The UNIDROIT Model Law on Factoring (MLF) was adopted by the UNIDROIT Governing Council at its 102nd session (Rome, 10-12 May 2023).

The MLF provides a complete, self-standing legal regime that facilitates factoring transactions. The instrument comprises of a set of black-letter law rules that is primarily aimed at States that have not yet fully implemented a modern, comprehensive secured transactions legal framework. For States that have undertaken prior secured transactions reforms, the MLF provides rules that could further strengthen their legal framework and encourage factoring, the assignment of receivables, and trade finance.

The UNIDROIT Model Law on Factoring is available in two official languages: English and French. Several unofficial translations of the instrument are also being developed.








Factoring is a vitally important type of financing used across the globe, with annual global factoring volume over 3 trillion euros. While Europe accounts for majority of the world’s domestic volume of factoring, new markets account for the highest growth in factoring volume, with the leading regions being the Middle East, Africa and South America.


Evolution of Global Factoring Volume (in Euro billions)

Source: FCI, Industry Statistics

In 1988 the UNIDROIT Convention on International Factoring was adopted in Ottawa, Canada. The Factoring Convention entered into force in 1995 and has been ratified by 9 States. However, international factoring represents approximately 20% of global factoring volume, whereas domestic factoring accounts for 80%. Despite the growing importance of factoring, no intergovernmental organisation has adopted a factoring model law to assist States in undertaking reforms to improve their domestic legal frameworks.

In December 2018, as a proposal for the UNIDROIT 2020-2022 Work Programme, the World Bank suggested that UNIDROIT develop a Model Law on Factoring. The World Bank proposal highlighted three reasons why a UNIDROIT Model Law on Factoring should be developed:

  1. The use of factoring as an important form of financing increasing access to credit;
  2. Ongoing constraints in access to credit as a limit on economic growth, particularly in
    developing countries and emerging markets; and
  3. The gap that currently exists in international rules and standards regarding factoring.

The proposal noted that then existing instruments largely focused on international or cross-border transactions and did not provide sufficient guidance to States to develop functional domestic factoring frameworks.

At its 98th session in May 2019, the UNIDROIT Governing Council approved the project for the 2020-2022 Triennial Work Programme as a high priority project.



The Unidroit Model Law on Factoring has been designed to be complementary and largely consistent with other relevant international standards.

The Model Law on Factoring is Unidroit’s second instrument in the field of factoring, having also prepared the Unidroit Convention on International Factoring (1988). The Factoring Convention, which entered into force in 1995, provides a treaty framework for international factoring with parties in different States, whereas the MLF provides a domestic legal framework for both domestic and international factoring transactions.

The MLF was carefully developed to also complement international standards prepared by the United Nations Commission on International Trade Law (UNCITRAL), including the United Nations Convention on the Assignment of Receivables in international Trade (2001) and the UNCITRAL Model Law on Secured Transactions (2016).

The MLF has a different purpose to the Receivables Convention, which provides a treaty framework for the international assignment of receivables between parties in different countries.

The MLF is closely aligned with the policy objectives, language and terminology of the Model Law on Secured Transactions (MLST). This approach was deliberately adopted to ensure that the two instruments would not only be complementary, but that a State enacting the MLF would be able to subsequently transition to a broader secured transactions reform using the MLST. Necessarily, the MLF has a much narrower scope as it deals only with receivables, whereas the MLST provides a comprehensive framework for security interests in different assets. Due to its narrower scope, the MLF is significantly shorter and less complex than the MLST.

During the development of the MLF, the Working Group also took into account other standards prepared by non-governmental organisations, such as the FCI Model Law on Factoring (2013) and the Afreximbank Model Law on Factoring (2016), which they themselves had been developed to be consistent with the earlier UNCITRAL and UNIDROIT instruments.



The Model Law was developed by the Model Law on Factoring Working Group, chaired by Professor Henry Gabriel (Unidroit Governing Council Member) and composed of 10 international legal experts in international secured transactions law, receivables finance, and factoring. The Working Group also included 24 institutional observers from 12 international, regional, industry and non-governmental organisations, and 8 individual observers.

