an assignee. 

Article 24 of the Convention ‘‘Special Rules on Proceeds’’ requires 

Convention countries provide a minimum level of rights to an assignee with respect to proceeds. U.S. law, including that adopted 

by the states, is highly developed. 

In the United States, assignees have rights under ‘‘proceeds’’ provisions of U.S. law to collect money due to the assignee and that 

should have been paid to the assignee, but which have been diverted to other uses, such as a purchase by the assignor or debtor 

of other assets. Proceeds provisions under U.S. law allow for the 

unwinding of such transactions intended to defeat the claims of the 

assignee. Unlike the United States, many countries do not have 

modern commercial finance laws governing the rights of an asFOREI-42327 with DISTILLER

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signee to ‘‘proceeds.’’ U.S. proceeds laws provide an assignee entitled to payment with the ability to attach liens or other claims to 

property subsequently purchased with proceeds funds that otherwise should have been paid to the assignee. 

This understanding clarifies that with respect to Article 24, the 

United States and the states retain the right to adopt laws that 

may go beyond the minimum level of rights an assignee can claim 

with respect to proceeds as required under the Convention. The understanding makes clear the United States may act to provide additional rights in such proceeds to an assignee. 

VII.B. DECLARATIONS INCLUDED IN THE

RESOLUTION OF ADVICE AND CONSENT

Section 3, Declaration (1) 

Pursuant to Article 23(3), the United States declares that, 

in an insolvency proceeding of the assignor, the insolvency 

laws of the United States or its territorial units may under 

some circumstances (a) result in priority over the rights of 

an assignee being given to a lender extending credit to the 

insolvency estate, or to an insolvency administrator that 

expends funds of the insolvency estate for the preservation 

of the assigned receivables (see, for example, Title 11 of 

the United States Code, Sections 364(d) and 506(c)); or (b) 

subject the assignment of receivables to avoidance rules, 

such as those dealing with preferences, undervalued transactions and transactions intended to defeat, delay or 

hinder creditors of the assignor. 

Article 23(3) provides an exception to the general rule in Article 

23(2) limiting the ability of the forum state to refuse application of 

the law of the State in which the assignor is located. Article 23(3) 

allows a State by declaration to identify preferential rights arising 

by operation of the law in the forum country in an insolvency preceding that would take precedence over the rights of an assignee. 

This declaration provides, consistent with Article 23(3), that in insolvency proceedings of the assignor, certain parts of U.S. bankruptcy law providing preferential rights will continue to apply 

within the United States, regardless of the priority rights of the assignee. The declaration is intended to provide notice of the application of such preferential rights under U.S. bankruptcy laws. 

U.S. bankruptcy laws favor efforts to reorganize and preserve the 

insolvent party if such efforts are reasonably expected to be successful. For example, Chapters 11 and 13 of the United States 

Bankruptcy Code allow for the readjustment of debts and for corporations or individuals to continue to hold property and pay debts 

over time to bring the bankrupt party out of insolvency. 

U.S. bankruptcy laws are considered among the most advanced. 

For example, the bankruptcy code contains ‘‘avoidance’’ rules 

whereby the bankruptcy judge can reach back up to 90 days and 

invalidate a transaction intended to defraud or otherwise avoid 

payments to legitimate creditors. Further, as noted above, U.S. 

bankruptcy laws favor efforts to rehabilitate insolvent businesses if 

possible (as opposed to proceeding directly to liquidation.) In such 

cases, the court may appoint a ‘‘debtor in possession’’ to manage 

the company’s affairs, including invalidating certain contracts to 

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keep the business afloat. Under U.S. law, because the debtor in 

possession is taking certain risks to keep the company going, they 

may be afforded certain rights to priority of payment as the manager of the insolvent company. 

With this declaration, for bankruptcy proceedings commenced in 

the U.S. courts, these preferential rights arising under U.S. bankruptcy law would take precedence over the rights of an assignee. 

Section 3, Declaration (2) 

Pursuant to Article 36 of the Convention, the United 

States declares that, with respect to an assignment of receivables governed by enactments of Article 9 of the Uniform Commercial Code, as adopted in one of its territorial 

units, if an assignor’s location pursuant to Article 5(h) of 

the Convention is the United States and, under the location rules contained in Section 9–307 of the Uniform Commercial Code, as adopted in that territorial unit, the assignor is located in a territorial unit of the United States, 

that territorial unit is the location of the assignor for purposes of this Convention. 

