UNCITRAL

From Max-EuP 2012

by Franco Ferrari

1. Background and structure

With the objective of promoting international trade by removing obstacles originating from the divergences of the laws of the different states, the United Nations Commission on International Trade Law (Uncitral) was set up at Hungary’s request on 17 December 1966 by the United Nations General Assembly by its Resolution 2205 (XXI). UNCITRAL, originally headquartered in New York and relocated to Vienna in 1979, consists of a limited—but steadily increasing—number of member states of the United Nations. At the outset, UNCITRAL was composed of 29 member states of the United Nations; subsequently, membership was expanded to 36 (1973) and thereafter to 60 (2002) states. The increase in the number of member states (elected for terms of six years) makes it easier to guarantee that the various geographic regions and the principal economic and legal systems of the world are represented.

Uncitral’s secretariat is provided by the International Trade Law Division of the United Nations Office of Legal Affairs (OLA), whose director also serves as the Secretary to UNCITRAL. Hence, the International Trade Law Division is, by way of example, in charge of the preparation of studies, reports and draft texts on issues that are being considered for potential inclusion in UNCITRAL’s work programme. It is that Division that is also responsible for elaborating and revising working papers and legislative texts on issues already included in the work programme. The secretariat is also tasked with reporting on the annual meetings of UNCITRAL (the venues of which alternate between Vienna and New York) as well as on the meetings of the various working groups which carry out the substantive preparatory work on the issues included in UNCITRAL’s work programme. At present, there are six working groups on namely, procurement, international arbitration (arbitration (international)) and conciliation, transport law, electronic commerce (e-commerce), insolvency law and security interests. These working groups, which carry out the actual work on the issues included in UNCITRAL’s work programme, meet once or twice a year, with the venue again alternating between Vienna and New York. The membership of these working groups includes all of UNCITRAL’s member states as well as non-member states and accredited international and regional organizations which all play an active role in the work and may well impact the output of the working groups, because decisions are taken by consensus and not by vote.

2. UNCITRAL’s coordination activities

As outlined in United Nations General Assembly Resolution 2205, UNCITRAL aims to achieve the aforementioned goal of promoting international trade via efforts made ‘towards the progressive harmonization and unification of the law of international trade’. The Resolution also describes how that progressive harmonization and unification of the law of international trade shall be achieved. In this respect, reference is made, for example, to the need to coordinate the work of organizations active in the field of harmonization and unification of the law of international trade. One must wonder, however, precisely how such coordination shall be accomplished, especially the coordination with the work of those organizations that are not integrated into the United Nations system and, therefore, cannot be obliged by either the United Nations or UNCITRAL to be subject to UNCITRAL’s coordination efforts. Therefore, it must be emphasized that these coordination efforts may only take the form of equal-footed cooperation which may be achieved, for instance, by allowing UNCITRAL to participate—as an observer—in the work of these organizations and vice versa.

Occasionally, cooperation may take other forms. When drafting the 1988 United Nations Convention on International Bills of Exchange and International Promissory notes, for instance, UNCITRAL relied on preparatory work done by UNIDROIT in the early 1950s. A similar method was applied to the 2008 United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, for which UNCITRAL heavily relied on initial work done by the Comité Maritime International.

Undoubtedly, the coordination of UNCITRAL’s activities with other bodies and special organizations of the United Nations is much easier. For example, recall the close cooperation between UNCITRAL and the United Nations Conference on Trade and Development (UNCTAD), upon the suggestion of which the working group on international legislation on shipping was established which elaborated the 1978 United Nations Convention on the Carriage of Goods by Sea—the ‘Hamburg Rules’, in force since 1992.

3. UNCITRAL’s codification activities

As stated in the United Nations General Assembly Resolution 2205, UNCITRAL is not only meant to further the progressive harmonization and unification of the law of international trade by coordinating the work of organizations engaged in the field, but also by promoting wider participation in existing international conventions and wider acceptance of existing model laws and uniform law instruments and by carrying out codification activities of its own. Codification appears to have been UNCITRAL’s preferred means of trying to reach this goal since its first session in 1968, on the occasion of which UNCITRAL adopted nine subject areas as the basis of its future work programme, namely international sale of goods, international commercial arbitration, transportation, insurance, international payments, intellectual property, elimination of discrimination in laws affecting international trade, agency, and legalization of documents. While some of these subject areas have not been taken up at all by UNCITRAL, others have been focused on extensively over the years (international sale of goods, transportation, international commercial arbitration and international payments), and other subject areas in which UNCITRAL has done extensive work have been added at a later stage (government contracts, insolvency and electronic commerce).

