Volume 42 | Number 3 Summer 2007
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If (international) commercial law is to keep pace with (international) commercial practices, then there has been much to do in the way of (international) law reform over the past forty years. During this period, commercial practices have changed substantially due to numerous factors: advances in telecommunications; the fall of the Soviet Union and attendant re-unification of Europe; systemic financial crises in South East Asia and South America; globalization; and developments, indeed, the revolution, in information and payment technology—the Internet and electronic funds transfers, to name just a few. To meet this challenge, UNCITRAL (the United Nations Commission on International Trade Law) has done more than simply reform trade law; it has also reconceived its very mission and the means by which it carried out its central purposes.
Although the UN resolution creating UNCITRAL initially spoke in terms of the “progressive harmonization and unification” of the law of international trade,1 UNCITRAL now defines its mission as the “modernization and harmonization” of trade law.2 Arguably, the task of modernizing the law of international trade was implicit in UNCITRAL’s core mission. The resolution creating UNCITRAL referred to the “progressive” harmonization and unification of trade law, not simply its harmonization and unification.3 This resolution emphasized that the progressive harmonization and unification of trade law followed from the United Nation’s broader agenda of economic development and the promotion of friendly relations among nations.4
Nonetheless, there may be an enormous difference between the task of harmonizing and unifying existing bodies of national law on the one hand, and the modernization of national laws on the other hand. Depending upon how one defines the task,5 harmonization may present only minimal intrusions upon national legislation, involving the identification of common approaches among existing domestic laws. Reports to the General Assembly and the Commission in the late 1960s suggest that international actors understood the “progressive harmonization and unification” of trade law as involving the reconciliation of divergent practices and an articulation of emerging international norms. Current statements of UNCITRAL’s efforts in achieving the “modernization and harmonization” of trade law depict UNCITRAL as a more pro-active participant in the reform of global commercial law. This version of international law reform—which looks to modernize, rather than simply harmonize, national laws—can come with one of two purposes. Where technical or market developments have outstripped existing law and the lack of suitable regulation is viewed by the international community to stall commercial development, modernization would require an (international) organization to create new law. With this relatively new method of modernization, the global actor purports to speak authoritatively to national legislatures about both the need for and content of law. Modernization may threaten national legislatures’ sovereignty more acutely than an “in with the new” reform agenda where national law exists on a topic, but is viewed by the international community as out-of-date. This “out with the old” method of modernization requires the international organization both to reject existing legislation and create new law, whereas “in with the new” modernization requires simply the filling of a gap in the old law with new law. In either case, modernization might work against harmonization or unification since “modernization” presumably relates to a revision of the law to meet new exigencies, revisions that might not be consistent with existing national laws or global norms.6
Both “in with the new” and “out with the old” modernization challenge traditional concepts of international law and law reform, and with this challenge comes an impetus for new tools. Because uniformity may not be necessary to (and may, in some cases, undermine) the goal of modernization, there is room to question whether law reform projects intending to modernize the law of international trade should rely on international instruments meant to produce a single, uniform legal standard.
UNCITRAL has predominantly relied on conventions and model laws to reach agreement on international instruments promoting international trade. A convention takes the form of a multilateral treaty. Countries accede to a single standard. As a result, the demands for accession are high since countries may not alter any part of the convention to suit domestic political or legal differences. Likewise, conditions of formulation require zero-sum bargaining in order to reach agreement. Both conditions mean that conventions are more likely to succeed where agreement across radically different legal families and levels of economic development is possible.7 Those conditions further imply that the politics of formulation and implementation will be time-consuming and the prospects of subsequent adaptation prohibitive.
A model law relaxes some of the strictures of conventions.8 It takes the form of a legislative text that UNCITRAL recommends for enactment. However, in order to be responsive to the particular needs of a given state, a model law may implicitly permit states to exclude or modify some provisions.9 While a model law sets a global standard, neither its conditions of formulation are as demanding nor its conditions of implementation as severe as a convention.10 As a result—although it appears as a less harmonizing instrument than a convention—it may permit a higher threshold in the standard itself and encourage a greater number of countries to adopt a form of it.11 As an enhancement on a model law, UNCITRAL has coupled a model law with a guide to enactment that sets out background information, explanations of decisions, and information on various policy options that might enable legislators to make informed decisions.12
Whatever the merits of conventions and model laws for the inducement of unification or harmonization, UNCITRAL has also historically understood the need for flexibility, diplomacy and patience in its law reform projects and the potential inflexibility of uniformity as a goal of global law reform. Because conventions can limit drafters’ room to maneuver, lead to the exclusion of issues on which delegates cannot reach consensus or, worse still, be conducive to reliance on compromise language that leaves an issue either unresolved or muddier than before, international conventions may not provide the best route toward modernization. While model laws are generally viewed as softer tools in the hands of international reformers than conventions, they too may possess an appearance of completeness and intractability.