Article 36 provides that a State with two or more territorial units 

may specify by declaration at any time other rules for determining 

the location of a person within that State. This ‘‘federalism’’ declaration supplements the Convention’s Article 5(h) and Article 36 

rules on location. The declaration is intended to ensure that the location rules of Uniform Commercial Code 9–307, as adopted by the 

states, are upheld. The declaration simply clarifies that if the assignor’s location under Article 5(h) is determined to be the United 

States, then further determination of the assignor’s location within 

a territorial unit of the United States will be determined by reference to the laws of the United States. Specifically, the location 

rules of UCC 9–307, as adopted by the states, shall apply. 

Section 3, Declaration (3) 

Pursuant to Article 37 of the Convention, the United 

States declares that any reference in the Convention to the 

law of the United States means the law in force in the territorial unit thereof determined in accordance with Article 

36 and the Article 5(h) definition of location. However, to 

the extent under the conflict-of-laws rules in force in that 

territorial unit a particular matter would be governed by 

the law in force in a different territorial unit of the United 

States, the reference to ‘‘law of the United States’’ with respect to that matter is to the law in force in the different 

territorial unit. The conflict-of-laws rules referred to in the 

preceding sentence refer primarily to the conflict-of-laws 

rules in Section 9–301 of the Uniform Commercial Code as 

enacted in each state of the United States. 

Article 37 of the Convention addresses the issue of which law is 

to be applied within the ‘‘territorial units’’ of a State. Article 37 further provides that a State may specify by declaration other rules 

for determining the applicable law, which may be the law of another territorial unit of the State. For the purpose of determining 

conflict of laws rules within the United States and for determining 

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which particular state’s law may apply within the United States, 

this declaration preserves the existing location rules, state by state, 

of the UCC as adopted by the states. 

UCC Article 9 contains detailed rules that determine which U.S. 

state’s laws may govern a particular transaction determined under 

the Convention to be subject to U.S. law. This declaration affirms 

that, once location is determined to be the United States under the 

Article 5(h) definition, to determine applicable law, one must then 

look to state laws, as adopted, to make the final determination as 

to which law may apply. The committee notes that among the U.S. 

states and territories adopting the provisions of UCC Article 9, 

there is a high degree of uniformity, creating an essentially uniform law within the United States. 

Section 3, Declaration (4) 

Pursuant to Article 39 of the Convention, the United 

States declares that it will not be bound by Chapter V of 

the Convention. 

Chapter V (Articles 26–32) of the Convention is optional. Under 

Article 39 a State may declare that it will not be bound by the 

Rules in Chapter V. The committee understands that Chapter V is 

intended to fill gaps with respect to conflict of laws rules. 

The United States has very advanced rules in this area and 

while the rules among the United States produce essentially the 

same results, the executive branch and Uniform Law Commission 

recommended that U.S. adoption of Chapter V, given the wording 

differences with U.S. law, would overly complicate interpretation of 

the law with little corresponding benefit. The executive branch 

hopes, however, to promote the adoption of Chapter V among countries party to the Convention that have underdeveloped laws on receivables financing. 

Section 3, Declaration (5) 

Pursuant to Article 40, the United States declares that the 

Convention does not affect contractual anti-assignment 

provisions where the debtor is a governmental entity or an 

entity constituted for a public purpose in the United 

States. 

Article 40 allows a State to exempt certain government entities, 

subdivisions thereof, and entities constituted for a public purpose 

from the scope of Convention Articles 9 and 10 that covers limitations on assignments and transfer of security rights. It is the understanding of the committee that the State Department recommends a carve-out for these government entities and entities 

constituted for a public purpose. 

The committee notes that the President, with the advice and consent of the Senate, could modify the scope of this declaration in the 

future. (See VII.C. Future Declaration under the Convention, 

below.) 

Section 4, Self-Execution Declaration 

The Senate’s advice and consent under section 1 is subject 

to the following declaration: This Convention is self-executing. 

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1Treaty-Doc. 114–7 at p. VI (stating that ‘‘The Convention would be self-executing and there 

would not be a need for the enactment of implementing legislation.’’) 

