Kiri

EN GENERAL ASSEMBLY UNIDROIT 2024

84th session A.G. (84) 1 rev.

Rome, 12 December 2024 Original: English

November 2024

ANNOTATED DRAFT AGENDA

1. Opening of the session by the Secretary-General and the Chair of the General Assembly

2023-2024

2. Election of the Chair of the General Assembly 2024-2025

3. Adoption of the agenda (A.G. (84) 1)

4. Statement regarding the Organisation’s activity in 2024 (A.G. (84) 2)

5. Report of the Chairman of the Finance Committee on its 98th session (F.C. (98) 10)

6. Final modifications to the Budget and approval of the Accounts for the 2023 financial year

(A.G. (84) 3)

7. Adjustments to the Budget for the 2024 financial year (A.G. (84) 4)

8. Arrears in contributions of Member States (A.G. (84) 5)

9. Approval of the draft Budget for 2025 and observations submitted by Member States (A.G.

(84) 6)

10. Appointment of the Members of the Administrative Tribunal (A.G. (84) 7)

11. Reappointment of the Auditor (A.G. (84) 8)

12. Update on the social security package applicable to UNIDROIT staff (A.G. (84) 9)

13. UNIDROIT Pension Reserve Fund – Proposal for investment in the financial markets (A.G. (84)

10)

14. Special contributions for the UNIDROIT centenary (A.G. (84) 11)

15. Any other business.

2. UNIDROIT 2024 – A.G. (84) 1 rev.

ANNOTATIONS

Item No. 1 – Opening of the session

1. The 84th session of the General Assembly will be held on 12 December 2024 at the seat of

UNIDROIT. The meeting will start at 10.00 CET.

Item No. 2 – Appointment of the Chair of the General Assembly 2024-2025

2. Her Excellency Ambassador Nosipho Nausca-Jean Jezile (South Africa) chaired the General

Assembly for the period 2023-2024. According to the practice of yearly rotation among the

geographic regions into which UNIDROIT’s membership is divided in accordance with Article 7(7) of

the UNIDROIT Regulations, it will be for the Americas group of States to nominate the Chair for the

period 2024-2025.

EN GENERAL ASSEMBLY UNIDROIT 2024

84th session A.G. (84) 10

Rome, 12 December 2024 Original: English/French

November 2024

Item No. 13 on the Agenda: UNIDROIT Pension Reserve Fund – Proposal for

investment in the financial markets

(prepared by the UNIDROIT Secretariat)

Summary Proposal regarding the long-term investment of UNIDROIT’s

pension fund assets in the financial markets

Action to be taken To approve the proposed investment strategy

Related documents UNIDROIT 2024 – F.C. (97) 4; UNIDROIT 2024 – F.C. (98) 7;

UNIDROIT 2024 – A.G. (84) 9

I. INTRODUCTION

1. As anticipated to the Finance Committee at its 97th and 98th session (F.C. (97) 4; F.C. (98 7)

4), and as explained in document A.G. (84) 9, the indicative threshold for the investment of UNIDROIT’s

Pension Reserve Fund (PRF) assets in the financial markets has been reached1. Therefore, the

International Service for Remunerations and Pensions (ISRP), which manages UNIDROIT’s PRF assets

since 2019, has prepared a Report setting out three possible strategies for the long-term investment

of the PRF assets (please see the Annexe). This document briefly describes the three strategies and,

in line with the recommendation of the CAF, proposes to adopt the investment strategy that is already

used by other CAF organisations.

II. PROPOSED INVESTMENT STRATEGY

2. To identify appropriate investment strategies, the Report considers that pursuant to Article

2.3 of the Statute of UNIDROIT’s Pension Fund (2019), “[t]he UNIDROIT General Assembly shall take

the appropriate decisions in order to ensure the long-term viability of the Fund. It shall issue to the

Secretary-General guidelines and goals in respect of the investment of Fund assets.” Therefore,

ensuring the long-term viability of the PRF is a main objective.

3. Within the CAF, two different approaches are used to measure long-term viability:

1 Since 2022, the indicative threshold for investment had been set at € 900,000. This threshold was reached in the first quarter of 2024. By end-August 2024, the total assets of UNIDROIT’s PRF had increased to €

1,1 million.

2. UNIDROIT 2024 – A.G. (84) 10

• “balanced cashflows” approach, which requires a return such that in aggregate, over 76-80

years inclusive, the projected expenses related to the PRF (benefits and administrative

expenses) are equal to projected contributions plus projected investment returns. According

to the ISRP’s calculations, the required annual nominal return to achieve the objective of this

approach would be 5.5%.

• “depletion avoidance” approach, which seeks to ensure that the PRF does not deplete over

the projection period (typically 80 years). According to the ISRP’s calculations, the required

annual nominal return to achieve the objective of this approach would be 4.9%.

4. In consultation with the IRSP, the UNIDROIT Secretariat concluded that the “balanced

cashflows” method was to be preferred. This mostly because the risk of the “depletion avoidance”

approach is that the Fund might be close to depletion at the end of the projection period, even if it

is not technically depleted yet. Therefore, in the remainder of the Report, a target annual return of

5.5% is used.

5. The three possible investment strategies outlined in the Report are, in short:

• Option (a): “Target-focussed” strategy.

Composition: 70% Equities, 15% Fixed Income, 15% Alternatives.2

The expected return would be 5.5% and the volatility 12.7%.

Advantage: it meets the target annual return from the beginning.

Disadvantage: it has higher short-term risks given the higher volatility.

• Option (b): “Low-risk” strategy.

Composition: 40% Equities, 50% Fixed Income, 10% Alternatives.3

The expected return would be 4.7% between 2025-2028 and thereafter 5.1%. The expected

volatility would be 8% between 2025-2028 and 10% thereafter.

Advantage: it mitigates liquidity risk in the first years, when relatively high benefit payments

might be payable.

Disadvantage: it does not meet the target annual return.

• Option (c): “CAF 1” strategy.

Composition: 55% Equities, 30% Fixed Income, 15% Alternatives.

The expected return would be 5.1% and the volatility 10%.

Advantage: it has a reasonable balance between risk and return, and provides a middle-

ground solution compared to options (a) and (b). Furthermore, it is the strategy adopted by

the PRFs of three other CAF organisations4 and has thus previously been recommended and

tested by the CAF.

Disadvantage: it does not meet the target annual return.

6. Over the short term, the “target-focussed” has the highest risk while the risks are lowest

under the “low-risk” strategy.5 Over the long term, all strategies produce a viable solution.

2 Euro area listed real estate and global direct real estate 3 This strategy assumes that the CAF1 strategy (option (c)) would be implemented as of 2029. 4 European Union Institute for Security Studies (EUISS), European Union Satellite Centre (EU SatCen), Hague Conference on Private International Law (HCCH). 5 The Report notices that the liquidity risk deriving from benefit payments (leaving allowances to be paid

when staff members leave the organisation prior to reaching ten years of service) could be reduced by (i) holding several months’ contributions to the PRF in cash so there is a lower risk of having to sell assets, and/or (ii)

advancing the leaving allowance from UNIDROIT’s budget and then paying subsequent monthly contributions UNIDROIT’s budget until the financing has been repaid. However, the Report takes a prudent approach and does

not consider these potentially mitigating options.

UNIDROIT 2023 – A.G. (84) 10 3.

7. At its 31st meeting in November 2024, the CAF considered these three options and agreed to

recommend option (c) to the UNIDROIT Secretary-General6, considering that it better mitigates

liquidity risk than the target-focussed approach but has a higher estimated return than the low-risk

approach. As the Report indicates, it provides an adequate middle-ground solution.

8. The Secretary-General proposes to the General Assembly to follow the recommendation of

the CAF and thus, to approve option (c). The accompanying risk appetite statement for option (c),

also to be approved by the General Assembly, is as follows:

Risk appetite statement: “The General Assembly approves the implementation of a strategic

asset allocation with an expected long-term target return of 5.1% and expected volatility of

10.0%. Whilst the strategic asset allocation is lower than the required return of 5.5%, it provides

suitable diversification for the PRF’s assets with an acceptable level of volatility for the long term.

The General Assembly accepts the potential liquidity risk arising from the turnover of key

personnel, in order to reach a higher return than other less volatile strategies.”

9. The CAF approved the following risk tolerance statement:

“The CAF regularly reviews the investment performance of the PRF to ensure that returns are

evolving in-line with the strategic asset allocation. In the event that returns are not consistent

with the objective of the PRF, this would be raised to the General Assembly for consideration and

potential action. It is understood that there will be short-term volatility in the investment returns

which may result in assets being sold from the PRF to meet benefit obligations and any response

should be consistent with the long-term objective.”

10. If the General Assembly would approve the proposed investment strategy, its implementation

may take up to six months. Steps to be taken in this period include selecting, and negotiating with,

asset managers of identified mutual funds, engaging a custodian bank, and an external performance

consultant. The Secretariat would regularly report to the Finance Committee on the implementation

of the investment strategy, and would update the General Assembly at its next session in 2025.

11. The investment strategy would be reviewed and possibly updated every five years, i.e., the

first review would take place in 2029.

III. ACTION TO BE TAKEN

11. The General Assembly is invited to take note of the proposals regarding the investment of

UNIDROIT’s Pension Reserve Fund assets in the financial markets (Annexe), and to approve the

proposed “CAF 1” investment strategy (option (c)), in line with the recommendation of the CAF.

Please note that the Annexe is confidential

6 Pursuant to Article 31 of the UNIDROIT Regulations, the Secretary-General is “authorised to invest

such funds as are not necessary for the immediate running needs of UNIDROIT, on the condition that he take due care in making investments and in selecting establishments in which he has no vested interest. The

Secretary-General shall report on the results of any such investments.”

4. UNIDROIT 2024 – A.G. (84) 10

ANNEXE

CAF INVESTMENT POLICY & STRATEGY OF THE PENSION RESERVE FUND OF

UNIDROIT

FOR INTERNAL USE

CAF/WD(2024)38 6 November 2024

COMMITTEE FOR THE ADMINISTRATION OF FUNDS INVESTMENT POLICY & STRATEGY OF THE PENSION RESERVE FUND OF UNIDROIT

ACTION:

The Committee for the Administration of Funds is invited to take note of the information presented in this document and to approve the main conclusions that will be presented to the Secretary General for approval by the General Assembly of UNIDROIT.

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TABLE OF CONTENTS

TABLE OF CONTENTS ........................................................................................................................... 2

BACKGROUND .................................................................................................................................... 3

SUMMARY .......................................................................................................................................... 4

INVESTMENT POLICY ................................................................................................................................ 4 INVESTMENT STRATEGY ........................................................................................................................... 5

FULL REPORT ON THE INVESTMENT POLICY AND STRATEGY OF UNIDROIT’S PENSION RESERVE FUND ... 8

1. INTRODUCTION TO THE PRF ......................................................................................................... 8 1.1. Fund Value ................................................................................................................................... 8 1.2. Investment Fees .......................................................................................................................... 8 1.3. Projections ................................................................................................................................... 8

2. INVESTMENT POLICY .................................................................................................................... 8 2.1. Risk Considerations...................................................................................................................... 9

Cash flow profile: ................................................................................................................................ 10 Feasibility of the investments: ............................................................................................................ 10 Portfolio diversification: ..................................................................................................................... 11 Risk of the portfolio and impact on the objectives of the Organisation: ........................................... 11

2.2. Risk Overview ............................................................................................................................ 11 Risks Related to Benefits / Cashflows ................................................................................................. 12 Risks related to assets......................................................................................................................... 14 Market risk .......................................................................................................................................... 15

3. INVESTMENT STRATEGY ............................................................................................................. 19 3.1. Investment Universe ................................................................................................................. 19 3.2. Expected return and risk ........................................................................................................... 21

Return ................................................................................................................................................. 21 Return - Equity .................................................................................................................................... 21 Return - fixed income: government and corporate bonds ................................................................. 22 Return – Alternative investments: euro area listed real estate and global direct real estate. .......... 23 Return – Comparison of the CAF estimations with those of other financial experts ......................... 24

Risk Measures (Volatility) ....................................................................................................................... 26 3.3. Construction of the Strategic Asset Allocation .......................................................................... 28 PRF Risk Considerations ......................................................................................................................... 34 Short-term Risks ..................................................................................................................................... 35 Long-Term Risks ..................................................................................................................................... 36

Base Case Cashflows ........................................................................................................................... 37 Sensitivity Scenario Cashflows ............................................................................................................ 37 Conclusion on Investment Strategy Options ...................................................................................... 39 CAF Recommendation ........................................................................................................................ 40

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COMMITTEE FOR THE ADMINISTRATION OF FUNDS INVESTMENT POLICY & STRATEGY OF THE PENSION RESERVE FUND OF UNIDROIT

Background

1. In September 2019, the International Institute for the Unification of Private Law (UNIDROIT) (or the Organisation) established a pension scheme for staff. Prior to the establishment of the new pension scheme, staff were affiliated to the Italian Social Security system. Some staff remain affiliated to the Italian Social Security system having chosen not to join the new pension scheme established in 2019. The administration of the Pension Reserve Fund (PRF), which was set up at the same time as the new pension scheme, was externalised to the ISRP. UNIDROIT joined the Committee for the Administration of Funds (CAF) on 6 September 2019.

2. Since inception, contributions received by the PRF have been placed in money market investments (principally term deposits). UNIDROIT now intends to invest the PRF in financial markets according to a strategic asset allocation (SAA) which meets UNIDROIT's objectives.

3. The CAF is invited to discuss and make a recommendation to the Secretary General of UNIDROIT on the Investment Policy and Investment Strategy suitable for the PRF such that the UNIDROIT General Assembly can “…take the appropriate decisions in order to ensure the long-term viability of the Fund [PRF].”1

4. The following sections first present a summary of the report and the investment policy and strategy for approval by the Member States. Next follows a detailed analysis of two options for the investment strategy, both designed to achieve the PRF’s target return. The Annex to this document presents a summary of the assumptions used to create the pension benefits projections.

1 Paragraph 2.3 of the “Statute of the Fund”

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Summary

INVESTMENT POLICY

5. The PRF’s statute states that “The UNIDROIT General Assembly shall take the appropriate decisions to ensure the long-term viability of the Fund [PRF].” To meet this requirement defined in the PRF’s statute, it is necessary to examine the definition of the long-term viability of the PRF and how to measure it, such that there is a well-defined target for the SAA.

6. Long-term viability can be defined in various manners. Within the CAF organisations there are two separate methodologies used to define long-term viability2:

a. “Balanced Cashflows” being defined as projected expenses (benefits plus administrative expenses related to the PRF) being equal to projected contributions plus projected investment returns in aggregate over the last five years of the projection period (typically years 76-80 inclusive).

b. “Depletion Avoidance” being defined as attempting to delay depletion of the Fund as far as possible into the future without recourse to additional contributions from Member States.

7. These two approaches are related - the “Depletion Avoidance” target is a consequence of the required return being unachievable with a SAA that has a reasonable level of risk without supplementary contributions which would be required for the “Balanced Cashflows” approach.

8. The required return under each objective may be determined using actuarial projections. For the purposes of establishing the investment policy and strategy, actuarial projections of the benefits and contributions were provided to UNIDROIT and produced based on agreed assumptions and parameters relevant to UNIDROIT3.

9. Based on the investment objective definitions outlined above, the Secretariat has determined the required return for each objective, based on the actuarial cash flows and including all expenses related to the operation of the PRF, as set out below:

Table 1: Determination of required return

Methodology Required Annual Nominal Geometric Return4

Balanced Cashflows 5.5% No Depletion 4.9%

10. Based on discussions with UNIDROIT, there is a preference to use a balanced cashflows methodology and so a return of 5.5% (or more) is to be targeted.

11. The risks attached to setting an investment policy have also been analysed. In particular, it was noted that there is a significant liquidity risk in 2028. If the Secretary General were to leave UNIDROIT in 2028 (the current end of the appointment), then a leaving allowance would be due which could not be financed by 2028 annual

2 Note that all CAF Organisations use the same requirement of “long-term viability” within their respective statutes. 3 As set out in the document provided to UNIDROIT: “Cashflow and PRF Projections” SIRP/E(2024)26 4 A geometric average return is the average annual return (growth rate) of a compounded return (series).

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contributions alone. In this case there would be a requirement to sell assets from the PRF to pay the benefit. If this were to happen at the same time as investment returns being below expectations, then this could result in a significant fall in the PRF, potentially impacting its long-term viability.

12. In addition, it is noted there were only 12 employees affiliated to the UNIDROIT pension scheme at 31 July 2024. Therefore, the accuracy of the actuarial projections should be treated with caution as any unforeseen movement in personnel could have a significant impact on the cashflow requirements and may require capital to be drawn from the PRF.

13. Other risks related to the PRF were also analysed including the feasibility of investments, portfolio diversification and risks related to the investment of the assets.

INVESTMENT POLICY – CONCLUSION

Based on the “Balanced Cashflows” approach, the required annual return is 5.5%.

INVESTMENT STRATEGY

14. The General Assembly will need to approve the Investment Strategy deemed to meet the PRF’s objectives. The CAF has analysed various options for implementation of a strategic asset allocation. Whilst only the target-focussed strategy meets the required return in the long term, the short-term risk, particularly in respect to liquidity risk, is different between the two options.

15. The options considered by the CAF are:

Table 2: Investment strategy options

Option Geometric Return Volatility Considerations

Target- focussed

5.5% 12.7% Achieves target return from implementation. May have higher short-

term risks. Low Risk- focussed

4.7% (2025-8) thereafter 5.1%

8.0% (2025-8) thereafter

10.0%

Lower-risk SAA implemented until liquidity risk is reduced. SAA would be adjusted in

2029 to achieve long-term target return in aggregate.

CAF 1 5.1% 10.0% Reasonable risk-return profile implemented by other CAF Organisations.

16. The target-focussed option has significantly higher volatility than the current SAAs implemented by other CAF Organisations due to the large allocation to higher-risk assets (70% equity). This may be perceived as an aggressive strategy whose high volatility could increase the liquidity risk for the PRF.

17. The alternative options presented, whilst not achieving the required return, provide fewer volatile returns which could mitigate short-term risks to the PRF and provide a more balanced and diversified portfolio.

18. Note that for the purposes of the analysis, it has been assumed that for the low risk- focussed option, the CAF 1 SAA would be implemented in 2029 for the long term. However,

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a suitable SAA to be implemented in 2029 will be analysed at the appropriate time which may be different from the CAF 1 SAA presented here.

19. In creating suitable investment strategy options, market risk and liquidity risk of the PRF as well as the projected cashflows are considered. In light of these issues, the CAF considered the following options for the implementation of a strategic asset allocation:

Table 3: Strategic asset allocation for the PRF by investment strategy option

SAA Target- Focussed

Low Risk- Focussed CAF 1

Asset Class Sub Asset Class Equities Global (Developed) Equities 30% 25% 35% Euro Area Equities 22% 10% 10% Emerging Markets Equities 18% 5% 10% Total Equities 70% 40% 55% Fixed Income Global Government Bonds (EUR Hedged) 5% 30% 15%

Global Investment Grade Corporate Bonds (EUR Hedged) 5% 15% 10%

Emerging Markets Sovereign Bonds – Hard Currency (EUR Hedged) 5% 5% 5%

Total Fixed Income 15% 50% 30% Alternatives Euro Area Listed Real Estate 15% 10% 10% Global Direct Real Estate 0% 0% 5% Total Alternatives 15% 10% 15% Total Portfolio 100% 100% 100% Expected Return Nominal Geometric 5.5% 4.7% 5.1% Real Geometric (2% inflation) 3.4% 2.6% 3.0% Volatility 12.7% 8.0% 10.0%

20. The CAF considered the short- and long-term risk implications of the options for the PRF, looking at the projected development of the PRF as well as the dispersion of returns under each investment strategy considering the projected cashflows and investment returns of each option above.

21. The CAF also considered the risk to the PRF of a large benefit payment being made in 2028 which would need to be financed by the PRF. This was highlighted as a potential liquidity risk based on the actuarial projections provided to UNIDROIT. If this occurs, it is estimated that benefit payments in 2028 could require up to 25% of the PRF at that time being liquidated to meet the cash requirements. The viability of the PRF could be put at risk if the PRF must be partially liquidated to meet this benefit payment at the same time as investment returns being lower than expected. Such an event could result in a significant fall in the value of the PRF which would then place the viability of the PRF at risk in the long term5.

22. Prior to implementation of a new SAA in 2029, it is suggested that a further review is undertaken to consider the updated cashflow projections for the PRF and inform UNIDROIT and the CAF of any changes in the SAA required to meet the PRF’s long-term objectives.

5 The impact on the PRF of a potentially large benefit payment in 2028 may be alleviated by contributions being financing of the benefit being provided from UNIDROIT’s budget with future pension contributions being paid to UNIDROIT to cover the financing. However, this has not been considered in this report which takes a conservative view on the PRF financing. However, significant cash holdings may also have the effect of reducing the returns to the PRF which may result the PRF not achieving its required return.

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INVESTMENT STRATEGY – CAF RECOMMENDATION The CAF is requested to make a recommendation to the Secretary General of UNIDROIT for approval by the General Assembly on the investment strategy option to be implemented and the accompanying risk appetite and risk tolerance statements.

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FULL REPORT ON THE INVESTMENT POLICY AND STRATEGY OF UNIDROIT’S PENSION RESERVE FUND

1. Introduction to the PRF

1.1. Fund Value

1. The value of the PRF as at 31 August 2024 used in this analysis, was EUR 1.1 million. The PRF is invested in various term deposits which have been renewed at the best available rate found by the Secretariat upon expiry since UNIDROIT joined the CAF in September 2019.

1.2. Investment Fees

2. Administration fees, which include CAF fees, Custodian fees and performance provider fees, have been considered within the funding analysis. Total estimated fees for 2025, being the assumed first year of investment, are approximately EUR 48 0006. Asset management fees related to the selected investments and vehicles are included in the analysis as part of the target return.

1.3. Projections

3. Projections of benefits, salaries and contributions were provided to UNIDROIT by the Secretariat and have been used in the scenario illustrations below to establish the investment policy. Summary details of the assumptions and parameters used as part of the actuarial projections’ work is set out in ANNEX A. Actuarial Assumptions.

4. Whilst the actuarial projections have been provided based on the inclusion and exclusion of CAF fees from the PRF, the analysis in this report focuses on the most prudent cash flow projections, being those which include all administrative expenses related to the ongoing operation of the PRF.

5. It should be highlighted that the actuarial projections used have some degree of assumption and model risk given the size of UNIDROIT. However, the robustness of the projections and conclusions have been verified with the examination of various scenarios. Details of the various scenarios are set out in paragraph 33.

2. Investment policy

6. The PRF’s statute states that “The UNIDROIT General Assembly shall take the appropriate decisions to ensure the long-term viability of the Fund [PRF].”

7. To consider different investment policies, different measurable objectives are possible such that the PRF’s long-term viability can be assured.

8. “Balanced Cashflows” approach to long-term viability seeks to ensure that the PRF eventually reaches a stable position that the fund is not required to grow exponentially, whilst ensuring that future benefits can be paid using the projected contributions and projected investment returns. This methodology provides a required return such that in aggregate, over years 76-80 inclusive, projected expenses (benefits and administrative

6 This amount consists of costs for the custodian and performance consultant as well as annual CAF fees. The fees for the custodian and performance consultant are assumed to increase with inflation and the CAF fees are related to the size of the PRF.

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expenses) are equal to (i.e. financed by) projected contributions plus projected investment returns. The advantage of this approach is that it focuses on the long-term cashflows and ensures that there is no strain on the Fund. However, the disadvantage is that there is a high degree of dependency on the accuracy of the projections for years 76-80.

9. Based on the actuarial projections, the annual target nominal return required to achieve the “Balanced Cashflows” objective to ensure long-term viability is 5.5%.

10. “Depletion Avoidance” approach to long-term viability seeks to ensure that, as a primary goal, the PRF does not deplete over the projection period (typically 80 years). The advantage of this approach is its ease of understanding. However, the disadvantage is that at the end of the projection period, the PRF may be close to depletion, without technically depleting as the PRF could be fully utilised to pay projected benefits.

11. Based on the actuarial projections, the annual target nominal return required to achieve the “Depletion Avoidance” objective to ensure long-term viability, is 4.9%.

12. The “Balanced Cashflows” approach is the objective used by CAF Organisations for establishing the required return which informs the construction of the SAA. However, in some circumstances, it is not possible to achieve this objective with a return that has a reasonable risk and/or without supplemental contributions. If the CAF Organisation is not in a position that supplemental contributions are possible, then the objective should be “Depletion Avoidance”. If, even under the “Depletion Avoidance” objective, the required return is not attainable, then the objective decided by other CAF Organisations has been to extend the life of the PRF as much as possible.

13. A summary of the required annual nominal geometric return under each methodology is shown in Table 4 below:

Table 4: Determination of required return

Objective Required Annual Nominal Geometric Return

Balanced Cashflows 5.5% No Depletion 4.9%

14. Based on discussions with UNIDROIT, there is a preference to use a balanced cashflows methodology and so a return of 5.5% (or more) is to be targeted.

2.1. Risk Considerations

15. The CAF has examined the level of risk, with regards to the long-term objective and the variations in the funding situation that could be borne by the PRF, to estimate what could be a reasonable return and risk.

16. Apart from this quantitative analysis, UNIDROIT should consider the appropriate investment strategy to be implemented based on its risk appetite and risk tolerance as this informs the construction of a suitable SAA and is a fundamental aspect of the holistic risk management of the PRF7. A higher risk appetite and risk tolerance implies willingness to

7 See “Pension Risk Management – Holistic In-Depth Analysis” [CAF/WD(2023)26]” for further details on the risk management of pension schemes.

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implement a more aggressive and higher risk (volatile) investment strategy as well as other associated risks, particularly liquidity risk in UNIDROIT’s case.

17. The reasonability of the returns (and of the portfolios generating them) has been assessed as regards the following:

Cash flow profile:

18. Under the base case actuarial projections8, until 2052, the annual contributions received by the PRF are greater than the annual benefit payments to be made. If short-term losses do not need to be realised to pay benefits, then potentially a higher risk investment strategy could be implemented.

19. In the actuarial projections provided to UNIDROIT there is a scenario investigated, which considers the impact of the Secretary General leaving in 2028. If this happened, the estimated benefit payments for that year would be greater than the annual contributions which could pose a significant cashflow risk as it would require a portion of the PRF to be redeemed to finance benefits. In this instance, if investment returns are negative that year or lower than anticipated and there is a large benefit payment to be made, then this could result in the Fund not achieving its objective. Therefore, it may be prudent to implement a less volatile and more liquid SAA until 2029 to reduce the impact on the PRF’s long-term viability should benefit payments in 2028 be large in relation to the PRF’s size at that time.

20. In addition, it is noted there were only 12 employees affiliated to the UNIDROIT pension scheme at 31 July 2024. Therefore, the accuracy of the actuarial projections should be treated with caution as any unforeseen movement in personnel could have a significant impact on the cashflow requirements and may result in capital to be drawn from the PRF to pay benefits.

21. The CAF noted that the financing of such benefit payments and the risk of needing to draw capital from the PRF may be reduced by:

a. The use of prior months’ contributions being held in cash which would reduce the asset selling required from the PRF or

b. UNIDROIT providing financing to the pension scheme to pay the benefit so that the PRF does not need to be liquidated to meet the benefit payment. In this case, later pension scheme contributions would be transferred to UNIDROIT’s ordinary budget until the financing provided had been repaid.

22. However, the present analysis considers a conservative approach to the liquidity risk posed by this potential payment and does not consider these potentially mitigating options. The availability of these options is highly dependent upon the timing and size of a potential benefit payment as well as the prior notice period to enable such financing options to be put in place.

Feasibility of the investments:

23. The size, governance and administration framework of the Fund can put some limits on the investment universe, the management style and therefore on the achievable or reasonable return. The Secretariat has considered the initial and ongoing investment size

8 Considering UNIDROIT’s small population, these dates can vary significantly in the future with small but significant staff changes.

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requirements set by funds used by other CAF Organisations and considers that the required strategies could be implemented in the framework of the PRF being administered by the ISRP, under the instruction of the CAF.

24. Given the size of UNIDROIT’s PRF, which was approximately EUR 1.1 million at 31 August 2024, it may be prudent to consider minimum investment sizes, in terms of monetary amounts and allocation share in the SAA, to ensure a cost-efficient SAA is implemented by avoiding too many transactions.

Portfolio diversification:

25. The optimal strategy to reduce excessive market risk whilst still obtaining an investment return (a product of market risk) is to diversify the portfolio as much as possible whilst accounting for the costs of implementation. An appropriate portfolio diversification should be a part of the design of a strategic asset allocation to establish a reasonable investment strategy and return.

Risk of the portfolio and impact on the objectives of the Organisation:

26. The PRF will be exposed to a variety of risks when investing in financial markets. Such risks may be due to both events / actions internal to UNIDROIT and the PRF (e.g. liquidity needs) as well as those external to UNIDROIT and the PRF (e.g. movements in investment markets). The risk appreciation and consideration is a key factor in the construction of the SAA to minimise the possibilities of the PRF’s objectives not being met.

2.2. Risk Overview

27. It is considered that the primary outcome to be avoided is the need for additional contributions in addition to those required under the pension scheme rules to ensure the PRF’s long-term viability. This may be due to an expected future depletion, requiring additional contributions to avoid this event, or, in the worst-case scenario, actual depletion of the Fund and the elimination of the PRF’s assets. It should be noted that in this case, the Member States, as guarantors of the pension scheme benefits, would be required to contribute for the payment of annual benefits. It would be expected, in the case of depletion, that the annual contributions required would be significantly higher than if the PRF were not depleted. This is due to the loss of investment return that the PRF provides to help finance the benefits.

28. The main risks facing UNIDROIT relate, broadly, to the risk of benefit payments evolving unfavourably (typically benefit payments being higher than expected) and the risk of the PRF’s investments and therefore its objective not being achieved.

29. In conformity with standard risk frameworks, the risks facing the PRF are considered in conformity with standard risk assessment:

a. Risk Identification

b. Risk Monitoring

c. Risk Management

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30. Note that in the CAF meeting of November 2023, the CAF discussed and considered a report on “Pension Risk Management – Holistic In-Depth Analysis”9 which covers risks to the pension scheme on a wide-ranging basis. The risks considered here are specific to the investments of the PRF.

Risks Related to Benefits / Cashflows

31. The ISRP has provided UNIDROIT with an actuarial report on projected benefits and cashflows. This report examined the development of the staff affiliated to UNIDROIT’s pension scheme and the projected benefits and contributions under the current pension scheme rules. Various assumptions were used in the production of the projections as summarised in ANNEX A. Actuarial Assumptions.

32. Actuarial models are typically applied to large populations which makes the projections more reliable. Furthermore, the assumptions used for actuarial projections are usually based on an analysis of historic experience specific to the organisation and pension scheme. UNIDROIT has only 12 people affiliated to its pension scheme as at 31 July 2024 which increases the risk of individual events impacting the accuracy of the projections. Additionally, due to the pension scheme being recently established, historic experience of the pension scheme was not possible. Therefore, whilst the assumptions were discussed and agreed with UNIDROIT, there is significant assumption risk in the projections.

33. To examine the degree of risk associated with the pension scheme, the projections included various scenarios to consider the impact on the projections and benefits. The scenarios included:

a. High Turnover – staff turnover being significantly higher than base case which impacts the frequency of the payment of Leaving Allowances which are the main benefit payment in the early years of a pension scheme.

b. High Inflation – inflation being 1% higher than base case

c. High salary increases – real salary being +0.5% higher than base case

d. High career progression – individual salaries increasing faster due to more rapid career advancement

e. Key personnel leave – Key person (Secretary General) leaves just prior to achieving 10 years of service.

2. The development of the PRF, including only projected custodian expenses, with an expected geometric return of 4.68%10 for the base case and each of these scenarios as provided in the actuarial projections to UNIDROIT is shown below:

9 [CAF/WD(2023)26] 10 4.68% is the nominal expected geometric return on assets based on the strategic asset allocation proposed as an example in [CAF/WD(2019)24] and the latest long-term capital markets assumptions.

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Figure 1: PRF development – Actuarial assumption scenarios

34. The scenarios of high inflation and high career progression would result in an undesirable development of the PRF in the long term although, focussing on the next 40 years up to 2065, the assumption risk is not significant- with the PRF development not being significantly impacted under all scenarios.

35. The projected benefits are lower than the projected contributions to the PRF, under all scenarios, except for the scenario relating to key personnel leaving, in all years up to at least 2051. In the scenario related to key personnel leaving, it is projected that total benefit payments for 2028 would be larger than total contributions received. If the Organisation were able to provide financing for the annual benefit payments under this scenario, then this would reduce the need to draw down the PRF in this event. Furthermore, the frequency of investment of contributions and rebalancing may also reduce the need to redeem the PRF’s capital as it would allow the accumulation of funds outside of the PRF which could be used to pay benefits if necessary.

36. The monitoring of benefit payments and development of the projected benefit payments is performed via an annual Treasury Management Plan which would be agreed with UNIDROIT and presented to the CAF. In this case, any significant fluctuations of actual benefit payments compared to expected benefit payments can be highlighted and the necessary action taken when necessary.

37. It should be noted that regular reviews of the PRF which would update the assumptions and population to provide updated cashflow projections should mitigate any long-term risk to the PRF by enabling issues to be identified early. Furthermore, it was assumed that the contribution rate to be paid to the pension scheme under the current rules would stay constant throughout the projection period. The contribution rate is re- evaluated every five years in accordance with the pension scheme rules, following an

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actuarial study on the benefit development. This contribution adjustment will also mitigate the risk of an unfavourable long-term development of the PRF.

Risks related to assets

38. Regarding asset risks, there are a number of risks that may result in the PRF falling short of its performance target and overall objective.

39. Market risk is the risk of a decrease in the value of the portfolio due to adverse movements in financial markets. The acceptance of some degree of market risk is essential for the PRF needs to reach its target return. Market risk can be reduced through portfolio diversification and monitored through different mechanisms. Market risk has several sources, impacting different parts of the portfolio:

• Interest rate and credit risk - in bonds

• Currency risk - in any non-domestic investment

• Company or business risk - in equities

• Political/regulatory risk - particularly in emerging markets equity

• Economic risk - in equities and bonds

40. Relative risk is the risk of deviation from the benchmark’s performance which represents the target of the return of each individual asset class and the overall PRF due to: portfolio drift from the different growth across asset classes; tactical decisions related to the asset allocation; or to active management within asset classes. The relative risk stemming from the first two factors can be controlled through the rebalancing strategy and by keeping the investment portfolio close to the established long-term SAA. The third risk factor may be limited by investing in index-linked products or by imposing certain deviation limits to active asset managers and by monitoring them closely.

41. Liquidity risk is the risk of significant losses when liquidating positions or when there is no possibility of liquidation at all. The PRF can afford some liquidity risk as it is a long-term investor and has annual net inflows for approximately the next 30 years, based on the Base Case cashflow projections. However, it should be noted that under the “Key Personnel Leave” scenario examined in the actuarial cashflow projections there is an expectation that if the Secretary General were to leave in 2028 then this would result in annual projected benefit payments being larger than annual contributions in 2028. The implications of this liquidity risk are examined in further depth in this report.

42. Liquidity risk may also be mitigated by the selection of liquid asset classes which means the PRF could redeem investments, if needed, at market price. Typically, mutual funds are used in the CAF and further requirements on the mutual fund selection should result in investments being easily redeemed.

43. Counterparty risk is the risk that a counterparty may be incapable of honouring its obligations. The nature of the long-term investment vehicles usually selected by the CAF – mutual funds – does not entail a direct counterparty risk as the assets are always under the ownership of the Organisation. In the event of an asset manager bankruptcy, the PRF’s

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ownership of investments will not be affected11. Within the funds, there exists a counterparty risk for some asset classes, especially within the fixed-income asset class, which is managed by the asset managers and translated into market risk.

44. Operational risk12 is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. This risk could exist either within the administration of the PRF itself, or within the mutual funds at the level of the asset managers. The ISRP, as Administrator of eight pension funds from six international organisations, has implemented investment procedures and control mechanisms to optimise the execution and administration of the investments with the aim of reducing this risk. Regarding operational risks inside the mutual funds, the latter should be / has been analysed at the time of the asset managers’ selection, where the solidity and the risk control procedures of the candidates should be a heavily weighted element in the evaluation.

45. Some pension fund managers define the main risk of funds like the PRF as the risk of losing money, whereas the risk of fluctuations in value should be considered irrelevant due to the long-term investment horizon. This is a valid view for pension funds which have net inflows, such as is the case with UNIDROIT, and in the context of mean reversion models (where market prices revert to their long-term trend). Nonetheless, it can be challenged in pension funds subject to regulatory or accounting constraints imposing a stable value, and by short-term reporting and assessment practices. According to this approach, liquidity, counterparty and operational risks are the highest, as they may lead to actual losses.

46. From the perspective of return compensation, higher risks are typically compensated with higher returns. Therefore, the PRF would obtain risk compensation for bearing liquidity, market and counterparty risks while relative risk13 and operational risk would not be compensated.

47. Overall, the PRF's biggest exposure is to market risk as it is the most challenging to reduce whilst attempting to obtain a positive return; in parallel, it is the only risk having a budget, i.e. market risk is explicitly allowed by the investment strategy via the expected (and actual) volatility of the strategy implemented. Further analysis of the market risk and its impact on the PRF is provided below.