Members of the UNIDROIT Model Law on Factoring Working Group

  1. Henry GABRIEL — Professor of Law, Elon University, United States of America
  2. Giuliano CASTELLANO — Associate Professor, Asian Institute of International Finance Law (AIIFL), Hong Kong
  3. Neil COHEN — Jeffrey D Forchelli Professor of Law, Brooklyn Law School, United States of America
  4. Michel DESCHAMPS — Université de Montréal, McCarthy Tetrault, Canada
  5. Marek DUBOVEC — Director of Law Reform Programs, United States of America
  6. Alejandro GARRO — Adjunct Professor of Law, Colombia Law School, United States of America
  7. Louise GULLIFER — Rouse Ball Professor of English Law, University of Cambridge, United Kingdom
  8. Megumi HARA — Professor of Law, Chuo University, Japan
  9. Catherine WALSH — Professor of Law, McGill University, Canada
  10. Bruce WHITTAKER — Senior Fellow, University of Melbourne, Australia

In addition, several international, regional and private organisations with expertise in factoring were invited to observe the Working Group:

  1. The World Bank Group
  2. The United Nations Commission for International Trade Law (UNCITRAL)
  3. The Kozolchyk National Law Centre (NatLaw)
  4. The European Bank for Reconstruction and Development (EBRD)
  5. The Organization of American States (OAS)
  6.  The African Export-Import Bank (AFREXIMBANK)
  7. Organisation for the Harmonisation of Business Law in Africa (OHADA)
  8. Industry Groups
    1. Factors Chain International (FCI)
    2. International Chamber of Commerce Banking Commission (ICC)
    3. Secured Finance Network (SFN)
    4. World of Open Account (WOA)


The Working Group negotiated the UNIDROIT Model Law on Factoring over six sessions and several dozen intersessional and subgroup meetings between February 2020 and March 2023. The instrument also underwent an intensive public consultation process between June and October 2022, which allowed hundreds of stakeholders around the world to review the instrument and submit comments.

The UNIDROIT Model Law on Factoring (MLF) was adopted by the UNIDROIT Governing Council at its 102nd session (Rome, 10-12 May 2023).


First Working Group Meeting (1 – 3 July 2020)

The first session of the Working Group took place via videoconference between 1-3 July 2020. The first session was attended by 32 participants.

The documents from the first session can be found below:


Second Working Group Meeting (14 – 16 December 2020)

The second Session of the Working Group took place between 14-16 December 2020. The second session was attended by 30 participants.

The documents from the second session can be found below:


Third Working Group Meeting (26 – 28 May 2021)

The third Session of the Working Group took take place between 26-28 May 2021. The third session was attended by 32 participants.

The documents from the third session can be found below:


Fourth Working Group Meeting (1 – 3 December 2021)

The fourth Session of the Working Group took take place between 1-3 December 2021. The fourth session was attended by 30 participants.

The documents from the fourth session can be found below:


Fifth Working Group Meeting (16 – 18 May 2022)

The fifth Session of the Working Group took take place between 16-18 May 2022.

The documents from the fifth session can be found below:


Public Consultation

At its 101st session (Rome, June 2022), the Governing Council approved the draft MLF for the purposes of launching a public consultation on the draft instrument and mandated the Secretariat to facilitate such consultation. UNIDROIT conducted a three-month consultation on the draft MLF between July and October 2022.

The purposes of the consultation were to:

  1. Raise awareness about the instrument;
  2. Ensure that the instrument is well suited to application in different contexts, including both civil law and common law jurisdictions, as well as developing economies, emerging markets and developed economies;
  3. Seek feedback from parties engaged in factoring on whether the instrument sufficiently addresses issues that arise under existing legal frameworks and will improve factoring arrangements in States that implement the Model Law; and iv. Solicit comments on the drafting of the instrument itself.

The public consultation had three aspects:

  1. The launch of a dedicated webpage on the UNIDROIT website that allowed interested parties to access the draft Model Law on Factoring and facilitated the submission of comments (https://www.unidroit.org/instruments/factoring/modellaw-onlineconsultation/);
  2. The circulation of the draft Model Law on Factoring directly to interested parties, including UNIDROIT stakeholders,
  3. project stakeholders and industry stakeholders; and
  4. The organisation of consultation events to discuss the content of the draft instrument with stakeholders. On 12 October 2022, UNIDROIT held a virtual Question and Answer session on the MLF. Approximately 50 stakeholders from the factoring industry, government and academia participated in the virtual event. The event recording is available on the Institute’s YouTube channel (https://www.youtube.com/watch?v=9uian_qiWig). The draft MLF was also considered at a series of events organised by the FCI for stakeholders in Africa, Europe and Latin America.

