‘Why has the United Nations unification of global payment law failed?’

The purpose of this paper is to explain why the efforts of the United Nations Commission on International Trade Law (UNCITRAL, est. 1966) to make uniform global payment law have almost completely failed in spite of its fruitful production from1980s to mid-1990s of the relevant quasi-legal and potentially binding documents. These documents are the UNCITRAL Legal Guide on Electronic Funds Transfers (1987), United Nations Convention on International Bills of Exchange and International Promissory Notes (New York, 1988), and the UNCITRAL Model Law on International Credit Transfers (1992), and the United Nations Convention on Independent Guarantees and Stand-by Letters of Credit (New York, 1995). Although intended for wide adoption by most countries as the uniform law for universal application to global payments, these UNCITRAL documents have only been adopted as law by just a handful of Member States. This is in sharp contrast to the recognised success of the UNCITRAL unification of law in other areas of international trade.

For the purpose stated above, this paper has six substantive parts. Following the introductory paragraphs, Part 1 describes the legal status of UNCITRAL and other relevant international law-harmonising institutions. The legal status means that their law-harmonisation products cannot readily have legal force. Part 2 analyses the legal nature of the bank-customer relationship in international payment involving correspondent or intermediary banks, and also the challenges in reconciling the differences between the common law system and the civil law system regarding that relationship. Part 4 analyses both the limits of harmonising the substantive private law for cross-border transactions and the global payment system, noting that even the recognised success of the UNCITRAL unification of law in other areas of international trade such as sale of goods, transport of goods, commercial arbitration, and cross-border insolvency are not unlimited or full, let alone the failure of the UNCITRAL Model Law on International Credit Transfers (1992) and the other three relatively less relevant UNCITRAL documents listed above. Part 5 discusses how international financial and/or banking regulation has contributed to the difficulties in harmonising international payment law. Part 6 describes the complications in harmonising private international law (also known as the conflicts-of-laws rules) in relation to international payment. Part 7 reflects on the role of private law in international trade and, in that relation, explains why the international payment system has worked generally well nonetheless in spite of the UNCITRAL’s failure in unifying and harmonising international payment law. The concluding paragraphs summarises.

Dr Yong Han (BA, LLM, PhD in Law, English LLB) is a Lecturer in Law at the University of Reading since September 2021. Prior to that, for one year he was a fixed-term Lecturer in Commercial Law at the University of Manchester, and further back a post-doctoral researcher in the economic history project ‘Global Culture of Risks’ at the University of Hull and the University of Basel. Before returning to the UK, he was a post-doctoral Research Fellow at the Faculty of Law (and its Centre for Banking and Finance Law), National University of Singapore. He researches and teaches English and international commercial contract law, insurance law, financial consumer law, and banking law. Three of his publications have been cited by Supreme Court judges in Australia (NSW), China, and Singapore. Since late 2015, he has been an academic member of the Principles Drafting Committee of the (international) UNIDROIT Principles of Reinsurance Contract Law project, and since 2020 a Research Consultant for the World Bank project Framework for the Protection of Financial Consumers. Since 2016, he has been a member of the Society of Legal Scholars. As of 2018, he has been a member of the International Academy of Financial Consumers, and also a foreign law consultant to Benchmark Chambers International.