Market risk

48. The “risk-free option” for the Organisation would be to invest in assets with a guaranteed notional value at maturity and return, as has been the investment strategy pursued to date with the use of short-term savings contracts. Contributions could be invested into products which attempt to match the projected benefit payments, in terms of inflation, duration and amount, such that the financing of benefits is made without risk.

11 However, in the case of an asset manager’s bankruptcy, there may be a temporary lack of liquidity, while the legal and administrative procedures are carried out. 12 Related to operational risk, there is the very short-term market risk, measured based on financial markets’ daily volatility, as it is a highly disturbing factor for operations: rebalancing operations and investment of incoming contributions. This risk, even though it comes from market fluctuations, is very much related to operational risk. Indeed, large movements in securities prices during volatile periods make portfolio valuations and corrections through rebalancing very erratic. Moreover, exit and entry prices are more uncertain than under normal conditions, which largely perturbs both the rebalancing and investment executions. Certain levels of market instability can be monitored, eventually leading to the decision to suspend rebalancing operations and/or the investment of contributions. 13 The efficient markets’ theory as well as empirical evidence shows that the relative risk coming from active or tactical management is not consistently rewarded over the long term.

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Whilst theoretically possible, in practice, finding investment products which perfectly match the benefits payments is almost impossible. The “risk-free option” is typically more expensive for organisations due to the lower level of return obtained and so greater contributions are required from the organisation to finance pension benefit obligations. Furthermore, if products are used to guarantee the payment of benefits, then this would be a transfer of risk to a third party who would inevitably price in such risks through lower returns or a higher purchase price (both requiring greater contributions from the organisation).

49. Alternatively, the Organisation can finance its pension benefit obligations with uncertain and potentially higher investment income (non-guaranteed capital return) from financial markets. Investing in financial markets does entail a certain risk and the evolution of the assets will not necessarily be linked to that of the benefits to be paid. There will also be a certain short-term volatility in the value of the assets. The Organisation exchanges the certainty of the need to pay higher contributions and invest in the risk-free portfolio, for the risk of having to increase them in the future if market returns are lower than the target.

50. It is difficult to predict what will happen in the future, especially with such a long- term horizon as the one used for the objectives of the PRF. In addition, the probabilities of events lose significance when considered over such a long period. Even though the expected rate of return is the most probable average result in the long term, there is a probability of returns being higher as well as a probability of returns being lower. In parallel, it is possible to have significant market downturns over one, or multiple, years. As the PRF has positive cash inflows until 2052, based on the base case of the actuarial projections, the PRF could sustain negative fluctuations in market value on the assumption that these would be offset by positive returns in order to achieve the required return (mean-reversion model) as the PRF’s capital would not need to be used to pay benefits. Although, due to the small population of UNIDROIT the cashflow projections could be significantly different from reality and therefore it cannot be ruled out that benefit payments could be higher than contributions prior to this date. Therefore, the Organisation should understand the risk that capital may be required from the PRF when approving an investment in financial markets.

51. Thus, the actual returns could be lower (or higher) than the target or expected return because of two types of situations, one short-term and another long-term. The impact of these risks in the context of the SAA is evaluated later in this document.

52. An overview of the risk framework – identification, monitoring and mitigation – for the PRF is shown in Table 5.

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Table 5: PRF risk framework summary

Risk Identification Description / Identification Monitoring Mitigation Benefit Related Benefit payments Benefit payments are significantly

different from expectations resulting in earlier negative cashflows and potentially draw down of PRF’s capital. Due to the small population, changes in personnel could significantly impact the projected cashflows and require the liquidation of some of the PRF’s investments to pay benefits.

Annual Treasury Management Plan in place to consider cash flow requirements over the forthcoming calendar year. Discussed and agreed with UNIDROIT.

Regular reviews of PRF and re- evaluation of benefit projections.

Assets Related Market Risk The risk of a decrease in the value of the

investment portfolio due to adverse movements in financial markets.

Performance monitoring at CAF meetings. Regular reviews of PRF and the appropriate strategic asset allocation.

Relative Risk The risk of deviation from the benchmark’s performance

Performance monitoring at CAF meetings. Fund managers may be placed on watchlist and subsequently removed if relative risk of underlying funds is considered excessive.

Regular reviews the underlying investment vehicles used to achieve the strategic asset allocation.

Liquidity Risk The risk of significant losses when liquidating positions or when there is no possibility of liquidation at all

Annual Treasury Management Plan in place to consider cash flow requirements over the forthcoming calendar year. CAF has previously discussed the approach to negative cashflows which would be used if contributions are insufficient to cover annual benefit payments.

Underlying investment vehicles used are typically mutual funds. Liquidity availability is a key requirement when selecting a fund. However, volatility of funds should also be considered to mitigate the impact of a market downturn at the time of liquidation.

Counterparty Risk The risk that a counterparty may be incapable of honouring its obligations

Secretariat has regular updates with asset managers and regularly questions asset

Assets are always under the ownership of the PRF.

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managers on any events that may impact the company.

Operational Risk The risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events.

ISRP, as Administrator, is duty bound to report any operational failures within ISRP that may impact the PRF. Secretariat’s regular updates with asset managers monitors any operational events at the asset manager. Any significant operational events are reported to the CAF in the regular performance monitoring reports.

Due diligence on asset managers is performed at the time of mutual fund selection.

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3. Investment strategy

53. This chapter defines the investment strategy or strategic asset allocation (SAA), which is the combination of assets necessary to meet the required return of 5.5%. It is composed of four parts: selection of investment universe, expected return and risk of the different asset classes composing the investment universe, composition of the optimal SAA and implementation style (static or dynamic).

3.1. Investment Universe

54. The proposed investment universe is that already implemented in other CAF Organisations’ PRFs. The investment universe is composed of the following asset classes:

Table 6: CAF Investment Universe

Asset Class Sub Asset Class Equities Global (Developed) Equities Euro Area Equities Emerging Markets Equities Fixed Income Global Government Bonds (EUR Hedged) Global Investment Grade Corporate Bonds (EUR Hedged) Emerging Markets Sovereign Bonds – Hard Currency (EUR Hedged) Alternatives Euro Area Listed Real Estate Global Direct Real Estate (EUR Hedged)

55. Global Equities are included as the basis of a portfolio searching for a return and having an allowance for risk, to be increased or reduced through its allocation (its share of the portfolio).

56. Global (Developed) Equities, as represented by the MSCI World index are today largely dominated by the United States, which represents over 70% of the index market capitalisation. Euro Area Equities are included to offset the bias of Global (Developed) Equities towards US equities. The inclusion of Euro Area Equities14, whilst creating a duplicate exposure to the Euro Area stock market, offsets the bias towards US equities (and currency) and provides diversification benefits.

57. Emerging Markets Equities are part of the universe as the prospects of the emerging markets' dynamism justify the inclusion of their equity markets. In parallel, different risk and return characteristics justify singling out this asset class for separate consideration. Indeed, several aspects distinguish emerging equity markets from developed equity markets. Emerging equity markets tend to be newer, smaller, less transparent, and less liquid than developed country equity markets. As such, investments in this asset class have been largely riskier over the past 20 years than developed equity markets and are expected to continue being so. The asset class has therefore benefited and earned higher returns than developed equity markets over a 20-year period. However, these markets are maturing rapidly, becoming larger, more transparent and more liquid. Still, their expected return for the future is higher than that for developed equity markets. Finally, the emerging

14 Represented by the MSCI EMU, whose three largest countries are France (34%), Germany (28%) and the Netherlands (15%).

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economies have been, and are likely to remain, the fastest growing in the world. As a consequence, these countries' stock markets have been accounted for an ever-increasing share of total global market capitalisation - from around 1% in 1988 when MSCI launched its emerging markets index to over 10% today. Since 2013, the emerging (and developing) economies’ share of the world’s Gross Domestic Product (GDP) has exceeded that of developed economies (percent of world GDP, based on purchasing power parity).

58. Global (Developed) Government Bonds are fixed-income instruments issued by sovereign states from developed economies. Global Government Bonds play an important role in an investment portfolio when combined with other asset classes. In general, their inclusion in a portfolio tends to make the returns on that portfolio less volatile, as government bonds tend to fluctuate less in value than equities and other risky assets. Additionally, Global Government Bonds provide diversification benefits as, usually, bond prices tend to move in the opposite direction from stock prices. This is mainly due to the evolution of interest rates, the main determinant of government bond returns, during the business cycle. In general, when the economy is strong and stocks are rising, interest rates tend to increase, pushing down bond prices and, hence, reducing bond returns. In contrast, when economic growth is weak and stock prices are falling, interest rates tend to decrease, driving up bond prices and enhancing bond returns. This negative relationship between stock and bond price movements is far from being perfect, and at times tends to break down, in particular when inflation turns out to be much higher or lower than anticipated. Overall, however, it is sufficiently strong to justify the inclusion of Global (Developed) Government Bonds in a portfolio as a distinct asset class.

59. Global Investment Grade Corporate Bonds15 are defined as fixed-income securities with maturities greater than one year issued by corporations with credit ratings of “BBB-“ or higher. Although the reasons for including corporate investment-grade bonds in a diversified portfolio are broadly the same as for government bonds, the two markets are sufficiently different to justify their inclusion. In particular, returns on corporate investment-grade bonds are determined by the level of and change in interest rates and the level of and change in the additional yield, or "spread", paid to compensate investors for the risk that the company may default (credit risk). Most of the time, the extra yield earned as compensation for credit risk enhances the return on corporate bonds relative to government bonds, which advocates for its inclusion in global asset allocations.

60. Emerging Markets Sovereign Bonds16 are defined as government bonds issued by Emerging Market countries. This asset class is attractive due to the exposure to strong economic growth in Emerging Markets compared to Developed Markets. The asset class also provides attractive yield and return characteristics compared to other fixed income asset classes included in the CAF Investment Universe.

61. Euro Area Listed Real Estate is included given the attractive risk and return characteristics of real estate investments, and especially the income component, as well as for the diversification benefits and the inflation hedge properties. Indirect (listed) investment is the most easily accessible exposure to real estate, but it is subject to factors such as the market sentiment; they are effectively part of the quoted equities universe, and thus can be correlated with it in the short term.

15 See [CAF/WD(2020)13] for a full analysis of Global Investment-grade Corporate Bonds 16 See [CAF/WD(2021)38] for a full analysis of Emerging Market Sovereign Bonds

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62. Global Direct Real Estate17 provides similar traits to Euro Area Listed Real Estate but due to its underlying investments, it is less correlated to equities markets. In addition, the risk return characteristics of Global Direct Real Estate as well as the inflation protection provided by the asset class makes it appropriate for inclusion in the investment universe.

63. For information, the ISRP and the CAF analysed other asset classes such as infrastructure and private equity, and taking into account the objective of the PRF, its Fund size, governance and administration framework, the CAF considered these options inappropriate.

3.2. Expected return and risk

64. To estimate the long-term expected returns of the invested asset classes, the Secretariat used (ex-ante) forecasting financial models, which are described below.

65. The Secretariat estimated the expected risk using (ex-post) historical volatilities.

66. Note that the CAF return estimations provided in this section are arithmetic expected returns. Such returns do not consider the compounding impact on the PRF as they are a simple average of forecast returns. In contrast, the target return for the PRF has been calculated as a geometric average return which considers the compounding effect of investments. Geometric returns are lower than average returns due to the compounding effect.18

Return

Return - Equity

67. The Secretariat estimated equity returns using an ex-ante approach based on the Gordon (constant) Growth model, itself derived from the Gordon-Shapiro model, in which the expected equity return for a given country/region equals the dividend yield plus expected dividend growth.

68. To estimate the dividend yield, the Board extrapolated historical figures for related market indices. For the expected growth of dividends, the expected nominal GDP growth of the equity market's region/country was used, using OECD real growth and inflation forecasts for the period 2024-2060 and applying relevant market indices’19 country weights.

69. Thus, the following formula gives the projected nominal equity return:

Equity return = historical market index dividend yield + country-weighted forecast nominal GDP growth Country-weighted forecast nominal GDP growth = (1 + country-weighted real forecast GDP Growth) x

(1 + country-weighted forecast inflation)

17 See [CAF/WD(2021)37] for a full analysis of Global Direct Real Estate 18 Geometric returns may be estimated from arithmetic returns by applying the formula: geometric return = average return – 0.5*variance 19 MSCI World for global developed markets equities; MSCI EMU for euro area equities; and MSCI emerging markets for emerging markets equities.

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70. The results provided by the formula for world and emerging markets equities are presented in Table 7 below, together with the former calculations used in PRF reviews for other CAF Organisations.

Table 7: Projected equity nominal returns

Asset Class

Dividend Yield

Country- weighted Real GDP Growth

Country- weighted Inflation

Long-Term Annual Expected

Return 2022 CAF

Estimation

Global DM equities 2.2% 1.4% 2.0% 5.7% 5.7% Euro area equities 3.1% 1.4% 1.8% 6.3% 6.1% Emerging markets equities 2.5% 2.5% 3.2% 8.3% 7.7%

Source: Secretariat

Return - fixed income: government and corporate bonds

71. The long-term equilibrium rate of return of government bonds (global developed and emerging markets) is projected to be equal to the long-term nominal growth of the issuers’ country or region, as per the neoclassical theory20. Application of this ex-ante approach, together with the long-term OECD forecasts for global GDP real growth and inflation21, and the estimated currency hedge impact gives the equilibrium return assumptions for global government bonds (EUR hedged). The currency hedging effect is considered to be an assumed cost of 0.5%, calculated as the historical return difference between the hedged and unhedged representative fixed-income indices. Contrary to equities indeed, there is clear empirical evidence of volatility being reduced by using currency hedged bond indices compared to unhedged ones. The volatility has consistently been lower for the hedged index, which should also theoretically be reflected in a lower return. This proved to be the case historically, and consistent with previous observations, the updated performance track-record still shows a difference of close to 0.5% on average.

72. Global investment-grade corporate bonds returns are estimated as the government bond return plus the historical yield spread between corporate and government bonds.

73. Table 8 presents the Board's estimates of projected returns for the fixed-income asset classes, together with the former assumptions used in PRF reviews for other CAF Organisations.

20 Derived from Phelps’ Golden Rule of Capital Accumulation and Solow’s model, which implies an optimum growth rate can be reached when the rate of profit (interest) equals the rate of growth of an economy. 21 Guillemette, Y. and D. Turner (2021), "The long game: Fiscal outlooks to 2060 underline need for structural reform", OECD Economic Policy Papers, No. 29, OECD Publishing, Paris, https://doi.org/10.1787/a112307e-en.

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Table 8: Initial projected fixed-income nominal returns

Asset Class Equilibrium return

Credit (Corporate)

Spread Premium

Impact of EUR hedge

Long-Term Annual

Expected Return

2022 CAF Estimation

Global DM government bonds (EH) 3.4% - -0.5% 2.9% 2.1%

Global IG corporate bonds (EH) 3.4% +1.7% -0.5% 4.6% 3.8%

Emerging markets sovereign bonds (HC) 6.3% - -0.5% 5.8% 5.4%

Source: Secretariat

Return – Alternative investments: euro area listed real estate and global direct real estate.

74. For euro area listed real estate, which is a sub-component of the overall euro area equities market, the CAF assumed that over the long term, the risk-adjusted returns measured with the Sharpe ratio22 of euro area listed real estate and the overall euro area equities shall be equal, i.e. a riskier investment should compensate investors with higher returns and vice versa. The Sharpe Ratio of euro area equities was calculated using the ex- ante expected return as previously estimated, the “ECB all bonds 20Y” as the risk-free rate (Rf), and historical euro area equities volatility23. Then, using historical volatility of euro area listed real estate, the implied return was derived for euro area listed real estate as per the formula below:

75. For the expected return of global direct real estate, the Board decided to rely on the average of several asset managers’ long-term expected returns. The assumptions of BlackRock and J.P. Morgan, the two asset managers providing the most comprehensive coverage of asset classes, were averaged.

76. The B return estimates for alternative investments’ returns are presented in Table 9 below, together with the former assumptions used in PRF reviews for other CAF Organisations.

22 The Sharpe ratio is a measure of risk-adjusted return of an asset or portfolio. It measures the excess portfolio return over the risk-free rate (Rf) relative to its volatility (i.e. its risk measured with the standard deviation). Sharpe Ratio euro area equities = (euro area equities return – Rf) / euro area equities’ standard deviation. 23 The Sharpe Ratio of euro area equities was calculated at 0.3. Volatilities used are since the common inception of MSCI EMU and FTSE EPRA Nareit Eurozone Capped, being 1 March 2005.

Expected return for euro area listed real estate =

Rf + (euro area equities’ Sharpe Ratio x euro area listed real estate’s volatility)

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Table 9: Projected alternative investments nominal returns

Asset Class Long-Term Annual Expected Return 2022 CAF Estimation

Euro area listed real estate 6.9% 6.8% Global direct real estate 5.6% 5.2% Source: Secretariat

Return – Comparison of the CAF estimations with those of other financial experts

77. The CAF has also considered the return estimations of other financial experts, which are presented in Table 10. The CAF notes that other financial experts have similar expected returns overall for all asset classes.

78. It is reminded that given that time horizon, currency and methodology differ among Asset Managers (which can show material amplitude between two annual publications) and the Board’s estimated returns, the comparison among them need to be taken cautiously.

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Table 10: Comparison of the CAF’s estimations with those of other financial experts

*BlackRock assumptions are provided in geometric terms. Using the provided volatilities, the Secretariat calculated an arithmetic equivalent, for consistency of presentation with other peer assumptions.

24 Estimations may be provided in arithmetic or geometric terms. Arithmetic terms imply a simple average of expected returns. A geometric return implies the average annual growth rate will be lower than the arithmetic return due to consideration of the compounding effect.

Asset Class / Source CAF JP Morgan AM BlackRock Goldman

Sachs AM State Street Amundi Allianz GI

Currency, time horizon EUR, 30Y+ EUR, 10-15 Y EUR, 30Y EUR, 10Y+ LCL, 10Y+ LCL, 10 Y EUR, 10Y

Methodology24 Arithmetic Arithmetic Arithmetic (Implied*) Arithmetic Arithmetic Arithmetic Arithmetic

Equities

World Developed 5.7% 7.0% 6.5% - 5.90% 7.40% 7.90% 9.20%

5.50% Euro area 6.3% 9.3% 8.8% 5.70% 6.70% 7.30% Emerging Markets 8.3% 8.4% 10.0% 5.50% 7.70% 6.40% Fixed-Income

World Government Bonds EUR- Hedged 2.9% 3.5% 2.5% 2.70% 2.60% 3.50% 3.20%

World Corporate Bonds EUR-Hedged 4.6% - - 3.50% 3.80% 4.40% 4.10% US IG Corp Bonds Hedged - 5.3% 5.4% 3.50% 4.10% 5.90% 4.20% Euro IG Corp Bonds 3.9% 4.1% 3.2% 3.40% 2.90% 4.10% 3.90% EMD Sovereign Hedged 5.8% 6.4% 4.7% 5.20% 6.90% 6.40% 4.70% Alternative

Euro Area Listed Real Estate 6.9% 7.7% 7.3% - 5.50% -

Global Core Real Estate 5.6% - 4.6% 7.0% - - 4.5% US Core Real Estate - 6.5% 3.5% - 7.20% -

European ex-UK Core Real Estate - 6.1% 0.0% - - -

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Risk Measures (Volatility)

79. Table 11 and Table 12 on the following page present the updated assumptions for volatility and correlations. These have been calculated using the historical volatility of each asset class’s benchmark index, as in previous reviews. The estimated returns have also been provided in Table 11 for ease of reference.

Table 11: Estimation of volatility

Asset Class Sub Asset Class Return Volatility (Standard Deviation)

Equities Global (Developed) Equities 5.7% 13.4% Euro Area Equities 6.3% 16.8% Emerging Markets Equities 8.3% 17.4% Fixed Income Global Government Bonds (EUR Hedged) 2.9% 3.7% Global Investment Grade Corporate Bonds

(EUR Hedged) 4.6% 5.2%

Emerging Markets Sovereign Bonds – Hard Currency (EUR Hedged)

5.8% 9.7%

Alternatives Euro Area Listed Real Estate 6.9% 20.0% Global Direct Real Estate 5.6% 12.1%

Source: Secretariat. Volatility is the annualised standard deviation of monthly returns observed over the longest commonly available period for each asset class’s relevant market index, being 1 March 2005 (monthly data, in EUR, as of end-December 2024), except for direct real estate, for which J.P. Morgan’s calculations were used.

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Table 12: Correlations calculations

Global DM equities

Euro area equities EM equities

Global DM government bonds (EH)

Global IG corporate bonds (EH)

EM sovereign bonds (HC)

Euro area listed real

estate

Global direct real estate

Global DM equities 1.00

Euro area equities 0.85 1.00

EM equities 0.73 0.71 1.00

Global DM government bonds (EH) -0.02 -0.04 -0.04 1.00

Global IG corporate bonds (EH) 0.44 0.46 0.46 0.66 1.00

EM sovereign bonds (HC) 0.52 0.30 0.42 0.33 0.52 1.00

Euro area listed real estate 0.65 0.75 0.56 0.16 0.59 0.60 1.00

Global direct real estate 0.49 0.32 0.49 -0.20 0.10 0.16 0.51 1.00

Source: Secretariat; data from Morningstar Direct for traditional asset classes, as of end-December 2023, using the longest common monthly return history (being 1 March 2005); in EUR. Unlike the other asset classes shown above, alternative investments such as direct real estate have no underlying investible index. The return estimate for global direct real estate is an estimate of the industry average, net of manager fees, and compiled by J.P. Morgan Asset Management. Typically, for alternative asset classes and strategies, the dispersion of returns among managers is significantly wider than for traditional asset classes.

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3.3. Construction of the strategic asset allocation

80. The optimal investment portfolio is created using the Markowitz modern portfolio theory, which combines pre-selected asset classes in such a way that the combined portfolio shows the lowest possible volatility for a given target return. In this way it is possible to define an “Efficient Frontier” which is the set of optimal portfolios that offer the lowest risk (volatility) for an expected return. The Efficient Frontier shown in Figure 2 below considers no constraints on allocation and can, in some cases, result in extreme allocations that are not reasonable to implement.

Figure 2: Unconstrained Efficient Frontier

Source: Secretariat

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81. The weightings for each target return on the Efficient Frontier is shown in Figure 3 below.

Figure 3: Unconstrained Efficient Frontier – Portfolio weights by asset class

Source: Secretariat

82. Considering a target geometric return of 5.5%, the allocation with unconstrained optimisation would be:

Table 13: Unconstrained portfolio – 5.5% Geometric target return

Asset Class Sub Asset Class Weights Equities Global (Developed) Equities 0% Euro Area Equities 0% Emerging Markets Equities 17% Total Equities 17% Fixed Income Global Government Bonds (EUR Hedged) 0% Global Investment Grade Corporate Bonds (EUR Hedged) 39% Emerging Markets Sovereign Bonds – Hard Currency (EUR

Hedged) 28%

Total Fixed Income 67% Alternatives Euro Area Listed Real Estate 0% Global Direct Real Estate 16% Total Alternatives 16% Total Portfolio 100% Expected Return Nominal Geometric 5.5% Real Geometric (2% inflation) 3.4% Volatility 7.1%

83. The initial result of the optimisation exercise without any constraints is extreme. There is little diversification with only four asset classes and 45% of the portfolio allocated to Emerging Markets. Therefore, the CAF decided to put limits to certain asset classes with the aim of creating better-balanced, feasible portfolios. Setting limits to the strategy is a common practice among pension funds for the purposes of liquidity, risk preferences,

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availability of investments and fund regulations (related to country exclusions, for example). To set such limits, the financial target of the PRF, views on (and ability to take) risk, the size of the PRF, and the liquidity and availability of investment products have been considered. Finally, as it determines the ability for the PRF to be invested in risky and/or illiquid assets, the cash flow profile of the Fund has been considered when setting the limits.

84. Considering the cash flow profile and feasible portfolios, in order to make a well diversified portfolio, the following constraints were applied. These constraints have also been used in the creation of SAAs for other CAF Organisations:

a. Minimum of 5% per asset class, when the asset class is included, to ensure a sound implementation. This ensures sufficient resources are dedicated to the asset class and the allocation is non-trivial.

b. Minimum of 85% to core asset classes (Global Equities, Euro Area Equities, Global Government Bonds, Global Investment-grade Corporate Bonds and Euro Area Listed Real Estate).

c. Maximum of 15% to Emerging Markets (Emerging Markets Equities and Emerging Markets Sovereign Bonds)

d. Maximum of 5% to asset classes which have been most recently added to the investment universe – Global Direct Real Estate and Emerging Markets Sovereign Bonds

85. In addition to the above constraints, the CAF also considered the removal of Global Direct Real Estate from the investment universe for the PRF. Global Direct Real Estate is less liquid than other investments and if the PRF requires funds then inclusion of Global Direct Real Estate may increase the liquidity risk to the PRF25.

86. Following investigation, it was not possible to find a suitable SAA that would meet all the constraints listed above and achieve the required return. However, by increasing the constraint relating to the maximum investment in Emerging Markets to 25%, from 15% and allowing a small reduction in the minimum constraint to core assets from 85% to 75%, it is possible to find an SAA that meets these constraints as shown in Table 14 below.

25 Note that the CAF chose the UBS Global Real Estate Fund for the Global Direct Real Estate allocation. Following recent updates with the asset manager the Secretariat understands this fund has a long queue of redemption requests and therefore this asset class maybe be considered temporarily illiquid.

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Table 14: Constrained portfolio – 5.5% Geometric target return

Asset Class Sub Asset Class Weights Equities Global (Developed) Equities 30% Euro Area Equities 22% Emerging Markets Equities 18% Total Equities 70% Fixed Income Global Government Bonds (EUR Hedged) 5% Global Investment Grade Corporate Bonds (EUR Hedged) 5% Emerging Markets Sovereign Bonds – Hard Currency

(EUR Hedged) 5%

Total Fixed Income 15% Alternatives Euro Area Listed Real Estate 15% Global Direct Real Estate 0% Total Alternatives 15% Total Portfolio 100% Expected Return Nominal Geometric 5.5% Real Geometric (2% inflation) 3.4% Volatility 12.7%

87. Whilst the portfolio is diversified across asset classes, the large allocation to volatile asset classes significantly increases the volatility of the portfolio. The high volatility increases the vulnerability to liquidity risk for the PRF, particularly in 2028 when there is a risk of large benefit payments. The Secretariat believes this to be an aggressive strategy, not followed by any of the rest of CAF Organisations.

88. Considering the short-term liquidity risk faced by the PRF, a low volatility SAA has also been developed which could be implemented until 2028. After 2028 a new SAA could be implemented once the liquidity risk has reduced. The suggested SAA is shown in Table 15 below:

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Table 15: Low volatility SAA

Asset Class Sub Asset Class Weights Equities Global (Developed) Equities 25% Euro Area Equities 10% Emerging Markets Equities 5% Total Equities 40% Fixed Income Global Government Bonds (EUR Hedged) 30% Global Investment Grade Corporate Bonds (EUR Hedged) 15% Emerging Markets Sovereign Bonds – Hard Currency

(EUR Hedged) 5%

Total Fixed Income 50% Alternatives Euro Area Listed Real Estate 10% Global Direct Real Estate 0% Total Alternatives 10% Total Portfolio 100% Expected Return Nominal Geometric 4.7% Real Geometric (2% inflation) 2.6% Volatility 8.0%

89. Compared to the previous SAA shown in Table 14, this SAA provides an approximate 5% reduction in volatility and a more balanced SAA with greater diversification amongst and within asset classes. Although this SAA does not meet the required target return of 5.5%, it does mitigate the short-term liquidity risk faced by the PRF. It is anticipated that, in 2029, a new SAA could be implemented to ensure that the required return is met in the long term based on a subsequent cashflow review and update in the asset return assumptions.

90. Table 16 below shows the SAAs presented here as well as the SAAs currently implemented by other CAF Organisations for information. The returns and volatility of each SAA is based on the most recent estimations as set out in Section 3.2.

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Table 16: Summary of SAAs

Name Unconstrained SAA 1 SAA 2 CAF 1 CAF 2

Objective 5.5% Target

with no constraints

Target- Focussed

Low Risk- Focussed

Asset Class Sub Asset Class Weights Weights Weights Weights Weights

Equities

Global (Developed) Equities 0% 30% 25% 35% 22% Euro Area Equities 0% 22% 10% 10% 13% Emerging Markets Equities 17% 18% 5% 10% 5% Total Equities 17% 70% 40% 55% 40%

Fixed Income

Global Government Bonds (EUR Hedged) 0% 5% 30% 15% 31% Global Investment Grade Corporate Bonds (EUR Hedged)

39% 5% 15% 10% 14% Emerging Markets Sovereign Bonds – Hard Currency (EUR Hedged)

28% 5% 5% 5% 5%

Total Fixed Income 67% 15% 50% 30% 50%

Alternatives Euro Area Listed Real Estate 0% 15% 10% 10% 5% Global Direct Real Estate 16% 0% 0% 5% 5% Total Alternatives 16% 15% 10% 15% 10%

Total Portfolio 100% 100% 100% 100% 100% Expected Return Nominal Geometric 5.5% 5.5% 4.7% 5.1% 4.6% Real Geometric (2%

inflation) 3.4% 3.4% 2.6% 3.0% 2.6% Volatility 7.1% 12.7% 8.0% 10.0% 7.5%

(1) “CAF 1” SAA has been implemented by the PRFs of EUISS, HCCH and EU SatCen. (2) “CAF 2” SAA has been implemented by RATU’s SUF. (3) Real return is calculated using a 2% inflation assumption geometrically applied to the nominal (unrounded) return, after which the calculation is rounded to one decimal place. Due to rounding, the table shows a 0.1% difference in the nominal geometric return between SAA 2 and CAF 2 even though the expected return is different.

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91. Figure 4 below represents the positions of the suggested SAAs, the efficient frontier and the position of the assets used in the optimisation process.

Figure 4: Efficient frontier – CAF Universe with SAA options

Source: Secretariat

92. As an alternative to SAA 1, which has an expected return equivalent to the required return, or SAA 2, which has low volatility to mitigate liquidity risk, the SAA implemented for other CAF Organisations – in particular CAF 1 in Table 16 – could also be considered. Whilst not achieving the required return, it would provide a higher return than SAA 1 for a reasonable risk and has previously been recommended for adoption by the CAF.

PRF Risk Considerations

93. The CAF also considered the short- and long-term risks associated with the considered SAAs. The CAF considered the risks associated with the SAA options shown in Table 17.

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Table 17: Investment strategy options

Option SAA Geometric Return Volatility Considerations

Target- focussed SAA 1 5.5% 12.7%

Achieves target return from implementation. May have higher short-term risks based on events

Low Risk- focussed (1)

SAA 2 implemented for 2025-2028. It is then assumed that CAF 1 SAA is implemented from 2029 onwards.

4.7% (2025-8)

thereafter 5.1%

8.0% (2025-8)

thereafter 10.0%

Lower-risk portfolio implemented until liquidity risk is diminished

(2029). Portfolio would be adjusted in 2029 to seek a long-term required return over the full horizon period.

CAF 1 CAF 1 5.1% 10.0% Reasonable risk-return profile

implemented by other CAF Organisations.

Notes: (1) The SAA to be implemented in 2029 is not currently fixed and would be re-assessed following a further PRF review.

Short-term Risks

94. Over the short term, the PRF faces the risk that investment returns are significantly below expectations. These risks are predominantly due to market risk, whilst it is necessary to adopt some level of market risk to obtain investment returns, this must be in-line with UNIDROIT’s risk appetite. Based on the investment strategy options, the potential dispersion of returns over the short term can be examined. The dispersion of average returns expected from SAA options is shown in Figure 5. It shows the 90% confidence intervals (i.e. returns are expected to be within this range 90% of the time) of average annual returns over 1, 5 and 10 years for each investment strategy option, based on the stochastic simulation of returns26.

26 The stochastic simulations involve projecting investment returns, based on a chosen mean return and volatility, over an 80-year projection horizon. The stochastic analysis looks at 10 000 simulations to consider the risks to the PRF of different investment returns.

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Figure 5: 90% confidence intervals of nominal geometric average returns

after 1, 5, 10 years by investment strategy option

Source: Secretariat

95. The target-focussed option poses the most downside risk over the short term. Over one year, the worst 5% of sampled returns in the target-focussed option show a -14.1% investment return, compared to a -7.8% investment annual loss with the low-risk focused option and a -10.4% investment loss with the CAF 1 option.

96. The lower volatility of the low risk-focussed option reduces the downside risk of the portfolio across all investment horizons shown in Figure 5. However, as the horizon is increased, the differences between the three options become smaller.

Long-Term Risks

97. Over the long term, the PRF is exposed to a wider range of risks than just market risk. To capture the risks, it is possible to examine the development of the Fund over time, by incorporating the projected cashflows along with the stochastically projected investment returns to show the potential development of the PRF.

98. To examine the risks to the PRF, the CAF considered the long-term outlook for the PRF using projected cashflows under two scenarios:

a. Base Case scenario – these are the base case projections presented in the actuarial projections adjusted to include all expenses related to the ongoing operations of the PRF.

b. Sensitivity scenario – this incorporates a “benefits shock” in 2028 when a large benefit payment of EUR 500 000 could be possible. Such a benefit payment would be financed from the PRF, and it is assumed to occur at the start of the year.

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Base Case Cashflows

99. The development of the PRF in the long term can be considered with the use of stochastic projections27 applied to each investment strategy option as shown in Figure 6 below.

Figure 6: PRF development with base case cashflows

Source: Secretariat

100. Over the long term, all investment strategies produce a long-term viable solution. The low risk-focussed option and the CAF 1 SAA produce a very similar outcome. This is due to the two options having the same SAA from 2029 onwards.

101. Whilst the stochastic projections show some possibility of depletion, it should be noted that this is approximately 45 years in the future. Furthermore, future reviews and re- evaluation of risks and the investment strategy should mitigate the possibility of any significant deviations from the PRF’s expected development and impact on the PRF’s long- term viability.

Sensitivity Scenario Cashflows

102. The development of the PRF can also be considered using the sensitivity cashflows which incorporate a large benefit payment being made in 2028 and assuming the entire benefit is funded from the PRF at the start of 2028. This is shown in Figure 7 below.

27 Stochastic projections use 10 000 simulations of investment returns based on the return and volatility profile of each investment strategy option. The PRF development is then calculated for each simulation after which the probability of outcomes can be calculated based on the 10 000 development simulations.

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Figure 7: PRF development with sensitivity cashflows

Source: Secretariat

103. Over the long term, all investment strategies produce a long-term viable solution. However, by the end of the horizon in 2077 there is approximately a EUR 8 million difference in the development of the PRF in the Sensitivity scenario compared to the Base case cashflows.

104. To gauge the impact of the large benefit payment in 2028 by investment strategy, it is possible to consider the confidence intervals of the PRF in the years 2027 to 2029 as shown in Figure 8 below.

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Figure 8: 90% confidence intervals of the projected PRF value in 2027 to 2029 by investment strategy option

Source: Secretariat

105. Comparing the lower bound of the confidence intervals (i.e. the least favourable development of the PRF under each investment strategy option) for the target-focussed and low risk-focussed investment strategy options, the impact of a “benefits shock” in 2028 is more pronounced in the target-focussed option. The smaller dispersion of values, represented by smaller bars, in the low risk-focussed option is due to the lower volatility of this investment strategy option.

Conclusion on Investment Strategy Options

106. In conclusion, all investment strategy options could be considered long-term viable, showing little depletion risk for the next 50 years, aided by the expected net cash inflow to the PRF until 2052.

107. Given the small population of UNIDROIT staff affiliated to the pension scheme and the small size of the PRF there exists significant liquidity risk to the PRF from staff changes which could result in large benefit payments being made at an inopportune moment. The low risk-focussed investment strategy shows lower investment return dispersion and potentially better positioned to mitigate the impact of a large, simulated benefit payment in 2028, related to the end of the Secretary General’s contract. On the other hand, only the target-focussed investment strategy will meet the required return over the long term. The CAF 1 investment strategy may provide a middle-ground – providing some risk mitigation through lower volatility, to provide better mitigation against liquidity risk compared to the target-focussed investment strategy, but still being well-diversified and balanced to provide higher investment returns than the low risk-focussed investment strategy.

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4. CAF Recommendation

108. The CAF is invited to consider this report and make a recommendation to UNIDROIT’s Secretary General to be approved by UNIDROIT’s General Assembly on which investment strategy to implement. The CAF recommendations for decision and suitable risk appetite statements for the PRF, as well as a risk tolerance statement, to be accepted by the General Assembly are set out below:

Option (a):

Target-focussed investment strategy with a 5.5% expected return and expected volatility of 12.7%.

Risk appetite statement: “The General Assembly approves the implementation of an aggressive strategic asset allocation with an expected long-term target return of 5.5% and expected volatility of 12.7% so the expected cashflows between projected years 76 to 80 offset each other. This is understood as a long-term viable situation. The General Assembly accepts the potential liquidity risk arising from the turnover of key personnel and the high volatility of the SAA in order to reach a higher return than other less volatile strategies.”

Option (b):

Low risk investment strategy with a 4.7% expected return and expected volatility of 8.0% to be implemented until 2028 (inclusive).

