UNIDROIT

From Max-EuP 2012

by Herbert Kronke

1. History, purposes, member states

The International Institute for the Unification of Private Law, better known as UNIDROIT, the abbreviation of the organization’s French name, Institut International pour l’Unification du Droit Privé, was founded in 1926 as one of six specialized agencies (bureaux) of the League of Nations. The initiative had been taken by Vittorio Scialoja, professor of Roman law and senator. The first Statute of 1926 (as with the 1993 Statute presently in force) describes the objectives of the Organization as follows: ‘The purposes … are to examine ways of harmonising and coordinating the private law of States and groups of States, and to prepare gradually for the adoption by the various States of uniform rules of private law …’. The Council of the League of Nations appointed the Institute’s Governing Council, whereas Italy provided the historic Villa Aldobrandini, enlarged by an important library building, as its seat as well as the budgetary means for the carrying out of its activities. On 30 May 1928, the Institute commenced its work with the official inauguration, attended by King Victor Emmanuel III and his prime minister Benito Mussolini, and the opening of the Governing Council’s first session. A member of the first Governing Council was Ernst Rabel, under whose direction the former Kaiser Wilhelm Institute for Comparative and International Private Law had been founded in Berlin in 1926 (today the Max Planck Institute for Comparative and International Private Law in Hamburg). He emphasized the need to focus the available resources on work aimed at the unification of the law concerning the sale of goods (sale of goods, international (uniform law)). Apart from that, priority items on the agenda were the law of bills of exchange and cheques, culminating in the Geneva Conventions of 1930 and 1931 (negotiable instruments (cheques and bills of exchange), arbitration (arbitration (international)), and the enforcement of maintenance obligations (maintenance). When work on the sale of goods was about to come to fruition, Italy and Germany left the League of Nations. Ernst Rabel’s forced emigration brought the work temporarily to an end.

UNIDROIT’s new constitutional arrangement as an intergovernmental organization is based on a multilateral treaty, the Statute of 1940, which entered into force in the same year for 23 member states. However, there is no evidence for its having been more than a mere shell. No substantial activity appears to have been carried out.

While the European member states were predominant both in numbers and with respect to pro-active involvement in the Institute’s work until the 1960s (only Japan and a number of Latin American states initially represented non-European regions), today, with 63 member states from all corners of the world, the Organization is truly a global one. The two states that acceded most recently (2008)—Saudi Arabia and Indonesia—are particularly significant examples for the growing attraction at being involved in co-ordinated efforts for law reform.

A peculiarity worth mentioning is that only as late as 1988 have instruments developed by UNIDROIT actually been named after the Organization (eg UNIDROIT Convention on International Factoring and UNIDROIT Convention on International Financial Leasing, Ottawa 1988). Prior to that time, the Organization considered itself an academic forum where Conventions were conceived and elaborated by experts only to be handed over to other organizations (eg the UN and its specialized agencies, Council of Europe, Hague Conference on PIL) for the purpose of being adopted. Prominent examples for its role as an academic back office are the 1956 Convention on International Carriage of Goods by Road (CMR; carriage of goods by road) and the 1964 Hague Conventions on the International Sale of Goods (sale of goods, international (uniform law)).

2. Legal status, languages

UNIDROIT is an independent intergovernmental organization based on its Statute, currently in its 1993 version. According to its provisions, ‘[t]he Institute shall enjoy, in the territory of each participating Government, the necessary legal capacity to enable it to exercise its functions and to realise its purposes. The privileges and immunities which the Institute and its agents and officers shall enjoy shall be defined in agreements to be concluded with the participating Governments.’ Of crucial importance is the 1966 headquarters agreement with the Italian Republic, as most recently amended in 1995. Jurisdiction in internal matters, notably in matters concerning the staff’s status and labour relations, is vested in the UNIDROIT Administrative Tribunal whose judges are elected by the General Assembly.

Co-operation agreements govern relationships with the United Nations and a number of other international and regional organizations.

According to the Statute the official languages are English, French, German, Italian and Spanish, a reflection of the importance of German, Italian and Spanish-speaking scholars during the early decades of the Institute’s history. Today, the working languages are English and French. A number of instruments are, however, available in the remaining official languages as well as numerous other languages.

3. Organizational structure

The Statute establishes three organs: the General Assembly, the Governing Council elected by the Assembly and the Secretariat.

