UNIDROIT Working Group near completion of the draft Factoring Model Law | FCI
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UNIDROIT Working Group near completion of the draft Factoring Model Law
UNIDROIT Working Group near completion of the draft Factoring Model Law
6 December 2022

I am excited to report that the draft Factoring Model Law (FML) has been finalized by the UNIDROIT FML working group during its 6th and final session held last week in Rome.  I want to thank all FCI members, factoring associations and other important stakeholders who took the time to review the draft FML and provide responses.  The FML working group reviewed all 190 comments presented and was a great catalyst for the enhancement of the law. The UNIDROIT Governing Council will review the draft FML for final approval during its upcoming annual meeting in May 2023, hence we anticipate having the final model law shortly thereafter.

As you know, this model law has its origins dating back to when FCI was first created. The very first attempt at developing a global legal framework on cross-border factoring was initiated in 1964 with the founding of Factors Chain, which named the first agreement after our founding member, Shield Factors, UK.  The Shield Agreement was introduced by Freddy Salinger, a significant architect in the earlier projects at the UNIDROIT and UNCITRAL who was employed there.  Shield Factors (later to be acquired by HSBC) together with five others in Northern Europe and the US would create FCI in 1968, and the association would a few years later develop the Code of International Factoring. The Code in part inspired the UNIDROIT to develop the Ottawa Convention on International Factoring in 1988 (to which my predecessor, Mr Jeroen Kohnstamm was quite involved) and later the UNCITRAL Receivables Convention released in 2001 (to which Freddy Salinger from the FCI Legal Committee played an instrumental role in its development) and of course most recently the creation of the UNCITRAL Model Law on Secured Transactions. All of these many historical initiatives were for the purpose in great part to support the growth of factoring and receivables finance around the world. However, the absence of a global model law on factoring was a detriment to the long-term health and success of our industry, hence we are pleased to have reached this milestone.

The FML had been developed by a Working Group composed of international legal experts. The Working Group is chaired by the Member of the Governing Council Professor Henry Gabriel (who spoke in person during the 54th FCI Annual Meeting in June in Washington DC), the project is led by William Brydie-Watson and supported by Marek Dubovec from the International Law Institute with the assistance of Bob Trojan and is composed of the following experts:

  • Henry Gabriel (Chair) (United States)
  • Giuliano Castellano (Italy)
  • Neil Cohen (United States)
  • Michel Deschamps (Canada)
  • Alejandro Garro (Argentina)
  • Louise Gullifer (United Kingdom)
  • Megumi Hara (Japan)
  • Ignacio Tirado (Italy)
  • Cathy Walsh (Canada)
  • Bruce Whittaker (Australia)

FCI was initially invited as an observer and had been represented at every meeting by three members of the FCI Legal Committee: Ulrich Brink (Germany), Edward Wilde (UK) Jin Saibo (China) and myself.

About UNIDROIT
Established in 1926 as an auxiliary organ of the League of Nations, the UNIDROIT is an intergovernmental organization whose objective is to harmonize international private law across countries through uniform rules, international conventions, the production of model laws, sets of principles, guides and guidelines. To find out more, visit their website by clicking here.