In the area of international sale of goods, UNCITRAL’s efforts first led to the 1974 Convention on the Limitation Period in the International Sale of Goods; thereafter, they led to UNCITRAL’s most successful uniform law instrument, the 1980 United Nations Convention on Contracts for the International Sale of Goods, which is in force today in more than 70 countries and governs more than two-thirds of the overall trade of goods. It is worth mentioning that the adoption of the 1980 Convention made a revision of the Limitation Convention necessary, which is why the Limitation Convention was amended by a Protocol adopted in 1980 by the diplomatic conference that adopted the United Nations Convention on Contracts for the International Sale of Goods. Both the original Limitation Convention and the Convention as amended by the Protocol entered into force on 1 August 1988.

In the area of transportation, both the Hamburg Rules and the recent 2008 Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea ought to be mentioned.

Uncitral has also been particularly active in the area of international commercial arbitration since its founding. In 1976, it adopted the Arbitration Rules, widely used both in ad hoc arbitrations and administered arbitrations, which provide a comprehensive set of procedural rules upon which parties may agree for the conduct of arbitral proceedings arising out of their commercial relationship. UNCITRAL’s major achievement in this area is, however, the 1985 UNCITRAL Model Law on International Commercial Arbitration, amended in 2006 (with a view towards the modernization of the form requirement of an arbitration agreement to better conform with international contract practices). The Model Law, which covers all stages of the arbitral process, has been developed with the objective of providing national legislators with an ideology-free and globally suitable model for the drafting of national rules on international commercial arbitration. Considering that the arbitration legislation of more than 50 states is based upon the Model Law, it appears that UNCITRAL has achieved its goal. UNCITRAL’s work in this area has also led to the 1996 UNCITRAL Notes on Organizing Arbitral Proceedings, designed to assist arbitration practitioners by providing an annotated list of issues in relation to which decisions of the arbitral tribunal are desirable, including the determination of the set of arbitration rules, the language and place of arbitration and questions relating to confidentiality, as well as other matters.

It is well known that the subject of commercial conciliation is closely related to that of commercial arbitration. It is therefore unsurprising that UNCITRAL has also worked, and continues to work, in the area of commercial conciliation, and has one working group, Working Group II, specifically dedicated to ‘international arbitration and conciliation’. As a result of UNCITRAL’s efforts in this specific area, the UNCITRAL Conciliation Rules and the UNCITRAL Model Law on International Commercial Conciliation were adopted in 1980 and 2002 respectively.

As regards UNCITRAL’s work in the area of international payments, the adoption of the following uniform law instruments should be mentioned: the 1988 United Nations Convention on International Bills of Exchange and International Promissory Notes, the 1992 Model Law on International Credit Transfers, and the 1995 United Nations Convention on Independent Guarantees and Stand-by Letters of Credit.

The fact that UNCITRAL focused its attention mainly on the aforementioned areas does not mean that UNCITRAL has ignored other areas. For instance, consider the work done on security interests, an area in which efforts have been underway since the very first session of the Commission. In 2001, this work resulted in the adoption of the United Nations Convention on the Assignment of Receivables in International Trade.

Over the years, UNCITRAL has also become active in areas not listed in the 1968 work programme. This is true, for instance, for the area of electronic commerce, to which, for obvious reasons, no thought had been given in 1968. The efforts undertaken in this area have resulted in various instruments, namely the 1996 Model Law on Electronic Commerce (amended in 1998), the 2001 Model Law on Electronic Signatures and the 2005 Convention on the Use of Electronic Communications in International Contracts. Likewise, insolvency law is an area UNCITRAL has been concerned with for some time now, although it did not start looking into the subject until 1993. The efforts in this field allowed, however, for the adoption in 1997 of the UNCITRAL Model Law on Cross-Border Insolvency, an instrument designed to assist states to equip their insolvency laws with a modern, harmonized and fair framework to address instances of cross-border insolvency more effectively.

4. UNCITRAL’s additional activities

Aside from the types of texts mentioned in the previous section (namely conventions, model laws and rules), UNCITRAL has also drafted legislative guides and recommendations. These types of texts are resorted to when it appears impossible for a consensus to be reached on specific provisions. Thus, these texts offer a number of possible legislative solutions to specific issues without promoting any one specific solution in particular. Where it seems appropriate, the texts include variants to mirror the varying policy choices that can be made vis-à-vis a given issue. For an example of these types of texts, see the 2004 Legislative Guide on Insolvency Law, as well as the 2007 Legislative Guide on Secured Transactions.

