Post on 19-Jan-2023
I. INTRODUCTION
The second half of the nineteenth century has seen
significant development of international trade and commerce as
evidenced by the proliferation of cross-border transactions. This
scenario calls for a new legal framework that is essential
adaptation to evolutionary economy of the world. More recently,
The United Nations Commission on International Trade Law
(UNCITRAL) has emerged as a key organization of United Nations
providing initiatives to harmonize and unify the rules of
international commercial law. Its instruments, whether
international conventions, model laws, legislative guides or
model rules, are increasingly influential in shaping the legal
regime of global commerce.
Nevertheless, the work of UNCITRAL in relation to
harmonization of transnational commercial law may be subject to
trenchant criticisms. They have been the fear of increasing
influence of non-state actors over the work of UNCITRAL and
concern about conflicts of interest groups at the law-making
stage.
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The aims of this essay are thus threefold: to shed some
light on the concept of harmonization that is widely used by
various scholars (infra, II), critically assess the work of
UNCITRAL in respect of harmonization of transnational commercial
law, and analyze the relevant criticisms (infra, III).
II. THE CONCEPT OF HARMONIZATION
The genesis of the word “harmonization” is not readily
ascertainable. One of the best attempts to clarify this notion
was that of Professor Boodman who contended that harmonization is
a process in which diverse elements are combined or adapted to
each other to form a coherent whole while still preserving
peculiarity of the objects harmonized1. From this outset, there
exists various notions of harmonization. According to Professor
Gomez, one may refer legal harmonization to “many different
phenomena and processes, even if all of them share an initial stage of –assumedly, at
least –high degree of legal fragmentation, and a final stage resulting from them is
essentially similar in terms of a reduced level of fragmentation, even identical or similar
legal rules in terms of content”2.. Meanwhile, Gopalan indicated a
1 Boodman, M. (1991). "The myth of harmonization of laws" 39(4) The AmericanJournal of Comparative Law, pp. 699-724, p.702.2 Gomez, F. (2011). "Some Law and Economics of Harmonizing European PrivateLaw" in Hartkamp, A.S. & von Bar, C. (eds.) Towards a European Civil Code.
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proclivity towards problem-solving perspective in his definition
of harmonization by explaining that the purpose of harmonization
“is not merely to arrive at a uniformity that can be marvelled at, but to produce a
harmony of result by deriving the best possible solution in any given area of law,
quarrying from the mines of diverse legal systems”3. For Professor Goode, he
did not give a direct definition, but differentiated between two
approaches to harmonization. The first is to eliminate
differences of national laws which is per se undesirable for
business and operation of a common market. The second is to
create a new legal regime for removal of specific obstacles to
transnational business4.
While each of aforementioned definitions may be contentious,
it is important to examine the approaches which UNCITRAL has
adopted in defining harmonization. Although none of legislative
documents of UNCITRAL has provided a specific definition of
harmonization, a clarification can be found in its official
website under which harmonization is considered as “the process
Frederick, Kluwer Law International, pp.401-422, p.405.3 Gopalan, S. (2002). "Transnational Commercial Law: The Way Forward" 18(4)American University International Law Review, pp. 803-849, p.809.4 Goode, R. (2005). "Rule, Practice and Pragmatism in Transnational CommercialLaw" 54(3) International and Comparative Law Quarterly, pp. 539-562, p. 554.
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through which domestic laws may be modified to enhance predictability in cross-border
commercial transactions”5. This interpretation is to distinguish
harmonization from the term “Unification” which “may be seen as the
adoption by States of a common legal standard governing particular aspects of
international business transactions”6. However, the boundary between
harmonization and unification is now blurred. UNCITRAL is
presumed to adopt a flexible approach to harmonization.
Accordingly, a hard definition views harmonization as convergence
of non-uniform national laws around an agreed upon international
standard7. Whereas, a softer definition of harmonization refers
to a process of reducing legal differences over time8. Even, to
accommodate ever-changing nature of global commerce, definition
of harmonization might be expanded to embody aspects of
modernizing law reform of which the work of UNCITRAL on the field
of cross-border insolvency law has been a telling example 9.