Twenty-eight submissions were received during the consultation process, comprising 195 individual comments on the draft MLF. Submissions were received from stakeholders in twenty different countries, including twelve from Europe, six from Asia-Pacific, five from South America, four from North America and one from Africa.

UNIDROIT received fifteen submissions by private sector stakeholders, eight submissions from academic institutions and five submissions from Governments. The significant majority of the comments on the draft MLF received from stakeholders held a positive view of the draft MLF. Most stakeholders considered that the draft MLF provided a clear and effective legal framework that would better facilitate factoring transactions in their countries.

The full list of submissions is available here. The Secretariat also prepared an article-by-article summary for the Working Group. The Working Group considered the submissions received by stakeholders at its sixth session in November 2022 and made several revisions to the draft MLF.

Model Law on Factoring Online Consultation Paper: https://www.unidroit.org/wp-content/uploads/2022/08/Study-LVIII-A-draft-Model-Law-on-Factoring-consultation-document-29-July-1.pdf


Sixth Working Group Meeting (28 – 30 November 2022)

The sixth Session of the Working Group took place between 28-30 November 2022.

The documents from the sixth session can be found below:


Governing Council documents

The UNIDROIT Governing Council supervised the development of the UNIDROIT Model Law on Factoring. The relevant documents regarding the Model Law on Factoring considered by the Governing Council can be found here:



Following the publication of the MLF, UNIDROIT has adopted a four-part implementation and promotion strategy.

  1. Position the MLF as a core instrument that facilitates trade finance, access to credit and economic development: UNIDROIT is working with its partner stakeholders to ensure that the MLF is recognised as the tool representing international best practice for receivables financing.
  2. Raise awareness of the MLF at relevant large, multilateral fora: UNIDROIT is working with partner stakeholders to ensure that the MLF is presented at relevant large international events, including private stakeholder, government and NGO fora.
  3. Support domestic implementation of the MLF: UNIDROIT is working with partner organisations that deliver technical assistance programmes to assist States to improve their domestic factoring, receivables finance and trade finance legal frameworks. In recent years, the EBRD, IFC, ADB, UNCITRAL and ILI have all been deeply involved in secured transactions reforms in developing countries and emerging markets. UNIDROIT is working with these partner organisations (who have been directly involved in the negotiation of the MLF) to ensure that the MLF forms the basis of future receivables finance and factoring law reform projects across the globe.
  4. Ensure that the MLF is broadly accessible: UNIDROIT is working to ensure that the MLF is accessible to the broadest possible audience by (i) disseminating both printed and electronic copies of the instrument to all stakeholders involved in the development of the MLF, and (ii) working with partner stakeholders to facilitate unofficial translations into languages other than French and English.

The MLF has already been recognised as one of three key pillars of the “Financial Inclusion in Trade Roadmap” by the World Trade Board. Launched in April 2023, the “Financial Inclusion in Trade Roadmap” (FIT) is a framework designed to increase the participation of micro-, small- and medium-sized enterprises (MSMEs) in international trade. The World Trade Board was established in 2016 with the purpose of improving living standards by connecting trade, finance and technology. The FIT was developed as a collaborative project between the World Trade Board, the International Chamber of Commerce, the International Finance Corporation (IFC), the Bankers Association for Finance and Trade (BAFT), International Trade and Forfaiting Association (ITFA) and the FCI. The FIT is available at: https://worldtradesymposium.com/sites/wts/files/file/2023-03/financial-inclusion-in-trade-roadmap-2023.pdf.

The MLF has also already been acknowledged in the EBRD’s New Finance Support report (May 2023) which proposes a strategy to address liquidity and working capital issues currently affecting MSMEs around the world. As part of this strategy, the report recognises the MLF as a new international legal standard for receivables finance which can support access to credit for MSMEs in countries that implement the Model Law. The New Finance Report is available at: https://www.ebrd.com/what-we-do/sectors/legal-reform/access-to-finance.html





Guide to Enactment for the UNIDROIT Model Law on Factoring

Following the adoption of the UNIDROIT Model Law on Factoring (MLF) by the UNIDROIT Governing Council at its 102nd session (Rome, 10-12 May 2023), UNIDROIT has begun work on the development of a Guide to Enactment (GtE). Further information on the preparation of the MLF Guide to Enactment is available on the dedicated webpage: https://www.unidroit.org/work-in-progress/model-law-on-factoring-guide-to-enactment/.