Uncitral’s mandate is, however, not limited to the aforementioned coordination and codification activities. Pursuant to United Nations General Assembly Resolution 2205, UNCITRAL shall also promote ‘ways and means of ensuring a uniform interpretation and application of international conventions and uniform laws in the field of the law of international trade’. This is necessary since the mere drafting of uniform texts does not by itself create uniform law. Rather, it is necessary that uniform texts also be interpreted and applied in the same manner throughout the states where it is in force. This requires interpreters to be aware of how a given uniform text is interpreted and applied by interpreters of other states, ie that the courts of one state know what happens in the courts of other states. In practice, this may cause some difficulties since foreign court decisions are not easily accessible. Where they are accessible, they are most likely drafted in a foreign language. To overcome these practical obstacles, UNCITRAL created in 1988 a system for the gathering and distribution (in all official languages of the United Nations) of information concerning the case law on UNCITRAL texts rendered in various countries. This system is known as ‘CLOUT’, the acronym for ‘Case Law on UNCITRAL Texts’, and comprises abstracts of court decisions rendered in application of texts drafted by UNCITRAL, in particular the Convention on Contracts for the International Sale of Goods and the Model Law on International Commercial Arbitration. These abstracts are drafted in one of the official United Nations languages by national reporters appointed by the different governments and are then sent to the secretariat, which edits and translates them into the other official United Nations languages.

The CLOUT system is not the only UNCITRAL project intended to further the uniform interpretation and application of UNCITRAL texts. On the basis of a decision taken during the 2001 commission session, UNCITRAL prepared, with the help of a number of experts, a ‘Digest of case law on the United Nations Convention on the International Sales of Goods’, published in June 2004 and revised in 2008. The Digest is meant to reflect the evolution of case law by offering a synopsis of the relevant case law, highlighting common views and reporting any divergent approach, thus enabling the interpreters to become aware of how that particular Convention is interpreted and applied around the world. This is certainly useful, which is why other Digests are being prepared. One has to wonder, however, whether this kind of publication can really promote the uniform interpretation and application of the uniform texts they relate to, since it does nothing but promote knowledge of foreign case law which is insufficient to create uniformity. A critical evaluation of the court decisions, which is absent due to a conscious decision taken by UNCITRAL to avoid any criticism—or any praise for that matter—would certainly have been helpful in guiding the interpreters through the vast case law that is, at times, contradictory. Thus, the Digests do not allow the interpreters to distinguish between case law that should and case law that should not be followed. Regrettably, UNCITRAL missed the chance to truly promote uniform interpretation and application.

Literature

Allan E Farnsworth, ‘UNCITRAL’ (1972) 20 Am J Comp L 314; Gerold Herrmann, ‘The Contribution of UNCITRAL to the Development of International Trade’ in Norbert Horn, Clive M Schmitthoff (eds), The Transnational Law of International Commercial Transactions (1982) 35; Bernadine WM Trompenaars, UNCITRAL en haar mandaat—Molengrafica (1989) 3; Bernadine WM Trompenaars, Pluriforme unificatie en uniforme interpretatie: In het bijzonder de bijdrage van UNCITRAL aan de internationale unificatie van het privaatrecht 1989; Geoff Fischer, ‘UNCITRAL gives international trade law CLOUT’ [1993] Australian Business Law Review 362; Jacques Bischoff, ‘Allgemeine Erfahrung bei der Rechtsvereintlichung in der UNCITRAL’ [1993] Schweizerische Zeitschrift für internationales und europäisches Recht 623; Gerold Herrmann, ‘The Role of UNCITRAL’ in Ian Flechter, Loukas Mistelis, Marise Cremona (eds), Foundations and perspectives of international trade law (2001) 28; Gerold Herrmann, ‘A Vision for UNCITRAL: Global Commerce Needs a Global Uniform Law’ [2001] Business Law International 249; Spiros V Bazinas, ‘Harmonisation of International and Regional Trade Law: The UNCITRAL Experience’ [2003] Uniform Law Review 53; Franco Ferrari, Harry Flechtner, Ronald A Brand (eds), The Draft UNCITRAL Digest and Beyond (2004).

Retrieved from UNCITRAL – Max-EuP 2012 on 19 May 2022.

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