The General Assembly, the supreme organ of the Institute, consists of the representatives of all member states (currently 63). They are the respective ambassador of the member states in Italy or diplomats delegated by them. The ambassador of one of the member states, chosen according to a system of rotation from among the states of one world region, exercises the office of President of the General Assembly. The Assembly’s competence is general. However, the most important acts for which it has responsibility are the approval of the annual budget, the triennial work programme, the strategic plan and its amendments and, occurring every five years and of particular importance, the election of the members of the Governing Council. The General Assembly moreover deliberates and adopts internal regulations regarding administrative, financial and staff matters. The Finance Committee, which oversees the development of the budget, and ad hoc committees, charged with, for example, the preparation of amendments to the regulations, assist the Assembly in carrying out its functions. The General Assembly is convened once a year for its ordinary session. It may also be convened for an extraordinary session, as most recently occurred in November 2008 when it adopted the Model Law on Leasing (see 5. below) in a joint session with a committee of governmental experts.

The Governing Council is a unique body distinguishing UNIDROIT from other organizations. It is due to its composition, competences and working methods that the Organization owes its nickname, the ‘Republic of scholars’. Twenty-five members elected for a five-year term of office and an honorary President appointed by the Italian Government (also for five years) formulate strategic objectives, discuss and submit proposals for the working programme to the General Assembly, monitor the development of each project and make key decisions with respect to Secretariat officials. The Council, moreover, forwards the draft budget, as proposed by the Secretariat, to the General Assembly with its comments and recommendations. The Council’s members are typically eminent scholars, high ranking members of the judiciary or senior government officials or diplomats. Each member government follows its own traditions in selecting and proposing its candidate, and recently there would appear to be a tendency to ensure a stronger presence of governments themselves. Traditionally, notwithstanding their having been initially nominated by their respective Governments, members of the Council—once elected—saw themselves not so much as Government representatives but rather as experts in matters of private law who served in that specific capacity independently from any instructions. As long as a member was a civil servant—as has traditionally been the case in the continental European countries, China, Japan and Australia—the difference was but nominal. Where, however, members of the Council were academics or judges who insisted on their independence, this potentially impaired the effectiveness of communication between the member state and the organization. The aforementioned more recent tendency in selecting candidates with government backgrounds is in all likelihood a reaction to this shortcoming. Yet the price for enhanced effectiveness may be diminished originality and a reduced scholarly character in respect of programmatic and substantive discussions at the Council’s sessions.

The Secretariat is the executive organ. The Secretary-General is appointed by the Governing Council on the nomination of the President for a term of office of five years. The President’s proposal is based on the decision of an ad hoc committee which concludes an open international selection procedure. The Secretariat consists furthermore of one or two Deputy Secretaries- General of different nationalities, a staff of qualified lawyers from various jurisdictions and legal families, as well as qualified librarians and clerical staff. In 2008, nationals from 12 countries served on the Secretariat. The Secretary-General is ex officio Secretary of the General Assembly, the Governing Council and all Diplomatic Conferences convened by UNIDROIT. The Secretariat’s tasks and responsibilities include: (1) the organization and preparation of all legislative activities, such as receiving and analysing proposals for the work programme submitted by member states’ governments, industry and academics, making enquiries with relevant circles as to the need for an instrument, conducting feasibility studies, drafting opinions assisting the Governing Council and the General Assembly with their decisions, etc; (2) establishing the composition of working groups, in particular the identification of potential members with the requisite expertise, preparing and following-up work of the groups’ working sessions and assisting the chairpersons; (3) the organization of sessions of committees of governmental experts, including the production of drafts, reports and commentaries, and the keeping of minutes and reports on the sessions; (4) preparation and organization of diplomatic conferences for the adoption of conventions; (5) once an instrument has been finalized, ensuring its promotion and providing assistance in its implementation. The Secretariat furthermore carries out all non-legislative activities (see 7. below). Apart from work on individual projects, the most resource-consuming activity is nurturing the relationship with member states’ governments, governments of states contemplating accession to the UNIDROIT Statute as well as with other intergovernmental and non-governmental organizations. Close cooperation and coordination of work with the two ‘sister’ organizations, namely the Hague Conference on Private International Law and UNCITRAL, and related work carried out within this framework enjoys highest priority. The Secretariat represents UNIDROIT as an observer with the two just-mentioned organizations as well as with other international and regional organizations engaged in activities relevant for its own pro-jects.

4. Organization of work on the part of member states

Locally, member states’ embassies or trade missions in Italy are in charge of ensuring communication with their governments as well as all routine consultations, such as attending to the Finance Committee’s and the General Assembly’s business. Conversely, a wide range of organizational models for substantive involvement can be found in the member states’ capitals. In some cases the ministry of foreign affairs has primary competence for all matters concerning UNIDROIT (eg in the majority of Latin American member states, a few European countries, such as Greece and Italy, in India, Pakistan, South Africa and the United States). In others competence lies with the ministry of justice or the attorney general (examples here are Australia, Canada, the majority of countries in continental Europe, Japan and Nigeria) or the ministry of trade, industry, the economy or some specific governmental branch of economic regulation (as in, for example, China, Poland, the Russian Federation, or the United Kingdom). The key criterion seems to be whether the ministry of justice has comprehensive competence for all areas of legislation—as in Germany for example—or whether its focus is—as in Italy—on the organization of the judiciary and all matters relating to the execution of penal judgments.

Typically, it is the ministry with primary competence that attends to matters such as internal coordination for the government as a whole and consultation with that country’s industry and other interested circles. In this respect, fundamentally different approaches and priorities have a significant impact. Governments of countries whose policies and objectives regarding all activities relevant for private and economic law in all organizations—from UNIDROIT and its ‘sisters’ to the World Bank and regional development banks, the International Monetary Fund, the OECD and the Regional Economic Integration Organizations—are formulated or coordinated by one department or office and where continual presence of governmental and private-sector interests in internal preparation and on negotiating delegations is ensured are typically those that contribute most effectively to negotiations and secure the strongest impact on the outcome.

5. Working methods

Thanks to the exceedingly low degree of regulation typical of an independent organization, the organization and administration of any work process is extremely flexible. There is, obviously, a fundamental difference in approach which flows from the decision as to whether an international Convention, ie a treaty (hard law), or one of the various types of soft law, such as model laws, general principles or guides, is being prepared.

Proposals from member governments, international organizations, central banks, industry, academia, or members of the Governing Council that have been included in the work programme are submitted to a study group consisting of independent experts (scholars and practitioners) after having been the subject of further analysis on the basis of comparative law reports, feasibility studies, economic impact assessment studies and the like carried out or commissioned by the Secretariat. Apart from excellence, the only criterion for being invited to serve on a study group is UNIDROIT’s desire to have expertise drawn from the major legal families and from jurisdictions likely to be particularly strongly affected by, or to benefit particularly strongly, from a particular project. Traditionally, study groups were very small (four to seven experts). More recently, and where considered useful for the particular project (eg secured transactions, financial markets law), up to 14 experts have been invited to participate. The result of a study group’s work—eg a position paper, or a first draft of a future Convention—is submitted to the Governing Council for examination and, if approved, transmitted to a committee of governmental experts. Only now, during this second phase, do member states’ governments become directly involved. International organizations, international trade and other professional associations as well as non-member states may be invited to attend the committee’s sessions as observers. Again, the result of this phase, usually a reasonably mature draft convention, will be examined by the Governing Council and, if approved, transmitted to a diplomatic conference for final deliberation and adoption. Diplomatic conferences are hosted by a member state (during the period 1988–2008 the hosts were Canada, Italy, South Africa, Luxembourg and Switzerland); all UN member states and relevant international organizations are invited to attend. For the text adopted by such a conference to become law it requires ratification or accession according to the relevant constitutional procedures.

Beginning in the 1980s there has been a tendency towards more frequent use of one of the many types of non-binding instruments in those cases where the subject matter area permits or requires such an approach. The prime example of this trend are the UNIDROIT Principles of International Commercial Contracts (PICC) (first version 1994; second, enlarged edition 2004; third, further enlarged edition 2010). This international ‘restatement’ has been elaborated without any governmental involvement by a group of 17 (2004) or 21 (third version) experts (scholars, eminent practitioners and judges, with the participation of the most important arbitration institutions). In this case, a finalized draft of black-letter rules and a detailed explanatory text (‘comments’) is laid before the Governing Council and adopted by that body.

The two model laws elaborated so far by UNIDROIT, the Model Franchise Disclosure Law of 2002 (franchising) and the Model Law on Leasing of 2008 (leasing), were, after the first stage, finalized and adopted by a committee of governmental experts. As regards the latter, the committee had been convened in a joint session with the General Assembly with a view to emphasizing its political importance, in particular for the intended users in developing countries and transition economies.

The development of the Guide for Master Franchise Arrangements (1998, second edition 2007) permitted an even more informal process: a restricted group of experts formulated the individual chapters, and the Council merely authorized the publication.

Coordination of the work with that done in other intergovernmental organizations is of utmost importance in order to avoid duplication and ensure efficient use of scarce resources. With respect to the Hague Conference on Private International Law and UNCITRAL, coordination occurs on the one hand by way of reciprocal participation in the sister organizations’ meetings and, on the other hand, by means of an annual meeting of the three Secretaries-General which is aimed at exchange of information and the fine-tuning of the various projects under development. Currently, a common guide to the instruments on secured credit transactions which has been developed by the three organizations is under preparation.