The Senate’s sixth declaration declares that the advice and consent under Section 1 is subject to the declaration that the Convention is self-executing.1 This declaration is consistent with statements made in the Letter of Submittal from the Secretary of State 

to the President on this instrument. The Senate continues to include statements regarding the self-executing nature of treaties in 

resolutions of advice and consent, in light of the Supreme Court decision, Medellin v. Texas, 128 S. Ct. 1346 (2008). The committee 

continues to believe that a clear statement in the resolution is warranted. A further discussion of the committee’s views on this matter can be found in Section VIII of Executive Report 110–12. 

VII.C. FUTURE DECLARATIONS UNDER THE CONVENTION

The committee notes that the Convention provides some flexibility to adjust to changed circumstances and allows certain additional declarations to be made in the future should the need arise. 

In particular, the following Articles allow for a party to the treaty 

to make a declaration ‘‘at any time:’’ 

1. Article 35 allows a State to exclude from application under the 

Convention, certain territorial units within a State in which 

different systems of law are applicable. The Convention allows 

for the State to declare the extent to which the Convention 

shall apply to those territorial units. 

2. Article 40 of the Convention allows a State to exempt government entities, central or local, any subdivision thereof, or entities constituted for a public purpose. 

3. Article 41 of the Convention allows a State to declare at any 

time that it will not apply the Convention to specific types of 

assignment or to the assignment of specific categories of receivables clearly described in a declaration. 

4. Article 42 of the Convention allows a State to declare at any 

time that it will be bound by the priority rules set forth in the 

Annex to the Convention. 

The committee reminds the President that, should it be necessary to consider, in the United States interest, making a declaration with respect to Articles 35, 40, 41 or 42, the committee must 

be notified in advance with a reasonable period for consideration 

and with a description giving the reasons for the proposed change. 

While, historically, the United States has rarely sought to modify 

a condition to consent to ratification included by the Senate, precedent nevertheless exists for cooperation between the two branches 

to effectuate a modification to a condition to ratification. The committee recalls the example whereby in 1984, then President Reagan 

sought the Senate’s advice and consent for the withdrawal of a reservation that had previously been included with the U.S. ratification of the Patent Cooperation Treaty. See Letter of Transmittal 

from President Ronald Reagan, July 27, 1984, in Treaty Doc. 98– 

20. The Senate gave its advice and consent to the withdrawal two 

years later. 

To the extent any future modification of any understanding or 

declaration allowed under the Convention goes beyond a tacit 

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14 

change and constitutes a substantive change to the terms of the 

Convention, the committee expects any such substantive change to 

follow a similar Constitutional process of the President seeking the 

advice and consent of the Senate to the modification. 

At times, circumstances may require that minor, technical adjustments be made to treaties to which the Senate has given its advice and consent. There may be times when such an adjustment 

may not rise to the level of a substantive amendment requiring the 

advice and consent of the full Senate. The committee has previously indicated its willingness to consider tacit amendments proposed by the executive branch on a case-by-case basis and has provided an incomplete list of illustrative factors to be considered 

when determining if a change is tacit in nature or a substantive 

change: 

1. The significance and character of the amendment; 

2. Whether it is technical or administrative; 

3. Whether it is consistent with the object and purpose of the 

treaty and simply implements objectives already identified in 

the treaty; 

4. Whether the proposed amendment can be given effect without 

Congressional action; 

5. Whether the committee has indicated (in its report on the treaty or otherwise) that such amendments are to be submitted to 

the Senate for advice and consent. 

VIII. TEXT OF THE RESOLUTION OF ADVICE

AND CONSENT TO RATIFICATION

TEXT OF THE RESOLUTION OF ADVICE AND CONSENT TO RATIFICATION

OF THE UNITED NATIONS CONVENTION ON THE ASSIGNMENT OF RECEIVABLES IN INTERNATIONAL TRADE, DONE AT NEW YORK ON DECEMBER 12, 2001, AND SIGNED BY THE UNITED STATES ON DECEMBER 30, 2003

Resolved, (two-thirds of the Senators present concurring therein), 

SECTION 1. SENATE ADVICE AND CONSENT SUBJECT TO UNDERSTANDINGS AND DECLARATIONS. 

The Senate advises and consents to the ratification of the United 

Nations Convention on the Assignment of Receivables in International Trade, done at New York on December 12, 2001, and 

signed by the United States on December 30, 2003 (the ‘‘Convention’’) (Treaty Doc. 114–7), subject to the understandings of section 

2 and the declarations of sections 3 and 4. 

SEC. 2. UNDERSTANDINGS. 

