Priority Rules Under Convention On The Assignment Of Receivables In International Trade

Receivables financing has been deterred not only due to the diversity of priority rules governing the relationship between the assignor and the third parties in different countries, but also because domestic rules in many jurisdictions ad hoc are outdated and insufficient. Convention on the Assignment of Receivables in International Trade, adopted by the United Nations General Assembly in December 2001, addresses the priority rules on international level for the first time by creatively marrying substantive rules and conflict rules. It is safe to expect that the Convention will have a dramatic impact on the growth of receivables financing in international trade.A comprehensive methodology including historical research, comparative research and value research is employed in this article. Based on a general overview of significant features of assignment of receivables in international trade, the article analyzes the background of the priority rules. Then, the article explores respectively the justifications and applications of both substantive priority rules and conflict priority rules provided in the Convention. It is pointed out that such priority rules characterized by publicity and predictability could fundamentally helps to avoid conflicts of rights between the assignor and third parties, as well as establish a standard to determine priority between competing claimants. Finally, the article advocates that'substantive priority rules based on registration'and'conflict priority rules that the law of the assignor's residence governs effects of assignment toward third parties'should be established in China.