A Treaty the Bush Administration Actually Likes?

It’s no secret that the Bush Administration has little love for treaties, and I’d expect the Supreme Court’s recent pronouncements will do little to improve that outlook. Still, it’s worth recalling that the Bush Administration does not view all treaties as fatally flawed. There are a few (increasingly rare?) exceptions. For example, on Wednesday the United States and Switzerland became the first two states to sign the Hague Securities Convention (the treaty text is available here). This treaty, developed through the auspices of the Hague Conference on Private International Law, would establish a choice of law framework to determine the applicable law for the transnational holding, transfer or collateralization of securities. Article 4(1) provides that the applicable law for such activity is the law expressly agreed by the investor and the relevant intermediary (in the absence of such an agreement, the treaty contains default rules where the applicable law is–in descending order of preference–the state of the office entering into the account agreement with the investor, the state of incorporation for the intermediary, or the intermediary’s principal place of business). Joining the Convention will require some states, notably EU member states, to change their approach, since European Directives currently use the location of the account, not the parties agreement, to determine the applicable law. Still, the European Commission has come out in favor of the treaty and recommended EU member states consent to it because of the legal certainty it will provide (the European Community itself will also likely join the treaty directly, but three nation states must join for it to enter into force).

Of course, simply because the Executive Branch signs a treaty doesn’t mean the United States will join it. The Senate still gets its say or a future Administration could withdraw its support. But those are topics for another day . . .