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• Structure Of This Study Paper
• Membership Of International Organisations

1 Introduction

1 THE LAW COMMISSION commenced a new project on international trade in October 1997. The principal purpose of this project was to identify legal barriers to international trade, which might adversely affect New Zealand’s export-driven economy. By initiating reform of New Zealand’s domestic law, the Commission hopes to contribute to the removal of impediments to international trade.

2 However, ensuring our domestic law is in order is only half the battle. As New Zealand becomes more integrated into the global market for goods and services, international rules and practices assume more importance. To be effective, our domestic laws should where appropriate be consistent with those of our major trading partners. Consistency does not mean slavishly adopting those laws. Rather, we should critically examine those rules and consider the advantages and disadvantages of applying them in New Zealand. While having different laws can sometimes result in trading advantages,¹ care must be taken in assessing whether a different law will achieve that outcome.

3 The harmonisation of rules governing cross-border transactions can facilitate trade, and international conventions have a part to play in achieving uniformity. The harmonisation of laws can be pursued in different ways:

• by unifying domestic laws;
• by unifying laws relating to cross-border dealings; or
• by recognising regulatory outcomes (for example, agreeing that goods which can be sold lawfully in country A can also be sold in country B without needing to comply with the corresponding regulatory requirements of country B).

All of these solutions require a degree of international co-operation – they cannot be achieved unilaterally.²

4 In addition, harmonisation can be achieved by parties to a contract reaching agreement on applicable laws.³ Usually New Zealand trading entities will prefer to specify New Zealand law as the applicable law in their international contracts, because New Zealand law is familiar and our court system is relatively efficient and inexpensive compared to many other jurisdictions. One of the country’s leading exporters informed us that when persuading a trading partner to apply New Zealand law, the Privy Council’s status as the final appellate court of New Zealand may be influential, because international parties are more familiar with English law and judges (from which, by and large, the Privy Council is drawn) than those of New Zealand.

5 In considering whether to adopt the conventions discussed in this paper, the Law Commission has paid particular attention to whether adoption would result in a greater degree of commonality between our legislation and that of our major trading partners. In making this assessment, we have taken into account statistics on the countries with which New Zealand conducts most trade, in terms of the value of both exports and imports. These statistics are reproduced in appendix A.⁴ While these statistics indicate New Zealand’s most significant trading partners by value across all sectors, it should be noted that other perhaps less apparent markets may be of great significance to particular industries.⁵

STRUCTURE OF THIS STUDY PAPER

6 This Study Paper introduces a number of international conventions. For each convention, it summarises the current situation in New Zealand in respect of the law to which the convention relates, and outlines the benefits or otherwise of adopting it. In some cases, it is recommended that New Zealand should adopt a convention; in others the recommendation is against adoption. This Study Paper is primarily intended to be educative; even if conventions are not adopted as part of New Zealand’s domestic law, they can be useful drafting tools for those engaged in documenting the terms of contracts which have international elements.

7 To ensure that those conducting international transactions are aware of the provisions of these instruments, we have included relevant extracts from the relevant conventions as a resource.⁶

MEMBERSHIP OF INTERNATIONAL ORGANISATIONS

8 Since commencing the international trade project, Law Commissioners and others representing the Commission have attended meetings of organisations such as the United Nations Commission on International Trade Law (UNCITRAL), and the Hague Conference on Private International Law.⁷ As New Zealand is not a full member of these organisations, these representatives attended in the capacity of observer.⁸

9 The membership of UNCITRAL is limited to a certain number of countries, and determined by the United Nations, so there is little that New Zealand can do to advance its own membership. There are however arguments in favour of New Zealand becoming a formal member of the Hague Conference, with full voting and speaking rights. If New Zealand as a member of the Conference ratified a convention, that convention would apply automatically between New Zealand and other member States, with no need for each other contracting State to accept specifically New Zealand’s accession. Most of New Zealand’s major trading partners are member States, including Australia, Japan, the United States, the United Kingdom, China and Korea.⁹

10 In addition to the procedural conventions discussed in this paper, the focus of the Hague Conference has been in the area of family law; New Zealand has become party to two of its more successful conventions in relation to intercountry adoption, and child abduction.¹⁰ The Hague Conference plans to undertake further work in the family law area, in particular regarding maintenance obligations, over the next 12 months. The Hague Conference is also beginning work on private international law issues that arise where securities are used as collateral, an issue of some importance to the banking and finance sectors.

11 Not only is it important for New Zealand to be involved in the formulation of rules that will apply to and facilitate our own international relations, but we also have an obligation as an international citizen to contribute to the development of international law. The Commission notes the desirability of New Zealand becoming a full member of the Hague Conference, while also recognising the need to balance its advantages against the cost of membership. Originally the Hague Conference had hoped to approve a final text of the Convention on Jurisdiction and Foreign Judgments¹¹ during 2000. However disagreement over the draft may make completion impossible this year. The Commission expects to be able to make a more firm recommendation regarding membership of the Hague Conference in its third report on electronic commerce.

12 Before going to press, the Commission became aware of New Zealand’s forthcoming accession to the Hague Conference Convention Abolishing the Requirement of Legalisation of Public Documents, concluded in 1961. Accession requires some amendments to the Evidence Act 1908, which are contained in the Statutes Amendment Bill (No 7) 1999. The Convention aims to simplify the series of formalities entailed in using public documents outside the country from which they emanate, by reducing the formalities of legalisation to the simple delivery of a certificate (in a prescribed form) by the authorities of the State from which the document originates. Approximately 70 other States are party to this Convention, including Australia, the United States, the United Kingdom and Japan.