Volume 42 | Number 3 Summer 2007
IV. Modernization and Global Law Reform
We have argued that over the forty years since its inception, UNCITRAL both broadened and shifted its mission. While created to promote the “progressive harmonization and unification” of the law of trade, it now also views itself as an agent for the “modernization and harmonization” of trade law. The goals are not disconnected. Both follow from an interest in promoting an expansion of international trade, particularly trade with developing and under-developed nations. At its inception, UNCITRAL was conceived around the notion that “divergencies arising from the laws of different States in matters relating to international trade constitute one of the obstacles to the development of world trade.”151 It now understands that these “divergencies” constitute only one “obstacle to the development of world trade,” and perhaps a relatively unimportant obstacle at that. By embracing “modernization,” UNCITRAL looks to tackle obstacles that go beyond divergencies among national laws. It has taken on the charge of law reform writ large.
In order to execute its expanded shift in mission, UNCITRAL found it necessary to invent new legal technologies. Table 1 demonstrates that UNCITRAL has employed, not only conventions, model laws and model legal provisions, but also recommendations, guides to enactment, legal guides and legislative guides. We have shown that the Legislative Guide on Insolvency Law is a skillfully crafted set of norms that enabled UNCITRAL concomitantly to push towards an overarching global norm—the value of corporate reorganization as a complement to corporate liquidation—while allowing significant flexibility for national lawmakers to modernize their own laws in ways appropriately adapted to variations in legal families, economic circumstances, and policy preferences, among others. As a result, this explicitly modernizing Legislative Guide also aspires to some measure of harmonization, thus, enabling UNCITRAL to lean towards the current primacy it accords modernization without losing touch with its original mandate.
Nevertheless, one or two puzzles remain that warrant further comment. For the most part, we have explained UNCITRAL’s shift in mission as an adaptation to changes in the world of commerce. However, another story might be told that is consistent with the experience of many organizations. UNCITRAL is nested within at least three organizational contexts. It is a very small entity within the United Nations system. To justify its own existence, to expand its budget, and to enable the UN itself to demonstrate its responsiveness in a changing world, UNCITRAL may have been compelled to show its relevance to a world where transitions from command to market economies required new law, or where financial crises required legal institution-building, or where the legal infrastructure of markets goes far beyond the substantive domains of its founding. If this could not be managed within the constraints of its founding mandate, then its senior management was pressed to reinvent its mission and technologies. To the extent that UNCITRAL could show itself responsive to demands upon the United Nations that it be more proactive in the legal construction of markets, then UNCITRAL would ensure its viability and perhaps even expansion within the UN.
UNCITRAL also exists in a field of organizations concerned with law reform. Since the Asian financial crises, a variety of international organizations—international financial institutions such as the World Bank and IMF, regional development banks such as the Asian Development Bank, clubs of nations such as the G-7, G-22 and OECD—together with expert professional associations (in the insolvency field these prominently include INSOL, IBA, and ABA) all moved into fields of law reform thought to be salient to developing countries and transitional economies. Insolvency and secured transactions featured prominently among these. In the insolvency field, for a short period it seemed as if UNCITRAL would be marginalized by initiatives of the World Bank, IMF and Asian Development Bank. But perception was short lived. UNCITRAL’s flexible technology, coupled with its legitimate deliberative process, gave it an edge that no other organization could match. “Modernization” provided the substantive reach to treat national bankruptcy law. Reliance on a legislative guide format gave it the flexibility to be salient to the entire world, while also integrating constructively—perhaps even transcending—the previous efforts of potential rivals. The flexibility of a legislative guide enabled UNCITRAL to be competitive with other international organizations and ultimately to emerge with a global standard to which its potential rivals acceded.
By the same logic, the matching of a flexible technology to an expansive goal permitted UNCITRAL’s leadership to take onto its agenda issues at the heart of the ideological consensus about law and markets. Both the Washington Consensus and post-Washington Consensus champion the regulatory import of law for the liberalization of national markets as well as the integration of global markets. Once bankruptcy law became part of the agreed-upon bundle of a “modern” regulatory apparatus, then UNCITRAL’s expanded mission gave it a legitimate claim to enter the field of global lawmakers with a technology that would balance convergence towards the ideological center with national variation at the global periphery. By this means, UNCITRAL’s organizational adaptations justified its position at the table of global agents for market regulation. At the same time, it could hold itself out as responsive to sovereign interests that would likely not subscribe to all convergent provisions in a set of global norms.
