Analysis of the UNCITRAL model in the 21st century

Analysis of the UNCITRAL model: Creation of UNCITRAL

Prior to 1947, the trade was governed by laws of customs and usages. In the year 1947, a need was felt to codify the laws and this led to an organisation been established, GATT (General Agreement on Tariffs and Trade). GATT was signed on the 30th of October, 1947 by 23 countries. GATT is a legal agreement aimed at minimising the barriers to international trade by eliminating or reducing quotas, tariffs, and subsidies while preserving significant regulations.

GATT had three main objectives primarily.

Free Trade – There shall be no barriers to trade.

Fair Trade – There shall be no discrimination in the trade market.

Predictable Trade – The trade rules should be such that they are similar all around the world and thus, predictable.

GATT was a good initiative for governing the trade around the world, but it focused solely on Tariff. This affected the trade of the developing and under developed countries. Thus, rose a feeling of dissent in those countries towards these organisations. Thereby, as a result in 1957 for the first time the United Nations faced a threat of demise. To deal with this lack of trust of the under developed and developing countries, the United Nations declared 1961 – 1970 as the United Nations Development Decade to pacify the cry of developing and under developed countries.

As part of the initiative to gain the trust of the developing and underdeveloped countries, the United Nations also gave a bunch of concessions named as G.S.P. (Generalised System of Preferences). The United Nations through the ECOSOC (Economic and Social Council) was planning for the development of under developed and developing countries, but the OECD (Organization for Economic Cooperation and Development)  acted as an impediment in the development.

Thus, in 1964 a new organisation came to be established, UNCTAD (United Nations Conference on Trade and Development). The establishment of UNCTAD was a further step in gaining the trust of the countries that were losing trust in the United Nations. The UNCTAD met once every four years and the only role assigned to it was to take initiatives. UNCTAD could not draft any resolutions by themselves, instead for drafting they had to forward their initiatives to the International Law Commission that was already overburdened with drafting of the initiatives of various other forums of the United Nations.

Thus, the International Law Commission could not draft matters speedily.

This lack of power and also undue delay in resolutions of the UNCTAD, a need was felt for a forum that was free from these issues persisting in the UNCTAD.

Therefore, just two years after the establishment of UNCTAD, UNCITRAL (United Nation Commission on International Trade Laws).

Thus, in 1966 UNCITRAL was established with the objective of harmonisation and unification of international trade laws.

Organizational Structure

UNCITRAL’s structure is designed to segregate its work at three levels:

1. The first level is the Commission itself, which has a mechanism of annual plenary sessions.
2. The second level comprises intergovernmental working groups, which undertake the development of the topics on UNCITRAL’s work programme.
3. The third level is referred to as the Secretariat, which assists the Commission and its working groups in the preparation and execution of their responsibilities.

The Commission

The Commission comprises of a chairperson, three vice-chairpersons and a rapporteur. A majority of its work is carried out at the annual plenary sessions. The duties of the Commission include:

• finalisation and adoption of draft texts referred to the Commission by the working groups;
• consideration of progress reports of the working groups on their respective projects;
• selection of topics for future work or further research;
• reporting on technical cooperation and assistance activities and coordination of work with other international organizations;
• monitoring of developments in the CLOUT system and the status and promotion of UNCITRAL legal texts;
• consideration of General Assembly resolutions on the work of UNCITRAL;
• and other administrative matters.

Working Groups

The substantive preliminary work on the subjects of the Commission’s work programme is generally assigned to working groups, which usually hold one or two sessions in a year and report on the progress of their work to the Commission. The membership of the working groups comprises of all member States of UNCITRAL. After the assignment of a subject, a working group is allowed to work on its substantive tasks without interference from the Commission. However, the Working Groups may ask for advice and counsel from the Commission when required, such as clarification of the Working Group’s mandate on a particular topic or approval of the policy settings of a particular text.