Risk appetite statement: “The General Assembly approves the implementation of a strategic asset allocation with an expected long-term target return of 4.7% and expected volatility of 8.0%. Whilst the strategic asset allocation is lower than the required return of 5.5%, it provides suitable liquidity risk mitigation via a relatively low level of volatility. A new strategic asset allocation may be implemented in the future once the liquidity risk has diminished.”

Option (c):

Implementation of the SAA already used by other CAF Organisations with a 5.1% expected return and expected volatility of 10.0%.

Risk appetite statement: “The General Assembly approves the implementation of a strategic asset allocation with an expected long-term target return of 5.1% and expected volatility of 10.0%. Whilst the strategic asset allocation is lower than the required return of 5.5%, it provides suitable diversification for the PRF’s assets with an acceptable level of volatility for the long term. The General Assembly accepts the potential liquidity risk arising from the turnover of key personnel, in order to reach a higher return than other less volatile strategies.”

Risk tolerance statement: “The CAF regularly reviews the investment performance of the PRF to ensure that returns are evolving in-line with the strategic asset allocation. In the event that returns are not consistent with the objective of the PRF, this would be raised to the General Assembly for consideration and potential action. It is understood that there will be short-term volatility in the investment returns which may result in assets being sold from the PRF to meet benefit obligations and any response should be consistent with the long-term objective.”

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Annex A. Actuarial Assumptions

1. Actuarial assumptions are classified into financial and demographic categories. Financial assumptions influence the amount and net present value of benefits to be paid overtime. Demographic assumptions reflect the likelihood of payment and factors specific to UNIDROIT.

Table 18: Selected Significant Actuarial Data and Assumptions for Cash Flow Projections

Data Description Value

Population evolution 24 actives (12 in UNIDROIT pensions

scheme & 12 affiliated to Italian system)

(at 31 July 2024) Fund Value Net Asset Value of the PRF EUR 1.1 million (at 31 July 2024) Assumption Description Updated Assumption

Financial Assumptions

Price Inflation Annual increase of inflation. Impacts

rate of increase of pensions in payment and salaries.

1.80%

Salary Inflation Increase in annual salary scales over and above price inflation 0.00%

Demographic Assumptions

Mortality Table Probabilities of death at different ages ICSLT 2023

Contribution Assumptions

Staff Contribution Rate Rate of contributions paid by staff

participating in the UNIDROIT pension scheme on their basic salary

16.7%

Organisation Contribution Rate

Rate of contributions paid by UNIDROIT on the basic salary of staff

participating in the UNIDROIT pension scheme

20.3%

EN GENERAL ASSEMBLY UNIDROIT 2024

84th session A.G. (84) 11

Rome, 12 December 2024 Original: English/French

November 2024

Item No. 14 on the Agenda: Special contributions for the UNIDROIT centenary

(prepared by the UNIDROIT Secretariat)

Summary Update regarding special contributions for the centenary

Action to be taken For information

Related documents UNIDROIT 2024 – F.C. (97) 5; UNIDROIT 2024 – C.D. (103) 29;

UNIDROIT 2024 – C.D. (103) Misc. 2 (Attached hereto on a

confidential basis); UNIDROIT 2024 – F.C. (98) 9

INTRODUCTION

1. The year 2026 will mark 100 years since the foundation of UNIDROIT, one of the world’s oldest

international organisations active in the area of rule of law. This milestone is indeed extraordinary

and worthy of adequate celebrations.

2. In preparation for the centenary, the President and the Secretariat have conducted an

assessment and reflected upon initiatives regarding the origins and history of the Institute, its

achievements, and the evolution of its governance and work programme. This has resulted in the

development of several proposals for activities and events to celebrate the centenary, which were

presented to the Governing Council at its 103rd session in May 2024 (UNIDROIT 2024 – C.D. (103) 29).

The proposals do not limit themselves to celebrating the Institute’s past and present achievements

but are intended to pave the way for the long term future of the Institute.

3. It is first and foremost the intention of the Secretariat to seize this opportunity to complete

a process that has been underway for some years now, and will see its full achievement in the

centenary: the complete modernisation of the organisation. Secondly, it is the Secretariat’s intention

to assess the different phases of the Institute’s history and consider its instruments and activities

within a sole unitary framework. The exercise would seek to highlight where and how UNIDROIT’s work

and unique methodology have contributed to enrich international legal governance in the area of

private law, with the purpose of establishing a sound and consistent foundation for future

developments.

4. The envisaged activities and events for the centenary greatly depend on the Institute being

able to procure sufficient funds and both external and internal support. With none of the funding

under the ordinary Budget available to be allocated to additional endeavours without seriously

undermining the organisation’s activity, the Secretariat has identified several sources of possible

extra-budgetary funding. The Secretary-General anticipated to the Finance Committee during its 97th

session in April 2024 (UNIDROIT 2024 – F.C. (97) 5), that one such form of funding could be special,

2. UNIDROIT 2024 – A.G. (84) 11

voluntary Member State contributions, either made in one lump-sum payment, or as a series of

smaller contributions during 2025 and 2026.1 Member States would be given the possibility to choose

specific activities to finance, should that be their preference.

5. This document - which was presented to the Finance Committee at its 98th session in October

2024 (UNIDROIT 2024 – F.C. (98) 9) - sets out the activities that the Secretariat would hope to

implement and fund, at least for a substantial part, in the manners hereby proposed.2 As explained

in detail in the remainder of this document, it is estimated that the execution of the planned activities

and events for the centenary would cost around € 1,000,000 in total.

II. ENVISAGED CENTENARY ACTIVITIES AND EVENTS

6. This section is organised in three sub-sections, categorised by types of envisaged activities

and events: (i) Section A describes activites in support of the Institute’s strategic objectives and their

estimated costs; (ii) Section B describes substantive events to celebrate the centenary and their

estimated costs; and (iii) Section C sets out the estimated transversal costs, namely costs for the

necessary human resources to support the organisation and successful execution of all the activities

and events described in this document. Please note that all reported amounts are provided on the

basis of initial estimates, which may be subject to changes and reallocation based on the assessments

of a special Funding Committee that the Secretariat plans to establish as part of the envisaged

institutional framework for the centenary.

A. Activities in support of institutional objectives

7. This sub-section addresses envisaged activities that are aligned with strategic objectives to

take the Institute to the next level by 2026 and adequately prepare it for the future. Such objectives

include intensifying UNIDROIT’s presence –including membership– in geographical areas of priority,

enhancing the Institute from a technological point of view, ensuring its continued growth by means

of secondments, and promoting UNIDROIT’s work in different languages.

1. Intensifying UNIDROIT’s presence in targeted geographical areas

8. At the time of writing, UNIDROIT has 65 Member States representing around 74% of the world

population and more than 90% of world GDP. The Institute currently has more Members and covers

more ground than ever before in its almost centenary history. However, there is still plenty of room

for improvement. There are areas in the world where the Institute is underrepresented, including

regions where the majority of countries could substantially benefit from the use of its instruments,

and which vice versa would greatly improve the quality of UNIDROIT instruments as a result of a

dialogue with those jurisdictions.

9. The Secretariat has identified three priority areas: (i) Africa, (ii) East and Southeast Asia,

and (iii) Central Asia, which are all regions where UNIDROIT has reduced membership (only 4 in Africa)

1 The Secretariat will do its utmost to obtain funding also from other sources, namely by: (i) applying for

funds through competitive public programmes aimed at supporting legal projects (e.g., the Secretariat has already applied for a three-year programme through the Italian Ministry of Culture), and (ii) creating a fund for

donations from private stakeholders (e.g., law firms, financial institutions, foundations, industry associations). The UNIDROIT Foundation would also be assisting in raising funds for the centenary. 2 For some envisaged centenary activities, the Secretariat has already been successful in obtaining

(partial) funding (e.g., several Italian entities have kindly made donations for work to build an archive for UNIDROIT, and the Italian government has generously provided funding for the restoration and renovation of the

building in which UNIDROIT resides). Furthermore, some activities may be executed by using UNIDROIT’s ordinary budget (e.g., the review and modernisation of the UNIDROIT Regulations). Activities that would not be expected

to require substantial funding from UNIDROIT Member States are not mentioned in this document.

UNIDROIT 2024 – A.G. (84) 11 3.

or could benefit from an additional substantive presence, and where the Institute’s instruments and

presence could be particularly relevant.

10. These objectives are to be achieved by adopting a strategy that combines different elements.

Importantly, the Secretariat would like to increase membership in the identified areas of priority. The

Secretariat believes that increasing membership by five countries by the end of 2026 is an extremely

ambitious yet potentially feasible target.

11. To this end, it is crucial not only to identify suitable contacts in each of the relevant

jurisdictions, but also to be able to travel to the respective regions. The President and the Secretariat

propose to add missions to their schedules focussed on the broader membership agenda, seeking to

promote the implementation of UNIDROIT’s instruments in the target areas that would benefit most

from UNIDROIT instruments and assistance in many fields of the law. In light of the € 45,000 allocation

for official journeys (a very small amount for an international organisation) in the ordinary budget

for 2025, it is likely that additional funding will be required for this purpose. Though the Secretariat

will try to benefit as much as possible from the generous invitations of States and organisations that

might be willing to fund the travel expenses of UNIDROIT representatives and staff members, it is to

be emphasised that not all countries are in the position to cover such expenses, especially developing

countries in the regional areas of priority.

12. The estimated amount the Secretariat would have to allocate to implement this element of

the strategy is of at least/around € 90,000 over 2025 and 2026.

2. Enhancing technological resources, cybersecurity and sustainability.

13. As the work of the organisation progresses and its instruments become more relevant, its

technology should also feature enhanced capacity, as well as strengthened cybersecurity. The

Institute has a new website, it is building an online archive, its bibliographical resources are

increasingly available in paperless format, its operations are ever more often conducted through

remote online communication, and, generally, the functioning of the Institute is now much more

dependent on adequate technological resources and adequate protection than it ever was.

Unfortunately, the current budget allocated to IT is extremely low and, in any case, far from capable

of acquiring and maintaining adequate systems of cybersecurity. This is a vulnerability that has been

identified by the Secretariat following consultation with experts in the subject matter. The Secretariat

aims to achieve a complete upgrade of the system by 2026.

14. It is estimated that, being conservative, a minimum of € 100,000 would be required to bolster

cybersecurity and to ensure the seamless, state of the art functioning of the institution’s IT systems

by 2026.

15. In addition to enhancing the Institute from a technological point of view, the Secretariat aims

at enhancing the sustainability of its headquarters, e.g., by installing solar panels if authorised by

the Italian authorities. Such sustainability efforts could be (partially) funded by the Italian

government (if current environmental subsidy policies remain in place) or the ordinary budget given

the expected future savings in costs for heating and electricity. However, Member States are welcome

to express interest in contributing to the Institute’s enhanced sustainability.

3. Secondments

16. Pursuant to the zero-growth policy of Member States’ contributions implemented by the

Institute, the growth of the organisation has been achieved through extra-budgetary contributions,

including by contributions in kind of certain Member States that have implemented secondment

agreements with UNIDROIT.

17. Special gratitude is owed to the enormous support of the People’s Republic of China, which

has seconded two junior professionals and one senior official from mainland China, and two legal

4. UNIDROIT 2024 – A.G. (84) 11

officers and two lawyers from the private sector from the Hong Kong Special Administrative Region;

and to Italy, which has seconded a senior legal officer for a period of three years.

18. The upcoming centenary provides an excellent opportunity for Member States to consider

concluding secondment agreements with UNIDROIT given the amount of additional work that is

expected to be required in the next two years. At the same time, the Secretariat would encourage

Member States to consider a mid-to-long-term outlook, i.e., to also look beyond the year 2026.

Secondees from francophone and Spanish-speaking jurisdictions would be especially welcome, given

that they could provide much-needed support in allowing the Institute to strengthen ties with

francophone African states and countries in Central and South America.

19. The estimated costs for secondments depend on the exact arrangements (including duration

of the secondment) and profile of the candidates.

4. Language use

20. UNIDROIT has two working languages (English and French) and five official languages (adding

German, Italian and Spanish to the former). Due to the very tight budget, the Institute does not

have the possibility to translate documents or even instruments into the official but non-working

languages, let alone any other language. This is a disadvantage of the Institute in comparison to

other organisations active in the same field of international law, which enjoy larger budgets or which

benefit from the translation services of a larger parent organisation.

21. The importance of using a country’s own language cannot be overstated. It greatly facilitates

the dialogue with government officials and substantially enhances the penetration and consideration

of the Institute’s work in the academic community as well as in the relevant part of the private sector.

22. The upcoming centenary provides a great opportunity to increase and accelerate the

translation of existing UNIDROIT instruments, so that these would be available in a broader range of

languages in 2026 – when it is envisaged to organise celebratory promotional events in different

regions of the world (see below Point B.2).

23. Member States that are interested in supporting the Institute in expanding its translation

efforts could provide support by means of arranging expert collaboration and/or funding for

translation services. It is estimated that the translation of our instruments to additional, highly

relevant languages would cost around € 100,000 by the end of 2026.

B. Celebration of the centenary

24. Consistent with the importance of the anniversary, it is proposed that the first 100 years of

UNIDROIT be celebrated through a series of events with substantive content, to take place over a time

span of at least twelve months, both in Rome and in different regions of the world. This sub-section

provides a short description of the envisaged events and the estimated costs for each of them.

1. Main celebratory event in Rome

25. It is anticipated that the main event take place in Rome in the final part of the year 2026,

although, due to capacity constraints, the event may need to be held in a more spacious building, at

least for part of it. This additional venue would need to be hired, incurring additional costs for the

Institute. Based on experience, the use for 3-4 days of a venue with capacity for 250 persons would

be beyond € 100,000. The event would comprise a joint session of the Governing Council and the

General Assembly,3 which would be expected to be attended by the authorities in charge of UNIDROIT

3 It is envisaged that this event would not replace the ordinary meeting of the Governing Council, which would take place earlier in the year. The Governing Council, thus, would be expected to meet twice in 2026,

although the ordinary business of the Council would be discussed in the first session.

UNIDROIT 2024 – A.G. (84) 11 5.

at the capitals, in addition to, or in substitution of, the country’s representatives in Rome. This joint

session would be in addition to the ordinary meeting of the Governing Council, so the budget for the

Governing Council would need to be doubled, adding approximately € 50,000 for 20264.

26. The content of the main event will be celebratory in nature, but also of substance. It is

proposed that it includes the conclusions of the different thematic workshops that are envisaged to

take place between the second half of 2025 and the first half of 2026 (see below, Point B. 3). The

event would then be crowned with a “joint declaration of the Governing Council and the General

Assembly” concerning not only what has been done over 100 years but especially what can be done

in the future.

27. The content of the main event would be documented in a series of articles to be published

as a special edition of the Uniform Law Review. Furthermore, the main event would also be the

moment to present a book on the first 100 years of the organisation that would be used in the future

for promotional purposes (see below, Point B.4).

2. Regional celebratory events

28. In the year 2026, with a view to taking the anniversary and its celebrations to the entire

UNIDROIT constituency, it is envisaged that regional celebratory events be organised in each of the

regions for the Institute: Africa, the Americas (two, North and Central America, on the one side, and

South America, on the other), Asia-Pacific, and Europe. In principle, the idea would be for each event

to cover the instruments that elicit the most interest in the region. It is the Secretariat's view that

these events are bound to be even more important than those conducted in Rome because of their

higher dissemination potential.

29. In order to organise and fund such events, the Secretariat will liaise with governments in

each of the regions, as well as with international organisations and internationally-oriented

institutions that are active or potentially interested in transnational law reform. Furthermore, each

of the regional events will be designed and organised in close cooperation with UNIDROIT

Correspondents and universities with which we have concluded cooperation agreements. The

effective celebration of these events and, ultimately, their design, will be for the most part marked

by the existence of funds to finance the celebration.

30. It is estimated that each regional event would require a budget of at least/around € 20,000,

amounting to € 100,000 in total for the four events. This would cover the travel and subsistence

expenses of the President and Secretariat, as well as those of a small group of experts from outside

the host country who have been instrumental in the development of the instruments of interest for

the region.

3. Specialised workstreams on different thematic areas of work

31. The Secretariat envisages the establishment of eight workstreams, for different thematic

areas of the Institute’s work:

➢ UNIDROIT and Transnational Law, a historical and methodological perspective,

➢ UNIDROIT’s work in contracts and arbitration,

➢ UNIDROIT and access to credit,

➢ UNIDROIT and financial markets and emerging technologies,

➢ UNIDROIT and the private law of agriculture,

➢ UNIDROIT and cultural property,

4 See e.g., the draft Accounts for the financial year 2023, which indicate that € 53,194.91 was spent

on the organisation of the Governing Council session in 2023.

6. UNIDROIT 2024 – A.G. (84) 11

➢ UNIDROIT and procedural law,

➢ UNIDROIT and sustainability.

32. The objective of each workstream according to subject matter is threefold: (i) to take stock

of how UNIDROIT’s relevant instrument(s) have performed in the past, (ii) to analyse the strengths

and weaknesses of the instrument(s), and (iii) to propose a way forward in each thematic area, with

specific recommendations. Each workstream will end with a workshop, and it will be expected to

produce a publication.

33. Each workstream will be co-chaired by a Governing Council Member and an external person,

together with a small committee that would help the Secretariat with the design of the activities and

the workshop. The wider composition of the workstreams should be a combination of experts from

academia, practice, and civil service (including judiciary), with preference for experts that have

participated in the drafting and dissemination/implementation of UNIDROIT’s instruments.

34. It is estimated that at least/around € 10,000 would be required for each thematic workshop,

amounting to € 80,000 in total for the eight workshops. This estimate takes into consideration that

the organisation of a Working Group session normally costs around € 10,000. It should be

emphasised that the experts in each workstream would work on a pro bono basis with the Institute,

as Working Group members do. The expenditure would therefore be limited to the minimum

necessary, namely reimbursing experts’ travel expenses according to UNIDROIT’s existing travel

reimbursement policy.

4. Publication of volumes dedicated to Unidroit

35. UNIDROIT is planning to publish a series of volumes that will cover key moments in the history

of UNIDROIT. The volumes will contain documents on the origins of the Institute that have been found

in the Archive, documents preserved with the Historical and Diplomatic Archives of the Italian Ministry

of Foreign Affairs and International Cooperation, as well as other documents forming part of the

Scialoja collection kept by the Sapienza University of Rome.5

36. Furthermore, the Secretariat envisages the publication of a book on the first 100 years of the

organisation. This book would represent a tangible testimony of the centenary, and, although it

should contain information on the history of the building and the organisation, its main protagonists

over the years, its instruments and its methodology, the book’s main purpose would be to serve as

a “business card” for international missions and institutional visitors.

37. Given the Institute’s limited budget for the printing of publications – roughly € 10,000 per

year – extra-budgetary funding will be required for this purpose. It is estimated that at least/around

€ 40,000 would allow the Secretariat to publish the envisaged series of volumes.

C. Transversal costs

38. The envisaged activities and events in 2025 and 2026 as described in this document will

require a considerably large amount of planning, organisation, and continuous support, which would

overburden the staff members of the Secretariat in addition to their regular workload. After all, the

Institute’s core activities – such as the organisation of Working Group sessions and intersessional

meetings for ongoing projects, the participation in events to promote UNIDROIT’s work, and the

institutional meetings of the Governing Council and Finance Committee – would be expected to

continue as per usual.

5 The first volume, At the Origins of the International Institute for the Unification of Private Law

(2024, ed. M.C. Malaguti), has already been published and produced thanks to the contribution of €10,000

provided by the IRTI-Sapienza Foundation of the University of Rome.

UNIDROIT 2024 – A.G. (84) 11 7.

39. Therefore, the Secretariat aims to hire three new colleagues (3 FTE) – two secretaries and

one legal consultant – who would be fully dedicated to the activities and events of the centenary. It

is estimated that at least/around € 275,000 would be required to hire such additional personnel.

III. ACTION TO BE TAKEN

40. The Finance Committee, at its 98th session (October 2024), took note of this update and

expressed support for the envisaged activities. Several members of the Finance Committee

expressed confidence that their Governments would be willing to contribute funding for the

organisation of the Centenary.

41. The General Assembly is invited to take note of this update regarding the financing needs for

envisaged activities and events for UNIDROIT’s centenary, and to start the internal procedures to

consider supporting the activities of the centenary.

EN

GENERAL ASSEMBLY UNIDROIT 2024

84th session A.G. (84) 2

Rome, 12 December 2024 Original: English

October 2024

Item No. 4 on the agenda: Organisation’s activity in 2024

(memorandum prepared by the Secretariat)

Summary Review of the activities carried out by UNIDROIT in 2024 to implement the

Work Programme adopted in 2022, including staffing and funding

implications

Action to be taken To take note of the resources allocated to carry out the current Work

Programme

Related documents UNIDROIT 2022 – A.G. (81) 3

2. UNIDROIT 2024 – A.G. (84) 2

Introduction

1. UNIDROIT’S Work Programme for the 2023-2025 triennium covers a number of topics

originally recommended by the Governing Council for inclusion in the Work Programme at its 101st

session (Rome, 8-10 June 2022) and approved by the General Assembly at its 81st session (Rome,

15 December 2022) (see document UNIDROIT 2022 – A.G. (81) 9, paras. 47-67).

2. The following criteria are applied to determine the level of priority assigned to the different

activities in the Work Programme:

(a) Priority for allocation of meeting costs:

(i) “high priority” – projects that should take precedence over others;

(ii) “medium priority” – projects eligible for being initiated or advanced in the event

that the costs of high priority projects turn out to be lower than anticipated (e.g. because

the Secretariat obtains extra-budgetary funding), thus freeing resources under the

regular budget; and

(iii) “low priority” – projects that should only be advanced after completion of other

projects or on the basis of full extra-budgetary funding.

(b) Priority for allocation of human resources:

(i) “high priority” – at least 70% of the time of the responsible officers;

(ii) “medium priority” – no more than 50% of the time of the responsible officers; and

(iii) “low priority” – no more than 25% of the time of the responsible officers.

(c) Indispensable functions: Indispensable functions are those that are either imposed by

the Statute (e.g. library, governance) or are otherwise necessary for its operation (e.g.

management and administration). These functions are by their very nature “high

priority” which is why they are supported by a dedicated pool of human and financial

resources.

3. The Work Programme for the 2023-2025 triennium currently includes the following

activities where the priorities were assigned by the General Assembly at its 81st session (Rome,

15 December 2022):

A. Legislative activities

1. Access to credit

1.1 Protocols to the Cape Town Convention

(a) Implementation of Rail and Space Protocols: high priority

(b) Implementation of Protocol on Matters Specific to Mining, Agricultural and

Construction Equipment: high priority

(c) Preparation of other Protocols to the Cape Town Convention

(i) Ships and maritime transport equipment: low priority

(ii) Renewable energy equipment: low priority

1.2 Development of a Guide to Enactment on Factoring: high priority

1.3 Development of a Model Law and Guide to Enactment on Warehouse Receipts:

high priority

1.4 Development of a Guide to Enactment for the UNIDROIT Model Law on Leasing:

low priority

UNIDROIT 2024 – A.G. (84) 2 3.

2. International Commercial Contracts

(a) UNIDROIT Principles of International Commercial Contracts and Investment

Contracts: high priority

(b) Formulation of Principles of Reinsurance Contracts: low priority

3. Private law and agricultural development

(a) Development of an international guidance document on Collaborative legal

structures for agricultural enterprises: high priority

(b) Development of an Agricultural Financing Legal Guide: medium priority

4. Law and Technology

Global Value Chains: Governance Issues and Digital Challenges: low priority

5. Capital Markets and Financial Law

Bank Insolvency: high priority

6. Transnational civil procedure

(a) Formulation of Best Practices for Effective Enforcement: high priority

(b) International Civil Procedure in Latin America: low priority

7. Cultural property

Private Art Collections: medium priority

8. Sustainable Development

(a) Legal Nature of Verified Carbon Credits: high priority

(b) Development of a guidance document on Corporate Sustainability Due

Diligence in Global Value Chains: medium priority

9. Exploratory work

(a) Law Applicable to Cross-Border Holdings and Transfers of Digital Assets and

Tokens

(b) Digital transformation, Data Governance and Artificial Intelligence

(c) Private Law and Contemporary Health Research: Intellectual Property issues in

the field of Personalised Medicine

(d) Standard-Essential Patents

(e) Access to Justice in Environmental Matters

B. Implementation and promotion of UNIDROIT instruments: high priority

1. Depositary functions

2. Promotion of UNIDROIT instruments

C. Non-legislative activities (UNIDROIT Academy): high priority

1. UNIDROIT Library

2. Scholarship, Internship and Research Programme

3. Academic Projects

4. Academic Institutes

4. UNIDROIT 2024 – A.G. (84) 2

5. International Programme for Law and Development

6. Chair Programmes

7. Cooperation with academic institutions (MoUs)

8. Publications (Uniform Law Review and others)

9. Information resources and policy

4. This document provides a summary of the activities undertaken over the course of the year

2024 to implement the legislative and non-legislative activities of the 2023-2025 Work Programme

of the Institute. More detailed information will be provided in the Annual Report 2024, which is to

be published in 2025.

5. Annex I includes information, in monetary terms, on the allocation of resources to the

various projects and activities of the Institute in the financial year 2024, on the basis of the Budget

approved by the General Assembly at its 82nd session (Rome, 14 December 2023). The high level

of efficiency of the Institute is well known, with a staff that delivered a tremendous amount of

work with very limited resources. This is being achieved through close collaboration between the

members of the Secretariat and experts from around the world who devoted their time and effort

towards implementing the Institute’s mandate.

6. Annex II, in turn, provides information on extra-budgetary contributions available to the

Secretariat and their allocation to various activities in the year 2024.

UNIDROIT 2024 – A.G. (84) 2 5.

A. LEGISLATIVE ACTIVITIES

1. Access to credit

1.1 Protocols to the Cape Town Convention

(a) Implementation of the Rail and Space Protocols to the Cape Town

Convention ***

7. At its 81st session in December 2022, the General Assembly confirmed the inclusion of the

implementation of the Luxembourg Rail Protocol and the Space Protocol to the Cape Town

Convention as a high-priority activity in the UNIDROIT Work Programme for the triennial period

2023–2025.

Luxembourg Rail Protocol

8. The Luxembourg Protocol to the Convention on International Interests in Mobile Equipment

on Matters specific to Railway Rolling Stock (“Luxembourg (Rail) Protocol”) entered into force on

8 March 2024 at the first and constitutive session of the Supervisory Authority for the Registry, a

new international body which is now composed of representatives appointed by Spain (Chair),

Sweden (First Vice-Chair), South Africa (Second Vice-Chair), Algeria, France, Luxembourg,

Türkiye, the United Kingdom, and the European Union as Regional Economic Integration

Organisation. The entry into force of the treaty was made possible by the fulfilment of the two

conditions provided for in its Article XXIII (1), namely the reaching of the fourth State Party (which

had been already achieved with the ratification of Spain on 20 January 2023) and the deposit by

the Secretariat of the Supervisory Authority (OTIF) with the Depositary (UNIDROIT) of a certificate

confirming that the International Registry for Railway Rolling Stock was fully operational. The entry

into force of the treaty was the result of the intense preparatory work which continued to be carried

out in 2024, focusing in particular on the preparation of all required documentation, the monitoring

of the technical implementation of the Registry, and culminating in the 12 th and final session of

the Preparatory Commission, held on 7 March 2024, back-to-back with the first Supervisory

Authority session, with participation of 21 State delegations as well as institutional observers.

9. The first session of the Supervisory Authority, co-organised by OTIF and UNIDROIT and held

at the seat of OTIF in Bern (Switzerland), was tasked, among other items, with the approval of its

Statutes and Rules of Procedure, of the agreement between the Secretariat and the Supervisory

Authority, and of the Model Rules for the permanent identification of railway rolling stock adopted

by the UN Inland Transport Committee. It also set up the Committee of Experts and established

the International Registry for Rolling Stock (managed by Regulis SA, a Luxembourg-based entity

wholly owned by the Canadian company ISC), which started its operation upon the approval of the

assumption, by the Supervisory Authority, of the rights and obligations of the Preparatory

Commission under its contracts with the Registrar and related parties, as well as the approval of

the fee schedule, yearly budget, Regulations, and Procedures for the Registry.

10. As of 18 November 2024, the Protocol had been signed by seven States (France, Germany,

Italy, Mozambique, South Africa, Switzerland, and the United Kingdom), ratified by four States

(Gabon, Luxembourg, Spain, and Sweden), and approved by one Regional Economic Integration

Organisation (the European Union). The deposit by Paraguay of its instrument of accession to the

Protocol is foreseen for 27 November 2024. The Secretariat furthermore received notice of the

completion of all institutional steps towards ratification by South Africa and is awaiting the deposit

of the respective instrument, while several other States are working towards ratification (among

which, the United Kingdom and Türkiye).

6. UNIDROIT 2024 – A.G. (84) 2

11. During 2024, the Secretariat continued to participate in the work carried out by the

Revisions Committee of the Model Rules for the Permanent Identification of Railway Rolling Stock,

including with a meeting held in Geneva on 2-4 September 2024, which approved a revision of the

Model Rules and established an informal working group on the impact of technology on the

permanent identification system, with that informal group’s first meeting then held on 13

November 2024.

12. Finally, the Secretariat continued to organise or participate in promotional and technical

workshops in cooperation with OTIF and the Rail Working Group, including a workshop held in

Stockholm, Sweden on 15 May 2014 for industry stakeholders and governmental experts; a

conference held on 21 June 2024 in Lyon, France for academic experts and stakeholders; the Cape

Town Convention Academic Project Annual Conference held in Cambridge, UK on 11-13 September

2024, which had a special focus on the Rail Protocol; dedicated lectures during the 2024

International Programme for Law and Development (IPLD) and in the Master 2 Mintec in Toulouse,

France (22 January 2024). It also continued to cooperate with other organisations in raising

awareness on the benefits of the implementation of the Protocol (including the African Union, APEC,

EBRD, European Union, UNECA, UNECE), take part in bilateral governmental meetings, and provide

information at the request of governments (including China, France, Hungary, Italy, South Korea,

Türkiye, United Kingdom). More information will be provided in the Annual Report 2024.

13. In addition, in October 2024 the Institute published the third edition of Professor Sir Roy

Goode’s Official Commentary on the Convention on International Interests in Mobile Equipment

and Luxembourg Protocol thereto on Matters Specific to Railway Rolling Stock, the first edition in

a decade and notably following the Rail Protocol’s entry into force.

Space Protocol

14. At its 81st session in December 2022, the General Assembly confirmed the inclusion of the

implementation of the Protocol to the Cape Town Convention on International Interests in Mobile

Equipment on Matters specific to Space Assets (“Space Protocol”) as a high-priority activity in the

UNIDROIT Work Programme for the triennial period 2023-2025. UNIDROIT is designated as the

Depositary of the Protocol under its Article XLVIII (1)). The Protocol will enter into force following

the procedure provided for in Article XXXVIII.

15. As of 18 November 2024, the Space Protocol has four Signatory States (Burkina Faso,

Germany, Saudi Arabia and Zimbabwe). The deposit by Paraguay of its instrument of accession to

the Protocol is foreseen for 27 November 2024, which will make Paraguay the first Contracting

State to the Protocol.

16. Since the publication of the Statement of Activities at last year’s session of the General

Assembly, the Secretariat has continued to promote the Space Protocol and further develop a

community of support for the instrument, notably revitalising the informal Working Group for the

evaluation of governmental and industry support. The Secretariat undertook, among other

initiatives, the following activities: participation in the deliberations of the 61 st session of the

Scientific and Technical Subcommittee of the Committee on the Peaceful Uses of Outer Space

(COPUOS) (29 January-9 February 2024); participation in the Working Group’s workshop on the

Long-term Sustainability of Outer Space Activities (6 February 2024); participation in the SEE Lab

General Assembly meeting on 11 March 2024; delivery of a statement updating the COPUOS at its

63rd session (15-26 April 2024); delivery of a statement at the CLIODN meeting during the 75 th

International Astronautical Congress of the International Astronautical Federation (IAC-IAF) and

participation in several bilateral meetings with delegations at the IAC (15-17 October 2024); and

organisation of lectures within the 2024 International Programme for Law and Development (IPLD).

More information will be provided in the 2024 Annual Report.

UNIDROIT 2024 – A.G. (84) 2 7.

(b) Implementation of the Protocol to the Cape Town Convention on

Matters Specific to Mining, Agricultural and Construction Equipment ***

17. The fourth Protocol to the Cape Town Convention on Matters Specific to Mining, Agricultural

and Construction Equipment (the “MAC Protocol”) was adopted at a Diplomatic Conference in

Pretoria, South Africa on 22 November 2019. As consistent with the implementation of the other

Cape Town Convention Protocols and Resolution 1 of the Diplomatic Conference Final Act, a

Preparatory Commission of 16 States has been established to act as Provisional Supervisory

Authority until the Protocol enters into force. The Preparatory Commission operates under the

guidance of UNIDROIT’s Governing Council and General Assembly.

18. Throughout 2024, the Preparatory Commission continued to make progress regarding its

three key responsibilities: (i) designation of a Supervisory Authority, (ii) selection of a Registrar

to operate the MAC Protocol International Registry, and (iii) preparation of a first edition of the

International Registry Regulations.

19. Regarding the designation of a Supervisory Authority, in 2021 the MAC Protocol Preparatory

Commission requested that UNIDROIT consider whether it would accept the role of Supervisory

Authority. The UNIDROIT Governing Council considered the matter between 2021 and 2023 and

eventually recommended to the General Assembly by majority vote that UNIDROIT should be

designated as the MAC Protocol Supervisory Authority. The UNIDROIT General Assembly agreed to

the Governing Council’s recommendation at its 82nd session in December 2023 and instructed the

Secretariat to inform the MAC Protocol Preparatory Commission that it would be willing to accept

the role of Supervisory Authority, on the precondition that the costs associated with undertaking

the function are fully compensated.1 At its sixth session in April 2024, the MAC Preparatory

Commission formally designated UNIDROIT as the Supervisory Authority under the MAC Protocol, to

take effect on entry into force of the Protocol. The Governing Council will next consider how best

to structure the Supervisory Authority functions within UNIDROIT’s organs at its 103rd session in

May 2025.

20. Regarding the selection of a Registrar, the Preparatory Commission undertook an extensive

international procurement process between 2021 and 2023 and in 2023 identified a preferred

candidate for Registrar. The Preparatory Commission then established a Contract Negotiation Team

to negotiate a draft contract with the preferred candidate. The Contract Negotiation Team

undertook negotiations with the preferred bidder over a period of approximately 50 hours across

seven sessions, as well as several intersessional internal coordination meetings. In March 2024,

the Contract Negotiation Team submitted a draft contract to the MAC Preparatory Commission,

with a recommendation that the draft contract was ready for signature. At its sixth session in April

2024, the Preparatory Commission approved the draft contract and authorised its finalisation,

subject to a final independent evaluation. The contract negotiation is in its final stages and is

expected to be completed before the end of 2024. The Preparatory Commission also decided to

establish a Registry Working Group to work with the appointed Registrar to establish the

international registry, once the contract negotiations have been completed.

21. Regarding the preparation of the first edition of the International Registry Regulations, a

Working Group was established by the Preparatory Commission in 2020 to prepare a first draft of

the Regulations. The Working Group prepared a draft of the Regulations over six sessions between

2020 and 2024. At its sixth session in April 2024, the MAC Preparatory Commission approved a

revised draft of the Regulations, which will become the Baseline Regulations to be incorporated as

a schedule in the Registry Contract.

____________________ 1 See the UNIDROIT General Assembly 82nd session Report (UNIDROIT 2023 – A.G. (82) 11), paras 58–76.

8. UNIDROIT 2024 – A.G. (84) 2

22. At its fifth session in November 2022, the Preparatory Commission decided to create a MAC

Protocol Ratification Task Force (RTF) to support the implementation of the MAC Protocol.2 The RTF

met twice in 2023 and twice in 2024 to progress various initiatives to promote the implementation

of the MAC Protocol.

23. Additionally, in 2024 UNIDROIT undertook the following initiatives to promote and implement

the MAC Protocol: presentation to the Equipment Financing and Leasing Association (ELFA) on the

benefits of the MAC Protocol for the equipment finance industry (Washington DC, January 2024);

presentation to the World Bank Group on how the MAC Protocol would complement the legal

reforms undertaken by the World Bank Group to facilitate private sector investment and develop

financial markets globally (Washington DC, January 2024); presentation to African legal experts

of the UNIDROIT International Programme for Law and Development on how the MAC Protocol could

provide legal and economic benefits for African States (Rome, July 2024);policy Dialogue during

the APEC Economic Committee on how the MAC Protocol could facilitate access to finance for the

agricultural sector in the Asia-Pacific region (Lima, August 2024); presentations by academics and

the Secretariat on various aspects of the MAC Protocol to 128 legal experts at the 13 th Annual Cape

Town Convention Academic Conference (Cambridge, September 2024); International Conference

regarding “Sustainable Economic Development through Credit Expansion – A Focus on the Mining,

Agriculture and Construction Protocol and Rail Protocol” to 76 participants from 16 States

(Cambridge, September 2024); consultation workshop with 40 Japanese government officials,

legal experts and private sector representatives to discuss the legal and economic impacts of the

MAC Protocol, and its potential benefits and costs for Japan (Tokyo, September 2024);

consultations with Colombian Government Officials (Bogota, October 2024); and consultation

roundtable with Hong Kong finance companies to discuss how the MAC Protocol would improve the

regional legal framework for equipment finance (Hong Kong, November 2024).