5UNCITRAL. FAQ – Origin, Mandate and Composition of UNCITRAL. Available fromhttp://www.uncitral.org/uncitral/en/about/origin_faq.html [accessed 1st
January 2014].6 Ibid.7 Block-Lieb, S. and T. Halliday (2006). "Harmonization and Modernization inUNCITRAL's Legislative Guide on Insolvency Law" 42 Texas International LawJournal, pp. 475-514, p.494.8 Ibid., p.495.9 Ibid., p.493.
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Overall, a well-settled concept is hard to be found even
among leading exponents of harmonization. The scholars can have
dissimilar approaches to harmonization depending on what subject
they are dealing with. Nonetheless, to the extent that
harmonization has a place in the field of commercial law, it
would involve a process through which any efforts ranging from
creation of legislative or non-legislative instruments to
coordination of works on international trade law, conducted in
ways which will alleviate or where possible eliminate legal
differences in national laws, with the ultimate goal being
unification and modernization of commercial laws.
III. CRITICAL ASSESSMENT OF THE WORK OF UNCITRAL IN RELATION TO
HARMONIZATION OF TRANSNATIONAL COMMERCIAL LAW
1. Assessing the work of UNCITRAL
UNCITRAL performs its mandate to further the progressive
harmonization and unification of international trade law by
engaging in various works. It is not the purpose of this essay to
depict all detailed works of UNCITRAL but rather focus on
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analyzing two main harmony attempts of UNCITRAL that are
international legislation and coordination activity.
Firstly, it is necessary to examine and evaluate
international law-making of UNCITRAL. Thanks to the adoption of
different techniques: legislative, contractual and explanatory
UNCITRAL generated four types of products including international
convention, model laws, legislative guides and model rules10.
This flexible approach allows UNCITRAL to ensure availability of
instruments suitable to a particular area and enhanced
alternativity of instruments which are well apt to acquire the
greatest supports from state as well as private actors in that
area. For instance, although much weight has been given to making
of uniform law convention due to its numerous advantages ascribed
to legal codifications, legal binding and avoidance of conflict
of laws11, overuse of the convention may lead to low level of
ratification or lack of interest by the major trading nations12.
10 UNCITRAL. A guide to UNCITRAL: Basic facts about the United NationsCommission on International Trade Law [hereinafter UNCITRAL Guide], p.13Available from http://www.uncitral.org/pdf/english/texts/general/12-57491-Guide-to-UNCITRAL-e.pdf [accessed 1st January 2014].11 Kronke, H. (2000). "International uniform commercial law Conventions:advantages, disadvantages, criteria for choice" 5 (1) Uniform Law Review,pp.13-21, p. 19.12 Faria, J. A. E. (2009). "Future Directions of Legal Harmonisation and LawReform: Stormy Seas or Prosperous Voyage" 14 Uniform Law Review, pp.5-34.
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However, these limitations of convention may be greatly
diminished with effective development shifted to more flexible
alternatives being model laws, legislative guides or model
rules13. These less formal strategies would allow states easily
to incorporate international legal standards into their domestic
laws and parties to transactions to adopt the principles and
guides in their contracts. It is submitted that mutual complement
between binding convention and facultative instruments herald
bright future of harmonization of transnational commercial law.
Furthermore, the distinctive success of UNCITRAL on
harmonization work is attributable to its sufficient regard to
consultation with non-state actors in legislative activities14.
p.11.13 Rose, A. D. (1996). "Challenges for Uniform Law in the Twenty-FirstCentury" 1(1) Uniform Law Review, pp. 9-24, p.14.14 UN-General Assembly resolution 2205 (XXI) of 17 December 1966 Establishing– United Nations Commission on International Trade Law. Pt. 2, Para. 11: "TheCommission may consult with or request the services of any international ornational organization, scientific institution and individual expert, on anysubject trusted to it, if it considers such consultation or services mightassist it in the performance of its functions ". UNCITRAL. A/CN.9/638/Add.5 - UNCITRAL rules of procedure and methods of
work. Para. 30: "The Commission has repeatedly recognized that participationof international organizations, both governmental and non-governmental, insessions of the Commission and its working groups, was crucial for the qualityof texts formulatedby the Commission. In addition, the Commission recognized that by suchparticipation, they contributed their expertise to the development of theCommission’s own programme of work". Available from http://daccess-ods.un.org/TMP/2532971.20332718.html [accessed 1st January 2014].