Cognizant of these trade-offs, as UNCITRAL has shifted its focus toward modernization it has invented new legal technologies—guides to enactment, recommendations, model legal provisions, and legislative guides—that offer greater flexibility to reform a broader range of laws, especially with the benefit of time and incremental progress.13 Indeed, the implementation of this more expansive mission could only have proceeded on the basis of a broader repertoire of legal technologies.14
This shift in goals through the invention of technologies is well illustrated by UNCITRAL’s work on the Legislative Guide on Insolvency Law.15 Although many experts were pessimistic about the prospect of a legislative guide on insolvency, the UN General Assembly confounded their expectations and ratified a Legislative Guide on Insolvency Law in December 2004.16 How did UNCITRAL succeed in promulgating the Legislative Guide on Insolvency Law?17 How did its reliance on a legislative guide, rather than a convention or model law, enable the UNCITRAL’s Working Group on Insolvency to produce global rules on insolvency law? In this article,18 we argue that by inventing a new legal technology UNCITRAL was able to join specific recommendations with lengthy and nuanced commentary intended to educate domestic legislatures. In addition, by inventing an array of rule-types within the recommendations made in the legislative guide, UNCITRAL enabled the Working Group to speak authoritatively and in great detail on a range of topics, but on other issues to say little in deference to social and political concerns. In short, UNCITRAL succeeded in this arena by embracing its diplomacy as a strength and not a weakness.
Our examination of UNCITRAL’s Legislative Guide on Insolvency Law demonstrates that modernization may come at a price. A legislative guide is on its face less harmonizing than a model law, just as a model law is on its face less harmonizing than a convention. Nonetheless, we argue that less is more, at least in this instance. Many in the Insolvency Working Group believed that it would have been impossible to achieve a convention or a model law on insolvency law. UNCITRAL consciously decided to rely on a legislative guide to structure its work principally because the flexibility of this technology took away the need to reach consensus on myriad details, and more importantly, the contentious policy issues inherent in such an endeavor. UNCITRAL created a legal technology purporting to require less harmonization because it viewed the flexibility of a legislative guide as increasing the likelihood that it would succeed in promulgating an international instrument on domestic insolvency law.
This is not to deny that the Legislative Guide on Insolvency Law might have a harmonizing effect. Nor should we view UNCITRAL’s reliance on technologies other than conventions and model laws as an abandonment of the desirability of promoting the “progressive harmonization and unification” of trade law. Harmonization takes time, and global law reform involves the efforts of both international and domestic actors. Because national actors may not feel international pressure to adopt the recommendations in a legislative guide wholesale, they can feel free to adopt what they can. With a convention or model law, accession or implementing legislation may fail precisely because the choices are binary—either accept it in its entirety or reject it outright. A legislative guide offers national actors choices, albeit within limits. The decision to promulgate a legislative guide might in practice result in greater harmonization “on the ground” than a model law or convention.19
The remainder of this Article is organized as follows. Part I briefly traces the organizational development of UNCITRAL and demonstrates that UNCITRAL broadened its mission over time to include not just the harmonization of international commercial law but also its modernization. This Part finds that, in the course of more broadly defining its core mission, UNCITRAL also broadened the range of international instruments it relied upon to accomplish law reform, and that the breadth of mission and technologies are inter-related. Part II focuses on UNCITRAL’s most recent project—the Legislative Guide on Insolvency Law—and compares and contrasts it with UNCITRAL’s earlier work. This Part describes this new legal technology—a legislative guide—as combining legislative recommendations with commentary. The commentary justifies the recommendations made in the Guide in terms of the policy purposes of the provisions; where recommendations are more open-ended, the commentary assists legislatures with the Herculean task of assessing the choices that remain. We conclude that the array of linguistic forms in which the recommendations were expressed in the Guide gave UNCITRAL the flexibility to adjust its level of prescription to the level of consensus it could achieve and, as a result, the flexibility to modernize insolvency law. Part III turns back to the apparent tension between modernization (at least the “out with the old” variety) and UNCITRAL’s original mission: the “progressive harmonization and unification” of trade law. We argue that UNCITRAL’s pursuit of the modernization of the law of international trade should not be viewed as inconsistent with the goals of “harmonization and unification;” instead, UNCITRAL has adapted its implementation of the goals of harmonization and unification in recognition of pragmatic limitations that inhere in (second order) international lawmaking. In Part IV, we conclude that UNCITRAL’s adoption of modernization as a goal both expands its organizational reach and demands technologies that will underwrite its expansive aspirations.