24. As of 18 November 2024, five States (the Republic of Congo, the Republic of Gambia, the

Republic of Paraguay, the Federal Republic of Nigeria, and the United States of America) and one

Regional Economic Integration Organisation (the European Union) have signed the treaty. The

deposit by Paraguay of its instrument of ratification of the Protocol is foreseen for 27 November

2024, which will make Paraguay the first Contracting State.

(c) Preparation of further Protocols to the Cape Town Convention:

(i) Ships and maritime transport equipment *

25. Consistent with the low priority assigned to the project in the Institute’s Work Programme

for the 2023-2025 triennium, the Secretariat has continued to conduct research on the viability of

a future Protocol on ships and maritime transport equipment and monitor recent developments in

the field of shipping finance.

(ii) Renewable energy equipment *

26. Consistent with the low priority assigned to the project in the Institute’s Work Programme

for the 2023-2025 triennium, the Secretariat has continued to conduct research on the viability of

a future Protocol on renewable energy equipment and monitor recent developments on renewable

energy finance.

____________________ 2 The RTF is an informal group of interested stakeholders that will meet on a regular basis to coordinate strategy and initiatives to promote and implement the MAC Protocol. The RTF is composed of (i) supportive Member States, (ii) supportive intergovernmental and international non-governmental organisations, (iii) the MAC Working Group (representing private sector stakeholders), (iv) the Registrar for the International Registry for MAC Equipment (once appointed), (v) the Supervisory Authority (once appointed), and (vi) the UNIDROIT Secretariat. Participation in the RTF is on a voluntary basis and there are no financial obligations for members.

UNIDROIT 2024 – A.G. (84) 2 9.

1.2 Development of a Guide to Enactment on Factoring ***

27. At its 102nd session (Rome, May 2023), the UNIDROIT Governing Council adopted the

UNIDROIT Model Law on Factoring and requested that the Secretariat establish a Working Group to

begin work on the UNIDROIT Model Law on Factoring Guide to Enactment.3 The purpose of the GtE

is to assist States in understanding, implementing, and interpreting the provisions of the UNIDROIT

Model Law on Factoring. The primary audience for the GtE is government officials or legislative

bodies in States considering implementing the Model Law on Factoring. The GtE is being prepared

in adherence with four guiding concepts: (i) targeted, (ii) accessible, (iii) concise, and (iv) principle

based.

28. The Guide to Enactment is being developed by a Working Group composed of the same

experts that developed the Model Law on Factoring itself, under the Chairmanship of UNIDROIT

Governing Council Member ad honorem Professor Henry Gabriel. The Working Group held two initial

planning discussions regarding the purpose, content and structure of the GtE on 18 January and

19 February 2024. The first full Working Group session was held as a hybrid meeting on 8 – 10

April 2024 at UNIDROIT’s Headquarters in Rome. The first session was attended by 36 participants

(10 Working Group members, 17 observers from intergovernmental organisations, non-

governmental organisations, industry representatives and academic experts, and nine members of

the Secretariat). During the first session, the Working Group agreed upon the working

methodology, structure and general content of the GtE. The Working Group also reviewed and

provided feedback on the content outlines for the different sections. The Working Group was able

to resolve several important policy issues at its first session

29. The Working Group is preparing a first full draft of the GtE for consideration at its second

session in December 2024. The draft will be further refined at the Working Group’s third session

in April 2025, with the intention of submitting a full draft of the GtE to the Governing Council for

approval at its 104th session in May 2025. The GtE would then be finalised, translated and

published by the end of 2025.

1.3 Development of a Model Law and Guide to Enactment on Warehouse

Receipts *** (also related to work area n°3)

30. The joint UNCITRAL/UNIDROIT Model Law on Warehouse Receipts (MLWR) project was

approved by the General Assembly at its 79th session in December 2020 as a high-priority item in

the 2020-2022 Work Programme (UNIDROIT A.G. (79) 10, paras. 40-47). At its 101st session in June

2022, the Governing Council authorised an extension of the project to prepare a Guide to

Enactment of the Model Law (UNIDROIT C.D . (101) 21, para. 223), which was confirmed by the

General Assembly at its 81st session in December 2022 (see UNIDROIT A.G. (81) 9, paras. 48-67).

31. The purpose of the MLWR and its accompanying Guide is to assist States in developing

state-of-the-art warehouse receipt legislation supporting the issuance and transfer of both

electronic and paper-based receipts. Adopting a technology-neutral approach, the Model Law

facilitates the use of central registries, distributed ledgers, platforms and other technologies for

managing the electronic warehouse receipts. The Guide to Enactment contains article-by-article

commentary of the MLWR provisions, as well as guidance on complementary legislation necessary

to implement the Model Law.

____________________ 3 See Governing Council 102nd session Summary Conclusions, UNIDROIT 2023 - C.D. (102) Misc. 2, paragraph 6.

10. UNIDROIT 2024 – A.G. (84) 2

32. The joint work on this project was structured into two phases: (i) the preparation of a

comprehensive draft Model Law and Guide to Enactment by a UNIDROIT Working Group, followed

by (ii) State negotiations of the draft texts through an UNCITRAL Working Group.

33. Accordingly, the UNIDROIT Working Group developed a draft Model Law text over the period

2020-2023, which was adopted by the Governing Council at its 102nd session in May 2023 for

submission to UNCITRAL for State negotiations (see UNIDROIT C.D. (102) 25, para. 80). The draft

MLWR text was assigned to UNCITRAL Working Group I, which first considered the draft Model Law

at its 40th session on 25-29 September 2023. Delegates and observers expressed their appreciation

for the text prepared by the UNIDROIT Working Group. Subsequently, the UNCITRAL Secretariat

started incorporating the outcome of the discussions in the Model Law text.

34. In addition, following the approval of the draft Model Law by the Governing Council, the

UNIDROIT Working Group prepared a comprehensive draft of the Guide to Enactment. The complete

draft was discussed by the Working Group during one dedicated session that took place on 13-15

November 2023. Subsequently, the draft was sent to the UNCITRAL Secretariat for negotiation and

completion by its Working Group I together with the Model Law.

35. On 5-9 February 2024, both the draft Model Law and Guide to Enactment were discussed

by UNCITRAL Working Group I at its 41st session. At the end of this session, the Working Group

agreed to recommend the Model Law with the Guide to Enactment to the UNCITRAL Commission

for adoption at its 56th session on 24-12 July 2024. It was noted that the Guide would still undergo

final linguistic revision.

36. The final version of the MLWR and the draft Guide to Enactment were presented to the

Governing Council at its 103rd session on 8-10 May 2024 (the Model Law and Guide are available

in Annexes I and II to UNIDROIT C.D. (103) 9.2, respectively). The Council unanimously adopted

the MLWR as presented, as well as the draft Guide to Enactment. On 26 June 2024, the identical

MLWR text was adopted by the UNCITRAL Commission at its 57th session.

37. The adopted MLWR contains six chapters: Chapter I “Scope and general provisions”;

Chapter II “Issuance and contents of a warehouse receipt; alteration and replacement”; Chapter

III “Transfers and other dealings in negotiable warehouse receipts”; Chapter IV “Rights and

obligations of the warehouse operator”; an optional Chapter V “Pledge bonds”; and Chapter VI

“Application of this Law”. The final text of the Guide contains four main parts: Part I “Purpose of

this Guide”; Part II “Introduction to the Model Law”; Part III “Article-by-article Commentary”; and

Part IV “Complementary Legislation” which provides guidance to legislative and executive branches

on the implementation of additional primary and secondary legislation.

38. Following the adoption of the MLWR and Guide to Enactment, UNCITRAL is taking charge

of the translation of both texts from English into the other five UN languages (Arabic, Chinese,

French, Russian and Spanish). The publication of the MLWR and its Guide to Enactment is

tentatively envisaged for the first quarter of 2025.

39. The Secretariats of UNIDROIT and UNCITRAL have both started planning joint launch and

dissemination activities. They are also liaising with associated experts and organisations that

participated in the Working Groups on the Model Law concerning potential promotion activities.

Over the course of 2024, UNIDROIT has already undertaken several promotion activities to raise

awareness about the MLWR project. The project was presented at various events, including the

following: a series of lectures for the students of the Master in International Economic Law at the

Université Capitole Toulouse, France, on 22 and 23 January 2024; a lecture to students as part of

their master studies in International Business Law at the Sapienza University in Rome on 4 July

2024; and a presentation to African legal experts during the UNIDROIT International Law and

Development Programme in Rome on 21 June 2024.

UNIDROIT 2024 – A.G. (84) 2 11.

1.4 Development of a Guide to Enactment for the UNIDROIT Model Law on

Leasing *

40. Consistent with the low priority assigned to the project in the Institute’s Work Programme

for the 2023-2025 triennium and UNIDROIT’s other ongoing projects in the field of access to credit,

the Secretariat did not begin substantive work on a Guide to Enactment for the UNIDROIT Model Law

on Leasing in 2024.

1. International Commercial Contracts

(a) UNIDROIT Principles of International Commercial Contracts and

Investment Contracts ***

41. The project on the UNIDROIT Principles of International Commercial Contracts (UPICC) and

Investment Contracts is a high-priority project in the Institute’s 2023-2025 Work Programme. The

project is undertaken jointly with the International Chamber of Commerce’s Institute of World

Business Law (ICC Institute) and aims at developing guidance to foster the modernisation and

standardisation of international investment contracts (IICs) by examining the suitability of the

UPICC for such contracts and considering recent developments in the area of international

investment law, such as the increasing focus on certain policy goals (e.g., sustainability) and the

possible improvement of treaty-based solutions concerning investment protection (e.g., in the area

of Investor-State Dispute Settlement).

42. Following preparatory work conducted by the Secretariat and the ICC Institute in the first

months of 2023, at its 102nd session (May 2023) the Governing Council authorised the Secretariat

to establish a Working Group on International Investment Contracts, as well as a Consultative

Committee that would be composed of experts appointed by Member States (C.D. (102) 25). The

first session of the Working Group was held in October 2023 at the headquarters of UNIDROIT in

Rome.

43. The Working Group has met twice so far in 2024: for its second (13-15 March 2024) and

third (3-5 June 2024) sessions. During the second session, which was hosted by the ICC Institute

in Paris, the deliberations focused on discussion reports prepared by thematic Subgroups4 that had

been established at the end of the first Working Group session, accompanied by a Revised Issues

Paper (Study L-IIC – W.G. 2 – Doc. 2) and a document on the contents of existing UNIDROIT

instruments relevant to the project. Topics of discussion included: (i) the main characteristics of

IICs and whether a definition of IIC would be needed (which the Working Group advised against)

and the relationship between IICs, on the one hand, and domestic law and investment treaties, on

the other (Subgroup 0); (ii) complexities raised by the nature of the parties to an IIC and possible

pre-contractual issues (Subgroup 1); (iii) the possible applicability and scope of “stabilisation”

clauses, and the relevance of hardship and force majeure to IICs (Subgroup 2); and (iii) a mapping

of policy commitments stemming from new-generation investment treaties, international soft law

instruments, and domestic law that might be of relevance for IICs (Subgroup 3). The Working

Group also had a preliminary discussion on the content of a possible dispute settlement clause,

having regard to issues such as avoiding arbitrators’ conflicts of interest and transparency, and to

the possible resort to alternative means of dispute resolution (Subgroup 4).

____________________ 4 Subgroup 0 on Definitions and conceptualisation of IICs; relationship of IICs with IIAs and domestic law; interactions with the UPICC. Subgroup 1 on Pre-contractual issues, formation and validity; parties, non- signatories and affected stakeholders; remedies, including compensation and damages; transfer of rights and obligations; other UPICC that might need adaptation. Subgroup 2 on change of circumstances (stabilisation/renegotiation/adaptation, hardship, force majeure); other clauses typical of IICs. Subgroup 3 on addressing policy goals in IICs (sustainability, Corporate Social Responsibility); other treaty standards to be functionally addressed at the contractual level. Subgroup 4 on choice of law and dispute settlement clauses.

12. UNIDROIT 2024 – A.G. (84) 2

44. During the third session, the Working Group discussed updated versions of the Subgroup

reports, as well as a Revised Issues Paper prepared by the Secretariat (Study L-IIC – W.G. 3 –

Doc. 2) and a document with relevant ICC Model Clauses. On the assumption that the future

instrument would take the form of a set of Principles with Commentary and Model Clauses (which

has not yet been definitively decided), the Chairs of the Working Group had shared a template

with the Subgroups in the intersessional period, which enabled several Subgroups to present their

proposals in a form that would be closer to the expected output. The discussions focused on the

subtopics that has been allocated to Subgroups 1 to 4. The Working Group also discussed a

proposal for a draft structure of the future instrument. The report of the third session is available

in Study L-IIC – W.G. 3 – Doc. 7.

45. The fourth Working Group session will be held at UNIDROIT’s headquarters between 25-27

November 2024. On that occasion, it is anticipated that a Drafting Committee will be established

with the aim of developing a preliminary draft of the future instrument. The fifth Working Group

session is scheduled for 2-4 April 2025 and will be hosted by the ICC Institute in Paris.

46. In parallel to the progress made by the Working Group, an informal research task force

was established within the Roma Tre-UNIDROIT Centre for Transnational Commercial Law and

International Arbitration. This task force conducts research on the contents of publicly available

IICs under the supervision of the UNIDROIT Secretariat. During the second Working Group session,

the task force presented preliminary findings on (i) change of circumstances clauses, and (ii)

clauses concerning policy goals. During the third session, preliminary findings were shared on

choice of law clauses and dispute settlement clauses in IICs. On 4 October 2024, a virtual

intersessional workshop was organised for the Working Group, dedicated to the research work of

the task force combined with a presentation on relevant ICC Model Clauses. On that occasion, the

task force presented updated research memoranda on the above-mentioned categories of clauses

in IICs. As a next step, it is anticipated that the task force would conduct research on arbitral

awards concerning IICs.

47. Finally, in line with the mandate provided by the Governing Council, a Consultative

Committee was established end-2023 with the objective of providing the Working Group with

advice, comments, and relevant information from a national and/or regional perspective. The

Consultative Committee is Chaired by Governing Council Member Mr José Antonio Moreno

Rodriguez and composed of experts appointed by 27 Member States. In June 2024, the Secretariat

shared a first Request for Input with the Committee members, the results of which will be

presented during the fourth Working Group session in November 2024. In the meantime, the

Secretariat has also invited a number of non-Member States with significant investment relations

to appoint experts as Observers to the Consultative Committee.5

(b) Formulation of Principles of Reinsurance Contracts *

48. The project for the development of Principles of Reinsurance Contract Law (PRICL), led by

the Universities of Zurich and Frankfurt (and formerly Vienna) and with participation of academics

and practitioners from different jurisdictions, is aimed at the formulation of a “restatement” of

existing global reinsurance law. UNIDROIT was invited to participate in the project, wholly funded

by the participating universities and research institutions, to provide expertise on the UNIDROIT

Principles of International Commercial Contracts. The first part of the project, covering a General

Part and Chapters on Duties, Remedies, Aggregation, and Allocation, was published online in

December 2019, and can be found on the dedicated website. The Unidroit General Assembly, at

its 81st session in December 2022, upon recommendation of the Governing Council, adopted the

____________________ 5 At the time of writing, Observers to the Consultative Committee were nominated by the governments of Algeria, Burkina Faso, Cameroon, Ivory Coast, Kenya, Malawi, and Togo.

UNIDROIT 2024 – A.G. (84) 2 13.

continuation of the project for the Work Programme 2023-2025 with the same conditions as before,

to complete the second part of the instrument by the end of 2024 or beginning of 2025.

49. After the 12th, and last, PRICL Workshop, the PRICL Working Group is finalising the text of

the instrument, with inclusion of principles on the “Period of the reinsurance contract”, the “Back-

to-back clause”, and “Rules on retention”. The instrument is expected to be fu lly completed by the

end of 2024 or beginning of 2025, and the UNIDROIT Secretariat is planning to submit the finalised

text of the black-letter rules and comments of the PRICL to the Governing Council (as was done

for the first part in 2019) to request authorisation to refer to the text of the PRICL on the UNIDROIT

website, once finalised for publication. Meanwhile, the Working Group is envisaging the further

steps for the implementation and development of the PRICL through an agreement with the

University of Zurich and in cooperation with Unidroit, with an international conference on the use

of soft law in insurance and reinsurance law being organised for 9-10 January 2025.

2. Private Law and Agricultural Development

(a) Development of a Legal Guide on Collaborative Legal Structures for

Agricultural Enterprises *** (also related to work area n°8)

50. The development of the project on Collaborative Legal Structures for Agricultural

Enterprises (CLSAE) began during the 2020-2022 Work Programme, initially with a medium-

priority level, which was upgraded to high-priority level in 2021 by the UNIDROIT Governing Council

(UNIDROIT 2021 C.D. (100) B.24, para. 80). At its 101st session in June 2022, the Governing Council

recommended maintaining the high priority level of the project in the 2023-2025 Work Programme

(UNIDROIT C.D. (101) 21, para. 247), which was confirmed by the General Assembly at its 81st

session in December 2022 (see UNIDROIT A.G. (81) 9, paras. 48-67). The CLSAE project is the third

project undertaken in partnership with the Food and Agriculture Organization of the United Nations

(FAO) and the International Fund for Agriculture Development (IFAD) in the field of private law

and agricultural development.

51. The purpose of this UNIDROIT/FAO/IFAD CLSAE project is to develop guidance on

“collaborative legal forms” that support smallholders and smaller enterprises to enhance

sustainable agricultural development in agri-food value chains and contribute to the transformation

of agri-food systems. The future legal guide will mainly cover four collaborative legal forms: (i)

multiparty contracts, (ii) cooperatives, (iii) corporations, and (iv) digital platforms. The analysis is

premised on complementarity rather than on the disparate collaborative legal forms being separate

alternatives. The CLSAE project presupposes that the needs of smallholders and agri-MSMEs to

overcome challenges posed by global value chains can be addressed through collaboration by: (i)

improving access to viable markets, market resources and inclusive financial services; (ii) exploring

the enormous innovation opportunities while giving due consideration to the risks created by

digitalisation, digitisation and digital platforms; (iii) addressing power imbalances and increasing

participation in decision-making; and (iv) proposing remedies for unfair commercial practices. The

fundamental differences between the collaborative legal structures covered in the CLSAE Project

are explained by considering their different purposes; formation and entry requirements;

governance and decision-making procedures; scope of liability; remedies and sanctions for breach;

as well as the requirements for exit and dissolution. Horizontal and vertical forms of collaboration

are considered to clarify the different collaborative legal structures that may be adopted within the

value chain.

52. Since the last session of the General Assembly, the Working Group held its fifth (18-20

March 2024) and sixth (20-22 November) sessions. During the fifth session, the Working Group

further discussed the list of topics and key concepts to be addressed in each of the chapters

dedicated to the different collaborative legal forms analysed in the CLSAE project. In respect of

multiparty contracts, the Working Group focused on exit, dissolution, and post-contractual

14. UNIDROIT 2024 – A.G. (84) 2

obligations, particularly to ensure such exits would not disrupt the collaboration. Concerning

cooperatives, the discussion focused on integration into value chains, challenges of democratic

governance (particularly in the face of membership growth and technological advances) and breach

of obligations at various levels by different actors. On companies, discussions concerned key

definitions, such as “profit” and “non-profit”, the role of social benefit companies, as well as specific

aspects of the company form, including limited liability and asset partitioning. The Working Group

acknowledged the need to consider the impact of digitalisation on collaborative legal forms and

decided to include a separate chapter on digital platforms. Sustainability and access to credit were

also considered, especially in relation to the governance and functioning of collaborative legal

structures.

53. In preparation for the sixth session of the Working Group, draft discussion papers were

prepared on multiparty contracts, cooperatives, companies and digital platforms, as well as a

Secretariat Report (Study LXXXC – W.G. 6 – Doc. 2) on the work conducted during the

intersessional period. Issues of governance, management, and decision-making continue to be

the focus, especially regarding the protection of weaker parties and equitable attribution of

contributions and returns. Discussions also raise broader questions deemed important for the

comparative chapter of the CLSAE Guide and issues that could significantly influence the choice of

collaborative legal forms. Additional efforts were made to gather empirical evidence on the use of

multiparty contracts, cooperatives, companies and digital platforms in the agricultural sector with

the assistance of the project partners, all with a view towards providing clear and detailed guidance

to smallholders and agri-MSMEs in navigating these complex legal frameworks.

54. The seventh session of the Working Group is scheduled to take place from 9-11 April 2025.

Preparation of the CLSAE guidance instrument is expected to require seven (possibly eight)

Working Group sessions, followed by a period of consultations before the complete draft is

submitted for adoption by UNIDROIT, FAO and IFAD in 2025. All background documentation and

information regarding the Working Group sessions and its composition is available at the CLSAE

project’s dedicated webpage.

(b) Development of an Agricultural Financing Legal Guide **

55. Upon recommendation of the Governing Council, the General Assembly included at its 81st

session future work on the topic in the Institute’s Work Programme for the 2023-2025 triennium.

Consistent with the medium level of priority assigned to the project, the Secretariat did not begin

substantive work on this project.

3. Law and Technology

Global Value Chains: Governance issues and Digital Challenges *

56. Consistent with the low priority assigned to the topic in the Institute’s Work Programme

for the 2023-2025 triennium, the Secretariat did not initiate work on this topic. However, at the

Governing Councils 103rd session in May 2024, the Secretariat presented a further elaborated

proposal to undertake common work in the area of technology and global value chains that had

been received by the Secretariat from the European Law Institute (ELI) after the 102nd session of

the Governing Council (see C.D. (103) 12 bis). The document provided a brief analysis of the

proposal which outlined the possibility to analyse the impact of technology on the design, structure,

and functioning of global value chains, the fundamental role of technology in enabling human rights

and environmental due diligence, as well as preventing and mitigating technology’s risk of severe

adverse impacts in global value chains. The joint project aims to channel these three points into a

multifaceted consideration of the role that contemporary and emerging technologies are playing

across global value chains, and their impact on contractual design and enforcement.

UNIDROIT 2024 – A.G. (84) 2 15.

The Governing Council took note of and expressed a positive opinion on the proposal presented by

the Secretariat to conduct joint exploratory work with the ELI at the Secretariat level (UNIDROIT

C.D. 1(103) Misc. 2, para. 18). Designated experts from the ELI participated in the exploratory

workshop that was held on 27-28 May 2024 for the UNIDROIT project on Corporate Sustainability

Due Diligence (CSDD) in Global Value Chains to assess if the analysis of technology in the context

of corporate sustainability due diligence would be a matter falling under the scope of the

UNIDROIT/ELI project, or rather within the scope of the UNIDROIT CSDD project. The experts

recommended the latter solution. The outcomes of the workshop and the Secretariat’s

recommendations are to be presented to the Governing Council. Both Secretariats have also

conducted joint exploratory work on the impact of technology on the design, structure, and

functioning of global value chains.

4. Capital Markets and Financial Law

Bank Insolvency ***

57. The project on Bank Insolvency was included in the Institute’s 2020-2022 Work Programme

in 2019 and was assigned high priority in 2021. In 2022, the General Assembly agreed to continue

the project with high priority during the 2023-2025 Work Programme (A.G. (81) 9).

58. The aim of the Bank Insolvency project is to develop international guidance covering the

key aspects of liquidation frameworks for non-systemic banks. Given the mix between matters of

private law and regulatory law, the project is undertaken by UNIDROIT in cooperation with the Bank

for International Settlements’ (BIS) Financial Stability Institute (FSI).

59. Between December 2021 and March 2024, the Working Group on Bank Insolvency6 met six

times. In addition, nearly all Working Group participants were involved in intense intersessional

work, through three thematic Subgroups that met twelve times and were consulted on preliminary

drafts of the instrument. Furthermore, a survey was conducted within the Working Group to gather

information on bank liquidation regimes across the world.

60. At its third session, the Working Group decided that the future instrument should take the

form of a Legislative Guide and a Drafting Committee was established. A first preliminary draft of

the Legislative Guide on Bank Liquidation was discussed during the fourth Working Group session

(March 2023) and was updated for the fifth session (October 2023).

61. Following the fifth session, the Drafting Committee met three times and in February 2024,

the updated draft Chapters were submitted to the full Working Group for comments. During its

sixth session (March 2024), the Working Group discussed the feedback received during the Working

Group consultation. At the close of its sixth session, the Working Group decided that the draft

Legislative Guide – after revisions in line with the sixth session7 – was sufficiently developed to

undertake a consultation and referred the draft instrument to the Governing Council for

consideration. At its 103rd session (May 2024), the Governing Council authorised the Secretariat

to commence a consultation on the draft Legislative Guide.

____________________ 6 The Working Group on Bank Insolvency is chaired by Governing Council Member Professor Stefania Bariatti and is composed of ten members and 39 institutional observers, including international and regional bodies or organisations (e.g., the IMF, UNCITRAL, European Central Bank), as well as banking supervisors, deposit insurers, and bank resolution authorities from all over the world. Overall, the Working Group consists of participants from 26 jurisdictions from across five continents. Considering the participation of a large number of financial regulators in the Working Group and the sensitive nature of the topics, the meetings of the Working Group are conducted under Chatham House Rule. 7 Following revisions in line with the sixth session, the updated draft Legislative Guide was sent to the Working Group for fatal flaw review on 15 April 2024.

16. UNIDROIT 2024 – A.G. (84) 2

62. The Secretariat launched the consultation on 5 June 2024, through a dedicated consultation

webpage. The draft Legislative Guide on Bank Liquidation consists of ten Chapters: (i) Introduction;

(ii) Institutional Arrangements; (iii) Procedural and Operational Aspects; (iv) Preparation and

Cooperation; (v) Grounds for Opening Bank Liquidation Proceedings; (vi) Liquidation Tools; (vii)

Funding; (viii) Creditor Hierarchy; (ix) Group Dimension; (x) Cross-Border Aspects. Each Chapter

contains a discussion of key issues and a set of Recommendations for legislators and policymakers.

The Recommendations as such do not constitute provisions that could be directly enacted in

national law. Rather, they provide guidance on core issues that it would be desirable to address in

an effective bank liquidation framework.

63. The consultation ran for 18 weeks, until 11 October 2024. Comments could be submitted

by all interested parties, although technical feedback was particularly welcome from (i) national

and supranational authorities (e.g., banking supervisors, resolution authorities, deposit insurers,

securities regulators, and international organisations); (ii) insolvency practitioners and law firms;

(iii) banks and banking associations; (iv) academics and think-tanks. The Secretariat contacted a

number of targeted stakeholders bilaterally, inviting them to take part in the consultation. On 19

September 2024, UNIDROIT organised a conference on the draft Legislative Guide in cooperation

with the European Banking Institute (one of the proponents of the project), hosted by the

Université Paris-Panthéon-Assas in Paris. The Secretariat also presented the draft Legislative Guide

at a series of other events during the consultation period.8

64. The Secretariat received 20 sets of comments on the draft Legislative Guide as part of the

online consultation. In addition, the Secretariat received feedback from two Working Group

Observers. In parallel with the consultation, the Secretariat conducted a survey on technical legal

aspects of bank liquidation procedures, to which Working Group participants and other targeted

stakeholders were invited to participate.

65. The Working Group on Bank Insolvency will consider both the feedback received during the

consultation and the responses to the technical survey during its seventh session, which will be

held between 18-20 November 2024. In principle, it is envisaged that this will be the final Working

Group session. It is anticipated that the Legislative Guide on Bank Liquidation will be finalised and

published in 2025.

5. Transnational Civil Procedure

(a) Formulation of Best Practices for Effective Enforcement ***

(also related to work area n°4)

66. The project on Best Practices for Effective Enforcement was included in the 2020-2022

Work Programme at the 78th session of the General Assembly (A.G. (78) 12, paras. 41 and 51,

and A.G. (78) 3). At the second meeting of its 99th session, held in September 2020, the Governing

Council approved the proposed scope of the project, confirmed its high-priority status, and

authorised the establishment of a Working Group, chaired by Governing Council Member

Ms Kathryn Sabo (C.D. (99) B.3 and C.D. (99) B.21, paras. 57-58). The continuation of the project

was approved for the 2023-2025 Work Programme at the 81st session of the General Assembly.

67. During 2024, the Working Group, the informal sub-groups, and the Drafting Committee

intensified their efforts to discuss all remaining open issues and finalise the first complete draft of

the instrument. To this end, three sessions of the full Working Group were organised.

____________________ 8 Including events organised by the Single Resolution Board, the International Insolvency Institute, and INSOL Europe.

UNIDROIT 2024 – A.G. (84) 2 17.

68. From 15 to 17 April 2024, the Working Group met for its eighth session. It continued its

consideration of the advanced revised draft on best practices on enforcement by way of authority

(focusing on enforceable instruments, debtor’s information duties, and digital registers),

enforcement of security rights (focusing on general provisions, disposition of assets, and

enforcement of security rights over immovables), and enforcement on digital assets. The report of

the session is available here.

69. On 22 and 23 September 2024, the Working Group held an extraordinary (remote) session,

which discussed in particular the parts on modes of enforcement of monetary and non-monetary

claims, costs, and enforcement organs, as well as expeditious relief for extra-judicial enforcement.

It also addressed the proposed structure of the entire instrument and the timeframe for the way

forward. The summary report of the session is available here.

70. The ninth session of the Working Group will be held from 2 to 4 December 2024 and is

expected to discuss a finalised draft of the instrument.

71. In addition to the full sessions, the Drafting Committee met several times, both virtually

and in person around the Working Group sessions (with formal meetings on 15, 17 and 18 April,

23-24 September, 28 October 2024, and 2 and 5 December 2024, while additional intersessional

meetings of the Drafting Committee and ad-hoc subgroups were held to discuss open issues).

72. In the intersessional period, the project was presented or discussed on various occasions,

including: the annual International Coordination Conference on Secured Transactions Reform in

Washington, D.C. on 16-17 January 2024; within the framework of the cooperation with the World

Bank Group (Washington, D.C., 18-19 January 2024), especially on the practical challenges of

enforcement by way of authority in various jurisdictions where the WBG operates; during the

dissemination conference on the ELI-UNIDROIT Model Rules of European Civil Procedure, held in

Vienna, Austria on 5-6 February 2024; in a dedicated panel at the Cape Town Convention Academic

Project Annual Conference (Cambridge, 11-12 September 2024); lectures during the International

Programme for Law and Development; and presentations to visiting delegations. More information

will be provided in the 2024 Annual Report.

73. The Secretariat would seek the authorisation of the Governing Council to proceed with

consultations on the finalised draft. The outcome of the consultations would then be considered at

the last session of the Working Group, to be convened in spring 2025.

(b) International Civil Procedure in Latin America *

74. Upon recommendation of the Governing Council, the General Assembly confirmed the

inclusion in the Work Programme 2023-2025 of possible future work on the topic, with low priority,

subject to further consultation with the Organization of American States (OAS), other interested

organisations, and availability of resources.

75. Consistent with the low level of priority assigned to the project, the Secretariat has merely

continued to monitor developments in this area, also in conjunction with the promotion of the ELI-

UNIDROIT European Model Rules for Civil Procedure.

6. Cultural Property

Private Art Collections **

76. Since the General Assembly upgraded the priority to the project focusing on orphan cultural

objects, at its 81st session in 2022, the Exploratory Expert Group completed its work and a Working

Group was set up. The project is supported by the Fondation Gandur pour l’Art and the Art-Law

18. UNIDROIT 2024 – A.G. (84) 2

Centre of the University of Geneva, with which UNIDROIT has concluded a Memorandum of

Understanding.

77. The Working Group on Orphan Cultural Objects is chaired by Governing Council Member Dr

Jorge Sánchez Cordero Its first session, held in Rome and online on 2 and 3 May 2024, was

composed of eight members,9 as well as institutional observers, such as UNESCO, the International

Centre for the Study of the Preservation and Restoration of Cultural Property (ICCROM), the

International Council of Museums (ICOM) and the International Confederation of Art and Antique

Dealers' Associations (CINOA). The Fondation Gandur pour l’Art and the Art-Law Centre of the

University of Geneva were also represented in the Working Group.

78. The first session of the Working Group included almost 20 participants who discussed

among others (i) the relationship of the Private Art Collections project with existing international

initiatives; (ii) the scope and content of the project; (iii) case studies which illustrate the difficulties

encountered with orphan objects; and (iv) the development of guidelines and procedures which

would enable claims related to orphan objects and enhance confidence and integrity within the art

market.

79. The second session of the Working Group will take place from 11 to 13 December 2024 in

Rome with an enlarged composition.

8. Sustainable Development

(a) Legal Nature of Verified Carbon Credits ***

(also related to work area n°4)

80. At its 101st session June 2022, the Governing Council recommended the inclusion of a

project on the Legal Nature of Voluntary Carbon Credits (the “VCCs Project”) in the 2023-2025

Work Programme, with high priority. The Governing Council’s recommendation was endorsed by

the UNIDROIT General Assembly at its 81st session in 2022.

81. A First Consultative Exploratory Workshop was held in collaboration with the World Bank

Group (WBG) and the International Swaps and Derivatives Association (ISDA) on 27 March 2023.

Based on the outcomes of the workshop the UNIDROIT Governing Council, at its 102nd session in

May 2023, confirmed the Secretariat’s authorisation to establish a Working Group, in collaboration

with the World Bank Group, tasked with developing an international law instrument to provide

guidance on the legal nature and other private law aspects of VCCs. Accordingly, the Working

Group on the Legal Nature of Voluntary Carbon Credits was established and held its first session

at the seat of UNIDROIT in Rome on 10-12 October 2023.

82. The second session of the Working Group was held at the seat of UNIDROIT in Rome and

online between 22 and 24 April 2024. The session was attended by 50 participants, including

representatives from the World Bank and the Hague Conference on Private International Law

(HCCH), as well as legal experts and observers from international, regional and intergovernmental

organisations, the private sector and academia. The deliberations focused on the Revised Issues

Paper prepared by the Secretariat based on the outcomes of the first session and the intersessional

work carried out in the interim. The Working Group’s discussion centred on the content of the

future instrument to be developed. In particular, the Working Group analysed the main steps in

the life cycle of Verified Carbon Credits (VCCs) through a property law perspective in order to

____________________ 9 The Working Group is composed of the following members (May 2024): Ms Corinne Hershkovitch, Lawyer, France; Mr Keun-Gwan Lee, Professor, Republic of Korea; Mr Amnon Lehavi, Professor, Israel; Mr Till Vere-Hodge, Barrister-at-Law, United Kingdom; Mr Eric Cottier, former magistrate, Switzerland; Ms Joanna van der Lande, Antiquities Dealers' Association, United Kingdom; and Mr Marcilio Toscano Franca Filho, Professor (Federal University of Paraiba), Brazil.

UNIDROIT 2024 – A.G. (84) 2 19.

ascertain the proprietary nature of VCCs and the effect of transfers and dispositions in VCCs on a

holder’s proprietary rights. Among other aspects, the Working Group discussed the definitions of

key terms to be included in the instrument and addressed issues pertaining to the registration,

transfer, retirement, reversal and cancellation of VCCs. Of particular relevance was the

consideration of the role played by independent carbon crediting programmes and registries,

including in relation to the issuance and registration of VCCs. To that end, representatives from

Verra and Puro Earth, two leading independent carbon crediting programmes, delivered

presentations to the Working Group, addressing, inter alia, how VCCs are issued, evidenced,

individualised, transferred, encumbered, retired or otherwise cancelled. In addition, with input

from the HCCH, the Working Group discussed relevant conflicts of law issues to be addressed in

the instrument.

83. At the 103rd session of the Governing Council (Rome, 8-10 May 2024), an update on the

VCC project was presented to the members. The Governing Council took note of the significant

progress made by the Working Group on the Legal Nature of Voluntary Carbon Credits and

expressed a positive view on the publication of the joint “UNCITRAL/UNIDROIT Study on the legal

nature of verified carbon credits issued by independent carbon standard setters”. The Governing

Council also approved changing the project title to the “Legal Nature of Verified Carbon Credits”,

based on the experts’ advice that the legal nature of carbon credits does not depend on the use

ultimately given to the said credits.

84. From 4 to 6 September 2024, the third session of the Working Group took place in a hybrid

format at UNIDROIT’s headquarters in Rome. Held in collaboration with the World Bank, the session

included 58 participants, including legal experts and observers from international, regional and

intergovernmental organisations, as well as the private sector and academia. During the third

session, the Working Group focused on refining the draft UNIDROIT Principles on the Legal Nature

of Verified Carbon Credits that had been prepared by the drafting group. Key discussions revolved

around clarifying the main stages in the life cycle of VCCs, the definitions of fundamental terms,

as well as other crucial aspects such as the creation, transfer, reversal, revocation, and retirement

of VCCs. Additionally, the Working Group underscored the critical role of a VCC registry in

promoting market transparency and considered the relevant custody rules associated with VCCs.

85. The project was presented and discussed in several international fora. By way of example,

it was presented at the CODEWAY EXPO 2024 on 20 May 2024, ABAC-APFF Hybrid Roundtable on

Enabling Development of Interoperable Voluntary Carbon Markets on 23 May 2024, the TOSCA

Conference - Tokenization of Voluntary Carbon Credits on 7 June 2024, and the Innovate4Climate

(I4C) Workshop Panel on Deconstructing the Legal Nature of Voluntary Carbon Credits on 12

September 2024. Additionally, it was presented at the stakeholder meeting hosted by Daiwa

Institute of Research in Japan on 24 September; at the invitation of the ICC, CEDEP and the San

Ignacio de Loyola University of Paraguay in Asuncion on 11 October; and the 9th Strategic Dialogue

of the Carbon Market Platform (CPM) on 17 October 2024.

