IMPLEMENTATION

MODEL LAW ON FACTORING

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.

 

Since its adoption, the MLF has been recognised in three significant international publications by important stakeholder organisations:

1. The MLF was recognised as one of three key pillars of the “Financial Inclusion in Trade Roadmap” (April 2023) by the World Trade Board. 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.

FINANCIAL INCLUSION IN TRADE ROADMAP

2. The MLF plays a central role in the International Finance Corporation’s (IFC) Knowledge Guide on Factoring Regulation and Supervision (October 2023). The Knowledge Guide emphasises the importance of countries implementing a factoring law including both regulatory elements and private law rules based on the MLF. The MLF is introduced as the international best practice private law framework for factoring in Part I of the Knowledge Guide, and Annex I provides a template structure of a factoring law, which incorporates regulatory rules alongside the private law rules contained in the MLF.

KNOWLEDGE GUIDE ON FACTORING REGULATION AND SUPERVISION

3. The MLF was 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.

NEW FINANCE SUPPORT REPORT

 

Promotion, technical assistance and capacity building initiatives

UNIDROIT routinely partners with key institutional stakeholders in the promotion and implementation of the Model Law on Factoring. The UNIDROIT website provides an archive of these events: https://www.unidroit.org/news-3/?_categories=contracts-factoring

 

Implementation Reports

Since its adoption, the UNIDROIT Secretariat has prepared regular implementation reports for the UNIDROIT Model Law on Factoring, which are available at the below links: