For information only - not an official document
4 July 2016
UN Commission on International Trade Law Adopts the UNCITRAL Model Law on Secured Transactions
VIENNA/NEW YORK, 4 July (UN Information Service) - On 1 July, the United Nations Commission on International Trade Law (UNCITRAL) adopted the UNCITRAL Model Law on Secured Transactions (the "Model Law") at its session in New York.
The Model Law deals with security interests in all types of tangible and intangible movable property, such as goods, receivables, bank accounts, negotiable instruments, negotiable documents, non-intermediated securities and intellectual property with few exceptions, such as intermediated securities.
The Model Law follows a unitary approach using one concept for all types of security interest, a functional approach under which the Model Law applies to all types of transaction that fulfil security purposes, such as a secured loan, retention-of-title sale or financial lease, and a comprehensive approach under which the Model Law applies to all types of asset, secured obligation, borrower and lender. In this way, the Model Law is intended to address the main problem of secured transactions laws around the world, that is, the multiplicity of regimes that creates gaps and inconsistencies.
The Model Law includes a set of Model Registry Provisions (the "Model Provisions") that can be implemented in a statute or administrative decree, or in both. The Model Provisions deal with the registration of notices of security interests in a publicly accessible Registry to make a security interest effective against third parties and to provide an objective basis for determining the priority of a security interest over the rights of competing claimants.
By providing a transparent, comprehensive and rational legislative framework of secured financing, the Model Law is expected to have a beneficial impact on the availability and the cost of credit, in particular to small and medium-size enterprises in developing countries. This will not only assist in their market inclusion and alleviating poverty, but also contribute to achieving Goal 1 of the 17 Sustainable Development Goals on ending poverty. The Model Law will be accompanied by an analytical commentary, called the "guide to enactment", which is intended to assist States in enacting the Model Law. The Commission referred the preparation of the commentary to its Working Group VI on Security Interests).
The Model Law is based on the United Nations Convention on the Assignment of Receivables in International Trade, the UNCITRAL Legislative Guide on Secured Transactions, the Supplement on Security Interests in Intellectual Property and the UNCITRAL Guide on the Implementation of a Security Rights Registry. For the treatment of security interests in insolvency, the Model Law relies on the recommendations of the UNCITRAL Legislative Guide on Secured Transactions and the UNCITRAL Legislative Guide on Insolvency Law.
The work on the preparation of the Registry Guide was undertaken by the UNCITRAL Working Group VI on Security Interests from its 24th session in 2013 until its 29th session this year. The final version of the Model Law will soon be available at www.uncitral.org/uncitral/uncitral_texts/security.html.
The United Nations Commission on International Trade Law (UNCITRAL) is the core legal body of the United Nations system in the field of international trade law. Its mandate is to remove legal obstacles to international trade by progressively modernizing and harmonizing trade law. It prepares legal texts in a number of key areas such as international commercial dispute settlement, electronic commerce, insolvency, international payments, sale of goods, transport law, procurement and infrastructure development. UNCITRAL also provides technical assistance to law reform activities, including assisting Member States to review and assess their law reform needs and to draft the legislation required to implement UNCITRAL texts. The UNCITRAL Secretariat is located in Vienna, Austria , and maintains a website at www.uncitral.org .
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