The UNCITRAL Experience
Corporations, Globalisation and the Law series
Chapter 1: Introduction
The United Nations Commission on International Trade Law (UNCITRAL) has recently produced a Legislative Guide on Secured Transactions.1 The clear objective of the Guide is to facilitate secured financing. The possibility of taking security rights over the assets of the debtor is thought to expand the availability as well as to reduce the cost of credit, thereby producing benefits for both creditor and debtor as well as for the overall economy. The Legislative Guide is very facilitating and enabling, and permits the creation of security in all sorts of situations. Security is seen as a good thing, through enhancement of lower-cost credit availability. This perspective colours the approach adopted in the Legislative Guide on particular issues though, at the same time, it is recognised that beneficial economic results cannot be achieved by legislation alone – the legal and administrative infrastructure in a particular jurisdiction, including mechanisms for the enforcement of security, play a crucial role. In broad terms, the Legislative Guide follows the approach outlined in Article 9 of the American Uniform Commercial Code, and in the Personal Property Security Acts in Canada and New Zealand that have been modelled on Article 9. While the Legislative Guide is not an exact mirror image of Article 9, it is much closer in tone and spirit to Article 9 than the UNCITRAL Legislative Guide on Insolvency is to the comparable provisions of the US Bankruptcy Code. It is submitted that this closeness in approach is likely to militate against the prospects of the...