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The ways in which UNCITRAL incorporates knowledge drawn from
private actors, experts with relevant experience and future users
of its texts into its work products reflected prevail of the
technocratic model of UNCITRAL’s law-making15. Interestingly,
such a model was also alluded by Dr Peter Berger, a proponent of
new law merchant, who argues that result of the process by which
transnational commercial law is created will come from below
through the private work of academics and practitioners16. This
fashion allows harmonization products of UNCITRAL to be unbiased,
advanced, technical expertise and avoid interference of political
power. Implicit in this mechanism is also that to some extent,
powerful actors are refrained from chances of imposing their
individual standards on the common work of UNCITRAL. It seems
manifest that a technocratic fashion which UNCITRAL establishes
for its rule-making would help transcend unequal political power
on harmonization work.
Secondly, development of legislative activity is a condition
necessary, but not sufficient for harmonizing transnational15 Stephan, P. B. (1998). "Futility of Unification and Harmonization in International Commercial Law" 39 Virginia Journal of International Law, pp.743– 798, p.755.16 Berger, K. P. (1999). The Creeping Codification of the Lex Mercatoria,Kluwer, The Hague. p.210.
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commercial law. Equal importance is the UNCITRAL’s commitment
involved to need for coordination efforts. Justification for this
task of UNCITRAL is that there has been a large number of
organizations and institutions involved in legal harmonization
process. For example, only within the field of sale of goods,
there were numerous legal rules devised by different formulating
agencies such as the Vienna Sales Convention, the UNIDROIT
Principles of International Commercial Contracts or European
Principles on Contract Law. Such coexistence may result in
duplication of efforts, inconsistency of the policy and wastage
of resources and intellectual efforts17. As a corollary, UNCITRAL
had to maintain close links with international and regional
organizations so as to facilitate exchange of ideas and
information for encouraging effective cooperation and avoiding
overlaps18.Nevertheless, UNCITRAL might face two major issues of
coordination. First, it would exist that each formulating agency
which has its own approach and norm will present different
solutions to the same common problem. Ensuring adequate
coordination between these agencies become more difficult because
17 Faria, J. A. E. (2009), op.cit., p.21.18 UNCITRAL Guide, op.cit., p.23.
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of their independence, absence of hierarchical relationship and
sometimes different membership19. Second, the emergence of
various regional organizations such as the EU, OHADA, or MERCOSUR
to name but a few has led to conflict of harmonization and posed
challenges on coordination efforts of UNCITRAL. Rene David
pointed out the danger of regional harmonization which may
constitute obstacles to the harmonization of law on a world
scale20. To address these problems, some of proposed strategies
should be taken into consideration. At an international level,
one may consider the establishment of a regular forum calling for
participation of representatives of formulating agencies. It is
expected to open up the opportunities for agencies to keep each
other duly informed of their prospective harmonizing projects
while avoiding duplication or overlap of efforts. Furthermore,
such forum will allow organizations to explore comparative
advantages of each other so that the works of harmonization could
19 Faria, J. A. E. (2005). "Relationship between Formulating Agencies inInternational Legal Harmonization: Competition, Cooperation, or PeacefulCoexistence-A Few Remarks on the Experience of UNCITRAL" 51 Loyola Law Review,pp.253-285, p.274.20 David, R. (1969). "The International Unification of Private Law",International Encyclopedia of Comparative Law II, ch 5. Tübingen, J.C.B. Mohr,p.133.
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properly be allocated to each agency in future21. As regards
regional level, the idea that allows admission of regional
organizations as contracting parties to an international
negotiation has been suggested22. It would follow that
harmonization works of regional organizations are handled in a
manner that they are taken as a part of the work of UNCITRAL or
other formulating agencies.
2. Assessing the criticisms
While the harmonization work of UNCITRAL has generally been
canvassed by the international trade community, there are still
some of skeptical voices. Often the concern has been about
notable influences of non-state actors over the work of UNCITRAL.
This concern is specifically echoed in a memo submitted by the
French government to UNCITRAL in May 2007. Its proposition was
that UNCITRAL placed heavy reliance on private professional
associations and experts for formulating draft instruments23.
