Overview of UNCITRAL Legislative Guide on Secured Transactions

In conjunction with adoption of the United Nations Convention on the Assignment of Receivables in International Trade in 2002, the UNCITRAL Working Group Ⅵ (Security Interests) has prepared a Legislative Guide on Secured Transaction (“Guide”) which is in the final stage of adoption as of December, 2007. The Guide does not take one size-fits-all approach such as a model law or a convention but takes flexible “soft law” approach. However, it is a legislative guide not a contractual guide. The structure of the Guide planned to contain Commentary explaining the policy issues and the possible approaches with pros and cons. Also it includes detailed and comprehensive legislative recommendations. The recommendations are provided in general and asset-specific as well. This paper will discuss purpose of the draft Guide, key objectives and concepts of secured transactions law, structure of draft Guide, and scope of the draft Guide as to substantive secured transactions law. This draft Guide deals with creation of security right, third party effectiveness, the registry system, priority of security right, rights and obligations of parties, and rights and obligations of third party obligator. Further, the draft Guide provides as to enforcement and acquisition financing. Not only substantive provisions on the secured transaction, the draft Guide has certain provisions on the conflict of laws. This is new trend in the global norms to make the governing law of the subject matter clear. The draft Guide also has provisions regarding transition and impact of insolvency on security rights. This paper finally notes the future works to be done by the UNCITRAL to produce the final versions to be approved by the UNCITRAL and the General Assembly of the United Nations.