86. The Secretariat is preparing for the next session of the Working Group, envisaged to take

place in January 2025.

(b) Development of a guidance document on Corporate Sustainability

Due Diligence in Global Value Chains **

87. Upon recommendation of the Governing Council (UNIDROIT 2022 C.D. (101) 21, paras. 115-

131), at its 81st session in December 2022 the General Assembly included the “Development of a

guidance document on Corporate Sustainability Due Diligence in Global Value Chains” as a new

project with medium priority in the Institute’s 2023-2025 Work Programme (see UNIDROIT 2022

20. UNIDROIT 2024 – A.G. (84) 2

A.G. (81) 9). Consistent with the medium level of priority, over the period 2022-2024, the

Secretariat carried out comprehensive research on the topic.

88. At the 103rd session of the Governing Council in May 2024, the Secretariat informed the

Council that it was organising a first Exploratory Workshop. The purpose of the Workshop was to

gather key experts to assess the existing international instruments as well as the added value of

a future UNIDROIT instrument on the topic, and to provide recommendations as to its scope. All

Governing Council members received an invitation to the Workshop. The Secretariat anticipated

that the Council would be duly informed of the result of the Workshop and, should the Secretariat

be convinced that normative work could start, the Council would be invited to upgrade the project’s

priority to establish a Working Group. In order to maximise efficiency and avoid postponing the

work until the next ordinary Governing Council session, the proposal to upgrade the priority level

will be submitted to the Council intersessionally by written procedure.

89. The Exploratory Workshop was held at the seat of the Institute on 27 and 28 May 2024. A

total of 12 invited experts attended the Workshop, in addition to three Governing Council members

and five members of the Secretariat. The participants’ deliberations were guided by a Discussion

Paper that captured the research undertaken by the Secretariat. The Workshop resulted in the

conclusion of the participants that a future UNIDROIT instrument could fill important gaps and

constitute an important normative instrument complementing the international framework. The

participants recommended that UNIDROIT develop the proposed instrument, providing

recommendations as to the project’s form, scope and contents.

90. The Secretariat will share the Summary Report of the Exploratory Workshop with the

Council and request an upgrade of the priority level as well as authorisation to convene a Working

Group.

9. Exploratory work

(a) Law Applicable to Cross-Border Holdings and Transfers of Digital

Assets and Tokens

91. At the 102nd session of the Governing Council, the UNIDROIT Secretariat and the Permanent

Bureau of the HCCH agreed to elaborate a proposal to HCCH’s Council of General Affairs and Policy

(CGAP) to conduct exploratory work regarding a possible Joint HCCH-UNIDROIT Project on Law

Applicable to Cross-Border Holdings and Transfers of Digital Assets and Tokens (C.D. (102) 12).

The potential joint project was considered by the two organisations as a possible follow up of the

approval of the Principles on Digital Assets and Private Law (DAPL) by the Governing Council in

May 2023. There was indeed a common perception that work could have been conducted starting

from the basis provided by DAPL Principle 5, which established the framework on the law applicable

to “proprietary aspects” of digital assets, but did not provide a full regulation of all aspects,

particularly transfers, so that room was available to specify its contents providing adequate

consideration of issues which were not covered therein.

92. The HCCH-UNIDROIT joint work consisted of a first meeting that was held in the Hague in

June 2023 to discuss a scope paper prepared by the HCCH illustrating the contents of the DAPL

and possible areas for work, plus a second meeting held in Rome in October 2023 which hosted a

more thorough discussion on the feasibility of the Joint Project, based on a collection of written

contributions provided by the experts designated by both organisations. In this context, work

themes were identified, particularly in the area of rules of conflicts applicable to specific types of

transfer of digital assets and tokens and linked assets.

93. Following consultations, the Permanent Bureau of the HCCH concluded that the Joint

Project could not meet consensus and would need to be discontinued. On March 2024 the CGAP

UNIDROIT 2024 – A.G. (84) 2 21.

took note of the proposal by the Permanent Bureau and, despite the excellent level of collaboration

between the two organisations, declared the exploratory work on the Joint Project concluded.

(b) Other exploratory work

94. Upon recommendation of the Governing Council, the General Assembly included at its 81st

session exploratory work on further four topics in the Institute’s Work Programme for the 2023-

2025 triennium, namely on: (i) Digital transformation, Data Governance and Artificial Intelligence;

(ii) Private Law and Contemporary Health Research: Intellectual Property issues in the field of

Personalised Medicine; (iii) Standard-Essential Patents; and (iv) Access to Justice in Environmental

Matters. Consistent with the need to focus resources on UNIDROIT’s ongoing projects, the Secretariat

did not begin related exploratory work.

B. IMPLEMENTATION AND PROMOTION OF UNIDROIT INSTRUMENTS ***

1. Depositary functions

95. UNIDROIT is the Depositary for the 2001 Cape Town Convention and its Protocols (Aircraft

2001, Rail 2007, Space 2012 and Mining, Agriculture and Construction 2019) and for the 2009

Geneva Securities Convention. Depositary functions include, inter alia: providing assistance to

States that contemplate becoming Parties to the Conventions and Protocols, as well as informing

all Contracting States of each new signature or deposit of an instrument of ratification, acceptance,

approval or accession, of each declaration made in accordance with the Convention and Protocols,

of the withdrawal or amendment of any such declaration, or of the notification of any denunciation.

UNIDROIT also maintains a specific Depositary section on its website for the relevant instruments.

96. As Depositary for the Cape Town Convention and its Protocols, UNIDROIT is tasked with

preparing reports as to how the international regime established by this Convention operates in

practice. For this purpose, the Depositary considers the reports of the Supervisory Authority

concerning the functioning of the international registration system.

97. During the course of 2024, Uganda deposited its instruments of accession to both the Cape

Town Convention and the Aircraft Protocol, bringing the number of Contracting Parties to 87 for

the Convention, and 84 for the Aircraft Protocol. The deposit by Paraguay of its instruments of

accession to the Luxemburg Rail Protocol and the Space Protocol as well as its instrument of

ratification of the MAC Protocols to the Cape Town Convention is foreseen for 27 November 2024.

98. The Luxembourg Rail Protocol entered into force on 8 March 2024 following the 2023

ratification by Spain and the confirmation by the Intergovernmental Organisation for International

Carriage by Rail (OTIF), as Secretariat of the Supervisory Authority, to the Depositary that the

International Registry for railway rolling stock was fully operational (pursuant to Article XII(8) of

the Luxembourg Rail Protocol). Information on the status of these instruments can be found on

UNIDROIT’s website.

99. The Depositary functions should be regarded as indispensable and, as such, high-priority

activities for the purpose of allocation of human and financial resources.

22. UNIDROIT 2024 – A.G. (84) 2

2. Promotion of UNIDROIT Instruments

100. While promotion activities of the legislative projects addressed under Section A are outlined

in the corresponding subsections above,10 this section aims to further report on promotion activities

for UNIDROIT instruments.

(a) Cape Town Convention and its Protocols

101. The 13th Annual Cape Town Convention Academic Project Conference took place at Jesus

College, University of Cambridge, and online on 11-12 September 2024. The Conference was

organised by the Cape Town Convention Academic Project, which is a partnership between UNIDROIT

and the University of Cambridge Faculty of Law, under the auspices of the Centre for Corporate

and Commercial Law (3CL). The Aviation Working Group (AWG) is the founding sponsor of the

project.

102. The Conference featured presentations on the “Comparison of registration requirements in

the Aircraft Protocol, the Rail Protocol and the MAC Protocol”, “Financing models in relation to

aircraft, rail and MAC equipment”, and “Recent issues arising in insolvency cases: GOL, Go First

and SAS”, followed by comments and discussions.

103. Over the course of 2024, the Secretariat continued to cooperate in the promotion of the

Cape Town Convention and its Aircraft Protocol, taking part in governmental meetings,

conferences, and workshops in various countries. Among other events, the Aircraft Protocol was

presented in the context of a Masters course at the University of Toulouse (MINTEC, “Private

international law in a global context”) on 23 January, as well as within an international conference

organised at LUISS University on 27-28 January 2024, with participation of the Italian Aviation

Authority. The successes of the Aircraft Protocol were also featured during a consultation workshop

organised in Tokyo on 29 September 2024.

(b) UNIDROIT Principles of International Commercial Contracts (UPICC)

104. The year 2024 marks the 30th anniversary of the UNIDROIT Principles and accordingly a

series of events took place to celebrate and acknowledge the Principles’ worldwide success. On 6

and 7 May 2024, the Secretariat organised a celebratory conference at the seat of the Institute on

“30 Years of UPICC – Past, Present and Future Relevance”. The conference was attended by

UNIDROIT Governing Council Members, academic experts, and practitioners from all over the world,

who discussed the various ways in which the UPICC had been used over the past 30 years, as well

as their possible role in shaping new frontiers of contract law.

105. Furthermore, the Secretariat participated in several other events celebrating the UPICC’s

significant anniversary this year. The following shall be highlighted by way of example:

• An international celebratory conference entitled “Unifying the Commercial World – 30th

Birthday of the UNIDROIT Principles of International Commercial Contracts” held in

Hamburg at the Bucerius Law School on 6-7 June 2024;

• A conference held in Bogotá on 8 October 2024, organised by the Externado University

of Colombia and the University of Sabana, in cooperation with the Chamber of

Commerce of Colombia, which hosted the event, entitled “30 años de los Principios de

UNIDROIT sobre los Contratos Comerciales Internacionales”;

____________________ 10 See above for the Rail Protocol (para. 12); Space Protocol (para. 16); MAC Protocol (para. 22); UNCITRAL/UNIDROIT Model Law on Warehouse Receipts (para. 39); Best Pratices for Effective Enforcement (para. 72); and Verified Carbon Credits (para. 85).

UNIDROIT 2024 – A.G. (84) 2 23.

• A celebration held in Asunción on 14-15 October 2024, organised by the Centro de

Estudios de Derecho, Economia y Politica (CEDEP) and hosted by the Central Bank of

Paraguay, entitled “30 Años de los Principios UNIDROIT”;

• A panel celebrating the 30 years of UPICC organised on 29 October 2024 in the

framework of the 14th Jurist Conference in Seoul, by the Korean Society of Law, the

Constitutional Court, the Ministry of Justice, the Korean Bar Association, and the

Korean Law Professors Association, and hosted by University of Korea, with the

participation of several South Korean academics and judges, including Governing

Council Member Prof. Inho Kim;

• An international conference entirely dedicated to “The 30th Anniversary of the Release

of the UPICC and the General Principles of the Chinese Civil Code Contract Law”, co-

organised by UNIDROIT and the Shanghai Arbitration Center (SHIAC), the Zhongnan

University of Economics and Law (ZUEL), and the Civil Law Society of China, held in

Shanghai (People’s Republic of China) on 11 November 2024, with more than twenty

presentations on the influence of the UPICC on the Chinese Civil Code and judicial

practice, as well as their impact in arbitration.

106. Additionally, the UPICC were featured as a topic in other events with participation of the

Secretariat, including a conference held at the seat of UNIDROIT in Rome in memory of the late

President Professor Alberto Mazzoni, entitled “An Italian jurist shaping transnational law” (with a

dedicated panel on international contracts and arbitration), as well as a conference organised at

the University of Pavia (Italy), which launched the Italian translation of the “Tripartite” Legal Guide

on Uniform Law Instruments on Contract Law (with a Focus on Sales). The UPICC were also

addressed in the Annual Lecture on Arbitration which was co-organised with the University of Roma

Tre and held this year by Prof. Mohamed Abdel Wahab of Cairo University (Egypt).

107. The UPICC were further the object of several lectures and seminars with participation of

the UNIDROIT Secretariat, including:

• A series of lectures for the students of the Master in International Economic Law at the

Université Capitole Toulouse, France, on 22 and 23 January 2024;

• A remote presentation to students at Qatar University on 4 March 2024;

• A lecture on the UNIDROIT Principles at the Transversal Skills Laboratory on “Management

& Practice of International Contracts in the Foreign Direct Investments Sector” at Bari

University on 16 April 2024;

• A lecture at the Master of Business Law of the University of LUISS (Rome, Italy) on 9 May

2024;

• A lecture on “Harmonisation du droit, UNIDROIT et les Principes d’UNIDROIT relatifs aux

contrats du commerce international” to students of the Master in International Business

Law at the University of Lausanne on 14 May 2024;

• A lecture on “UNIDROIT & the UNIDROIT Principles of International Commercial Contracts” to

postgraduate students of the International Training Centre of the International Labour

Organization (ITC-ILO) in Turin on 22 May 2024, in the context of UNIDROIT’s cooperation

with the ITC-ILO;

• The International Law and Development Programme (specifically, on 18 June 2024 with an

interactive lecture and a special seminar on the application of the UPICC in the Middle East

and North Africa (MENA) region), and a workshop on the application of the UPICC in the

practice of in-house counsels and arbitrators;

• A lecture to students as part of their master studies in International Business Law at the

Sapienza University in Rome on 18 and 19 July 2024; and

• A lecture for the students of the Master in International Economic Law at the Université

Capitole Toulouse, France, on 13 to 15 November 2024.

24. UNIDROIT 2024 – A.G. (84) 2

108. In 2024, the Secretariat published the Ukrainian translation of the black-letter rules of the

UPICC 2016 and the Georgian translation of the black-letter rules of the UPICC 2010. In addition,

the Secretariat entered into a contract with qualified translators for the Georgian translation of the

UPICC 2016. The Portuguese translation of the integral version of the UPICC 2016 was also

completed and is pending publication. Moreover, the Secretariat received important updates on

the progress of the translations of the UPICC 2016 into Arabic and Farsi.

109. More information on promotional activities in relation to the UPICC is provided in the Annual

Report 2024.

(c) UNIDROIT/FAO/IFAD Legal Guide on Contract Farming

110. UNIDROIT has continued to promote the Legal Guide on Contract Farming, in collaboration

with FAO and IFAD. In 2024, the Legal Guide was presented at a number of events, including:

• A panel on innovation in agri-business and sustainable development at the CODEWAY Expo

in Rome, Italy on 17 May 2024;

• A workshop at the University of Edinburgh on “Sustainability in the Food Supply Chain:

Challenges and the Role of Law & Policy” on 30-31 May 2024;

• A presentation during the UNIDROIT International Programme for Law and Development on

20 June 2023; and

• A lecture for students during their Master in International Business Law at Sapienza

University in Rome on 4 July 2024.

111. More information on promotional activities regarding the Legal Guide will be available in

the 2024 Annual Report.

(d) UNIDROIT/IFAD Legal Guide on Agricultural Land Investment Contracts

112. The Legal Guide on Agricultural Land Investment Contracts was presented at various events

over the course of 2024, including:

• A panel on innovation in agri-business and sustainable development at the CODEWAY Expo

in Rome, Italy on 17 May 2024;

• A workshop at the University of Edinburgh on “Sustainability in the Food Supply Chain:

Challenges and the Role of Law & Policy” on 30-31 May 2024;

• A lecture for students during their Master in International Business Law at the Sapienza

University in Rome on 4 July 2024;

• A presentation during the UNIDROIT International Programme for Law and Development on

20 June 2023; and

• The Italian Water Dialogue 2024 at the seat of UNIDROIT on 22 October 2024.

(e) ELI-UNIDROIT Model Rules of European Civil Procedure

113. The ELI-UNIDROIT Model Rules of European Civil Procedure, adopted by the two

organisations in 2020, were presented and discussed during a dissemination conference jointly

sponsored by ELI and UNIDROIT and organised by ELI at the Austrian Academy of Sciences in Vienna

on 5 and 6 February 2024. The conference, opened by Manuela Baccarini (Vice Rector of the

University of Vienna), Pascal Pichonnaz (ELI President) and Ignacio Tirado (UNIDROIT Secretary-

General), aimed at reigniting discussion on the importance and impact that the Model Rules have

had and continue to have since their publication, and it saw the participation of many experts who

UNIDROIT 2024 – A.G. (84) 2 25.

had been involved in the development of the instrument, as well as commentators with academic

and judicial expertise and several other interested participants that animated the debate.

(f) Principles on Digital Assets and Private Law

114. The UNIDROIT Principles on Digital Assets and Private Law (the “DAPL Principles”) were

adopted by the UNIDROIT Governing Council at its 102nd session (10-12 May 2023) (C.D. (102) 25).

Following approval, the Council mandated the Secretariat to work towards the publication of the

instrument, to commence the process of translating the text into French, and to promote the

instrument in different jurisdictions to facilitate its implementation.

115. On 4 October 2023, the UNIDROIT Secretariat launched the publication of the DAPL Principles

at its seat in Rome, Italy. The event was widely attended and supported by public and private

stakeholders, including, e.g., by representatives of the International Monetary Fund and the

Association of Global Custodians, to name highly relevant representatives of both the public and

the private sector.

116. Following the publication of the DAPL Principles, the Secretariat designed an

implementation and promotion strategy for the instrument. The PDAPL Implementation and

Promotion Strategy was presented to the Governing Council at its 103rd session. The Strategy

comprises of four parts: (i) position the DAPL Principles as the leading international standard on

the proprietary aspects of digital assets; (ii) identify priority jurisdictions and engage with relevant

stakeholders to support domestic awareness of the DAPL Principles; (iii) raise awareness of the

DAPL Principles at relevant industry, academic and institutional fora in priority jurisdictions; and

(iv) ensure that the DAPL Principles be broadly accessible, including by engaging with partner

stakeholders to facilitate informal translations of the instrument into languages other than English

and French.

117. In relation to positioning the DAPL Principles as the leading international standard on the

proprietary aspects of digital assets, the DAPL Principles were recognised and endorsed at

Argentina's leading academic conference on private law, which formally recommended the

implementation of the legal instrument.11 The DAPL Principles were also recognised in the Cross-

border Settlement Infrastructure Forum Brief No. 4 titled “Key Aspects of UNIDROIT Principles on

Digital Assets and Private Law”, published by the Asian Development Bank in August 2024. The

Brief analyses the DAPL Principles and notes their importance in providing effective guidance on

the definition and treatment of business transactions involving digital assets.

118. In identifying key jurisdictions and engaging with relevant stakeholders to support

domestic awareness of the DAPL Principles, the Secretariat has engaged with domestic public

institutions and stakeholders in relevant jurisdictions. In addition, several countries have initiated

or are expected to initiate legislative reforms regarding the proprietary aspects of digital assets.

For instance, in March 2024 the Dubai International Financial Centre (DIFC) announced the

enactment of a new Digital Assets Law that addresses the legal characteristics of digital assets,

including the proprietary nature of digital assets, as well as how digital assets may be controlled

and transferred.12

119. In 2024, as part of efforts to raise awareness about the DAPL Principles, the Secretariat

presented and discussed the DAPL Principles at various government, academic, industry and

____________________ 11 Comisión N°9 de Derecho Internacional Privado de las Jornadas Nacionales de Derecho Civil de Argentina. 12 DIFC Announces Enactment of New Digital Assets Law, New Law of Security and Related Amendments to Select Legislation

26. UNIDROIT 2024 – A.G. (84) 2

institutional fora across Europe, Asia, Latin America and North America. These engagements

include:

• a webinar hosted by the Asian Business Law Institute (ABLI), in cooperation with

UNIDROIT on 3 September 2024;

• the Third Forum on Rule of Law in Global Digital Trade, held in Hangzhou, People’s

Republic of China, on 26 and 27 September 2024;

• a workshop on the "Tokenization of Physical Assets," organised by the University

of Turin, University of Milano-Bicocca, and the University of Florence on 25 March

2024;

• conferences, such as the XVII Jornadas de la ASADIP on private international law

held at the Austral University in Buenos Aires on 25 September 2024, and the

conference on Digital Assets and Private International Law hosted by the European

Banking Institute, the University of Vienna, and the Interdisciplinary Association of

Comparative and Private International Law on 11 and 12 April 2024;

• lectures delivered to students at institutions, such as Université Capitole Toulouse

on 23 January 2024, Loyola University Chicago School of Law on 27 March 2024,

and the British Institute of International and Comparative Law (BIICL).

120. In relation to accessibility, UNIDROIT has been working on the translation of the DAPL

Principles into French and has been engaging with partner stakeholders to facilitate informal

translations of the instrument into Chinese and Spanish. These translations are nearing completion

and are expected to be published in early 2025.

(g) Implementation of the UNIDROIT Model Law on Factoring

121. The UNIDROIT Model Law on Factoring (MLF) was adopted by the UNIDROIT Governing Council

at its 102nd session (Rome, 10-12 May 2023). The MLF provides a complete, self-standing legal

regime that facilitates factoring transactions. The instrument comprises a set of black-letter rules

that is primarily aimed at States that have not yet fully implemented a modern, comprehensive

secured transactions legal framework. The official English and French versions of the Model Law

on Factoring were published in September 2023.13 A revised version of the MLF was published in

August 2024, after the Governing Council decided at its 103rd session (Rome, 7-9 May 2024) to

amend Articles 11 and 52 to rectify an error in the transition rules.14

122. On adopting the MLF at its 102nd session, the Governing Council also mandated that the

Secretariat design and execute an implementation strategy for the MLF.15 The MLF Implementation

Strategy comprises of four parts (i) position the MLF as a core instrument that facilitates trade

finance, access to credit and economic development, (ii) raise awareness of the MLF at relevant

large, multilateral fora, (iii) support domestic implementation of the MLF, and (iv) ensure that the

MLF is broadly accessible.

123. In relation to positioning the MLF as a core instrument that facilitates trade finance, the

MLF was recognised in the International Finance Corporation’s (IFC) Knowledge Guide on Factoring

Regulation and Supervision, published in January 2024. The Knowledge Guide emphasises the

____________________ 13 The official versions of the Model Law on Factoring are available on a dedicate webpage on the UNIDROIT

website: https://www.unidroit.org/instruments/factoring/model-law-on-factoring/. 14 See document C.D. (103) 9.1 bis. 15 See Governing Council 102nd session document C.D. (102) 5 “Adoption of Draft UNIDROIT Instruments – Model Law on Factoring”, available https://www.unidroit.org/wp-content/uploads/2023/04/C.D.-102-5-Model- Law-on-Factoring.pdf, paragraphs 27 – 28.

UNIDROIT 2024 – A.G. (84) 2 27.

importance of countries implementing a factoring law including both regulatory elements and

private law rules based on the MLF.

124. In relation to presenting the MLF at large multilateral fora, the MLF was presented at the

6th Secured Transactions Coordination Conference on how the MLF could be implemented alongside

other international instruments (Washington DC, January 2024) and at the 7 th Secured

Transactions Conference on how the MLF could support regional access to credit reforms in the

Middle East (Istanbul, November 2024).

125. In relation to domestic implementation of the MLF, UNIDROIT has been working with partner

organisations (the EBRD, IFC, ADB, UNCITRAL and ILI) to support domestic law reform projects in

Jordan, Malaysia, Palestine and the United Arab Emirates. UNIDROIT’s partner organisations have

also advised that the MLF will be used for possible future reforms in Georgia, Tajikistan, Ukraine

and Uzbekistan. UNIDROIT has been directly involved in presenting the MLF to stakeholders in Jordan

(April 2024) and Turkey (November 2024).

126. In relation to accessibility, UNIDROIT has been working on the translation of the MLF into

Arabic, Japanese, Turkish and Spanish. The Turkish and Spanish translations are nearing

completion and are expected to be published in early 2025.

(h) UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects and

UNESCO-UNIDROIT Model Provisions on State Ownership of Undiscovered

Cultural Objects

127. The UNIDROIT Secretariat continued to offer technical assistance in connection with the 1995

Convention and in respect of the 2011 UNESCO-UNIDROIT Model Provisions on State Ownership

of Undiscovered Cultural Objects, owing, among other things, to the upsurge in trafficking in

cultural objects and the adoption of several declarations or recommendations calling States to

become a Party to the 1995 Convention. In 2024, the G7 Minister’s Meeting on Culture in Naples

(Italy) adopted a declaration inviting States to fight against illicit traffic in cultural property and

become Party to the relevant international conventions, among which the 1995 UNIDROIT

Convention. In addition, the G7 Ministers’ Meeting on Culture adopted a Declaration for the

sustainable development of Africa and the World more generally which is supporting the work

UNIDROIT has been doing in recent years on the continent.

128. In 2024, the Republic of Yemen deposited its instrument of accession to the 1995 UNIDROIT

Convention with the Italian Ministry of Foreign Affairs and International Cooperation which will

enter into force for Yemen on 1st February 2025.

129. UNIDROIT is regularly involved in national and regional capacity-building activities

concerning the fight against illicit traffic in cultural property (e.g., regional and national seminars

organised by or at the specific request of countries in order to improve their understanding of the

1995 UNIDROIT Convention, and its synergies with other international instruments, in view of

accession). In 2024, UNIDROIT participated in such seminars in Albania, Bosnia-Herzegovina,

Montenegro, North Macedonia, Poland, Qatar, Saudi Arabia, Serbia and Ukraine, as well as in

Central Asia and Western African countries.

130. At the institutional level, UNIDROIT is also pursuing its close collaboration with several

organisations in this field, among which UNESCO, INTERPOL, the World Customs Organisation

(WCO), the International Centre for the Study of the Preservation and Restoration of Cultural

Property (ICCROM), NATO, the European Union, the Council of Europe, the International Council

of Museums (ICOM), and the Antiquities Coalition.

28. UNIDROIT 2024 – A.G. (84) 2

131. UNIDROIT also continued its close cooperation with the African Union and ECOWAS to assist

African States in strengthening their legal framework to protect their heritage. As a result of this

cooperation, several African States have become in the recent years Parties to the 1995 UNIDROIT

Convention.

C. NON-LEGISLATIVE ACTIVITIES (UNIDROIT ACADEMY) ***

1. UNIDROIT Library

132. In 2024, the UNIDROIT Library continued to strengthen its cooperation with other libraries.

A cooperation agreement was entered into with the Library of the University of Regensburg

(Germany) in December 2023, and the first steps were taken to create a future stable collaboration

between the UNIDROIT Library, the Law Library of the University of Oslo (UJUR) and the Faculty of

Law Library of the University Library in Bergen (Ubbjur).

133. The expansion of the Library’s holdings has been hampered by steady increases in the price

of publications and a chronic lack of resources. Nevertheless, the Institute managed to increase

the Library’s holdings by 1671 titles.

134. In 2024, as in previous years, the Library received donations in kind from several

institutions and individuals. In particular, the Institute would like to offer its gratitude to the

following donors: the Max-Planck-Institute of Foreign Private and Private International Law in

Hamburg; Professor Giuditta Cordero-Moss; Professor Meiling Huang; and various publishing

houses from the Nordic countries.

135. Work progressed on the digitisation project of the Library. Special attention was given to

the digitisation of the collection on comparative law and unification of laws, and to the Scialoja as

well as the Cordero collection, in order to preserve some of the lLibrary’s most valuable historical

collections. Thanks to the very fruitful training project with the “Cooperazione HELP” (Rome), Mr

Carlo and Mr Riccardo della Fazia collaborated on the digitisation of the library's electronic

collection which was increased by a total of 891 newly digitised titles.

136. Thanks to the generous donation of the Dutch Foundation “Largesse” to the UNIDROIT

Foundation, it has been possible to create functional new workspaces for Library guests.

Furthermore, in 2024, about 300 monographs regarding UNIDROIT’s work programme and studies

were acquired to upgrade the Library’s collection, and various publications have been switched to

the relevant e-format. Some of the Library’s loose-leaf collections, in particular legal

encyclopaedias, which are less user friendly, have been substituted by their respective electronic

versions, and now offer easy access to legal materials for the Library’s guests from all over the

world. Work has continued on the upgrade of the Library’s list of law reviews, and scanned articles

have been added to the Library’s online collection. Over 200 journals are now available in the

Library’s Public Access Catalogue. In addition, a large number of references to articles available in

external databases (to which the UNIDROIT Library is subscribed) have been added to the Library’s

online catalogue.

2. Scholarship, Internship and Research Programme

137. UNIDROIT’s Scholarship, Internship and Research Programme (USIRP) is one of the

Institute’s most important tools for promoting UNIDROIT’s work and related research in the fields of

international private law, international commercial law and comparative law. Each year, the

programme brings a large number of academics, researchers, and law students to the UNIDROIT

Headquarters in Rome to undertake scholarship, internship and research opportunities related to

UNIDROIT instruments and projects. Participants in the programme are selected through a robust

and competitive selection process. Successful scholarship candidates are invited to undertake two-

UNIDROIT 2024 – A.G. (84) 2 29.

month research stays at the UNIDROIT Headquarters, and successful internship candidates are

invited to undertake three month internships with the UNIDROIT Secretariat. Participants are

provided with modest stipends (1000 euro per month for scholars, 600 euro per month for interns)

during their time in Rome. Additionally, each year the Institute selects one outstanding scholar to

undertake the prestigious 6-9 month “Sir Roy Goode Scholarship”.

138. Since 2014, this Programme has been entirely funded by voluntary contributions, relying

on the benevolence and generosity of its sponsors, which include, among others, the Ministry of

Commerce of the People’s Republic of China (MOFCOM), the UNIDROIT Asian Transnational Law

Centre (ATLC), the UNIDROIT Foundation, Members of the Governing Council, the UNIDROIT Alumni

Association, the Madruga law firm (Brazil) and the International Law Institute United Rule of Law

Appeal (UROLA). The long-term goal of the Programme is to provide funding to all accepted

applicants; however, due to limited resources, currently only a limited percentage of applicants

receive research scholarships or internship stipends.

139. For the 2024 Programme, UNIDROIT received a total of 244 internship applications and 165

scholarship applications. During 2024, the Institute has welcomed 151 participants in the

Scholarship, Internship and Research Programme. Specifically, UNIDROIT welcomed 54 interns and

38 scholars from 28 countries. Of the 54 interns, 8 were granted modest stipends for the duration

of their internships. Of the 38 scholars, 15 were granted stipends for the period of their research.

Additionally, 59 researchers from 22 countries undertook research stays in the UNIDROIT Library.

In addition, Ms Başak BAŞOĞLU KAPANCI was selected from a field of 30candidates as the 2024

Sir Roy Goode Scholar.

140. For the 2025 Programme, UNIDROIT received a record total of 295 internship applications,

162 scholarship applications and 30 Sir Roy Goode Scholarship applications.

3. Academic Projects

Cape Town Convention Academic Project

141. Established in 2019, the Cape Town Convention Academic Project (CTCAP) is a joint

undertaking between UNIDROIT and the University of Cambridge Faculty of Law, under the auspices

of the Centre for Corporate and Commercial Law (3CL), and with the Aviation Working Group as

its founding sponsor. Professor Ignacio Tirado (UNIDROIT), Professor Louise Gullifer (University of

Cambridge), and Professor Jeffrey Wool (Aviation Working Group) serve as the Directors of CTCAP.

142. The primary objective of CTCAP is to facilitate and further the academic study and

assessment of the Cape Town Convention and its Protocols. The CTCAP undertakes a number of

activities to achieve its objective:

• Maintenance of a comprehensive, digitised and searchable repository (https://ctcap.org/)

of relevant documents and publications.

• CTCAP issues annotations to the Official Commentary on the Convention and the Aircraft

Protocol in order to provide further guidance on specific issues relevant to practitioners

and researchers of the Cape Town Convention.

• Publication of the Cape Town Convention Academic Journal.

• Organisation of the annual Cape Town Convention Academic Project Conference (currently

at the University of Cambridge, having previously taken place at the University of Oxford

and at UNIDROIT).

• Organisation of the international Cape Town Convention Moot Court Competition.

30. UNIDROIT 2024 – A.G. (84) 2

• Delivery of projects that complement the Cape Town Convention and transnational law in

general. The CTCAP currently has three projects: (i) the Economic Evaluation of

International Commercial Law Reform (EE ICLR) Project; (ii) Best Practices in the Field of

Electronic Registry Design and Operation (BPER) Project; and (iii) the Implementation of

and Compliance with International Commercial Law Treaties Project (Treaty Project).

143. The 13th Annual Cape Town Convention Academic Project Conference took place at Jesus

College, University of Cambridge on 11-12 September 2024. The Conference had 128 registered

participants, 88 of whom attended in person and the rest joined online. The focus of the conference

was “Cape Town Convention in action: from aircraft to rail to MAC”.

144. In relation to the CTCAP projects, the seventh workshop on the BPER Project was held at

UNIDROIT’s Headquarters on 13-14 February 2024 in a hybrid format with 48 participants and the

eighth workshop was also hosted by UNIDROIT on 16 September 2024, with 32 participants. An

intersessional online meeting and ninth workshop will be held in 2025 to complete the Guide on

Best Practices for Electronic Business Registries.

145. The ninth (restricted) workshop for the EE Project was held on 14-15 February 2024 at the

seat of UNIDROIT in hybrid format with 12 experts, and the tenth (restricted) workshop was hosted

by UNIDROIT on 17 September 2024. The eleventh workshop will take place on 23 January 2025.

On 14 March 2024, the EE project was presented and discussed at a workshop on “Legal unification:

how to provide an economic evaluation”, organised by the European Law Institute (EUI) in

Florence, Italy.

146. A planning session on the Treaty Project was organised by CTCAP in hybrid format on 15

February 2024 in Rome with 12 participants, while the first workshop will take place on 21 and 22

January 2025. It is expected that both the BPER and EE projects will be completed in 2025.

Academic Project on the 1995 UNIDROIT Convention on Stolen or Illegally Exported Cultural

Objects

147. The Academic Project on the 1995 Convention (UCAP) is attracting institutional and

individual partners to raise awareness about UNIDROIT’s instruments in this field (e.g., among

universities, the judiciary, practising lawyers). Conferences and lectures were organised on

UNIDROIT’s instruments on the international protection of cultural objects together with several

universities around the world in 2024.

4. Academic Institutes

QMUL/UNIDROIT Institute for Transnational Commercial Law

148. The QMUL/UNIDROIT Institute for Transnational Commercial Law, originally founded in

2016 at the initiative of Professor Sir Roy Goode and former UNIDROIT President Professor Alberto

Mazzoni, was relaunched in 2023 with renewed governance, with Professor Rosa Lastra (Sir John

Lubbock Chair in Banking Law at QMUL/CCLS) and Professor Anna Veneziano (UNIDROIT Deputy

Secretary-General) as Co-Directors, Dr Franziska Arnold-Dwyer as Deputy Director, Professor Sir

Roy Goode as Founding Director and Honorary Chair of the Institute, and UNIDROIT Secretary-

General Professor Ignacio Tirado as member of the Executive Board. In autumn 2024, Dr Kamala

Dawar succeeded Dr Arnold-Dwyer as Deputy Director of the Institute. The Executive Board

nominated a new Advisory Board of the Institute with participation of eminent international

academics and practitioners, with four new appointments in 2024. The Advisory Board met on on

7 February 2024, on the occasion of a seminar on the UNIDROIT Principles on Digital Assets and

Private Law (DAPL Principles) sponsored by the Institute and held in London, with participation of

Secretary-General Ignacio Tirado, and again on 16 October 2024, to plan the activity of the

UNIDROIT 2024 – A.G. (84) 2 31.

Institute (including a seminar on supply chain side event at the ICC UK in London, focusing on

warehousing and factoring, for the first half of 2025).

Nordic Law Centre

149. Established in 2023 under the auspices of the UNIDROIT Academy, the UNIDROIT Nordic Law

Centre (Centre for Nordic Studies and Transnational Private Law – NLC) aims to strengthen

cooperation between UNIDROIT and the Nordic region, encompassing legal systems and institutions

of Norway, Sweden, Finland, Denmark, and Iceland. In line with UNIDROIT’s harmonisation activity,

the Centre seeks to promote research in comparative private law, focusing on areas connected to

UNIDROIT's work on transnational law. Through various dissemination activities such as seminars,

workshops, and conferences, the Centre aims to raise international awareness of Nordic law and

foster interest in UNIDROIT instruments within the Nordic region.

150. The Centre's first workshop, "Contra Proferentem in Nordic Contract Law," was held on 15

December 2023 at the seat of UNIDROIT and online, featuring presentations from academics across

the Nordic region. On 11 October 2024, a second workshop, titled "The Nordic Approach to the

Contract/Tort Divide," took place in a hybrid format in Rome and online, with the participation of

legal scholars from Denmark, Sweden, Norway and Finland.

UNIDROIT Asian Transnational Law Centre

151. Established in 2024, the UNIDROIT Asian Transnational Law Centre (ATLC) is a new initiative

under the UNIDROIT Academy. The objectives of the ATLC are to (i) establish a premier legal hub

for Asian transnational law at the UNIDROIT Headquarters in Rome; (ii) promote the work of

UNIDROIT, UNIDROIT instruments and UNIDROIT projects in Asia; and (iii) strengthen connections

between UNIDROIT and relevant academic institutes, legal institutes, regional institutes, law firms

and private sector stakeholders in Asia.

152. The operation of the ATLC and its activities are fully funded by extra-budgetary

contributions from interested stakeholders through donations to the UNIDROIT Foundation, and

support from partner organisations. In May 2024 the UNIDROIT Foundation secured a founding

sponsorship agreement with Yingke Law firm, which will provide the ATLC with funding for three

years (2024 – 2026).