Nevertheless, it is not only the legal technology that displays UNCITRAL’s adroitness in adapting to its various organizational contexts, but also the choice of “modernization” as a goal. A notion of the “modern” is a social construction. As a concept, it appears self-validating. Inherent in its meaning are the notions of progress and development, of advancement and maturity. Paradoxically, part of its power lies precisely in its vacuity; it is relatively empty of meaning and may, thereby, be infused with content as circumstances require. For instance, it could mean something temporal (i.e., it is “modern” simply because it is different from something older or pre-modern); it could mean something comparative (i.e., this country claims to be “modern” in comparison to that country which is not); or it could be functional (i.e., it achieves a “modern” function hitherto missing in a legal or economic system). We have seen that in practice UNCITRAL uses it in two ways—“modern” means filling a gap in the law with contemporaneous content (“in with the new”) or replacing former law (“out with the old”).
Something of this adeptness in mobilization of the term can be seen within the Legislative Guide on Insolvency itself. The Guide shows itself to be substantively modern by adopting an approach to bankruptcy in its policy norms that is consistent with the world’s most powerful economy and perhaps most “modern” nation—the primacy of reorganization. That the IMF and World Bank—themselves close to the policy preferences of Washington—also adopt this norm merely reinforces UNCITRAL’s modernizing credentials. Furthermore, we have seen that the Guide engages in rhetorical gestures that seem intended to underline its “modern” auspices. Frequently the commentary suggests choices based on modern developments and trends. Repeatedly the Guide encourages a path of action that would be consistent with a “modern economy,” a “modern insolvency regime,” a “modern commercial law framework,” and a “modern, interconnected world.” In all these ways, a very small international organization legitimates itself and its product through links to powerful nations that label themselves “advanced” and to the international organizations that urge other nations towards the modernity inherent in an advanced status.
But it should also be clear that the label of “modernity” relates to power. It is powerful countries that can adopt the label for themselves and then project their definition of modernity onto countries they label as not modern. In this sense, UNCITRAL’s adoption of the label may be viewed as the appropriation of claims made by powerful nations and institutions that they stand at the vanguard of development and, indeed, have the responsibility or even the right to make those claims pervasive throughout the “unmodern” world. This symbolic alignment of UNCITRAL with economic and political power thereby earns it an increased capacity to set global agendas and to earn the respect of global actors for the “modern” norms it produces.
The very ambiguity in the term “modern” may also serve a useful pragmatic function. We have argued that UNCITRAL has long recognized the improbability of far-reaching unification of laws, particularly in contentious policy areas. If widely relied upon, the Legislative Guide on Insolvency is also likely to be harmonizing at least in its convergence on reorganization as a policy goal. Beyond this, the vagueness of “modernization” as a goal allows global convergences around a set of variations on the global theme such that “modern” insolvency systems might variously approximate those of the United States, Great Britain, Australia, Germany, or France, among others—all nations indisputably modern by their own claims and yet with perceptibly different choices on the options presented by the Legislative Guide.
As a rhetorical strategy and form of organizational adaptation, therefore, UNCITRAL’s shift away from the goal of unification towards that of modernization simultaneously solves a number of problems. Insofar as it is conducive to harmonization, then modernization keeps UNCITRAL faithful to the spirit of its original mission to facilitate global trade by reducing the divergence of national laws. Insofar as it seeks to remain a player in the world of global norm making institutions, modernization provides UNCITRAL the maneuverability to adjust to changing global agendas. Insofar as UNCITRAL seeks to demonstrate its own relevance, and that of its parent organization, then modernization gives it reach. And insofar as it tolerates national diversity around overarching policy objectives, UNCITRAL can balance its deference to the global center with responsiveness to the global periphery. All these moves are enabled by the technological inventiveness of the Legislative Guide on Insolvency.
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Footnotes
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