UNIDROIT MODEL LAW ON FACTORING - GUIDE TO ENACTMENT

The draft UNIDROIT Model Law on Factoring Guide to Enactment, approved by the Governing Council at its 107th session, is now available in its electronic version at this link: https://www.unidroit.org/wp-content/uploads/2026/05/UNIDROIT-MLF-Guide-to-Enactment-May-2026.pdf

 

The Guide to Enactment assists States in understanding, implementing, and interpreting the provisions of the UNIDROIT Model Law on Factoring. The Guide seeks to explain the purpose of the Model Law and the operation of the provisions, including detailed technical explanations where implementation of the Model Law to the domestic legislation can have a higher degree of complexity. The primary audience for the Guide is government officials or legislative bodies in States considering implementing the MLF.

 

The Guide contains two innovative features that are expected to be particularly useful in assisting States in correctly implementing the MLF:

(i) Policy objectives, key features and common challenges: Part I of the MLF sets out the MLF’s five policy objectives and provides seven key features that achieve the policy objectives. The identification of policy objectives and key features is designed to ensure States do not inadvertently leave out specific aspects of the MLF which would significantly undermine its effectiveness in facilitating factoring.

(ii) Digital economy supplement: The Guide to Enactment contains a “Digital Economy Supplement”. The Digital Economy Supplement provides up-to-date information on how the MLF can be implemented alongside recent technological developments, with detailed guidance on digital assets, virtual currencies and electronic platforms and exchanges. Including the Digital Economy Supplement as a separate annexe allows it to be updated as needed to reflect changes in technology, without revising the Guide to Enactment itself. The Digital Economy Supplement is annexed to the digital version of the Guide, as available on the UNIDROIT website.