153. The Secretary-General has appointed two Co-Directors to lead the ATLC in undertaking

activities to achieve its objectives, Professor Meiling Huang (Zhongnan University of Economics

and Law, currently seconded to UNIDROIT) and Senior Legal Officer William Brydie-Watson.

Additionally, an Advisory Committee composed of UNIDROIT Governing Council representatives,

distinguished Asian academics, legal experts, and other relevant stakeholders has been established

to provide advice to the ATLC in achieving its objectives.

154. In 2024, the ATLC has undertaken the following activities to achieve its objectives:

• Publications and translations: (a) Translation of UNIDROIT instruments into Asian languages

(Chinese, Japanese and Korean translations of the UNIDROIT Principles on Digital Assets and

Private Law and the Turkish translation of the Model Law on Factoring); (b) establishment

of a dedicated Asian Transnational Law Library within the UNIDROIT Library; and (c)

provision of 150 additional Asian law publications to the UNIDROIT Library.

• Secondments, scholarships, and internships: Sponsorship of five scholars from Asia and

five interns from Asia.

32. UNIDROIT 2024 – A.G. (84) 2

• Project participation, consultations and events: (a) delivery of first forum event with

sponsors at UNIDROIT Headquarters in Rome (September 2024); (b) delivery of first ATLC

international conference in Shanghai, China (November 2024); and (c) Launch of the first

International Commercial Arbitration Moot to foster the study and practice of UPICC, with

the inaugural event scheduled for 2025（d）financial support for legal experts and the

UNIDROIT Secretariat to participate in several events:

(i) APEC: Facilitation of Asian expert (Japan) and UNIDROIT Secretariat participation in

an expert policy dialogue on the MAC Protocol at the APEC Economic Committee

meeting (Peru, August 2024).

(ii) Japan: Facilitation of UNIDROIT Secretariat participation in three events in Japan: (i)

Digital Assets international legal conference, (ii) Secured Transactions international

legal conference, and (iii) Japanese national consultation event on the MAC Protocol

(Tokyo, September 2024).

(iii) China: Facilitation of UNIDROIT Secretariat participation in the Hong Kong Legal

Week, presentation at the Asia-Pacific International Private Law Summit and other

Legal Week events; UNIDROIT Secretariat participation in China Scholarship Council

(CSC) China young talents events; (Hong Kong, Beijing, Nanjing and Shanghai,

November 2024).

(iv) Turkey: Facilitation of consultation event for the Turkish translation of the Model

Law on Factoring and lectures at partner Turkish universities (Istanbul, November

2024).

5. UNIDROIT International Programme for Law and Development

155. The first edition of the Programme originally known as the UNIDROIT International Summer

School was presented at the 100th session of the Governing Council and was sponsored by the

Italian Ministry of Foreign Affairs and International Cooperation, in 2022 (C.D. (100) B.22). That

edition was held from 20 June to 22 July 2022, and thanks to its success, the Italian Government

has since granted funding for the organisation of a second and third edition (5 June to 7 July 2023

and 6 June to 5 July 2024) under a new name to rebrand the concept of the broader scope

Programme the “UNIDROIT International Programme for Law and Development” (IPLD).

156. The third edition of the initiative was held under the new management of IPLD Director Ms

Mari Teresa Iaquinta, who was appointed to replace former director Marco Nicoli who chose to

retire after the second edition.

157. The Programme involved 18 participants, including judges, public prosecutors and

legislative drafters, coming from 15 African countries (Burundi, Kenya, Ethiopia, Cameroon, Ghana,

Burkina Faso, Egypt, South Africa, Algeria, Uganda, Mauritius, Morocco, Zimbabwe and Somalia),

in a process of sharing knowledge and learning about international private and commercial law

practices.

158. As with the previous editions, the main objective was to promote cultural exchange to

strengthen peaceful relations between states and communities. The program was financed by the

General Directorate for Development Cooperation of the Ministry of Foreign Affairs and

International Cooperation (DGCS-MAECI), as part of the initiatives with Africa. The two editions

have included lectures, presentations and discussions of case studies from world-renowned experts

in each field, who had often participated in the elaboration of the instruments presented. In

particular, the role of transnational law and UNIDROIT’s instruments in different fields were

addressed, with an emphasis on instruments with the potential to foster economic development in

Africa. Moreover, the Secretariat was honoured by the contribution to the 2023 edition of the

UNIDROIT 2024 – A.G. (84) 2 33.

Embassy of South Africa, which hosted a reception for IPLD participants at the Residence of its

Ambassador in Rome.

159. The Programme ended with a solemn ceremony at the historic headquarters of Villa

Aldobrandini in Rome, including the participation of Vice Minister for International Affairs and

Cooperation of Italy, the On. Edmondo Cirielli, the Ambassador of South Africa Her Excellency Ms

Nosipho Nausca-Jean Jezile, as well as other illustrious guests and representatives of the diplomatic

missions of the countries involved.

6. Chair Programmes

160. The UNIDROIT Joint Chair Programmes aim at bolstering technical knowledge and expertise

in certain areas of the Institute’s work. Thanks to the collaboration and support of third-party

institutions, the Joint Chair Programmes allow the Secretariat to appoint experts for one year or

more (depending on the specific Terms of Reference of the Chair), to provide highly specialised

advice for specific projects on its Work Programme. This adds capacity and stability to the

Secretariat’s workforce. Two Chair Programmes have been implemented so far, as described below.

161. The UNIDROIT-Bank of Italy Chair Programme aims to facilitate joint research and knowledge

sharing on matters of common interest, with a particular focus on UNIDROIT’s project on Bank

Insolvency. This Programme had a successful first edition in 2021-2022, when the Secretariat

hosted an Assistant Professor from the University of Amsterdam. Based on the positive outcome,

the Bank of Italy agreed to renew the programme for a second period. This allowed the Secretariat

to benefit from the assistance of Mr Iacopo Donati, Professor of Corporate and Insolvency Law at

the University of Siena, from November 2023 to November 2024. Mr Donati has attended two

session of the Working Group on Bank Insolvency and contributed to the development of the

Chapter on Creditor Hierarchy of the draft Legislative Guide on Bank Liquidation. In addition, he

has contributed analysis on the treatment of contingent liabilities in bank liquidation proceedings.

162. The UNIDROIT-Italian Ministry of Foreign Affairs Chair Programme is funded by the

Directorate General for Development Cooperation (Direzione Generale per la Cooperazione allo

Sviluppo – DGCS) of the Italian Ministry of Foreign Affairs and International Cooperation (Ministero

degli Affari Esteri e della Cooperazione Internazionale - MAECI). The purpose of this programme is

to involve a senior or mid-career professor or researcher with expertise in private law and

agricultural development to assist in the development of the legal guides produced in partnership

with FAO and IFAD. Over the course of 2024, the Secretariat continued to work with Dr Keni

Muguongo Kariuki, a Kenyan lawyer and political economist with a PhD from the School of Oriental

and African Studies of the University of London. Ms Jeannette Tramhel, a Canadian lawyer and

agricultural economist with an LLM from Georgetown University, also assisted the Secretariat as

Senior Legal Consultant under the UNIDROIT-MAECI Chair Programme.

7. Cooperation with academic institutions under Memoranda of Understanding

163. Over the course of 2024, the Secretariat has concluded several new Memoranda of

Understanding (MoU) with academic institutions to strengthen cooperation. The overall aim of

these cooperation agreements is to promote research in the areas of private law, commercial law,

and the unification of law, as well as UNIDROIT’s instruments and its Scholarship, Internship and

Research Programme. Accordingly, the MoU’s envisage joint activities such as the co-organisation

of events, research projects, and study programmes. Many of the promotion activities for

UNIDROIT’s instruments described in this document were undertaken within the framework of an

MoU, in particular the Secretariat’s lectures and presentation at various universities around the

globe. Details of the activities undertaken within the framework of the agreements can be found

in the Annual Report 2024.

34. UNIDROIT 2024 – A.G. (84) 2

164. Since the beginning of the year 2024, cooperation agreements were signed with the

following institutions:

• Asian-African Legal Consultative Organization (AALCO) on 16 February 2024;

• Shanghai International Arbitration Centre (SHIAC) on 28 February 2024;

• School of Law, National University of Mongolia on 12 March 2024;

• Faculty of Law of the University Externado de Colombia on 7 October 2024; and

• Faculty of Law of Austral University (Argentina) on 15 October 2024.

8. Publications (Uniform Law Review)

165. In 2024, UNIDROIT published a variety of volumes, including two new editions in the series

of Professor Sir Roy Goode’s Official Commentaries on the Cape Town Convention and its Protocol.

March saw the publication of the revised fifth edition of Sir Roy Goode’s Official Commentary on

the Convention on International Interests in Mobile Equipment and Protocol Thereto on Matters

Specific to Aircraft Objects (“Aircraft Commentary”), which not only incorporates various

amendments to the text but also features a substantially revised index. In October, the third edition

of Sir Roy’s Official Commentary on the Convention on International Interests in Mobile Equipment

and Protocol Thereto on Matters Specific to Railway Rolling Stock arrived off the presses – the first

edition of the “Rail Commentary” since the entry into force of the Luxembourg Rail Protocol in

March 2024 and a full decade after the second edition. In the last quarter of 2024, the Secretariat

was continuing to work with Sir Roy in the preparation of a second edition of the Official

Commentary for the MAC Protocol.

166. Furthermore, a number of translations of UNIDROIT instruments were finalised and published

for online reference in 2024: the Portuguese and Italian translations black-letter rules of the ELI-

UNIDROIT Model European Rules of Civil Procedure, and the Chinese translation of the UNIDROIT

Principles on the Operation of Close-Out Netting Provisions. Additionally, the Italian translation of

the Tripartite (UNCITRAL/HCCH/UNIDROIT) Legal Guide to Uniform Instruments in the Area of

International Commercial Contracts was finalised, to be published by Giuffré in open access format.

167. As for the UNIDROIT Principles of International Commercial Contracts (UPICC), 2024 saw the

completion of the Ukrainian translation of the black-letter rules of the UPICC 2016 as well as the

signing of an agreement for their translation into Georgian. In addition, as of October 2024, the

Secretariat had also received word from the respective translation teams that both the Arabic and

Farsi translations of the UPICC 2016 would soon be delivered.

168. As regards the Uniform Law Review, the new online method for submission, review and

treatment of articles (the “ScholarOne” submission system) introduced in 2023 is now fully

operative. This electronic development in publishing is being taken even further by the publisher,

Oxford University Press (OUP). Negotiations for the renewal of the triennial contract concluded in

2022 evidenced the plans of OUP to transform all their journals into online-only publications,

thereby eliminating the paper copies. During the negotiations, to meet the need of the Institute to

have the Review in paper format for the centenary in 2026, OUP agreed to postpone the transfer

of the Uniform Law Review onto the online-only platform to 2027. Thereafter it will be possible to

have special issues, containing for example the acts of a particularly important conference, printed

in paper format, but these will have to be printed separately, at the expense of the Institute.

169. This development will also have consequences for the Library, in that all exchange

agreements will be discontinued, the free copies which UNIDROIT was entitled to under the previous

UNIDROIT 2024 – A.G. (84) 2 35.

agreements being transformed into free subscriptions to the online copy. The number of free

subscriptions will be reduced from the number of free subscriptions the Institute was entitled to

under the previous agreements. The number of free subscriptions will therefore cover the

Depositary Libraries, the Editorial Board and the Advisory Editorial Board, but will not be sufficient

to cover the exchanges. Any of the periodicals that the Library wishes to continue to have in its

collections will henceforth have to be bought. Hopefully these will not be too many, as over the

years the number of exchanges has gradually decreased, also as a result of the fact that several

of the reviews received in exchange have become free online publications.

170. The importance of the Uniform Law Review as a source of information on both the Institute

and its instruments, as well as on the instruments of other organisations, and the reception of the

international private law instruments in the nations that adopt them, cannot be exaggerated. Its

importance can also be seen in the increased number of articles submitted freely by the authors,

several of which come from authors from Africa.

9. Information resources and policy

Social media

171. The purpose of UNIDROIT’s social media presence is to:

(i) Raise UNIDROIT’s public profile and online awareness of its current projects;

(ii) Promote upcoming events and encourage participation from relevant stakeholders;

(iii) Allow researchers, visiting professionals, interns, and other stakeholders to connect with

each other and maintain a connection with UNIDROIT;

(iv) Serve as a dynamic channel to communicate with the global community interested in

UNIDROIT’s work; and

(v) Allow UNIDROIT to widely advertise vacancies, internship and scholarship opportunities.

172. UNIDROIT currently maintains accounts on LinkedIn (2016), Facebook (2016), X (former

Twitter) (2018) and YouTube (relaunched in 2019). UNIDROIT’s presence on YouTube was

relaunched in 2019 to promote videos of expert presentations made at the Institute by

international legal experts and visiting scholars, as well as to share promotional videos about

UNIDROIT instruments and events.

173. Pursuant to a regularly updated internal social media strategy, the Secretariat shares the

following types of content through its various social media channels:

(i) Updates relating to projects;

(ii) Notable anniversaries of signatures, ratifications, accessions and entry into force

of UNIDROIT instruments in States (under the #UNIDROITanniversaries hashtag);

(iii) UNIDROIT events (past and upcoming);

(iv) External events relevant to Unidroit work (e.g. International moots utilising Unidroit

instruments);

(v) UNIDROIT attendance at other international meetings;

(vi) Profiles of scholars and interns;

(vii) Internship and scholarship opportunities;

(viii) Library news;

(ix) Webinars;

(x) History of the Institute;

36. UNIDROIT 2024 – A.G. (84) 2

(xi) Announcements of partnerships with other organisations;

(xii) Sharing relevant content from the social media accounts of partner organisations;

(xiii) Monthly themes to promote certain projects.

174. Additionally, the Secretariat actively works with universities, affiliated international

organisations, and individuals involved in UNIDROIT’s work in order to cross-mention each other in

social media posts, further promote these activities and increase the Institute’s digital engagement

and “reach”. All content posted generally includes images/videos either taken at UNIDROIT or

copyright-free images. Additionally, all content posted channels the audience back onto the

UNIDROIT website, thereby increasing the number of visitors on the website and allowing for more

visibility of UNIDROIT’s work.

175. Over the years, the Secretariat has benefitted from attending the “Social Media

Roundtable” organised every six months by the United States Mission to the UN Agencies in Rome.

These meetings bring together social media managers from international organisations based in

Rome (FAO, IFAD, WFP, IDLO, UNIDROIT, ICCROM etc.) to share best practices and effective

strategies in social media management, and to improve social media coordination. This forum has

allowed the Institute to benefit from the professional social media expertise of larger organisations

to improve its own social media practices. In 2024, UNIDROIT participated in two meetings held on

6 February and 11 September 2024.

Performance indicators

176. As of 18 October 2024, UNIDROIT had 36,807 (up from 29,333 in 2023) followers on

LinkedIn, 6,100 (up from 5,800 in 2023) followers on Facebook, 2,479 (up from 2,247 in 2023)

followers on X (former Twitter), and 557 (up from 557 in 2023) subscribers on YouTube. The

UNIDROIT social media channels continue to be the largest source of referrals to the UNIDROIT

website, after direct clicks and search engines. Particularly on LinkedIn, an increase of 18% has

been observed in terms of engagement and comments by the followers. In 2024, posts made by

UNIDROIT on all its channels collectively were delivered to people’s feeds over 1 million times.

UNIDROIT 2024 – A.G. (84) 2 37.

ANNEX I

Expenditure in Implementation of Work Programme

(estimate by 31 December 2024)

Priority level Regular budget

Legislative Activities

Access to credit

Protocols to the Cape Town Convention

(a) Implementation of Rail and Space Protocols to the Cape Town Convention *** Staffing costs Professional staff (Ch. 2.1, 3.1)

35.625,56

General services (Ch. 2.1, 3.1)

28.666,72

Missions (Ch. 1.5)

4.357,76

Total

68.650,04

(b) Implementation of MAC Protocol *** Staffing costs Professional staff (Ch. 2.1, 3.1)

65.047,82

General services (Ch. 2.1, 3.1)

9.040,80

Missions (Ch. 1.5)

1.637,57

Experts (Ch. 1.4)

3.365,00

Total

79.091,19

(c) Preparation of other Protocols to the Cape Town Convention * Staffing costs Professional staff (Ch. 2.1, 3.1)

0,00

General services (Ch. 2.1, 3.1)

0,00

Experts (Ch. 1.4)

0,00

Total

0,00

Development of Model Law and giude to Enactment on Factoring *** Staffing costs Professional staff (Ch. 2.1, 3.1)

24.230,08

General services (Ch. 2.1, 3.1)

3.013,60

Missions (Ch1.5)

2.685,68

Experts (Ch. 1.4)

26.634,58

Total 56.563,94

Development of a Model Law and Guide to Enactment on Warehouse Receipts ***

Staffing costs Professional staff (Ch. 2.1, 3.1)

72.077,13

General services (Ch. 2.1, 3.1)

9.040,80

Missions (Ch. 1.5)

4.425,76

Total 85.543,69

Development of a Model Law on Leasing *

Staffing costs Professional staff (Ch. 2.1, 3.1)

0,00

General services (Ch. 2.1, 3.1)

0,00

Missions (Ch. 1.5)

Experts (Ch. 1.4)

0,00

Total 0,00

International Commercial Contracts

(a) UNIDROIT Principles of International Commercial Contracts and Investment Contracts

***

Staffing costs Professional staff (Ch. 2.1, 3.1)

44.735,16

General services (Ch. 2.1, 3.1)

26.983,66

Missions (Ch. 1.5)

1.104,73

38. UNIDROIT 2024 – A.G. (84) 2

Experts (Ch. 1.4)

26.559,19

Total

99.382,74

(b) Formulation of Principles of Reinsurance Contracts *

Staffing costs Professional staff (Ch. 2.1, 3.1)

8.333,80

General services (Ch. 2.1, 3.1)

3.767,75

Experts (Ch. 1.4)

0,00

Missions (Ch. 1.5)

0,00

Total

12.101,55

Private Law and Agricultural Development

(a) Legal Structures for Agricultural Enterprises *** Staffing costs Professional staff (Ch. 2.1, 3.1)

83.120,23 General services (Ch. 2.1, 3.1) 17.490,93

Experts (Ch. 1.4)

12.983,36

Total

113.594,52

(b) Development of an Agricultural Financing Legal Guide **

Staffing costs Professional staff (Ch. 2.1, 3.1) 0,00

General services (Ch. 2.1, 3.1) 0,00

Experts (Ch. 1.4)

0,00

Total

0,00

Law and Technology

(a) Digital Assets and Private Law *** Staffing costs Professional staff (Ch. 2.1, 3.1)

General services (Ch. 2.1, 3.1)

Experts (Ch. 1.4)

Total

0,00

(b) Global Value Chains: Governance Issues and Digital Challenges *

Staffing costs Professional staff (Ch. 2.1, 3.1) 0,00

General services (Ch. 2.1, 3.1) 0,00

Staff missions (Ch. 1.5)

0,00

Total

0,00

Capital Markets and Financial Law

Bank Insolvency *** Staffing costs Professional staff (Ch. 2.1, 3.1)

72.489,43 General services (Ch. 2.1, 3.1) 21.258,68

Staff missions (Ch. 1.5)

1.005,50

Experts (Ch. 1.4)

20.055,08

Total

114.808,69

Transnational Civil Procedure

Formulation of Best Practices for Effective Enforcement ***

Staffing costs Professional staff (Ch. 2.1, 3.1)

52.293,16

General services (Ch. 2.1, 3.1)

28.666,72

Experts (Ch. 1.4)

24.833,85

Total

105.793,73

UNIDROIT 2024 – A.G. (84) 2 39.

International Civil Procedure in Latin America *

Staffing costs Professional staff (Ch. 2.1, 3.1)

0,00

General services (Ch. 2.1, 3.1)

0,00

Experts (Ch. 1.4)

0,00

Total

0,00

Cultural Property

Private Art Collections

*

Staffing costs Professional staff (Ch. 2.1, 3.1)

86.071,66

General services (Ch. 2.1, 3.1) 4.372,73

Official journeys (Ch. 1.5)

4.476,84

Total

94.921,23

Sustainable Development

Legal Nature of Voluntary Carbon Credits ***

Staffing costs Professional staff (Ch. 2.1, 3.1)

82.688,70

General services (Ch. 2.1, 3.1)

16.427,13

Missions (Ch. 1.5) &Experts (1.4)

20,386,44

Total 99.115,83

Development of a guidance document on Corporate Sustainability Due Diligence in GVCs ** Staffing costs Professional staff (Ch. 2.1, 3.1)

36.871,78

General services (Ch. 2.1, 3.1)

11.759,73

Experts (Ch. 1.4)

3.729,47

Total

52.360,98

Exploratory Work

Law applicable to Cross- Border Holdings and Transfers of Digital Assets and Tokens Staffing costs Professional staff (Ch. 2.1, 3.1)

5.120,00

General services (Ch. 2.1, 3.1)

5.438,28

Experts (Ch. 1.5) 0,00

Total

10.558,28

Digital Transformation, Data Governance and Artificial Intelligence Staffing costs Professional staff (Ch. 2.1, 3.1)

0,00 General services (Ch. 2.1, 3.1)

0,00

Staff missions (Ch. 1.5) 0,00

Total

0,00

Private Law and Contemporary Health Research: IP Issues in the field of Personalised Medicine Staffing costs Professional staff (Ch. 2.1, 3.1)

0,00 General services (Ch. 2.1, 3.1)

0,00 Total

0,00

Standard- Essential Patents Staffing costs Professional staff (Ch. 2.1, 3.1)

0,00 General services (Ch. 2.1, 3.1)

0,00

Staff missions (Ch. 1.5)

Total

0,00

40. UNIDROIT 2024 – A.G. (84) 2

Access to Justice in Environmental matters *** Staffing costs Professional staff (Ch. 2.1, 3.1)

0,00

General services (Ch. 2.1, 3.1)

0,00

Staff missions (Ch. 1.5)

Total

0,00

Implementation and promotion ***

(1) Depositary Functions ***

Staffing costs Professional staff (Ch. 2.1, 3.1)

44.779,46 General services (Ch. 2.1, 3.1) 4.372,73

Total

49.152,19

(2) Promotion of UNIDROIT Instruments ***

Staffing costs Professional staff (Ch. 2.1, 3.1) 107.128,60

General services (Ch. 2.1, 3.1) 28.574,26

Consultation/promotion Missions (Ch. 1.5)

25.760,15

Conference costs Experts (Ch. 1.4)

398,54

Sponsorship (Ch. 1.5) 2.751,93

Postage (Ch.4.3) Postage (Ch.4.3)

0,00

Total

164.613,48

UNIDROIT Academy (Non legislative activities) *** Staffing costs Professional staff (Ch. 2.1, 3.1)

132.560,72 General services (Ch. 2.1, 3.1)

282.800,42 Purchasing Purchase of books, legal journals, binding, software (Ch.6)

70.000,00

Total

485.361,14

Membership, institutional cooperation and governance Staffing costs Professional staff (Ch. 2. 1, 3.1)

105.059,99 General services (Ch. 2.1, 3.1) 47.715,31

Conference costs Interpretation/technical services (Ch. 1.5)

25.000,00

GC and PC (Ch. 1.1)

51.000,00

Consultation / promotion Missions (Ch. 1.5)

4.257,56

Experts (Ch. 1.5)

Representation (Ch. 1.7)

8.000,00

Total

241.032,86

Administration, support services and building management Staffing costs Secretary-General and Professional staff (Ch. 2. 1, 3.1)

40.206,28

General services (Ch. 2.1, 2.2, 3.1) 304.897,42

Auditor(Ch1.4)

5.200,00

Porter Lodge (Ch. 2.2)

10.000,00

Utilities Maintenance costs, Labour costs (Ch 5)

156.000,00

Compensation for retired members of staff (Ch. 3.3)

1.870,00

Accident insurance (Ch. 3.2) 8.800,00

Administration costs (Ch. 4.1, 4.2, 4.3,4.4.,4,5)

48.500,00

Total

575.473,71

TOTAL

2.508.119,77

UNIDROIT 2024 – A.G. (82) 4 41.

UNIDROIT Information on Extrabudgetary Contributions in 2024

Initial Balance Receipts* Expenditure ** Balance ***

Principles on Netting of Financial Instruments € Initial Balance Receipts* Expenditure ** Balance ***

Receipts

Donor Association of German Banks 281,39

281,39

Expenditure

Total € 281,39 0,00 0,00 281,39

UROLA - Prize € Initial Balance Receipts* Expenditure ** Balance ***

Receipts

Donor United Rule of Law Appeal - Prize 8.799,56 8.799,56

Total € 8.799,56 0,00 0,00 8.799,56

ORPHAN OBJECTS PROJECT € Initial Balance Receipts* Expenditure ** Balance ***

Receipts

Donor Gandur fund 24.131,40 24.131,40

Expenditure

Total € 24.131,40

Cape Town Convention Academic Project € Initial Balance Receipts* Expenditure ** Balance ***

Receipts

Donor CTCAP 48.706,09 78.120,65 59.517,53 67.309,21

Total € 48.706,09 78.120,65 59.517,53 67.309,21

42. UNIDROIT 2024 – A.G. (82) 4

Research Scholarship Programme € Initial Balance Receipts* Expenditure ** Balance ***

Receipts

Donor Scholarship General Fund 7.190,41 15.640,80 22.540,89 290,32

Sir Roy Goode Scholarship 10.085,70 28.918,64 7.143,45 31.860,89

People's Republic of China 55.338,32 22.900,00 20.521,85 57.716,47

Expenditure

Total € 72.614,43 67.459,44 50.206,19 89.867,68

UNIDROIT

Library

€ Initial Balance Receipts* Expenditure ** Balance ***

Receipts

Donor Various Italian Law Firms 10.113,99 10.113,99

Expenditure

Purchase of books and journals

Total 10.113,99 0,00 0,00 10.113,99

MAECI

IPLD 14.810,58 110.000,00 88.418,24 36.392,34

EC FUND Private Law and Agriculture 47.914,17 28.187,61 19.726,56

PALAZZO ALDOBRANDINI WORK 735.600,00 29.703,14 705.896,86

BANCA D'ITALIA 25.000,00 25.000,00 0,00

ATLC 97.001,00 11.609,93 85.391,07

UNIFORM LAW

FOUNDATION

65.828,36

18.000,00 83.828,36 0,00

GRAND TOTAL € 1.053.799,97 370.581,09 376.471,00 1.047.910,06

* Estimated total receipts as at 30 September 2024 including any amounts carried over from 2023

** Estimated expenditure as of 30 September 2024

*** Estimated balance as of 30 September 2024

EN GENERAL ASSEMBLY UNIDROIT 2024

84th session A.G. (84) 3

Rome, 12 December 2024 Original: English/French

November 2024

Item No. 6 on the Agenda: Final modifications to the Budget

and approval of the Accounts for the 2023 financial year

(prepared by the UNIDROIT Secretariat)

Summary Explanation of the Accounts 2023

Action to be taken Approval of the Accounts for the 2023 financial year

Related documents UNIDROIT 2022 – Budget 2023 (UNIDROIT 2022 – A.G. (81) 7);

UNIDROIT 2023 – Adjusted Budget 2023 (UNIDROIT 2023 – A.G.

(82) 7); UNIDROIT 2024 – Accounts of receipts and expenditure

for the 2023 financial year (UNIDROIT 2024 - F.C. (98) 2 and

Accounts 2023); Forthcoming Report of the Finance Committee

(UNIDROIT 2024 – F.C. (98) 10)

1. The Budget for the 2023 financial year, approved by the General Assembly at its 81st

session (15 December 2022), provided for actual expenditure of € 2,345,000.00 to be met by actual

receipts of € 2,345,000.00 (A.G. (81) 7) with no balance being carried over from 2022.

2. Following review by the Finance Committee at its 95th and 96th session, the General

Assembly at its 82nd session (14 December 2023), approved proposed adjustments to the Budget for

the 2023 financial year. The adjusted budget provided for actual expenditure of € 2,427,586.00 to

be met by actual receipts of € 2,427,586.00 (A.G. (82) 7).

3. The Accounts for the 2023 financial year indicate that actual receipts amounted to

€ 2,539,598.70 and actual expenditure amounted to € 2,424,552.37. The cash account at the close

of the 2023 financial year showed a balance of € 391,120.41, resulting from the positive balance of

€ 276,074.08 carried over from the 2022 financial year plus the credit balance in 2023 of €

115,046.33.

4. The credit balance in the Working Capital Fund at the close of the 2023 financial year was

€ 375,670.91.

2. UNIDROIT 2024 – A.G (84) 3

5. To facilitate the reading of the Accounts, a summary of the receipts (in euro) is indicated

below:

Estimate Actual Receipts

for 2023 2023

Surplus on 1 January 2023

--

276,074.08

Receipts:

Italian Government 126,500.00 128,750.00

Other participating Governments 2,150,500.00 2,320,854.03

Estimated profits on exchange rate -- --

Contributions from new Member States -- 25,999.261

Interest -- --

Contribution to overhead expenses 15,000.00 15,000.00

Sale of publications 30,000.00 25,962.47

Private donation (Aviareto) 23,000.00 23,032.94

Total ordinary receipts 2,345,000.00 2,539,598.70

Extraordinary receipts -- --

Total actual receipts

and surplus on 1 January 2023 2,345,000.00 2,815,672.78

Interests on assets of the Working Capital Fund 0.00 0.00

Total receipts year 2023

2,345,000.00

=========

2,815,672.78

=========

1 Contributions from new Member States Mongolia and Singapore.

UNIDROIT 2024 – A.G (84) 3 3.

6. The variations in expenditure for 2023 are illustrated analytically in the Accounts 2023 and

may be summarised as follows:

Difference

ITEMS Estimate Actual

for 2023 expenditure Savings Excess

A) Ordinary expenditure

Chap. 1 Reimbursement of expenses

290,000.00

253,123.01

45,915.01

9,038.02

Chap. 2 Salaries and allowances 1,260,000.00 1,337,728.49 52,665.38 93,516.88

Chap. 3 Social security charges 515,000.00 509,313.92 9,473.01 3,786.93

Chap. 4 Administrative expenses 48,000.00 39,600.04 11,384.33 2,984.37

Chap. 5 Maintenance costs 118,000.00 161,977.39 12,837.50 56,814.89

Chap. 6 Library 114,000.00 122,809.52 1,307.21 10,116.73

Chap. 7 Legal co-operation

programme

– – – – – – – –

Chap. 8 Various reserve funds – – – – – – – –

B) Extraordinary expenditure

Chap. 9. Working Capital Fund

– –

– –

– –

– –

Chap. 10. Convening of DC for the adoption of Draft

Conventions or a scientific

event

– –

– –

– –

– –

Total extraordinary expenditure 0.00

========

0.00

========

--

=======

– –

=======

Total actual expenditure

2,345,000.00

=========

2,424,552.37

========

87,667.43

========

167,219.80

=======

C) Special accounts

– –

========

– –

======

– –

=======

– –

=======

Total expenditure

2,345,000.00

=========

2,424,552.37

========

87,667.43

========

167,219.80

=======

4. UNIDROIT 2024 – A.G (84) 3

7. The balance may be explained as follows (in euro):

Budget Actual

Cash total at the close of the 2022 financial year 276,074.08

Total receipts 2,345,000.00 2,539,598.70

Total expenditure 2,345,000.00 2,424,552.37

Balance on 31 December 2023 0.00 391,120.41

8. At its 98th session (Rome/remote, 24 October 2024), the Finance Committee took note of the

above information and recommended that the General Assembly, at its 84th session (Rome, 12

December 2024), approve the final modifications to the Budget and Accounts for the 2023 financial

year.

9. In the light of the foregoing, the General Assembly, at its 84th session, is invited to approve

the final modifications to the Budget and Accounts for the 2023 financial year and to discharge the

Secretary-General for the management of the 2023 financial year, in accordance with Article 38(5)

of the Regulations.

UNIDROIT 2024 – A.G (84) 3 5.

APPENDIX

ACCOUNTS

OF RECEIPTS AND EXPENDITURE FOR THE 2023 FINANCIAL YEAR

6. UNIDROIT 2024 – Accounts 2023

AUDITOR'S REPORT OUTTURN OF THE YEAR 2023

1. The budget for the 2023 financial year, approved by the General Assembly at its 81st session on 15 December 2022, provided for actual expenditure of € 2,345,000.00 to be met by actual receipts of € 2,345,000.00. 2. The statement of account for the 2023 financial year is as follows (in euros):

Actual Special accounts Total

– Receipts

– Expenditure

Credit balance

2,539,598.70

2,424,552.37

115,046.33 =========

– – =======

2,539,598.70

2,424,552.37

115,046.33 =========

3. The financial situation at the close of the 2023 financial year was as follows:

A) General funds:

– at the close of the 2022 financial year 276,074.08

– credit balance for the 2023 financial year 115,046.33

– Balance at the close of the 2023 financial year 391,120.41

B) Working capital fund (sum deposited at the Unicredit Banca di Roma

account n° 400758353 in euros):

– credit balance at the close of the 2022 financial year + 367,800.61

– increases and reductions in the course of the 2023 financial year:

-352.20

– interest (see Chapter 13, Art. 4 of the Institute's

Budget)

– –

– payment in respect of Chapter 12 of the Institute’s Budget

– –

– contributions of new Member States 8,222.50

– Credit balance in the fund at the close of the 2023 financial year

375,670.91

C) Excess contributions paid by States during 2023

in respect of the 2024 financial year

146,517.00

Total credit balance:

913,308.32

=========

UNIDROIT 2024 – Accounts 2023 7.

CONCLUSIONS

The Auditor:

– having found that the receipts and payments recorded in the Institute's books are in conformity with the supporting vouchers and that they correspond with the balance held in the Institute's bank accounts with the Unicredit Banca di Roma relating to the Working capital fund;

– having ascertained that the funds of the Institute available at the close of the financial year as

reflected in the cash situation (APPENDIX A, parts A and B) correspond to those declared by the Unicredit Banca di Roma in respect of each of the above-mentioned bank accounts;

– expresses the opinion that the accounts of receipts and expenditure for the 2023 financial year may be approved.

Rome, March 2024

AUDITOR

8. UNIDROIT 2024 – Accounts 2023

APPENDIX A

GENERAL FINANCIAL SITUATION AT THE CLOSE OF THE 2023 FINANCIAL YEAR (in euros)

At 31/12/2022

Increases (+) Reductions (-)

At 31/12/2023

a) General funds

Cash account

b) Reserve fund for retirement allowances for Categories B and C staff in accordance with Art. 67 of the Regulations

c) Payment in respect of chapter 8

art.2 of the Institute’s budget for the 2023 financial year

d) Revolving funds

e) Excess contributions paid by States during 2023 in respect of the 2024 financial year

Overall total

276,074.08

276,074.08

– –

– –

367,800.61

72,705.38

716,580.07

========

115,046.33

115,046.33

– –

– –

7,870.30

73,811.62

196,728.25

========

391,120.41

391,120.41

– –

– –

375,670.91

146,517.00

913,308.32

========

CASH SITUATION AT THE CLOSE OF THE 2023 FINANCIAL YEAR

A) CASH ACCOUNT (including only the general funds)

a) Deposits on euros accounts at the Unicredit Banca di Roma:

● Credit balance of account n°

400307783 in euros at 28.02.2024

according to the bank's statement

dated 28.2.2024

● Transactions carried out between 1

January and 28 February 2024

relating to the 2024 financial year

– Receipts

– Payments

– Excess contributions paid by

States during 2023 in respect

of the 2024 financial year

● Credit balance

● Credit balance at the close of the

2023 financial year

-1,262,792.39

+478,863.18

+146,517.00

carried forward

1,175,049.62

-783,929.21

391,120.41

537,637.41

UNIDROIT 2024 – Accounts 2023 9.

brought forward 537,637.41

B) WORKING CAPITAL FUND and RESERVE FUNDS

● Working Capital Fund deposited on

account n° 400758353 at the Unicredit Banca di Roma: – Account balance at 31.12.2023

according to the bank's statement dated 28.02.2024

● Reserve fund for retirement allowances for

Categories B and C staff deposited on account no. 6153 at the Banca di Roma: – Account balance at 31.12.2023

according to the bank's statement

dated 28.02.2024

Overall total reflecting the financial situation (A + B)

367,800.61

– –

7,870.30

375,670.91

913,308.32 ========

10. UNIDROIT 2024 – Accounts 2023

CONTRIBUTIONS OF PARTICIPATING GOVERNMENTS

Sums due in 2023

Sums received

Difference to be carried over to the next financial year

For preceding

years

1 (-) (+) 2

For 2023

(ANNEX I to the Budget)

3

Total

4 (1 + 3)

For the financial

year 2023 (bank charges not

deducted) 5

Total including sums paid in

excess in preceding years

(Chap. 1/2) 6 (2 + 5)

less

7 (4 – 5)

more

8 (6 – 4)

(in euro)

CHINA FRANCE GERMANY JAPAN UNITED KINGDOM

UNITED STATES OF AMERICA

BRASIL CANADA AUSTRALIA REPUBLIC OF KOREA RUSSIAN FEDERATION SPAIN

MEXICO NETHERLANDS SAUDI ARABIA SWITZERLAND

TURKEY

ARGENTINA

AUSTRIA BELGIUM DENMARK INDIA INDONESIA

– – – – – – – – – –

– –

-91,080.00 – – – – – – – – – –

– – – – – – – – – –

-40,430.00

– – – –

-27,830.00 – – – –

126,500.00 126,500.00 126,500.00 126,500.00 126,500.00

126,500.00

45,540.00 91,080.00 55,660.00 55,660.00 55,660.00 55,660.00

45,540.00 45,540.00 45,540.00 45,540.00 45,540.00

20,240.00

27,830.00 27,830.00 27,830.00 27,830.00 27,830.00

126,500.00 126,500.00 126,500.00 126,500.00 126,500.00

126,500.00

136,620.00 91,080.00 55,660.00 55,660.00 55,660.00 55,660.00

45,540.00 45,540.00 45,540.00 45,540.00 45,540.00

60,670.00

27,830.00 27,830.00 55,660.00 27,830.00 27,830.00

126,500.00 126,500.00 126,500.00 126,500.00 126,500.00

126,500.00

136,620.00 91,080.00 55,660.00 55,660.00 55,660.00

114,664.00

45,540.00 45,540.00 45,540.00 45,540.00 45,540.00

20,240.00

27,830.00 27,830.00 55,660.00 27,830.00 27,830.00

126,500.00 126,500.00 126,500.00 126.500.00 126,500.00

126,500.00

136,620.00 91,080.00 55,660.00 55,660.00 55,660.00

114,664.00

45,540.00 45,540.00 45,540.00 45,540.00 45,540.00

20,240.00

27,830.00 27,830.00 55,660.00 27,830.00 27,830.00

– – – – – – – – – –

– –

– – – – – – – – – – – –

– – – – – – – – – –

40,430.00

– – – – – – – – – –

– – – – – – – – – –

– –

– – – – – – – – – –

59,004.00

– – – – – – – – – –

– –

– – – – – – – – – –

UNIDROIT 2024 – Accounts 2023 11.

