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Conflict-of-laws rules on assignments of receivables in the United States and Canada
Uniform Law Review  (IF),  Pub Date : 2019-12-01, DOI: 10.1093/ulr/unz041
Michel Deschamps

Introduction The main purpose of this article is to summarize the conflict-of-laws rules of the United States of America (the "US") and Canada on the assignment of receivables in order to allow the reader to compare these rules with the rules contained in the European Commission Proposal of 12 March 20181 (the "Commission Proposal").2 Comparisons will also be made with the 2016 Model Law on Secured Transactions prepared by the United Nations Commission on International Trade Law (the "UNCITRAL Model Law"). The UNCITRAL Model Law contains conflict-of-laws rules on security rights in receivables, which come from the UNCITRAL Legislative Guide on Secured Transactions adopted in 20073 and the United Nations Convention on the Assignment of Receivables in International Trade adopted in 2001 (the "UN Assignment Convention").4 The lack of harmonization in the area of receivables financing is often an impediment to transactions involving assignment of receivables in multi-jurisdictional transactions, both at the substantive law and the conflict-of-laws levels. A review of the US and Canadian conflict-of-laws rules illustrates this lack of harmonization between the US and Canada as well as within Canada. The Commission Proposal is an effort to achieve harmonization within the EU. For sake of concision, conflict-of-laws rules are referred to below as conflict rules.Part 1 deals with the terminology used in this article and the scope of the conflict rules of the U.S. and Canadian regimes on the assignment of receivables; certain differences in scope with the Commission Proposal are also noted, Part 2 summarizes the analysis that a financier must conduct to ensure that an assignment in its favour of the related receivables will be recognized in all relevant jurisdictions. Part 3 and Part 4 describe the conflict rules of the US and Canada, respectively. As is explained in Part 4, there are three different sets of conflict rules in Canada on the assignment of receivables. Part 5 is an overview of the conflict rules proposed by the UNCITRAL Model Law for similar matters.The conflict rules examined in this article are those relating to the creation (validity), effectiveness against third parties and priority of an assignment made by an assignor who is a corporation.5 It should be noted that the conflict rule to which practitioners pay the most attention is the rule on effectiveness against third parties. This is so because many national laws do not prescribe specific requirements for the creation of a valid assignment (as between the assignor and the assignee), with the result that an assignment made under the law of one jurisdiction will often be recognized as validly created by the laws of other jurisdictions. Moreover, the conflict rules on the effectiveness against third parties and priority of an assignment of a receivable generally point to the substantive laws of the same jurisdiction. Thus, for many practitioners in the US and Canada, the conflict-of-laws analysis is summarized in short-hand by the following question: "Where do you file?" Of course, even in the context of effectiveness against third parties, framing the analysis in that way is inaccurate because "filing" is not a universal mode for achieving third-party effectiveness. There are jurisdictions where assignments of receivables are not subject to registration or filing to gain priority.