21 Faria, J. A. E. (2009), op.cit., p.25.22 Basedow, J. (2003). "Worldwide Harmonisation of Private Law and RegionalEconomic Integration-General Report" 8 (1-2) Uniform Law Review, pp.31-49,p.45.23 UNCITRAL. France’s Observations on UNCITRAL’s Working Methods: Note by theSecretariat, U.N. Doc. A/CN.9/635 (May 24, 2007), p.3. Available fromhttp://daccess-ods.un.org/TMP/3676003.51572037.html [accessed 1st January2014].
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This claim is primarily based on two aspects. First, non-state
actors participated on an equal basis with Member States in the
session of working groups to produce draft instruments. Second,
the experts dominated the work of the secretariat on the
technical matters conducted in informal meetings24. For solving
these problems, the French government proposed that careful
attention must be paid to documents stemming from non-state
participants and that non-state entities should not be allowed to
circulate written documents for submission to UNCITRAL as working
papers unless they are expressly requested to do so by the
competent working group25. In addition, the French government
also suggested a limitation of participation in public
deliberations given to non-state actors26.
The above concern seems somewhat overstated. The reasons for
this are twofold. First, it merits restating that UNCITRAL is a
technical body that functions with political freedom in its
decision-making. Active participation of non-state actors in
24 Ibid.25 Ibid., p.4.26 UNCITRAL. UNCITRAL rules of procedure and methods of work - Proposal byFrance: Note by the Secretariat, U.N. Doc. A/CN.9/680 (June 5, 2009), p.4.Available from http://daccess-ods.un.org/TMP/8718217.01526642.html [accessed1st January 2014].
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UNCITRAL’s harmonization work is to guarantee the quality of
legal products and remove political influence over its products.
Second, a smooth interaction between state and non-state actors
for agendas of UNICTRAL become clearly crucial to make technical
solutions workable for a variety of legal traditions and increase
opportunities to mobilize great supports from the member states
and private actors. A similar position is also held by the US
government who trusts in the current works of UNCITRAL and argues
that there is no need for devising new mechanisms, but simply
clarifying operating rules that can resolve the current concerns
about participation of non-state actors27.
The second criticism is that the conflict between interest
groups may challenge UNICITRAL’s harmonization work. It is argued
that the law-making process is increasingly influenced by
organized interests who are steering projects in ways that
benefit themselves and hinder those which they find harmful28.
Meanwhile, claims have also been raised from other interest27 UNCITRAL. UNCITRAL Rules and Methods of Work: Note by the Secretariat,Observations by the United States , U.N. Doc. A/CN.9/639 , p.4. Available fromhttp://daccess-ods.un.org/TMP/8976787.92476654.html [accessed 1st January2014].28 Stephan, P. B. (1996). "Accountability and International Lawmaking: Rules,Rents and Legitimacy"17(1) Northwestern Journal of International Law &Business, pp.681-735, p.701.
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groups. For instance, in the paper of revising the UNCITRAL
arbitration rules to address state arbitrations, Center for
International Environmental Law (“CIEL”) and International
Institute for Sustainable Development (“IISD”) submitted that the
lack of transparency and publicity ascribed to UNCITRAL rules as
to State Arbitration may be oppressive or injurious to such
areas as labour, environment, tax and other public policies in
which residents of a state have interests during the arbitration
process and when arbitral awards are released29. Such
condemnations implicitly postulate more involvement of interest
groups who are directly affected by formulation of UNICTRAL’s
texts. Yet, it should be borne in mind that the larger the
working groups are, the more the proposals for amendments are
made. According to Professor John Honnold, “Amendments tend to lead to
compromises. Compromises may be in the interest of acceptability of legal rules, but
they do not always make good law”30. Apparently, it is not an easy task
29 IISD. Revising the UNCITRAL arbitration rules to address statearbitrations, p.3. Available fromhttp://www.iisd.org/pdf/2007/investment_revising_uncitral_arbitration.pdf[accessed 1st January 2014].30 Honnold, J. (1995). "Process and value of the unification of commerciallaw: lessons for the future drawn from the past 25 years", in UNCITRAL,Uniform Commercial Law in the Twenty-First Century. United Nations, New York,p.15.
