August 13, 2025

Coordination of work on security interests: the UNCITRAL Model Law on Secured Transactions and the Unidroit Model Law on Factoring compared

Key Points

The main finding reveals that the UNCITRAL Model Law on Secured Transactions and the Unidroit Model Law on Factoring lack sufficient coordination.
Key evidence shows that the UNCITRAL law takes a modern functional approach, while Unidroit adheres to a traditional asset-specific method.
The approach includes an analysis of how these model laws impact finance law, leading to fragmentation and uncertainty in credit availability.
The significance lies in the conclusion that these incompatibilities could negatively affect the cost and availability of credit in legal frameworks.

Abstract

Abstract This article deals with coordination among international legislative standard setting organizations in the field of secured transactions. It discusses in particular the relationship between the UNCITRAL Model Law on Secured Transactions and the Unidroit Model Law on Factoring. And concludes that, due to the lack of sufficient coordination, the two model laws are incompatible with each other in several respects. Most importantly, the former model law follows a modern, comprehensive and functional approach, while the latter follows a traditional asset- and practice- specific approach that prolongs the fragmentation and thus the uncertainty of finance law, which is bound to have a negative impact on the availability and the cost of credit.

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