At each working group session, member State delegations elect a chairperson and rapporteur from among the member State delegations. The secretariat of each working group consists of staff members of the UNCITRAL Secretariat. The secretariat of each working group is tasked with the preparation of working papers for working group meetings, provision of administrative services to that working group and reporting on working group sessions.

Secretariat

The Secretariat is tasked with assisting the Commission’s functioning. To achieve the same, it undertakes a several responsibilities, such as:

• preparation of studies, reports and draft texts on topics that are being considered for possible future inclusion in the work programme;
• legal research;
• drafting and revision of working papers and legislative texts on topics already included in the work programme;
• reporting on Commission and working group meetings; and
• providing a range of administrative services to UNCITRAL and its working groups.

In preparation of its work, the Secretariat may enlist the assistance of external experts from distinct legal systems, conduct ad-hoc consultations with individuals or convene meetings of groups of experts in a particular field, as and when required. The experts may be academics, practising lawyers, judges, bankers, arbitrators and members of various international, regional and professional organizations.

Mandate

The mandate given by the UN General Assembly to UNCITRAL, as the “core legal body within the United Nations system in the field of international trade law”, was to accelerate and regulate the progressive harmonization and unification of the law of international trade by engaging in the following activities:

• Co-ordinating the work of organizations active in this field and encouraging co-operation among them;
• Promoting wider participation in existing international conventions and wider acceptance of existing model and uniform laws;
• Preparing or promoting the adoption of new international conventions, model laws and uniform laws and promoting the codification and wider acceptance of international trade terms, provisions, customs and practices, in collaboration, where appropriate, with the organizations operating in this field;
• Promoting 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;
• Collecting and disseminating information on national legislation and modern legal developments, including case law, in the field of the law of international trade;
• Establishing and maintaining a close collaboration with the United Nations Conference on Trade and Development;
• Maintaining liaison with other United Nations organs and specialized agencies concerned with international trade;
• Taking any other action, it may deem useful to fulfil its functions.

Through the salient areas of commercial law. its mandate covers include dispute resolution, international contract practices, transport, insolvency, electronic commerce, international payments, secured transactions, procurement and sale of goods. UNCITRAL aims to formulate modern, fair, and harmonized rules on such commercial transactions. Its work includes conventions, model laws, and rules which are acceptable worldwide; legal and legislative guides, and practical recommendations; updated information on case law and enactments of uniform commercial law; technical assistance in law reform projects; and regional and national seminars on uniform commercial law.

Part of UNCITRAL’s mandate is also to coordinate the work of other bodies active in international trade, both within and outside of the UN, to enhance cooperation, consistency, and efficiencies and avoid duplication.

Role of UNCITRAL

UNCITRAL operates from the premise that international trade has global benefits to its participants. With increasing economic interdependence globally, UNCITRAL seeks to help expand and facilitate global trade through the progressive harmonization and modernization of the law of international trade.

UNCITRAL contributes to the promotion of the rule of law in commercial relations and in international trade, as well as to the establishment of the rule of law in a broader sense on a national and international level. Its activities also connect public and private law. For these reasons, the normative reforms resulting from its activities have an impact on the economic and commercial development of States.

It is involved in promoting the unification & harmonization of the law of international trade and assisting in domestic law reform (legislative work), strengthening uniform application & interpretation of the instruments adopted (technical assistance), coordinating the work of other similar organizations (cooperation with UN and not UN bodies /organisations).

The UNCITRAL contribution in the harmonization and unification of international trade law has been revolutionary. The UNCITRAL Model Laws in the areas of arbitration, mediation, cross-border insolvency, e-commerce, public procurement, etc., have served as the basic foundation of the national statutes of various legal regimes. Moreover, conventions such as the New York Convention, Convention on Contracts for the International Sale of Goods, and the Singapore Convention have had an overwhelmingly positive response from the international community, and the international trade law regime has become a prime example of international cooperation.