UNIDROIT (formally, the International Institute for the Unification of Private Law; French: Institut international pour l'unification du droit privé) is an intergovernmental organization whose objective is to harmonize international private law across countries through uniform rules, international conventions, and the production of model laws, sets of principles, guides and guidelines. Established in 1926 as part of the League of Nations, it was reestablished in 1940 following the League's dissolution through a multilateral agreement, the UNIDROIT Statute. As at 2019 UNIDROIT has 63 member states.UNIDROIT has prepared multiple conventions (treaties), but has also developed soft law instruments. An example are the UNIDROIT Principles of International Commercial Contracts. Distinctly different from the Convention on the International Sale of Goods (CISG) adopted by UNCITRAL, the UNIDROIT Principles do not apply as a matter of law, but only when chosen by the parties as their contractual regime..
Financial markets play a significant role in channeling funds from surplus spending units (fund givers) to deficit spending units (fund takers). Whether financial intermediation is carried out by banks or capital markets, market failures are ubiquitous and call for financial regulation. This chapter studies how different jurisdictions cope with market failures in banking and capital markets with a focus on how such market failures are addressed in different jurisdictions. We identify significant divergences in financial regulation despite the similarity of market failures. The drivers of such divergences are the private law underpinnings of financial markets, diverging policy objectives and regulatory goals, and the varying structure of financial markets. However, in the past few decades, there has been significant harmonization and convergence of financial regulation at the global level. We identify two main drivers of convergence: convergence with the aim to reduce transactions costs for cross-border transactions, mainly driven by pressure from industry associations; and convergence in financial regulations to address risk spillovers and prevent potential race-to-the-bottom from regulatory arbitrage. Discussing the drivers of divergence and convergence in financial regulation, this chapter provides an analytical framework for the comparative analysis of financial regulation.
Paul-André Crépeau et Élise M. Charpentier, Les Principes d’UNIDROIT et le Code civil du Québec : valeurs partagées ?, Scarborough (Ont.), Carswell, 1998. Un article de la revue Revue québécoise de droit international / Quebec Journal of International Law / Revista quebequense de derecho internacional (Volume 11, numéro 1, 1998, p. I-421) diffusée par la plateforme Érudit.
The concept of settlement finality sits at the heart of any type of commercial transaction; whether the transaction is in physical or electronic form or is mediated by fiat currencies or cryptocurrencies. Transaction finality refers to the exact moment in time when proprietary interests in the object or medium of transaction pass from one party to his counterparty and the obligations of the parties to a transaction are discharged in an unconditional and irrevocable manner, i.e., in a way that cannot be reversed even by the subsequent legal defenses or actions against the counterparty. Given the benefits of finality in terms of legal certainty and its potential systemic implications, legal systems throughout the globe have devised mechanisms to determine the exact moment of the finality of a transaction and settlement of obligations conducted using fiat currencies as a medium of exchange. However, as the transactions involving cryptocurrencies fall beyond the scope of such rules, they introduce new challenges to determining the exact moment of finality in on-chain cryptocurrency transactions. This complexity arises because the finality of the transactions in the cryptocurrencies that rely on proof-of- work (PoW) consensus algorithms is probabilistic. The probabilistic finality makes the determination of the exact moment of operational finality nearly impossible.After discussing the mechanisms of settlement of contractual obligations in the traditional sale of goods as well as payment and settlement systems - which rather than relying on the concept of operational finality, rely upon the concept of legal finality - the paper argues that even in the traditional payment and settlement systems the determination of operational settlement finality is nearly impossible. This is because no transaction, even a transaction involving a cash payment, cannot be operationally deemed irrevocable as it remains prone to hacks or unwinding by electronic means or mere brute force. The paper suggests that the concept of finality is inherently a legal concept and, as is the case in the conventional finance, the moment of finality in PoW blockchains should also rely on the conceptual separation of operational finality from legal finality. However, given the decentralized nature of cryptocurrencies, defining the moment of finality in PoW blockchains, which may require a minimum level of institutional infrastructures and centralization to support the credibility of the finality, may face insurmountable challenges.
Custody - simply defined as holding securities or funds on behalf of third parties – is one of the key institutions that defines and distinguishes major financial institutions in the financial system. However, custody rules in financial law have traditionally been studied as a microprudential tool for investor protection purposes, while their macroeconomic impact has largely been overlooked. Inspired by the literature on asset custody and its impact on the institutional design of the traditional financial markets, institutions, and infrastructures, this paper studies the potential impact of defining custody rules in the cryptoasset markets on the future developments of the cryptoasset ecosystem. In traditional finance, a survey of relevant regulations applicable to financial institutions shows that the custody rules and client asset (segregation) rules apply to all financial institutions, other than commercial banks’ core business activity (i.e., deposit-taking). The most salient impact of exempting deposit contracts from custody and client asset rules has been the emergence of a business model for banks that treat their clients’ funds as their own and use them for their own accounts. Comingling clients’ funds with that of the bank is a critical defining feature of the banking industry that differentiates it from non-bank financial institutions as well as non-financial firms, and positions banks at the heart of monetary systems. The custody and asset segregation rules can play the same important role in the future developments of the crypto-asset industry. To delineate the scope of crypto-banking and differentiate it from other types of cryptoasset services, such as exchange and custodial services, it is crucial to start from the custody and asset segregation rules. This paper advocates for a presumption of custody when a client does not self-custody his cryptoassets, giving (or sharing) the control of the assets to a third party. It argues that such a presumption not only would serve the objectives of investor protection but also could prevent excessive credit creation in the cryptoasset ecosystem and the potential risk spillovers to the conventional financial markets and the real economy.