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for UNCITRAL to yield satisfactory solutions for commercial
problems while striking a fair balance between the interest
groups. Nonetheless, at least for the purpose of facilitating the
harmonization process of UNCITRAL, much thought should be given
to the planning and management of the projects. Improvements are
expected to be achievable once there is more careful preparation
of the uniform texts, the proper timetable for the projects,
driver of the project and especially more regular meetings
organized to accord interests involved31.
IV. CONCLUSION
This essay critically explores the present works of UNCITRAL
to assess whether they are efficient and adequate for the
harmonization process of transnational commercial law. It has
been suggested that resounding success of UNCITRAL’s products is
owed to the effectiveness and legitimacy of its law-making
process that is a combination of flexible legislative approach31 Goode R., Kronke H., McKendrick E. (2007). Transnational Commercial Law: Text Cases and Materials. Oxford, Oxford University Press, p.237.
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and technocratic-based rule-making. UNCITRAL’s work has been also
held by a commitment to coordinating harmonization works of other
public and private actors. There have however been duplication
and overlap of harmonization endeavours in a number of particular
areas due to the emergence of numerous formulating agencies from
whether state or non-state sector at the different levels. This
status presents a paradox that the more the efforts of
harmonization are undertaken the more likely it would end up with
dis-harmonization. To overcome these constraints, there have been
recommendations to establish an international forum for
coordinating the work of the present formulating agencies and
provide a mechanism for considering regional organization as a
member state in the negotiation process.
On the other hand, this essay also formulates main
criticisms against the harmonization work of UNCITRAL, which
include concerns about over-reliance of UNCITRAL on non-
governmental actors and experts in the law-making process and
conflict of interests of various groups involved. These
criticisms are, however, not persuasive enough to be a rationale
for presenting a better alternative to the current working
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mechanism of UNCITRAL but rather serve the purpose of
improvement. Despite the challenges confronting UNCITRAL in terms
of harmonization, still UNCITRAL remains the most influential and
prestigious body whose works have made a remarkable contribution
to shaping transnational legal regimes that are adaptive to the
globalized business today.
BIBLIOGRAPHY
A. Books/Articles
Basedow, J. (2003). "Worldwide Harmonisation of Private Law and
Regional Economic Integration-General Report" 8 (1-2) Uniform Law
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Berger, K. P. (1999). The Creeping Codification of the Lex
Mercatoria. Kluwer, The Hague.
Block-Lieb, S. and T. Halliday (2006). "Harmonization and
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42 Texas International Law Journal, pp. 475-514.
Boodman, M. (1991). "The myth of harmonization of laws" 39(4) The
American Journal of Comparative Law, pp. 699-724.
17
David, R. (1969). "The International Unification of Private Law",
International Encyclopedia of Comparative Law II, ch.5. Tübingen,
J.C.B. Mohr.
Faria, J. A. E. (2009). "Future Directions of Legal Harmonisation
and Law Reform: Stormy Seas or Prosperous Voyage" 14 Uniform Law
Review, pp.5-34.
Faria, J. A. E. (2005). "Relationship between Formulating
Agencies in International Legal Harmonization: Competition,
Cooperation, or Peaceful Coexistence-A Few Remarks on the
Experience of UNCITRAL" 51 Loyola Law Review, pp.253-285.
Gomez, F. (2011). "Some Law and Economics of Harmonizing European
Private Law." in Hartkamp, A.S. & von Bar, C. (eds.) Towards a
European Civil Code. Frederick, Kluwer Law International, pp.401-
422.
Gopalan, S. (2002). "Transnational Commercial Law: The Way
Forward." 18(4) American University International Law Review, pp.
803-849.
18
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Commercial Law” 54(3) International and Comparative Law
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International Law, pp.743 – 798.
19
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to-UNCITRAL-e.pdf [accessed 1st January 2014].
UNCITRAL. A/CN.9/638/Add.5 - UNCITRAL rules of procedure and
methods of work .
20
Available fromhttp://daccess-ods.un.org/TMP/2532971.20332718.html [accessed 1st
January 2014].
UNCITRAL. France’s Observations on UNCITRAL’s Working Methods:
Note by the Secretariat, U.N. Doc. A/CN.9/635 (May 24, 2007).
Available from
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21
IISD. Revising the UNCITRAL arbitration rules to address state
arbitrations.
Available from
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tion.pdf [accessed 1st January 2014].
22