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

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17

David, R. (1969). "The International Unification of Private Law",

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Faria, J. A. E. (2009). "Future Directions of Legal Harmonisation

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Faria, J. A. E. (2005). "Relationship between Formulating

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18

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19

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20

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21

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22