Sums due in 2023

Sums received

Difference to be carried over to the next financial year

For preceding

years

1 (-) (+) 2

For 2023 (ANNEX I

to the budget) 3

Total

4 (1 + 3)

For the financial

year 2023 (bank charges not

deducted) 5

Total including sums paid in

excess in preceding years

(Chap. 1/2) 6 (2 + 5)

less

7 (4 – 5)

more

8 (6 – 4)

(in euro)

NORWAY POLAND

SWEDEN VENEZUELA IRELAND PORTUGAL CHILE COLOMBIA CZECH REPUBLIC

EGYPT FINLAND GREECE HUNGARY IRAN NIGERIA PAKISTAN

ROMANIA SLOVAKIA SOUTH AFRICA SINGAPORE BULGARIA

CROATIA

LATVIA LITHUANIA LUXEMBOURG SLOVENIA URUGUAY

– – – –

– – -204,005.68

– – +22,770.00 -20,240.00

– – – –

– – – – – – – –

-141,680.00 -86,020.00 -36,894.10

– – – – – – – – – –

– –

+12,650.00 +12,650.00

– – +12,650.00

– –

27,830.00 27,830.00

27,830.00 27,830.00 22,770.00 22,770.00 20,240.00 20,240.00 20,240.00

20,240.00 20,240.00 20,240.00 20,240.00 20,240.00 20,240.00 20,240.00

20,240.00 20,240.00 20,240.00 18,975.00 12,650.00

12,650.00

12,650.00 12,650.00 12,650.00 12,650.00 12,650.00

27,830.00 27,830.00

27,830.00 231,835.68 22,770.00 22,770.00 40,480.00 20,240.00 20,240.00

20,240.00 20,240.00 20,240.00 20,240.00

161,920.00 106,260.00 57,134.10

20,240.00 20,240.00 20,240.00 18,975.00 12,650.00

12,650.00

12,650.00 12,650.00 12,650.00 12,650.00 12,650.00

27,830.00 27,830.00

27,830.00 – –

22,770.00 24,138.00

– – 20,240.00 20,240.00

20,240.00 20,240,00 20,240.00 20.240,00

141,680.00 62,619.93 16,654.10

20,240.00 20,240.00 20,240.00 43.113,00 12,650.00

12,650.00

13,079.00 13,079.00 12,650.00 13,079.00 12,650.00

27,830.00 27,830.00

27,830.00 – –

22,770.00 46,908.00

– – 20,240.00 20,240.00

20,240.00 20,240.00 20,240.00 20,240.00

141,680.00 62,619.93 16,654.10

20,240.00 20,240.00 20,240.00 43,113.00 12,650.00

12,650.00

25,729.00 25,729.00 12,650.00 25,729.00 12,650.00

– – – –

– – 231,835.68

– – – –

40,480.00 – – – –

– – – – – – – –

20,240.00 43,640.07 40,480.00

– – – – – – – – – –

– –

– – – – – – – – – –

– – – –

– – – – – –

24,138.00 – – – – – –

– – – – – – – – – – – – – –

– – – – – –

24,138.00 – –

– –

13,079.00 13,079.00

– – 13,079.00

- –

12. UNIDROIT 2024 – A.G (84) 3

Sums due in 2023

Sums received

Difference to be carried over to the next financial year

For preceding

years

1 (-) (+) 2

For 2023

(ANNEX I to the budget)

3

Total

4 (1 + 3)

For the financial year 2023

(bank charges not

deducted)

5

Total including sums paid in

excess in preceding years

(Chap, 1/2)

6 (2 + 5)

less

7 (4 – 5)

more

8 (6 – 4)

(in euro)

CYPRUS

ESTONIA MALTA PARAGUAY SERBIA TUNISIA MONGOLIA HOLY SEE

SAN MARINO

+10,120.00

– – -10,120.00 +1,865.38

– – – – – – – –

– –

10,120.00

10,120.00 10,120.00 10,120.00 10,120.00 10,120.00 7,024.26 2,530.00

2,530.00

10,120.00

10,120.00 20,240.00 10,120.00 10,120.00 10,120.00 7,024.26 2,530.00

2,530.00

– –

10,120.00 20,240.00 8,254.62

10,120.00 10,120.00 7,024.26 2,530.00

2,530.00

10,120.00

10,120.00 20,240.00 10,120.00 10,120.00 10,120.00 7,024.26 2,530.00

2,530.00

– –

– – – – – – – – – – – – – –

– –

– –

– – – – – – – – – – – – – –

– –

TOTAL

+72,705.38 -658,299.78

2,105,659.26

2,763,959.04

2,420,664.91

2,493,370.29

417,105.75

146,517.00

Contributions paid to be brought forward to the 2024 financial year

146,517.00

Contributions relating to the 2023 financial year

2,346,853.29

RECEIPTS

14. UNIDROIT 2024 – Accounts 2023

RECEIPTS (in euro)

2023 Difference

ITEMS Estimate Receipts

Chap.

Art.

for 2023

received More Less

Estimated balance on 1 January 2023

276,074.08

276,074.08

1 A) Ordinary receipts:

Contributions of participating Governments

1 Italian Government 126,500.00 128,750.00 2,250.00 – –

2 Other participating Governments 2,150,500.00 2,320,854.03 170,354.03 – –

3 Estimated profits on exchange rate p.m. – – – – – –

4 Contributions from new Member States – – 25,999.26 25,999.26 – –

Total

2,277,000.00

==========

2,475,603.29

=========

198,603.29

=======

=======

2

Other receipts

1

Interest

0

0

– –

– –

2 Contribution to overhead expenses 15,000.00 15,000.00 – – – –

3 Sale of publications 30,000.00 25,962.47 – – 4,037.53

4 Private donation (Aviareto) 23,000.00

========

23,032.94

=========

32.94

=======

– –

=======

Total ordinary receipts

2,345,000.00

=========

2,539,598.70

=========

198,636.23

========

4,037.53

=========

Total carried forward

2,345,000.00

2,539,598.70

198,636.23

4,037.53

UNIDROIT 2024 – Accounts 2023 15.

2023

Difference

ITEMS Estimate Receipts

Chap.

Art.

for 2023 Received More Less

brought forward

2,345,000.00

2,539,598.70

198,636.23

4,037.53

B) Extraordinary receipts

3

Various receipts

Tax Reimbursement Credit

– –

– –

– –

– –

Total extraordinary receipts

– –

=======

– –

=======

– –

========

– –

=======

Total actual receipts

2,345,000.00

=========

2,815,672.78

=========

474,710.31

========

4,037.53

========

C) Special accounts

4

Revolving funds

1 Working Capital Fund p.m. – – – – – –

2 Interest on the assets of the Reserve Fund for

retirement benefits (Article 67 of the Regulations)

– –

– –

– –

– –

3 Interest on the assets of the Working Capital

Fund and contributions of new member States

– –

– –

– –

– –

Total special accounts

– –

========

– –

========

– –

======

– –

========

Total actual receipts

2,345,000.00

=========

2,815,672.78

=========

474,710.31

========

4,037.53

========

16. UNIDROIT 2024 – Accounts 2023

SUMMARY OF RECEIPTS

Difference

ITEMS Estimate Receipts

for 2023 received more less

Estimated balance on 1 January 2023

– – ========

276,074.08 ========

276,074.08 =======

– – =======

A) Ordinary receipts

2,345,000.00 =========

2,539,598.70 =========

194,598.70 =========

– – =======

B) Extraordinary receipts

– – __________

– – ___________

– – __________

– – _________

Total actual receipts

2,345,000.00 =========

2,815,672.78 =========

470,672.78 =======

– – =======

C) Special accounts

– – =======

– – ======

– – =======

– – =======

Total receipts

2,345,000.00 =========

2,815,672.78 ==========

470,672.78 =======

=======

EXPENDITURE

18. UNIDROIT 2024 – Accounts 2023

EXPENDITURE (in euro)

2023

Difference

ITEMS Estimate Actual

Chap.

Art.

for 2023 Expenditure Saving Excess

A) Ordinary expenditure

1

Reimbursement of expenses

1 Governing Council and Permanent Committee 50,000.00 53,194.91 – – 3,194.91

2

3

4

Auditor

Administrative Tribunal

Committees of experts

5,000.00

p.m.

147,000.00

5,203.86

p.m.

106,890.00

– –

– –

40,110.00

203.86

– –

– –

5

6

7

Official journeys and promotion of activities

Interpreters

Representation

60,000.00

20,000.00

8,000.00

65,639.25

16,648.71

5,546.28

3,351.29

2,453.72

5,639.25

– –

– –

Total

290,000.00

========

253,123.01

========

45,915.01

=======

9,038.02

=======

2 Salaries and allowances:

1 Salaries of Categories A, B and C staff 1,245,000.00 1,329,478.86 – – 84,478.86

2

3

Remuneration for occasional collaborators

Tax reimbursement

15,000.00

– –

8,249.63

– –

6,750.37

– –

– –

– –

Total 1,260,000.00

=========

1,337,728.49

=========

52,665.38

=======

93,516.88

=======

carried forward 1,550,000.00 1,590,851.50

52,665.38

93,516.88

UNIDROIT 2024 – Accounts 2023 19.

2023

Difference

ITEMS Estimate Actual

Chap.

Art.

for 2023 Expenditure Saving Excess

brought forward 1,550,000.00 1,590,851.50

52,665.38

93,516.88

3 Social security charges

1 Insurance against disablement, old age and

sickness

507,750.00

498,664.27

9,085.73

– –

2

3

Accidents’ insurance

Compensation retired members of staff

5,000.00

2,250.00

8,786.93

1,862.72

387.28

3,786.93

– –

Total

515,000.00

========

509,313.92

========

9,473.01

=======

3,786.93

======

4

Administrative expenses:

1 Stationery 10,000.00 11,897.24 – – 1,897.24

2 Telephone 20,000.00 11,252.42 8,747.58 – –

3 Postage 6,000.00 4,066.50 1,933.50 – –

4 Miscellaneous 2,000.00 3,087.13 – – 1,087.13

5 Printing of publications 10,000.00 9.296.75 703.25 – –

Total 48,000.00

========

39,600.04

=========

11,384.33

=======

2,984.37

=======

carried forward

2,113,000.00

2,139,765.46

73,522.72

100,288.18

20. UNIDROIT 2024 – Accounts 2023

2023

Difference

ITEMS Estimate Actual

Chap.

Art.

for 2023 Expenditure Saving Excess

brought forward 2,113,000.00 2,139,765.46 73,522.72 100,288.18

5 Maintenance costs

1 Electricity 15,000.00 28,502.08 – – 13,502.08

2 Heating 23,000.00 11,168.21 11,831.79 – –

3 Water 5,000.00 5,364.94 – – 364.94

4 Insurance of premises 12,000.00 10,994.29 1,005.71 – –

5 Office equipment 23,000.00 36,430.90 – – 13,430.90

6 Upkeep of building, public services 25,000.00 33,438.26 – – 8,438.26

7 Labour costs 15,000.00 36,078.71 – – 21,078.71

Total 118,000.00

========

161,977.39

=========

12,837.50

=======

56,814.89

=======

6 Library

1 Purchase of books 80,000.00 81,340.32 – – 1,340.32

2 Binding 4,000.00 2,692.79 1,307.21 – –

7

8

3

1

2

3

Software

Total

Total actual expenses

Legal co-operation programme

Various reserve funds

Reserve fund for unforeseen expenditure

Reserve fund for retirement allowance for

general services staff

Reserve fund for payment of compensation to

staff who do not enjoy all the advantages

provided for in Article 7 of the

Headquarters Agreement

30,000.00

114,000.00

========

2,345,000.00

=========

0

==

– –

– –

– –

====

38,776.41

122,809.52

=========

2,424,552.37

=========

0

==

– –

– –

– –

===

– –

1,307.21

=====

87,667.43

=======

0

==

– –

– –

– –

===

8,776.41

10,116.73

=======

167,219.80

=======

0

==

– –

– –

– –

===

carried forward 2,345,000.00 2,424,552.37 87,667.43 167,219.80

UNIDROIT 2024 – Accounts 2023 21.

2023

Difference

ITEMS Estimate Actual

Chap.

Art.

for 2023 expenditure Saving Excess

brought forward 2,345,000.00 2,424,552.37 87,667.43 167,219.80

B) Extraordinary expenditure

9 Working Capital Fund – –

– – – –

– –

10 Convening of a diplomatic Conference for the

adoption of one of the Institute’s draft

Conventions or a scientific event

– –

– –

– –

– –

Total extraordinary expenditure 0

========

– –

========

0

========

0

=======

Total actual expenditure

2,345,000.00

=========

2,424,552.37

==========

87,667.43

========

167,219.80

=========

C) Special accounts

11 Revolving funds

1 Working Capital Fund p.m. – – – – – –

2 Expenditure as balanced by receipts p.m. – – – – – –

3 Interest on the assets of the Reserve Fund for

retirement pay in accordance with Article 67 of

the Regulations

– –

– –

– –

– –

4 Interest on Working Capital Fund and

contributions of new member States

– –

– –

– –

– –

5 Payment of an account of a retirement allowance

from the Reserve Fund to the last employee

enjoying this allowance

– –

– –

– –

– –

Total special accounts

– –

========

– –

========

– –

=========

– –

========

Total expenditure

2,345,000.00

==========

2,424,552.37

==========

87,667.43

========

167,219.80

========

22. UNIDROIT 2024 – Accounts 2023

SUMMARY OF EXPENDITURE

Difference

ITEMS Estimate Actual

for 2023 expenditure Saving Excess

A) Ordinary expenditure

Chap. 1. Reimbursement of expenses

290,000.00

253,123.01

36,876.99

– –

Chap. 2. Salaries and allowances 1,260,000.00 1,337,728.49 – – 77,728.49 Chap. 3. Social security charges 515,000.00 509,313.92 5,686.08 – –

Chap. 4. Administrative expenses 48,000.00 39,600.04 8,399.96 – –

Chap. 5. Maintenance costs 118,000.00 161,977.39 – – 43,977.39 Chap. 6 Library

Chap. 7 Legal Co-operation programme

Chap. 8 Various Reserve Funds

Total Actual expenditure

B) Extraordinary expenditure

114,000.00

0

0

2,345,000.00

==========

122,809.52

0

0

2,424,552.37

==========

– –

0

0

50,963.03

=========

8,809.52

0

0

130,515.40

========

Chap. 9 Working Capital Fund

– –

– –

– –

– –

Chap. 10 Convening of a diplomatic Conference for the

adoption of one of the Institute’s draft Convention or a scientific event

– –

– –

– –

– –

Total extraordinary expenditure

– –

========

– –

========

– –

=======

– –

========

Total actual expenditure

2,345,000.00 =========

2,424,552.37 =========

50,963.03 ========

130,515.40 ========

C) Special accounts

Chap. 11 Revolving funds

– –

========

– –

=======

– –

=======

– –

========

UNIDROIT 2024 – Accounts 2023 23.

Total expenditure

2,345,000.00

==========

2,424,552.37

==========

50,963.03

========

130,515.40

========

24. UNIDROIT 2024 – Accounts 2023.

GENERAL SUMMARY OF THE 2023 FINANCIAL YEAR

(in euro)

Financial year

2023

General

funds

A) Cash total at the close of

the 2022 financial year

B) Total actual receipts

C) Total actual expenditure

Credit balance for the 2023

financial year

D) Cash total at the close of

the 2023 financial year

2,539,598.70

2,424,552.37

=========

276,074.08

115,046.33

391,120.41

UNIDROIT 2024 – Accounts 2023 25.

WORKING CAPITAL FUND 2023 FINANCIAL YEAR

(in euro)

At 31.12.2022 VARIATIONS

At 31.12.2023

Increases Reductions

Sum in hand on

31.12.2022

Interest on bank

account n°

400758353

(Chap.13 – art. 4)

Contributions of new

Member States

during 2023 financial

year

Reductions in the

course of the 2023

financial year

Total variations

Sum in hand on

31.12.2023

367,800.61

367,800.61

========

8,222.50

8,222.50

=======

352.20

352.20

=======

375,670.91

========

EN GENERAL ASSEMBLY UNIDROIT 2024

84th session A.G. (84) 4

Rome, 12 December 2024 Original: English/French

November 2024

Item No. 7 on the Agenda: Adjustments to the Budget for the 2024 financial year

(prepared by the UNIDROIT Secretariat)

Summary Explanation of the adjustments proposed by the Secretariat to

the 2024 Budget

Action to be taken To take note of the expected level of receipt and expenditure for

the year 2024 and approve the adjustments

Related documents Draft Budget 2024 – First estimates

(UNIDROIT 2023 - F.C. (95) 4);

Draft Budget 2024 – Governing Council

(UNIDROIT 2023 – C.D. (102) 24);

Draft Budget 2024 – Finance Committee

(UNIDROIT 2023 – F.C. (96) 6);

Budget 2024 – General Assembly

(UNIDROIT 2023 - A.G. (82) 9);UNIDROIT 2024 – F.C. (98) 2 and

Accounts 2023; Adjustments to Budget 2024 (UNIDROIT 2024 –

F.C. (98) 3)

INTRODUCTION

1. The first estimates of receipts and expenditure for the 2024 financial year prepared by the

Secretariat (F.C. (95) 4) were examined by the Finance Committee at its 95th session (March 2023),

in accordance with Article 26 of the Regulations. Those first estimates were then submitted to the

Governing Council, which, at its 102nd session (May 2023), established the draft Budget for 2024, as

set forth in the Appendix to that document (C.D. (102) 24), taking into account the opinion expressed

by the Finance Committee.

2. In line with the Institute’s practice, the draft Budget was subsequently submitted to the

Governments of UNIDROIT Member States, inviting them to share any observations that they wished

to make. The resulting document was presented to the Finance Committee at its 96th session

(October 2023) (F.C. (96) 6), which requested a positive opinion to be transmitted to the General

Assembly on the draft Budget. At its 82nd session (December 2023), the General Assembly approved

the Budget for the 2024 financial year (A.G. (82) 9).

3. Every year it is customary for the Secretariat to submit, first to the Finance Committee and

then to the General Assembly, a document indicating any adjustments that may need to be made to

2. UNIDROIT 2024 – A.G. (84)4

the Budget for that financial year. Such indications are to be based on the Accounts available for the

previous financial year, the partial accounts available for the current financial year and any other

modifications due to exceptional circumstances.

4. The Secretariat considers that it is necessary to introduce a few refinements to the Budget

for the 2024 financial year, as indicated in the notes to the revised budget contained in the Appendix

to this document. The Secretariat deems it prudent to anticipate an increase in expenditure of €

29,128 due to higher costs for salary payments in 2024 (Chapter 2), and higher administrative

expenses (Chapter 4) and maintenance costs (Chapter 5) due to the larger number of staff,

consultants, and visitors at UNIDROIT. The Secretariat intends to compensate, as much as possible,

for any higher expenditure in 2024 with a reduction of expenditure under other chapters, though the

Secretariat would encourage Member States to make any outstanding contributions in a timely

manner.

5. The Finance Committee, at its 98th session, took note of the proposed adjustments to the

Budget for the financial year 2024 (F.C. (98) 3), and recommended that the General Assembly, at

its 84th session, approve the adjustments to the Budget for the 2024 financial year.

6. In light of the foregoing, the General Assembly may wish to take note of the expected level

of receipts and expenditure for the 2024 financial year and approve the adjustments to the Budget,

as set out in the Appendix below.

UNIDROIT 2024 – A.G. (84)4 3.

APPENDIX

ADJUSTMENTS TO THE BUDGET FOR THE 2024 FINANCIAL YEAR

4. UNIDROIT 2024 – A.G. (84)4

RECEIPTS (in Euro)

2024

Budget 20241 Estimate Balance

Income

Chapter 1: Contributions of

Member States

Art. 1 (Member State

Contributions)

2,472,742.00 2,501,870.002 29,128.00

Chapter 2: Other Receipts

Art. 1 (Interest)3 0.00 0.00 0.00

Art. 2 (Contribution to overhead

expenses)4 15,000.00 15,000.00 0.00

Art. 3 (Sale of publications) 45,000.00 45,000.005 0.00

Art. 4 (Aviareto) 23,000.00 23,000.006 0.00

Total receipts 2,555,742.00 2,584,870.00 29,128.00

EXPLANATORY NOTES TO THE ADJUSTED RECEIPTS

1 The numbers in this column correspond to those found in the Budget for 2024 approved by

the Finance Committee at its 96th session on 12 October 2023 (see UNIDROIT 2023 – F.C. (96) 6), and

subsequently approved by the General Assembly at its 82nd session on 14 December 2023 (see

UNIDROIT 2023 – A.G. (82) 9).

2 The expected amount of contributions of Member States for 2024 corresponds to the UNIDROIT

Contributions Chart 2024 adopted by the General Assembly at its 82nd session (UNIDROIT 2023 – A.G.

(82) 9, Appendix IV), with an assumption that arrears in Member State contributions would be further

reduced.

3 The Secretariat considers prudent to continue estimating the interest earned on deposits in

checking accounts to be close to zero.

4 This sum represents the share of the Office for Italy and San Marino of the International

Labour Organization in the operating expenses of the premises of UNIDROIT.

5 The Secretariat has based this estimate on the receipts from the sale of publications in 2023

and considering that an increase in sales is anticipated due to (i) the entry into force of the Rail

Protocol, and (ii) the publication of the revised 5th edition of the Official Commentary to the Aircraft

Protocol (both in 2024).

6 UNIDROIT has received in 2024 a payment of USD 25,000 from Aviareto, the International

Registry under the Aircraft Protocol to the Cape Town Convention, in accordance with a renewed

licencing agreement by which UNIDROIT is to provide an electronic version of the fourth edition of the

Aircraft Protocol Official Commentary by Sir Roy Goode to Aviareto to make available to users of the

International Registry.

UNIDROIT 2024 – A.G. (84)4 5.

EXPENDITURE (in Euro)

Budget

20241

Adjusted Balance

Chapter 1 – Meeting costs and official travel2

Art. 1 (Governing Council and Permanent Committee) 53,000.00 51,000.00 -2,000.00

Art. 2 (Auditor) 5,000.00 5,200.00 200.00

Art. 3 (Administrative Tribunal) 0.00

Art. 4 (Committees of Experts) 170,000.00 130,000.00 -40,000.00

Art. 5 (Official journeys and promotion of activities) 70,000.00 67,000.00 -3,000.00

Art. 6 (Interpreters) 20,000.00 25,000.00 5,000.00

Art. 7 (Representation) 8,000.00 6,500.00 -1,500.00

Total 326,000.00 284,700.00 -

41,300.00

Chapter 2 – Salaries and allowances3

Art.1 (Salaries of Categories D, P, and GS staff and

consultant) 1,367,520.00

1,415,000.00 47,480.00

Art. 2 (Remuneration for occasional collaborators) 15,000.00 10,000.00 -5,000.00

Art. 3 (Tax reimbursement) 0.00 0.00 0.00

Total 1,382,520.00 1,425,000.00 42,480.00

Chapter 3 – Social security charges4

Art. 1 (Insurance against disablement, old age and

sickness) 552,972.00

547,000.00 -5,972.00

Art. 2 (Accidents’ insurance) 5,000.00 8,800.00 3,800.00

Art. 3 Compensation for retired members of staff 2,250.00 1,870.00 -380.00

Total 560,222.00 557,670.00 -2,552.00

Chapter 4 – Administrative expenses5

Art. 1 (Stationery) 10,000.00 10,000.00 0.00

Art. 2 (Telephone, fax and Internet) 15,000.00 20,000.00 5,000.00

Art. 3 (Postage) 6,000.00 7,500.00 1,500.00

Art. 4 (Miscellaneous) 2,000.00 2,000.00 0.00

Art. 5 (Printing of publications) 10,000.00 9,000.00 -1,000.00

Total 43,000.00 48,500.00 5,500.00

Chapter 5 – Maintenance costs6

Art. 1 (Electricity) 20,000.00 25,000.00 5,000.00

Art. 2 (Heating) 25,000.00 25,000.00 0.00

Art. 3 (Water) 5,000.00 5,000.00 0.00

Art. 4 (Insurance of premises) 12,000.00 11,000.00 -1,000.00

Art. 5 (Office equipment) 23,000.00 35,000.00 12,000.00

Art. 6 (Upkeep of building, local taxes) 30,000.00 35,000.00 5,000.00

Art. 7 (Labour costs) 15,000.00 20,000.00 5,000.00

Total 130,000.00 156,000.00 26,000.00

Chapter 6 – Library7

Art. 1 (Purchase of books) 80,000.00 70,000.00 -10,000.00

Art. 2 (Binding) 4,000.00 3,000.00 -1,000.00

Art. 3 (Software) 30,000.00 40,000.00 10,000.00

Total 114,000.00 113,000.00 -1,000.00

Total expenditure 2,555,742.00 2,584,870.00 29,128.00

6. UNIDROIT 2024 – A.G. (84)4

EXPLANATORY NOTES TO THE ADJUSTED EXPENDITURE

1 The numbers in this column correspond to those found in the Budget for 2024 approved by

the Finance Committee at its 96th session on 12 October 2023 (see Unidroit 2023 – F.C. (96) 6),

and subsequently approved by the General Assembly at its 82nd session on 14 December 2023 (see

Unidroit 2023 – A.G. (82) 9).

2 In an effort to contain costs, the Secretariat proposes a number of adjustments in expected

expenditures under Chapter 1 – Meeting costs and official travel: a decrease of € 2,000 to Art. 1

(Governing Council), a decrease of € 40,000 to Art. 4 (Committees of Experts), a decrease of € 3,000

to Art. 5 (Official journeys of representatives and staff), and a decrease of € 1,500 to Art. 7

(Representation) considering the expenditure under these budget lines during 2024 so far and

anticipated meetings and missions in the coming months. The Secretariat proposes an upward

adjustment of € 5,000 to Chapter 1, Art. 6 (Interpreters) given the increase in Zoom fees (additional

Zoom licenses were needed to facilitate hybrid meetings) and because the costs for simultaneous

translation services so far have been higher than expected given that interpreters have returned to

in-person presence and require the rental of a translation cabin for meetings in the Map Room.

3 The Secretariat proposes an increase in expected expenditure under Chapter 2, Art. 1 (Salaries

of Categories D, P, and GS staff and consultant) of € 47,480 given the arrival of a new secretary and

to account for the increase in salaries and dependent child allowance payments in 2024. Based on

the expenditure so far, it is proposed to decrease the costs for the remuneration of occasional

collaborators (Chapter 2, Art. 2) with € 5,000.

4 While the expenditure under Chapter 3, Art. 1 (Insurance against disablement, old age and

sickness) is expected to be slightly lower than anticipated (€ 5,972), the Secretariat anticipates an

increase in expenditure of € 3,800 under Chapter 3, Art. 2 (Accidents’ insurance) based on the actual

expenditure for such insurance in previous years (€ 8,787).

5 It is proposed to increase the expected expenditures under Chapter 4, Art. 2 (Telephone, fax

and internet) by € 5,000 given that there was a need to increase the Institute’s internet capacity to

1,000 megabytes. Furthermore, it is proposed to (i) increase expected expenditure under Chapter 4,

Art. 3 (Postage) by € 1,500.00; and (ii) decrease the expected expenditure under Chapter 4, Art. 5

(Printing of publications) by € 1,000, both based on the actual expenditure in 2024 so far.

6 The Secretariat proposes the following adjustments in expected expenditures under Chapter 5

– Maintenance costs: an increase of € 5,000 to Art. 1 (Electricity) due to higher electricity bills

following the increase in (temporary) staff, and new anti-mould equipment in the Library; a decrease

of € 1,000 to Art. 4 (Insurance of premises) based on the actual expenditure this year and previous

years; an increase of € 12,000 to Art. 5 (Office equipment) given the extra (temporary) staff that

has joined the Secretariat; an increase of € 5,000 to Art. 6 (Upkeep of building); and an increase of

€ 5,000 to Art. 7 (Labour costs, local taxes).

7 The Secretariat proposes to adjust the expected expenditure under Chapter 6, Art. 3

(Software) by € 10,000 to reflect the higher actual expenditure for library software. This increase in

costs is expected to be offset by a lower expenditure under Art. 1 (Purchase of books) given a

donation obtained through the Unidroit Foundation for the benefit of the Library.

EN GENERAL ASSEMBLY UNIDROIT 2024

84th session A.G. (84) 5

Rome, 12 December 2024 Original: English/French

November 2024

Item No. 8 on the Agenda: Arrears in contributions of Member States

(prepared by the UNIDROIT Secretariat)

Summary Description of the status of arrears

Action to be taken None

Related documents Forthcoming Report of the Finance Committee – UNIDROIT 2024 –

F.C. (98) 10

2. UNIDROIT 2024 – A.G. (84) 5

APPENDIX

OUTSTANDING CONTRIBUTIONS IN RESPECT OF 2023 AND PREVIOUS FINANCIAL YEARS AS OF 6 NOVEMBER 2024

(IN EURO)

2013/16

2017

2018

2019

2020

2021

2022

2023

TOTAL

Chile 20,240.00 20,240.00 40,480.00

Iran 20,240.00 20,240.00

Nigeria 3,160.07 20,240.00 20,240.00 43,640.07

Pakistan 20,240.00 20,240.00 40,480.00

Venezuela 59,795.68 20,240.00 20,240.00 20,240.00 27,830.00 27,830.00 27,830.00 27,830.00 231,835.68

Total 59,795.68 20,240.00 20,240.00 20,240.00 27,830.00 30,990.07 88,550.00 108,790.00 376,675.75

EN GENERAL ASSEMBLY

84th session

Rome, 12 December 2024

UNIDROIT 2024

A.G. (84) 6

Original: English/French

November 2024

Item No. 9 on the Agenda: Approval of the Draft Budget for 2025 and

observations submitted by Member States

(prepared by the UNIDROIT Secretariat)

Summary Explanation of the proposed expenditure and receipts under the

2025 draft Budget, the proposed contributions of Member States

and observations submitted by Member States

Action to be taken Approval of the draft Budget for 2025

Related documents Draft Budget 2025 – First estimates

(UNIDROIT 2024 - F.C. (97) 3);

Finance Committee Report – 97th session

(UNIDROIT 2024 F.C. (97) 5);

Governing Council – 103rd session

(UNIDROIT 2024 C.D. (103) 26); (UNIDROIT 2024 C.D. (103) 30)

Finance Committee – 98th session (UNIDROIT 2024 – F.C. (98) 6);

Forthcoming report (UNIDROIT 2024 – F.C. (98) 10)

INTRODUCTION

1. The first draft of the 2025 Budget, providing estimates of receipts and expenditure for the

2025 financial year, was examined by the Finance Committee at its 97th session (April 2024), for

preliminary opinion in accordance with Article 26 of the UNIDROIT Regulations (see F.C. (97) 3; F.C.

(97) 5).1

2. Those first estimates were then submitted to the Governing Council, which officially drew up

the draft Budget for 2025 at its 103rd session (C.D. (103) 26; C.D. (103) 30), as set forth in Appendix

I to this document, and authorised the Secretariat to transmit it to Member States without

amendments.

3. Accordingly, the draft Budget for 2025 resulting from this procedure has been submitted to

the Governments of UNIDROIT Member States, which were invited to submit any comments by 13

1 Considering that the proposed Budget for 2025 was slightly lower than the Budget for the 2024 financial

year, the Secretary-General anticipated during the 97th session that the Secretariat might need to resort to the

Institute’s buffer if additional funding for official travel or projects was deemed necessary. Furthermore, he

anticipated that the Secretariat planned to contact Member States to ask for an additional, extraordinary

contribution to facilitate the activities for the centenary of UNIDROIT.

2. UNIDROIT 2024 – A.G. (84) 6

September 2024 at the latest. The government of Ireland confirmed that Ireland would voluntarily

maintain 9 units of contribution in the financial year 2025, while the governments of Argentina and

Brazil requested an extension of the suspension of their reclassification in the Contributions Chart.2

4. Overall, the Secretariat had proposed a total expenditure of € 2,515,574.00 for the year 2025,

and total receipts of € 2,515,574.00. During the 98th session of the Finance Committee (October

2024), the Secretariat proposed to further reduce these amounts to € 2,495,574.00 (i.e., a decrease

of € 20,000 compared to the draft Budget for 2025 as had been submitted to UNIDROIT Member States

(F.C. (98) 6)). This is due to a prudent approach followed by the Secretariat based on the estimated

receipts in 2025 (particularly, the contributions from Member States).

5. Regarding expenditure, the Secretariat can only forecast a possible decrease in costs with

respect to Chapter 1 – Meeting and travel costs, Chapter 4 – Administrative expenses, and Chapter

5 – Maintenance costs, with the only purpose of matching reduced ordinary receipts by way of

contributions. It is worthy of note that (i) 2025 will be the Iubileum of the Catholic Church, a year

when pilgrims from all over the world are called upon to visit the city, and hence an increase in costs

of travel and accommodation is expected; and (ii) part of the preparatory events of UNIDROIT’s

centenary will take place in 2025, with a likely additional expenditure. The forecasted increase under

Chapter 2 – Salaries and allowances, and Chapter 3 – Social security charges is explained by the

annual increase in salaries due to the design of the salary system.

6. The Finance Committee, at its 98th session, expressed itself in favour of the draft Budget for

the 2025 financial year and recommended that the General Assembly, at its 84th session, adopt the

draft Budget for the 2025 financial year.

7. In light of the foregoing, the General Assembly may wish to adopt the draft Budget for 2025

as set forth in Appendix I to this document.

2 See Appendix II for the Notes Verbales submitted by the governments of Argentina, Brazil, and Ireland.

Please note that the draft Budget for 2025 was drawn up based on the latest Contributions Chart, which is the Contributions Chart 2024 that was submitted to the General Assembly for its 82nd session (December 2023). This

Chart already assumed that (i) Brazil and Argentina confirmed their will to suspend reclassification to a higher category, and (ii) Ireland and Portugal confirmed their will to waive reclassification to a lower category (please

see UNIDROIT 2023 – A.G. (82) 9, Appendix IV).

UNIDROIT 2024 – A.G. (84) 6 3.

APPENDIX I

DRAFT BUDGET FOR THE 2025

FINANCIAL YEAR

4. UNIDROIT 2024 – A.G. (84) 6

RECEIPTS (in Euro)

Budget 20241 Budget 2025

Chapter 1: Contributions of Member States

Art. 1 (Member States’ Contributions) 2,472,742.00 2,412,574.002

Chapter 2: Other receipts

Art. 1 (Interest) 0.00 0.003

Art. 2 (Contributions to overhead expenses) 15,000.00 15,000.004

Art. 3 (Sale of publications) 45,000.00 45,000.005

Art. 4 (Aviareto) 23,000.00 23,000.006

Total receipts 2,555,742.00 2,495,574.00

EXPLANATORY NOTES TO THE DRAFT BUDGET – RECEIPTS

1 The numbers in this column correspond to those found in the Budget for 2024 approved by

the Finance Committee at its 96th session on 12 October 2023 (see UNIDROIT 2023 – F.C. (96) 6),

and subsequently approved by the General Assembly at its 82nd session in Rome on 14 December

2023 (see UNIDROIT 2023 – A.G. (82) 9).

2 The expected amount of contributions of Member States for 2025 corresponds to the UNIDROIT

Contributions Chart approved by the General Assembly at its 82nd session (Rome, 14 December

2023) (see UNIDROIT 2023 – A.G. (82) 9 and A.G. (82) 11) and based on the expectation that arrears

in Member State contributions would be further reduced.

3 The Secretariat estimates that the interest earnt on deposits in checking accounts to be close

to zero again for 2025. This is a conservative approach, since the interest rates in deposit accounts

are currently increasing.

4 This sum represents the share of the Office for Italy and San Marino of the International

Labour Organization in the operating expenses of the premises of UNIDROIT.