The Senate’s advice and consent under section 1 is subject to the 

following understandings, which shall be included in the instrument of ratification: 

(1) It is the understanding of the United States that paragraph (2)(e) of Article 4 excludes from the scope of the Convention the assignment of— 

(A) receivables that are securities, regardless of whether 

such securities are held with an intermediary; and 

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15 

(B) receivables that are not securities, but are financial 

assets or instruments, if such financial assets or instruments are held with an intermediary. 

(2) It is the understanding of the United States that the 

phrase ‘‘that place where the central administration of the assignor or the assignee is exercised,’’ as used in Articles 5(h) 

and 36 of the Convention, has a meaning equivalent to the 

phrase, ‘‘that place where the chief executive office of the assignor or assignee is located.’’ 

(3) It is the understanding of the United States that the reference, in the definition of ‘‘financial contract’’ in Article 5(k), 

to ‘‘any other transaction similar to any transaction referred to 

above entered into in financial markets’’ is intended to include 

transactions that are or become the subject of recurrent dealings in financial markets and under which payment rights are 

determined by reference to— 

(A) underlying asset classes; or 

(B) quantitative measures of economic or financial risk 

or value associated with an occurrence or contingency. Examples are transactions under which payment rights are 

determined by reference to weather statistics, freight 

rates, emissions allowances, or economic statistics. 

(4) It is the understanding of the United States that because 

the Convention applies only to ‘‘receivables,’’ which are defined 

in Article 2(a) as contractual rights to payment of a monetary 

sum, the Convention does not apply to other rights of a party 

to a license of intellectual property or an assignment or other 

transfer of an interest in intellectual property or other types of 

interests that are not a contractual right to payment of a monetary sum. 

(5) The United States understands that, with respect to Article 24 of the Convention, the Article requires a Contracting 

State to provide a certain minimum level of rights to an assignee with respect to proceeds, but that it does not prohibit 

Contracting States from providing additional rights in such 

proceeds to such an assignee. 

SEC. 3. DECLARATIONS TO BE INCLUDED IN THE INSTRUMENT OF 

RATIFICATION. 

The Senate’s advice and consent under section 1 is subject to the 

following declarations, which shall be included in the instrument of 

ratification: 

(1) Pursuant to Article 23(3), the United States declares 

that, in an insolvency proceeding of the assignor, the insolvency laws of the United States or its territorial units may 

under some circumstances— 

(A) result in priority over the rights of an assignee being 

given to a lender extending credit to the insolvency estate, 

or to an insolvency administrator that expends funds of 

the insolvency estate for the preservation of the assigned 

receivables (see, for example, title 11 of the United States 

Code, sections 364(d) and 506(c)); or 

(B) subject the assignment of receivables to avoidance 

rules, such as those dealing with preferences, undervalued 

transactions and transactions intended to defeat, delay, or 

hinder creditors of the assignor. 

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(2) Pursuant to Article 36 of the Convention, the United 

States declares that, with respect to an assignment of receivables governed by enactments of Article 9 of the Uniform Commercial Code, as adopted in one of its territorial units, if an assignor’s location pursuant to Article 5(h) of the Convention is 

the United States and, under the location rules contained in 

section 9–307 of the Uniform Commercial Code, as adopted in 

that territorial unit, the assignor is located in a territorial unit 

of the United States, that territorial unit is the location of the 

assignor for purposes of this Convention. 

(3) Pursuant to Article 37 of the Convention, the United 

States declares that any reference in the Convention to the law 

of the United States means the law in force in the territorial 

unit thereof determined in accordance with Article 36 and the 

Article 5(h) definition of location. However, to the extent under 

the conflict-of-laws rules in force in that territorial unit, a particular matter would be governed by the law in force in a different territorial unit of the United States, the reference to 

‘‘law of the United States’’ with respect to that matter is to the 

law in force in the different territorial unit. The conflict-of-laws 

rules referred to in the preceding sentence refer primarily to 

the conflict-of-laws rules in section 9–301 of the Uniform Commercial Code as enacted in each State of the United States. 

(4) Pursuant to Article 39 of the Convention, the United 

States declares that it will not be bound by chapter V of the 

Convention. 

(5) Pursuant to Article 40, the United States declares that 

the Convention does not affect contractual anti-assignment 

provisions where the debtor is a governmental entity or an entity constituted for a public purpose in the United States. 

SEC. 4. SELF-EXECUTION DECLARATION. 

The Senate’s advice and consent under section 1 is subject to the 

following declaration: This Convention is self-executing. 

Æ 

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