UN trade group agrees on key principles of legislation for secured credit

7 July 2006

In a bid to make access to low-cost credit easier in many countries and boost economic development, the United Nations Commission on International Trade Law (UNCITRAL), today agreed on key principles of an international legislative guide for loans that are guaranteed by collateral.

In a bid to make access to low-cost credit easier in many countries and boost economic development, the United Nations Commission on International Trade Law (UNCITRAL), today agreed on key principles of an international legislative guide for loans that are guaranteed by collateral.

Resulting from UNCITRAL’s session in New York that ends today, the proposed guide on such “secured transactions,” which will be the culmination of several years’ drafting by the organization, is designed to give countries a template for how they should frame their domestic legislation, and will address rights of holders of collateral in movable property such as inventory, equipment and receivables.

New provisions on arbitration reflect the need to align the UNCITRAL Model Law on International Commercial Arbitration, concluded in 1985 and already adopted by some 50 States, with current practices in international trade, the organization explained.

“These provisions, together with appropriate explanatory material, will significantly update the provisions of the Model Law and facilitate the use of arbitration as a method of settling disputes arising in the context of international commercial relations,” it said.

UNCITRAL is the core legal body of the UN in dealing with international trade law, and aims to harmonize and modernize the rules of international business.

 

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