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What is UNCITRAL, and why it is important
If you open up a Google search query about UNCITRAL, you will most likely find articles on academic issues, which may be quite difficult to understand. In simplified terms, UNCITRAL is the acronym of the United Nations Commission on International Trade Law. It is a subsidiary body of the United Nations, which was created on the principle that “each country’s commercial laws have created barriers to the promotion of international trade, and thus should be minimized and eliminated to facilitate international trade and investment through the use of an international trade law”.
UNCITRAL consists of commissions from 60 countries elected by the United Nations General Assembly by taking into account the diversity of regions, the economic and legal systems. The Commission has a 6-year term in office. One of UNCITRAL’s most outstanding contributions is the outline of the “UNCITRAL Model Law on International Commercial Arbitration)” that can be applied for resolving international disputes. In this regard, the Thailand Arbitration Center (THAC) has also applied the UNCITRAL law.
If clarified in more detailed terms, UNCITRAL consists of 6 working groups, which are;
1. Working Group I, Micro, Small and Medium-sized Enterprises
2. Working Group II, Arbitration and Conciliation / Dispute Settlement (originally considered matters relating to arbitration and mediation)
3. Working Group III, Online Dispute Resolution. Currently, this working group has been abolished due to the disagreements among its members in which no compromise could be reached. Therefore, further continuation was considered a waste of time and resources and, thus, deemed appropriate to disband the working group.
4. Working Group IV, Electronic Commerce
5. Working Group V, Insolvency Law
6. Working Group VI, Collateral Rights
Each year, UNCITRAL will hold several meetings, both general meetings and smaller working group meetings. The two main meeting venues are; 1. the United Nations Headquarters in New York City, USA, and 2. the United Nations Office in Vienna, Austria. As mentioned above, UNCITRAL is an international organization that plays an important role in establishing the unified rules of international trade. The tools that UNCITRAL uses to create unified rules mainly appear in two important documents; 1. in the form of a Convention, and 2. Model Laws.
Model Laws are also known to have different names, such as the “model law”, or the “prototype law”. The Model Laws are not legally binding as conventions, but act more as a guideline for countries to enacted as their internal laws, which can be modified to be in line with the cultural and social contexts, as well as, needs of each country, without the need to enact every aspect of their internal laws to mirror the Model Laws.
UNCITRAL and Arbitration
In settlement of international trade disputes under the UNCITRAL Model Law, through the use of the UNCITRAL Model Law on International Commercial Arbitration, the arbitrator is required to settle the dispute according to the legal principles that the parties have chosen to apply to the dispute in cases where it has not been specified otherwise. In the event that the law of a particular state is selected, it will be referring to citing the substance law or statutes of that particular state which is not considered a contradiction of the law. In the event that the party did not specify the law governing the dispute, the arbitrator is required to apply applicable laws using conflicting principles of law. The arbitrator will use good faith and fairness principles to settle disputes in arbitration or apply the law only if the parties have explicitly given their authority.
In all cases, the arbitrator must also consider the terms of the contract and trade customs.
The UNCITRAL Model Law will primarily ensure fairness and equality towards the treatment of the parties involved in the arbitration, in addition to providing freedom and discipline for the arbitrators based on the following criteria;
1. UNCITRAL provides the arbitration parties with the freedom to choose the law to apply to the settlement of disputes, based on the principles of convenience, fairness, and which would be most beneficial to the relevant parties.
2. In the event that no mutual agreement can be reached between the parties, they may continue to complete the arbitration proceedings.
3. Determining the scope and role of national laws to provide freedom to international commercial arbitration. If the parties choose to settle the dispute in international commercial arbitration and a delay occurs, the parties will be ensured fairness in the arbitration dispute.
4. Honesty and fairness. The provisions and principles shall be established to apply and bring about justice and fair consideration to the arbitration parties.
5. Limitations on the intervention of domestic courts.
6. Enforcement and acceptance of the arbitral award. It is enforceable in the recipient country of the foreign arbitration award under the 1958 New York Convention rules, regardless of whether the country making the award is the same as the country of arbitration.
With the above mentioned, it can be concluded that UNCITRAL is a body of commissions represented by each country that has been formed to help minimize problems and remove obstacles in the promotion of international trade by creating international trade laws that are fair, impartial, and is universally accepted by every country. Additionally, it was also established to facilitate international trade and help settle international disputes.