5 This estimate considers (i) that the Rail Protocol entered into force in March 2024; (ii) the

publication of the revised fifth edition of the Official Commentary to the Aircraft Protocol in March

2024; and (iii) the expected finalisation of the institutional framework for the MAC Protocol.

6 In 2025 UNIDROIT will receive a payment of USD 25,000 from Aviareto, the International

Registry under the Aircraft Protocol to the Cape Town Convention, in accordance with a renewed

licencing agreement under which UNIDROIT is to provide an electronic version of the fifth edition of

the Aircraft Protocol Official Commentary by Sir Roy Goode for Aviareto to make available to users

of the International Registry.

UNIDROIT 2024 – A.G. (84) 6 5.

EXPENDITURE (in Euro)

Budget 20241 Budget 2025

Chapter 1 – Meeting costs and official travel2

Art. 1 (Governing Council and Permanent Committee) 53,000.00 53,000.00

Art. 2 (Auditor) 5,000.00 5,000.00

Art. 3 (Administrative Tribunal)

Art. 4 (Committees of Experts) 170,000.00 140,000.00

Art. 5 (Official journeys and promotion of activities) 70,000.00 45,000.00

Art. 6 (Interpreters) 20,000.00 18,000.00

Art. 7 (Representation) 8,000.00 6,000.00

Subtotal 326,000.00 267,000.00

Chapter 2 – Salaries and allowances3

Art. 1 (Salaries of Categories D, P and GS staff and

consultants)

1,367,520.00 1,385,328.00

Art. 2 (Remuneration for occasional collaborators) 15,000.00 10,000.00

Art. 3 (Tax reimbursement) 0.00 0.00

Subtotal 1,382,520.00 1,395,328.00

Chapter 3 – Social security charges4

Art. 1 (Insurance against disablement, old age, and

sickness)

552,972.00 552,567.00

Art. 2 (Accident insurance) 5,000.00 9,000.00

Art. 3 (Compensation for retired members of staff) 2,250.00 1,900.00

Subtotal 560,222.00 563,467.00

Chapter 4 – Administrative expenses

Art. 1 (Stationery) 10,000.00 10,000.00

Art. 2 (Telephone, fax, and Internet) 15,000.00 14,400.00

Art. 3 (Postage) 6,000.00 6,000.00

Art. 4 (Miscellaneous) 2,000.00 2,000.00

Art. 5 (Printing of publications) 10,000.00 8,000.00

Subtotal 43,000.00 40,400.00

Chapter 5 – Maintenance costs5

Art. 1 (Electricity) 20,000.00 20,000.00

Art. 2 (Heating) 25,000.00 20,000.00

Art. 3 (Water) 5,000.00 5,000.00

Art. 4 (Insurance of premises) 12,000.00 11,000.00

Art. 5 (Office equipment) 23,000.00 21,379.00

Art. 6 (Upkeep of building, public services) 30,000.00 25,000.00

Art. 7 (Labour costs) 15,000.00 15,000.00

Subtotal 130,000.00 117,379.00

Chapter 6 – Library

Art. 1 (Purchase of books) 80,000.00 80,000.00

Art. 2 (Binding) 4,000.00 2,000.00

Art. 3 (Software) 30,000.00 30,000.00

Subtotal 114,000.00 112,000.00

Total expenditure 2,555,742.00 2,495,574.00

6. UNIDROIT 2024 – A.G. (84) 6

EXPLANATORY NOTES TO THE DRAFT BUDGET – EXPENDITURE

1 The numbers in this column correspond to those found in the Budget for 2024 approved by

the Finance Committee at its 96th session on 12 October 2023 (see UNIDROIT 2023 – F.C. (96) 6) and

subsequently approved by the General Assembly at its 82nd session in Rome on 14 December 2023

(see UNIDROIT 2023 – A.G. (82) 9).

2 Purpose of expenditure: to cover travel and subsistence expenses incurred by the

members of the Governing Council and Permanent Committee in their attendance of sessions of

those bodies; the fees due to the auditor appointed by the General Assembly; the costs of hearings

of the Administrative Tribunal, registrar services, and sums awarded by the Tribunal for settlement

of claims; the costs incurred by UNIDROIT in organising meetings of committees of experts and other

meetings associated with UNIDROIT’s Work Programme; the travel and subsistence expenses incurred

by representatives of UNIDROIT, members of staff, and collaborators in connection with the attendance

of meetings of other organisations with which UNIDROIT cooperates, as well as missions intended to

further awareness of UNIDROIT’s work in general and, where appropriate, to encourage accession to

the Statute of the Organisation; the cost of simultaneous interpretation at meetings held by UNIDROIT;

and the cost of representation functions, such as receptions and similar events organised by UNIDROIT

in connection with its meetings.

Compared to the Budget for 2024, the Secretariat is forecasting a slight decrease in

expenditure with respect to Article 4 (Committees of Experts), Article 5 (Official journeys and

promotion of activities), and Article 6 (Interpreters) considering the actual expenditure under these

budget lines in 2023 and taking into account that some ongoing legislative projects are expected to

be finalised in the first half of 2025. Compared to the draft Budget for 2025 as drawn up by the

Governing Council at its 103rd session and as subsequently submitted to Member States, the

Secretariat has reduced the expected expenditure under Article 5 (Official journeys and promotion

of activities) by € 15,000 given the adjustment in expected receipts in 2025. In light of the likely

increase of travel and accommodation costs for Rome due to the Iubileum and the organisation of

preparatory meetings for the centenary, the forecasted decrease in expenditure in experts and travel

may not be effectively realisable, notwithstanding the effort that the Secretariat will -as always-

undertake. Were this the case, the Secretariat will request authorisation of the Finance Committee

to use part of the existing buffer.

3 Purpose of expenditure: to cover the salaries and allowances of the professional,

administrative, secretarial and library members of UNIDROIT staff, as well as remuneration of

consultants.

With respect to Article 1 (Salaries of Categories D, P and GS staff and consultants), the

Secretariat deems it prudent to forecast an increase of approximately 2% in order to reflect the

annual increase in salaries due to the design of the salary system.

With respect to Article 2 (Remuneration for occasional collaborators), the Secretariat foresees

a more limited need to rely on occasional collaborators as envisaged in 2024, therefore the

Secretariat estimates the expenditure for this budget line in 2025 at € 10,000.

4 Purpose of expenditure: insurance coverage of staff members against disability, old age,

sickness, and accidents, in accordance with the UNIDROIT Regulations. Article 3 concerns payments to

one retired member of staff to cover the periods, in the past, during which he was not covered for

social security purposes.

With respect to Article 1 (Insurance against disablement, old age, and sickness), the

Secretariat estimates that expenditure will be similar to the Budget for 2024.

UNIDROIT 2024 – A.G. (84) 6 7.

With respect to Article 2 (Accidents’ insurance), the Secretariat deems it prudent to increase

the expenditure to € 9,000, based on the actual expenditure under this budget line in recent years.

5 Purpose of expenditure: to cover ordinary running expenses of UNIDROIT (purchase of

stationary, telephone charges, postage of materials and correspondence, etc.).

6 Purpose of expenditure: to cover utility fees (electricity, water, and gas bills), building

maintenance costs (insurance, ordinary repairs in the building, maintenance of elevators) and

charges for municipal services (i.e. waste disposal).

7 Purpose of expenditure: to cover the cost of acquisitions for the Library’s stock of books

and the maintenance of its subscriptions to law journals, binding of periodicals and subscriptions to

electronic journals and databases. Compared to the draft Budget for 2025 as drawn up by the

Governing Council at its 103rd session and subsequently submitted to Member States, the Secretariat

has reduced the expected expenditure under Article 3 (Software) by € 5,000 given the adjustment

in expected receipts in 2025.

8. UNIDROIT 2024 – A.G. (84) 6

APPENDIX II

COMMENTS RECEIVED BY MEMBER STATES

EN

GENERAL ASSEMBLY UNIDROIT 2024

84th session A.G. (84) 7

Rome, 12 December 2024 Original: English/French

November 2024

Item No. 10 on the Agenda: Appointment of the members of the

Administrative Tribunal

(Secretariat Memorandum)

Summary See below

Action to be taken Appointment of the members of the Administrative Tribunal

Related documents None

1. The General Assembly, at its 84th session, is called upon to appoint the members of the

Administrative Tribunal, in accordance with Article 7bis (2) of the UNIDROIT Statute.

2. The composition of the Tribunal appointed at the 78th session of the General Assembly (2019)

was the following: Professor Sir Francis Jacobs, Professor Erik Jayme, and Professor Gianluigi Tosato,

as full members, and Justice Rafael García Valdecasas as the substitute member.

3. It is with great sadness that the Secretariat has learnt of the passing of Professor Erik Jayme.

Moreover, Professor Sir Francis Jacobs has declined the Secretariat’s invitation to serve for a further

term and therefore shall end his service on 31 December 2024.

4. In light of the above, the Secretariat would like to propose the candidacy of Professor

Gabrielle Kaufmann Kohler (Switzerland) to become a full member of the Administrative Tribunal,

and the candidacy of Meg Kinnear (Canada) to become the new substitute member of the Tribunal.

Given their long-standing relationship with the Institute and their extraordinary achievements in their

fields of expertise, the Secretariat is honoured to propose the reappointment by the General

Assembly of Professor Gianluigi Tosato and of Justice Rafael Garcia Valdecasas, this time as full

member of the Tribunal.

5. The abbreviated curriculum vitae of all four candidates is appended to this document 1.

6. The General Assembly is called upon to decide on the reappointment of Professor Gianluigi

Tosato, on the appointment of Justice Rafael Garcia Valdecasas and Professor Gabrielle Kaufmann

Kohler to the post of full members of the Administrative Tribunal, as well as to the appointment of

Ms Meg Kinnear as substitute member as of 1st January 2025, for a period of five years.

1 At the request of Member States, the Secretariat will provide a full cv of each of the candidates.

4. UNIDROIT 2024 – A.G. (84)7

APPENDIX

Full Members

Justice Rafael García Valdecasas

Born 1946; Bachelor of Laws (Universidad de Granada); Abogado del Estado (at Jaén and Granada);

Member of the Bar (Jaén and Granada); Head of the Spanish State Legal Service for cases before

the Court of Justice of the European Communities (Ministry of Justice); Head of the Spanish

delegation in the working group created at the Council of the European Communities with a view to

establishing the Court of First Instance of the European Communities; Judge at the Court of First

Instance from 25 September 1989 to 17 September 2007. Since 2007 he has been a Committee of

the Council of the European Union for the selection of the Judges of the European Civil Service

Tribunal Member of the Resources Committee of the European Investment Bank (2009-2018) ;

International Arbitrator since 2010 and Customer Ombudsman of the Banco Bilbao Vizcaya

Argentaria group in Spain.

Member of the Board of Directors of the Spanish Association for the Study of European Law as well

as on the board of Advisory and Editorial Committees of the following legal journals: “Noticias de la

Unión Europea – CISS”, Madrid, Spain; “Gaceta Jurídica de la Unión Europea y de la Competencia”,

Madrid, Spain; “World Competition Law and Economics Review”, The Hague, The Netherlands;

“Competition Policy International”, Boston USA.

Among his many accolades he was made Commander of the Civil Order of Agricultural Merit (1989),

Commander of the Order of Isabel la Catolica (1990), Grand Cross of the Order of Civil Merit (1999),

Silver Medal of the Royal Institute of European Studies (Zaragoza, 2001), Silver Medal for European

Merit from the Fondation pour le Mèrite Européen(Luxembourg, 2007),

He has been a member of the UNIDROIT Administrative Tribunal since 2010.

Professor Gabrielle Kaufmann-Kohler

Gabrielle Kaufmann-Kohler is a partner of Lévy Kaufmann-Kohler, Geneva, and practices

international commercial and investment arbitration, having acted in over 250 international

arbitrations, mainly as president. She appears on numerous institutional panels (including ICC,

ICSID, SIAC, CIETAC). She regularly ranks as one of the top arbitrators worldwide.

Professor Emerita at Geneva University, where she taught private international law and international

arbitration, Gabrielle Kaufmann-Kohler is the founder and former director of the Geneva LLM in

International Dispute Settlement (MIDS) and of the Geneva Center for International Dispute

Settlement (CIDS)co-founder of the Foundation for International Arbitration Advocacy (FIAA). She is

or was a visiting professor at Georgetown Law, University of Sao Paulo, Sciences Po Paris, the MIDS,

National University of Singapore and Tsinghua University Beijing.

Honorary President of ICCA (since 2020) and of the Swiss Arbitration Association (ASA), she is also

among other leadership positions a former member of the ICC Court, LCIA Court, and AAA Board,

and a current member of the Swiss delegation to UNCITRAL Working Group III.

She has published extensively in the area of her specialization (list available on https://lk-

k.com/?year=&lawyer=gabrielle-kaufmann-kohler&expertise=&s=&post_type=publication ).

Among other accolades and awards, she has received the GAR Lifetime Achievement Award (2023)

and the Chambers Europe Award for Outstanding Contribution to Arbitration (2021).

UNIDROIT 2024 – A.G. (84)7 3.

Gianluigi Tosato

Lawyer registered in the Rome Bar since 1976. Licensed to practice before higher courts since 1996.

“Libera docenza” since 1976; Professor emeritus of International Law and European Union Law in the

University “Sapienza” of Rome. Professor of European Union Law in the University “Luiss Guido Carli”

Rome. Founding partner of Tosato e Associati Law Firm

Cum laude Law degree from “Sapienza” University of Rome in 1962. Visiting scholar at the University

of Michigan in 1973 and at Stanford University in 1974/75.

Member of Scientific Committee of the Italian Arbitration Association, on the Executive Committee

of Istituto Affari Internazionali (International Affairs Institute), member of the International Law

Association, the Assocarta Board of arbitrators (“Probiviri”), Honorary President of L.M. Ericsson

Foundation. Former President of the Commission on Computing, Telecommunications and

Information Policies, ICC, Paris and Former President of the Board of Ericsson Italia S.p.A. and its

subsidiaries.

Author or curator of several publications on public and private international law and European Union

law.

He has been a member of the UNIDROIT Administrative Tribunal since 2010.

Substitute member

Ms Meg Kinnear

Meg Kinnear is a founding partner of LKDR LLC, where she acts as a dispute neutral, and in particular

as an arbitrator, conciliator, or mediator. From June 2009 to June 2024, Ms Kinnear was the

Secretary-General of the International Center for the Settlement of Investment Disputes (ICSID),

one of the five institutions of the World Bank Group. As Secretary General, Ms Kinnear led a group

of more than 70 dispute resolution professionals, administering a caseload of roughly 275 cases per

year. Prior to 2009 Ms Kinnear was the Senior General Counsel and Director General of the Trade

Law Bureau of Canada (April 1999 to June 1999), the Executive Assistant to the Deputy Minister of

Canada (1996-1999) and counsel in the Civil Litigation Section of the Department of Justice Canada

(1984-1996). She has written numerous articles and books on investor-State dispute resolution and

civil rules of procedure and is a frequent speaker on these topics. Ms Kinnear is a Canadian citizen

and currently resides in Toronto, Ontario.

EN GENERAL ASSEMBLY UNIDROIT 2024

84th session A.G. (84) 8

Rome, 12 December 2024 Original: English/French

November 2024

Item No. 11 on the Agenda: Reappointment of the Auditor

(prepared by the UNIDROIT Secretariat)

Summary See below

Action to be taken Reappointment of the Auditor as of 1st January 2025 for a period

of five years

Related documents UNIDROIT 2019 – A.G. (78) 9; Forthcoming report of the Finance

Committee (UNIDROIT 2024 – F.C. (98) 10)

I. INTRODUCTION

1. The General Assembly, at its 78th session (December 2019) appointed Mr Domenico Antonio

Italiano as auditor, responsible for the financial control of the Institute, in accordance with Article

17, paragraph 3 of the UNIDROIT Statute.

2. Mr Italiano was been appointed for a period of five years from 1 January 2020, and his term

of office will expire on 31 December 2024. The General Assembly will, at its 84th session, be called

upon to appoint the auditor of the Institute.

3. In view of the exemplary manner in which Mr Italiano has conducted the audit of the

Institute’s accounts for the last five years, the Secretary-General has no hesitation in recommending

to the General Assembly the reappointment of Mr Italiano to the post of auditor under the terms of

Article 17 of the Statute for a second period of five years to expire on 31 December 2029. The

Finance Committee, at its 98th session (October 2024) did not raise any objections to the

reappointment of Mr Italiano.

4. The curriculum vitae of Mr Italiano is appended to this document.

5. The General Assembly is called upon to decide on the reappointment of Mr Italiano to the

post of auditor as of 1st January 2025 for a period of five years.

2. UNIDROIT 2024 – A.G. (84) 8

APPENDIX

CURRICULUM VITAE OF MR ITALIANO

Curriculum Vitae

Domenico Antonio Italiano

Founding Partner – Studio GPD –

Studio Legale e Tributario

Office

Via di Villa Patrizi 13

000161 - Rome

Phone +39.06.441720

Fax +39.06.84242872

E-mail: [email protected]

Studies

Economics and Business Management

Languages

French: Written and spoken

from 1984 to date

TAX AND CORPORATE CONSULTING SERVICES

CARRIED OUT IN THE FOLLOWING PRACTICES:

Corporate transactions

- Business operations in general;

- Incorporation of companies, branches,

representative offices for foreign companies in Italy;

- Establishment of joint ventures and consortia;

- Sale and purchase of companies and shareholdings;

- Feasibility studies and implementation of corporate

restructuring operations including mergers, transfers,

demergers, transformations, liquidations of

companies and public entities;

- Planning and implementation of corporate

acquisitions and public offers of shares and stock

options;

- Advisory and consulting services to administrative

bodies;

- Board member of administrative control authorities.

Tax consultancy and planning

- Direct consulting on all tax related issues;

- Tax planning aimed to optimize direct/ indirect tax

burden;

- Tax consulting and auditing focused on extraordinary

corporate transactions such as acquisitions,

mergers, demergers, transfers and liquidations;

- Tax advising on national and international contracts;

- Assisting multinational companies and Italian

holdings on corporate groups’ management (tax

consolidation, group VAT, ruling procedures, etc.);

- Tax consulting for companies, organizations and

nonprofit foundations with regard to taxation of

capital income and other financial incomes (Italian

UCITS, harmonized and non-harmonized foreign

funds, asset management, income from equity

investments, etc.). ) and VAT issues;

Curriculum Vitae

- Comparability analysis in transfer pricing and market

evaluations on suspicious corporate transactions.

Consultancy and advising in law-related tax issues

- Advising in the tax assessment and subsequent

litigation before Tax Commissions and defense of the

tax-payer in court of all kinds and at all levels;

- Drafting opinions in all areas of tax law, substantive

and procedural, also in terms of EU and international

law;

- Formulation of questions to the financial

administration, request for rulings and agreements.

Due diligence investigations

- Investigating on legal and economic status of target

companies;

- Setting due diligence reports for companies

purchasing or selling companies, business units or

individual assets;

- Examining company and contract documentation;

- Monitoring and examining administrative and judicial

proceedings.

Corporate structuring optimization

- Providing assistance with regard to the entry of a new

shareholder within the company’s shareholding

following a capital increase designed to strengthen the

company's own resources;

- Providing assistance with regard to the reorganization

of corporate structure following the entry of new

shareholders within generational or management

replacement processes;

- Providing financial advisory to companies in crisis,

preparing and implementing economic and financial

recovery plans;

- Providing assistance analyzing financial statements,

examining corporate resolutions for verifying the

Curriculum Vitae

correct application of accounting (OIC, IFRS, IAS) and

regulatory principles.

Financial structuring optimization

- Defining optimal tax strategies for the financial

coverage of specific investments and expansion

projects.

Mergers & acquisitions

- Situation analysis and company assessment;

- Assisting in negotiations and tax issues related to the

acquisition and transfer of companies, business units,

controlling or minority share packages;

- Assisting in the planning (for economic, corporate and

fiscal aspects) and in the implementation of

acquisitions of companies or business branches with

the possible use of financial leverage.

CURRENT HELD POSITIONS

- UMBRIADUE SERVIZI IDRICI S.c.a.r.l. (ACEA Group S.p.A.) – Auditor

- DEMAP S.r.l. (ACEA Group S.p.A.) – Chair of Board of Auditors

- L.LAB S.r.l. (Luiss University) – Chair of Board of Auditors

- UNIDROIT – International Institute for the Unification of Private Law - Auditor

PERSONAL DETAILS

Born in San Pietro di Caridà on February 23, 1958

C.F.: TLN DNC 58B23 I102J

Domiciled in Rome, Via di Villa Patrizi, 13

Mobile: +39.335.6420655

Registered member of the Order of Chartered Accountants and Accounting Experts from 1984 (n. AA_001728)

Registered member of the Order of Legal Auditors from 1995 (n. 30679)

Rome, 2 October 2024

EN GENERAL ASSEMBLY UNIDROIT 2024

84th session A.G. (84) 9

Rome, 12 December 2024 Original: English/French

November 2024

Item No. 12 on the Agenda: Update on the social security package applicable to

UNIDROIT staff

(prepared by the UNIDROIT Secretariat)

Summary Update regarding the social security package offered to UNIDROIT

staff

Action to be taken To take note of the update

Related documents UNIDROIT 2017 – A.G. (76) 7 rev.; UNIDROIT 2017 – A.G. (76) 10;

UNIDROIT 2020 – A.G. (79) 8; UNIDROIT 2022 - A.G. (81) 8;

UNIDROIT 2023 – A.G. (82) 10; UNIDROIT 2024 – F.C. (97) 4

I. INTRODUCTION

1. Following the adoption of important social security reforms in 2017 (A.G. (76) 7 rev.; A.G.

(76) 10), the Secretariat has regularly updated the Finance Committee and the General Assembly

on the social security package applicable to UNIDROIT staff.

2. The new pension scheme was activated in 2019 and has since been administered by the

International Service for Remunerations and Pensions (ISRP). Initially, the Committee for the

Administration of Funds (CAF)1 had proposed to keep the incoming contributions to UNIDROIT’s

Pension Reserve Fund (PRF) in treasury until they reach a threshold amount of € 500,000. The assets

would then be moved towards a portfolio invested in financial markets (A.G. (79) 8). In 2022, the

minimum threshold for investment was increased to € 900,000 (A.G. (81) 8).

3. During its 81st session (December 2022), the General Assembly endorsed the

recommendation of the Finance Committee to transfer a substantial amount of UNIDROIT’s pension

fund assets from a savings bank account to a longer term account to obtain a higher interest rate

(A.G. (81) 8). Accordingly, a new bank account was opened and, since June 2023, UNIDROIT has

benefited from higher interest rates with term deposits (A.G. (82) 10).

4. Regarding health insurance, the Secretariat obtained insurance with Cigna last year, given

the general dissatisfaction of staff members with the previous insurance policy (A.G. (82) 10). The

Cigna health insurance plan started on 1 October 2023, for a period of 12 months with tacit renewal.

1 The CAF is composed of representatives of five Organisations that externalised the administration

of their pension reserve fund assets to the ISRP (see Annexe I).

2. UNIDROIT 2024 – A.G. (84) 9

II. UPDATE

Pension Fund:

5. The indicative threshold for investment has been reached in the first quarter of 2024 (F.C.

(97) 4). The pension funds’ total assets increased to € 1,138,758 by end-August 2024. Details

regarding the management of the Institute’s PRF are available in the CAF’s Second Bi-Annual Report

(please see the Annexe).

6. Since the indicative threshold for investment has been reached, the ISRP in cooperation with

the UNIDROIT Secretariat is preparing a proposal for the investment of the PRF’s assets in the financial

markets. To this end, several steps are envisaged: (i) drawing up a report on the expected

development of the PRF (cashflow analysis)2; (ii) establishing a Strategic Asset Allocation (SAA) plan;

(iii) selecting, and negotiating with, asset managers of identified mutual funds; and (iv) engaging a

custodian and an external performance consultant. The possible investment of UNIDROIT’s PRF assets

in the financial markets will be discussed during the next meeting of the CAF in November 2024. If

it is deemed appropriate to invest the PRF assets in the financial markets in accordance with that

plan, its implementation may take up to six months.

7. The one-off costs for the preparation of the two reports that are being prepared by the ISRP

are around € 20.000 in total (€ 12,500 for the cashflow analysis and € 10,000 for the SAA plan). To

reduce the impact on the Institute, UNIDROIT may pay these costs in installments of € 4,500 over a

period of five years. In addition, the Institute would continue to pay CAF fees and would incur

structural costs for investing the pension fund assets in the financial markets (e.g., custodian bank

and investment manager fees, and costs for a performance consultant).

Health Insurance:

8. As anticipated during the 97th session of the Finance Committee, the Institute’s health

insurance policies with Cigna have been renewed for another 12-month period, until 30 September

2025.

III. ACTION TO BE TAKEN

11. The General Assembly is invited to take note of this update regarding the social security

package applicable to UNIDROIT staff, including the update provided in the CAF’s Second Bi-Annual

Report (Annexe). Please note that the Annexe is confidential.

2 The cashflow analysis consists of (i) a projection of pension benefits to be paid to current and future

staff, (ii) an elaboration of actuarial assumptions used in the projection of pension benefits, and (iii) a scenario

analysis considering the impact of adjusting key assumptions on the cashflows and development of the PRF.

3. UNIDROIT 2024 – A.G. (84) 9

ANNEXE

ISRP – CAF UNIDROIT BI-ANNUAL REPORT

FOR INTERNAL USE

CAF/WD(2024)37 Written Procedure - October 2024

COMMITTEE FOR THE ADMINISTRATION OF FUNDS UNIDROIT – SECOND BI-ANNUAL REPORT FOR 2024

ACTION:

This document is presented to the CAF for approval.

FOR INTERNAL USE CAF/WD(2024)37.

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COMMITTEE FOR THE ADMINISTRATION OF FUNDS UNIDROIT - SECOND BI-ANNUAL REPORT FOR 2024

Introduction

1. UNIDROIT externalised the administration of its Pension Reserve Fund (PRF) assets to the International Service for Remunerations and Pensions (ISRP) and joined the Committee for the Administration of Funds (CAF) on 1 September 2019.

2. UNIDROIT’s PRF was established with zero assets at inception (30 September 2019) and few participants. UNIDROIT’s staff, the beneficiaries of UNIDROIT’s pension scheme, hold fixed-term renewable contracts. As a new fund, the CAF proposed that the General Assembly and Governing Council of UNIDROIT proceeded by investing the PRF’s incoming contributions in treasury products until the Fund reaches a certain amount. After reaching a predetermined amount, the PRF may start to invest in financial markets through selected mutual funds. This two-stage approach allows the PRF to grow to a level, which will produce a return that offsets the cost to administer the Fund and allows enough liquidity to pay benefits as they fall due.

3. Given that the predetermined amount has now been surpassed, a cash flow analysis and study on an appropriate strategic asset allocation (SAA) is being undertaken. The intention is for the CAF to consider this at the next meeting in November 2024. If it is deemed that a SAA is suitable for UNIDROIT, then the intention would be for the SAA to be implemented, after agreement with UNIDROIT, during 2025.

4. Pursuant to Article 3.4 of the Statute of the PRF [SIRP/MOA/UNIDROIT(2019)6/ADD3], the Secretary General of UNIDROIT shall report annually to the General Assembly on the status of the Fund. This Second Bi-Annual Report for 2024 presents the situation of the PRF’s performance at 31 August 2024 and summarizes the work carried out by the CAF since its inception.

1. PRF Assets at 31 August 2024

5. Since 30 September 2019, the ISRP has invested the PRF’s staff and employer contributions in treasury products, depositing these funds in a savings account with Crédit Industriel et Commercial (CIC). CIC is a French bank that allows non-profit organisations to open a "Compte sur Livret Association" (CLA) savings account, which guarantees the deposited capital and pays a discretionary interest rate. CIC’s current counterparty ratings by S&P, Fitch Ratings and Moody’s are ‘AA-’, ‘AA-’ and ‘Aa2’, respectively.

6. Since March 2023, the ISRP has also used savings products, notably fixed-term bank deposits, with Crédit Agricole (CA). Crédit Agricole’s current counterparty ratings by S&P, Fitch Ratings and Moody’s are ‘AA-’, ‘AA-’ and ‘Aa2’, respectively.

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Inflows:

7. At 31 August 2024, the value of the PRF’s total assets were EUR 1 138 758 as shown in Table 1 below:

Table 1: PRF assets at 31 August 2024

Bank Account Type Amount (EUR) (including

accrued interest)

Crédit Industriel et Commercial

Current account (not remunerated) 1

Short-term savings account

2.00% at 31 August 2024

(Compte sur Livret Association)

29 063

4 month fixed-term savings contract

(3.80% annual interest rate – maturity

19 September 2024)

164 293

2 month fixed-term savings contract

(3.80% annual interest rate – maturity 19

September 2024)

193 646

3 month fixed-term savings contract

(3.80% annual interest rate – 17

November 2024)

375 918

7 month fixed-term savings contract

(3.80% annual interest rate – maturity 19

January 2025)

375 838

Crédit Agricole

Current account (not remunerated) 0

Total 1 138 758

Source: ISRP, CIC, CA

8. As at 31 August 2024, 12 officials were contributing monthly to the Fund. There have been no staff departures and, therefore, no leaving allowances paid during 2024 up to 31 August. In total, the pension contributions represent 37% of UNIDROIT’s payroll, 16.7% of which are staff contributions, and 20.3% are contributions made by UNIDROIT. These contributions are transferred to the savings account monthly.

9. Graph 1 on the following page shows the evolution of the Fund’s assets from inception of operations on 30 September 2019 up to 31 August 2024:

FOR INTERNAL USE CAF/WD(2024)37.

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Graph 1: Evolution of UNIDROIT’s PRF’s assets

Source: ISRP, CIC, CA.

Outflows:

10. Leaving allowances – the lump sum given to officials leaving the Organisation with less than 10 years of service – are to be paid from the PRF’s assets. The contracts signed between officials and the Organisation have finite periods but may be renewed. No leaving allowances have been paid during the period 1 January 2024 to 31 August 2024.

2. Investment Plan

11. UNIDROIT initially approved investing the incoming contributions in a CLA that yields a relatively low return, but which bears no financial market risk. This was done to preserve the nominal value of the contributions so that the Fund accumulates them to reach a certain size.

12. In a second stage, it was planned that when the Fund reaches a minimum threshold (estimated as EUR 900 000) and the cash flow projections allow it, the assets may be moved to a portfolio invested in financial markets, according to an SAA that meets UNIDROIT’s objectives.

13. As the assets of the PRF are now greater than the threshold of EUR 900 000, a cash flow and SAA study is underway. The intention is for the CAF to consider the cash flows and SAA at the next meeting in November 2024. If it is deemed that it is appropriate for the PRF to be invested in financial markets, then the intention would be for the SAA to be implemented, after agreement with UNIDROIT, in 2025.

14. The implementation of any investment plan within the CAF should be performed in various stages:

i. a projection of expected cash flows to assess the expected potential inflows/outflows under several scenarios, as well as the ongoing custodian and management costs, to determine the liquidity needs of the PRF to ensure an appropriate asset allocation linked to the cash flow profile of the Fund;

ii. the assessment of expected returns for the available investment universe,

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considering the size of the PRF, liquidity requirements and any additional requirements imposed by UNIDROIT;

iii. the establishment of an SAA that meets the above requirements and does not expose the PRF to undue risks;

iv. the selection of, and negotiation with, asset managers of identified mutual funds within the CAF environment who best meet the requirements of the SAA;

v. the engagement with a custodian to hold the PRF’s assets and the engagement of an external performance consultant for the provision of regular performance reporting, as done for the other CAF Pension Reserve Funds.

15. Stages (i) and (ii) set out above are currently in progress.

16. If the implementation of this investment process is considered cost effective for UNIDROIT, once implemented, the SAA will be monitored through regular reports to the CAF.

3. Performance of the PRF

17. A savings account at CIC was opened in September 2019. The interest rate applied was regularly adjusted by CIC, ranging between 0.10% and 0.30% until 31 December 2022. During 2023, the applicable interest rate applied by CIC was 1% until 16 May 2023, when it was increased to 1.8% and was then further increased to 2.00% from 1 September 2023.

18. Since June 2023, following a review of banks’ offerings and the opening of a new account at Crédit Agricole, the Secretariat has used longer-term deposit accounts to obtain more favourable interest rates and deposit opportunities. Currently, fixed term deposits are being used, enabling the Secretariat to significantly improve the interest rate obtained.

19. In the current interest rate environment with interest rates anticipated to fall in the near-term, longer fixed-term deposits have been used to capture the current higher interest rates currently offered.

20. The historical nominal interest rates that applied to the PRF’s investment are presented in Table 2 below.

Table 2: Historical nominal interest rates applied to the PRF investment

Source: ISRP, CIC, CA and Morningstar for data on the Short-Term Euro Money Market Funds’ average performance.

Oct-Dec Jan. Feb. Mar. April May June July Aug. YTD

Performance PRF investments 0.20 0.10 0.10 0.16 2.59 0.33 0.32 0.32 0.31 0.31 0.31 0.31 0.31 2.56

Benchmark: €STR -0.54 -0.55 -0.57 0.00 3.31 0.34 0.32 0.34 0.33 0.34 0.31 0.32 0.32 2.63

Difference vs. benchmark 0.74 0.65 0.67 0.16 -0.72 -0.01 0.01 -0.02 -0.01 -0.02 0.00 0.00 0.00 -0.07

Short-term money market funds -0.41 -0.46 -0.52 -1.58 3.23

Difference vs. Short-term money market

funds 0.61 0.56 0.62 1.74 -0.64

202420232019 2021 In %

(annualised)

2020 2022

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21. The current benchmark or performance reference for UNIDROIT’s PRF is the €STR (euro short-term rate). It is the current1 reference benchmark for short-term interbank interest rates widely used in the financial industry to assess the return of money-market instruments with very low risk and high liquidity. The €STR is calculated based on interest rates obtained directly by the European Central Bank.

22. The nominal performance of the PRF is also measured including the impact of the timing of the investments of net contributions on the evolution of the Fund's performance. This leads to the actual or effective return of the Fund, also referred to as the internal rate of return (IRR). Considering accrued interest up to 31 August 2024, the nominal IRR has been 1.79% since the start of investments in September 2019.

23. In real terms, the annualised return of the PRF since inception is -2.04%. This is negative primarily due to the high inflationary environment experienced during the period, particularly in 2022 (3.83% annualised inflation in the euro area for the period October 2019 – February 2024). Since the start of 2023, the Fund has been able to benefit from higher interest rates, leading to more favourable returns on deposits.

4. CAF activities

24. The CAF is composed of representatives of five Organisations: The International Institute for the Unification of Private Law (UNIDROIT); the European Union Satellite Centre (EU SatCen); the European Union Institute for Security Studies (EUISS); the Hague Conference on Private International Law (HCCH); and the Residual Administrative Tasks Unit of the former Western European Union (RATU). A Qualified Person serves as Chair of the Committee2, and the ISRP is the Committee’s Secretariat.

25. Since its creation in September 2009 up to the reporting date, the CAF has held 28 meetings, during which it made recommendations regarding:

• the strategic asset allocations of EU SatCen, EUISS, HCCH and RATU, and the investment plan of UNIDROIT;

• the investment procedures of each Fund;

• the selection of a custodian bank and asset managers;

• the Funds’ treasury management plans;

• the reporting.

26. The CAF has also monitored the performance and the costs of the Funds; approved their annual financial statements; met with their asset managers; and was informed of and discussed the following topics:

• the risk management framework of the Funds;

1 EONIA was discontinued on 3 January 2022 and replaced by the €STR.

2 Mr Torres Trovik, a pension fund specialist with extensive experience in pension funds and

International Organisations, is the current Qualified Person and was appointed Chair during the 13 May 2022 CAF meeting.

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• socially responsible investments;

• the real estate sector;

• the euro-area sovereign debt crisis, the Covid-19 crisis and the Ukraine conflict;

• exchange-traded funds;

• late payment of contributions (the CAF noted the importance of the timely payment of Member State contributions for the operation of the Funds’ activities);

• performance measurements;

• review of fixed-income portfolios - corporate bonds, global government bonds and emerging markets bonds;

• comprehensive reviews of EU SatCen, RATU, HCCH and EUISS’s PRFs; these reviews (normally) examine the evolution of the respective Funds over the last five years and define the Funds’ investment policy and strategy for the future. The reviews give the Organisations a clear picture of their pension debt and of the Fund, and the opportunity to ask questions and take decisions on several pension and asset management-related topics.

• a review of the investment procedures and implementation options of their approved SAA;

• a review of UNIDROIT’s investment plan and threshold for investments in financial markets;

• portfolio protection measures;

• changing the performance calculation provider;

• a review of benchmarks;

• the procedure for monitoring the asset managers and terminating their contracts;

• stress tests;

• analyses of the Funds’ liquidity;

• analysis of global direct real estate;

• investing the United Kingdom’s extraordinary contributions in EU SatCen, RATU and EUISS’s Funds;

• analysis of pension funds’ investments in an inflationary environment;

• analysis of investments and negative cash flows;

• holistic view of pension risk management;

• changing the custodian to be used for the safekeeping of assets;

• the broad range of skills recommended for a pensions management board.

27. In light of the preceding information and in accordance with the provisions in the Statute of the PRF, the Secretary-General of UNIDROIT invites the General Assembly:

• to take note of the information presented in this document.