ARBITRATION CLAUSE – IS IT TRANSFERRED TO THE ASSIGNEE?

  • Andrea Vincze

Abstract

The question whether an arbitration clause is transferred to the assignee in cases of assignment of receivables, has remained a major problem even after the text of the UNCITRAL Convention on the Assignment of Receivables in International Trade (hereinafter: Receivables Convention) was finalized in 2001. Aims of the treaty are “to promote the movement of goods and services across national borders by facilitating increased access to lower-cost credit”…to ”remove legal obstacles to certain international financing practices, (…) to “enhance security and predictability with respect to the law applicable to key issues”, and to “harmonize domestic assignment laws by providing a regime governing priority between competing claims for States to opt-into”.2 The Convention needs five accessions for entry into force, however, only Luxembourg has signed it so far3 (status of 30 August 2003). Hence, in this case, two major issues are concerned: arbitration and international assignment of receivables. The first one, arbitration, has an important role amongst means of dispute resolution. This results from its numerous advantages, e.g. more effective consideration of professional points of view, cheaper and speedier procedure compared to that of the state courts4, neutrality and guaranteed enforceability with the assistance of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter: the New York Convention)5. Moreover, in the era of modern developed economy enormous amounts of money are involved in business transactions, which implies several supplementary issues and legal institutions including payment, banking activities etc. The Receivables Convention was also necessary because of the fact that the assignment of receivables has recently become even more widespread than it used to be. In search for quick and effective means of dispute resolution, assignment cases are more frequently dealt with by arbitrators. This is where the question of the article rises – whether an arbitration clause can be transferred from an assignor to an assignee when the receivables included in a certain contract are assigned to the latter.

Published
01-01-2003
Section
Articles