UNIDROIT attaches considerable importance to efficient and rational coordination with the work on private law carried out by regional organizations (eg Organization of American States (OAS); Organisation pour l’Harmonisation du Droit des Affaires en Afrique (OHADA); Common Market of the South (MERCOSUR/MERCOSUL); and, in the future, possibly additional organizations in Africa and Asia). Such coordination is more difficult and complex where—as in the case of the European Union—member states of a regional supra-national organization have transferred legislative competences to that organization. Here, unanimity regarding the exact scope of the (transferred) competence and a clear mandate for the negotiating organ (in casu the European Commission legislative competence of the EU) are needed. Where a globally applicable instrument is under preparation, the European participants must be mindful that they cannot dictate time-tables and content in the belief that the given subject matter requires a deeper and more detailed harmonization in the framework of the internal market.

6. Important instruments

It is impossible to list even only those of the more than 75 projects (or ‘studies’) carried out since the 1920s that have actually entered into force (complete index up to 2004 in Lena Peters, see Literature). Worth mentioning are the CMR (1956—in cooperation with UN/ECE and ICC International Chamber of Commerce); the two Hague Uniform Laws on Sale, predecessors of the CISG (1964); the Conventions on International Factoring and International Leasing (1988); the Principles of International Commercial Contracts (1994, 2004, 2010); the Convention on Restitution of Stolen or Illegally Exported Cultural Objects (1995 cultural property); the Guide on International Master Franchise Arrangements (1998, 2007); the Cape Town Convention on International Interests in Mobile Equipment and the Protocol thereto on Matters Specific to Aircraft Equipment (2001—in cooperation with ICAO); the Luxembourg Protocol on Matters Specific to Railway Rolling Stock (2007—in cooperation with OTIF); the ALI/UNIDROIT Principles of Transnational Civil Procedure (2004 harmonization of procedural law); the draft Uniform Act on Contract Law for the Member States of OHADA (2004/2007); the Convention on Substantive Rules for Intermediated Securities (2009 intermediaries, markets for financial instruments); and the Model Law on Leasing (2008).

7. Non-legislative activities

The Statute provides for the Institute’s maintaining a library which currently holds about 300,000 volumes and which, notwithstanding a permanent lack of funding, continues to represent a world standard specifically in the area of the harmonization of private law. Among other publications, the Uniform Law Review/Revue de droit uniforme (new series since 1996) stands out. The database UNILEX, devoted to the UNIDROIT Contract Principles and the CISG, is maintained in association with the Institute. Another database, UNILAW, devoted primarily to the law of carriage of goods is being developed. UNIDROIT’s programme of legal assistance rests on two pillars: first, scholarships for young scholars, government officials or practitioners, in particular from developing countries and transition economies, permitting them to work in Rome on projects of their own choice and, secondly, assistance with the development and the implementation of instruments of uniform private and commercial law in such states.

Literature

Ernst Rabel, ‘On Institutes of Comparative Law’ in HG Leser (ed), Ernst Rabel, Gesammelte Aufsätze III (1967) 235; René David, ‘The International Unification of Private Law’ in IECL II (1971) ch 5; Riccardo Monaco, ‘L’unification du droit dans le cadre d’UNIDROIT (1926–1986)’ [1986] Rev dr unif vol I, 46; Gonzalo Parra-Arranguren, ‘La importancia del Instituto para la Unificación del Derecho Privado (UNIDROIT) en la futura uniformidad juridica del hemisferio americano’ [1992] Revista de la Facultad de Ciencias Jurídicas y Políticas 34; Peter Winship, ‘Introduction to Harmonization of Private Law’ in Introduction to Transnational Legal Transactions (1995) 159; Walter Rodinò, Malcolm Evans and UNIDROIT: ‘A Chronology’ [1998] Uniform Law Review 249; Pierre Widmer, ‘The International Institute for the Unification of Private Law: Ship-Yard for World-Wide Unification of Private Law’ [1999] EJLR 181; Walter Rodinò, UNIDROIT, Digesto, Discipline Privatistiche—Sezione Civile, Aggiornamento (4th edn, 2000) 742; Herbert Kronke, ‘Ziele—Methoden, Kosten—Nutzen: Perspektiven der Privatrechtsharmonisierung nach 75 Jahren UNIDROIT’ (2001) JZ 1149; Lena Peters, ‘International Institute for the Unification of Private Law (UNIDROIT)’ in Roger Blanpain and Jan Wouters (eds), International Encyclopedia of Laws, Intergovernmental Organizations, vol 2 (2005) suppl 23; Herbert Kronke, ‘Methodical Freedom and Organizational Constraints in the Development of Transnational Commercial Law’ (2005) 51 Loy L Rev 287; Roy Goode, Herbert Kronke and Ewan McKendrick, Transnational Commercial Law—Text, Cases and Materials (2007) ch 5.

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

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