what is the purpose of the UNCITRAL optional rules and what is degree of its persuasiveness ?


The last decade of the twentieth century has been a period of great significance in the history of international trade and commerce. Various developments in the political and economic arena led to the onset of globalization and foreign corporations started pervading across all States and widened their commercial activities. This scenario paved the way for a booming economy worldwide and also evolution of the need for a well-trenched international legal framework regulating the behavior of transnational corporations. Amidst these circumstances the work of the United Nations Commission on International Trade Law (Herein after called UNCITRAL) assumes importance. UNCITRAL is the core body of the United Nations working in the field of International Trade Law for regulating activities of private corporations while conducting their businesses across States. The purpose is to reduce the obstacles to the exchange of goods, capital, and services in order to favor international investment amongst the major part of the modern international community.

The Work of UNCITRAL

According to Sridhar and Fabrizio(2006), UNCITRAL aims to create a more secure legal environment that could provide a basis for States to develop their national laws with greater consistency and for an interface in a global economy. The starting point of this idea is to have modernized and harmonized commercial laws, for an enhanced commercial activity in order to promote economic and social growth by reducing transaction costs. The precursor to the establishment of UNICTRAL was the belief that international trade cooperation among States is an important factor in the promotion of friendly relations among States and consequently in the maintenance of peace and security. Furthermore the interests of developing countries were considered to be of paramount importance for the betterment of conditions for development of international trade. This view was in conjunction with the fact that developing countries have to have an opportunity to participate in the activities carried out in the field of international trade law with adequate and modern laws in place and thereby to attain equality in international trade. In this direction UNCITRAL is considered to be an effective apparatus to establish international trade relations through progressive development, unification and harmonization of international trade law based on the principles of sovereignty, equality and interdependence of interests of both developed and developing countries.

UNCITRAL has become the core legal body of the United Nations system in the field of international trade law ever since its establishment. The significant inclusion in the UNCITRAL was “various geographic regions and its principal economic and legal systems”. This exercise was carried out in response to the survey results published in the Report. At present the UNCITRAL is composed of sixty member States, elected for a term of six years and the terms of half the members expire every three years. However it is important to note that UNICTRAL is not involved in setting trade rules between States and it does not even settle disputes involving issues of private international law.   (p-5)

Object and Mandate of UNCITRAL

In common parlance it can be said that the primary purpose of the UNCITRAL is to have a uniform, predictable and transparent system of law for encouraging foreign investment and international trade amongst nations. Hence, the object of UNCITRAL is to make possible interface of laws and for establishment of universal rule of law in the field of international trade law. Identifying problems that hamper smooth flow of international trade and thereby framing solutions by considering interests of all principal legal systems has been the principal object of UNCITRAL. This process has been termed as ‘Progressive Harmonization and Unification of International Trade’, which is the mandate of UNCITRAL.

In Sridhar and Fabrizio’”s review(2006), According to Resolution 2205 (XXI) of 1966, the mandate accorded to UNCITRAL is:

a) Coordinating the work of the organizations active in this field and encouraging cooperation among them.

b) Promoting wider participation in existing international conventions and wider acceptance of existing model and uniform laws.

c) Preparing or the adoption of new international conventions, model laws and uniform laws and promoting the codification and wider acceptance of international trade terms, provisions, customs and practices, in collaboration, where appropriate, with the organizations operating in this field.

d) Promoting ways and means of ensuring a uniform interpretation and application of international conventions and uniform laws in the field of law of international trade.

e) Collecting and disseminating information on national legislation and modern legal developments, including case law, in the field of law of international trade.

f) Establishing and maintaining a close collaboration with the United Nations on Conference of Trade and Development.

g) Maintaining liaison with other United Nations organs and specialized with international trade.

h) Taking any other action it may deem useful to fulfill its functions. (p-7)

Purpose of the Law

Although the Model Law was negotiated through an intergovernmental body, it is not an international agreement (unlike the GPA, in the broad sense of being an agreement between States). Indeed, the Model Law is expressly subject to any international agreements entered into by the enacting State. Although commentators have noted this distinction between the Model Law and other international or regional trade agreements on procurement, it is commonly noted that the tools available for implementing the objectives of national and international texts on procurement are similar, even if the motivations behind them differ. Tripe considers three “abstracted” models of procurement. The first is an “economic” model, based on maximizing value for money for the purchaser. The second is a “social” model, based on the economic model, but allowing for social or other economic or political objectives to be accommodated in the system. The third is an “international” model, in which national governments are required to follow internationally agreed principles and procedures, which generally restrict them from national policies that would conflict with the international trade objectives of the international agreement concerned. Tripe concludes that not all objectives under each model are mutually exclusive, and that each procurement system includes some features of each model. Thus the Model Law is an example of a mainly economic system that allows limited social or political objectives.

UNCITRAL engages in outreach activities to promote familiarization with UNCITRAL texts and their use; undertakes law reform assessments to assist governments and other authorities in assessing their needs for law reform in the commercial field; assists in drafting national legislation to implement UNCITRAL texts and in their implantation, in conjunction with other international development agencies, provides advice and assistance on the use of its texts.


LAW (UNCITRAL), the purposes of this Law can be summed up as following:

(a) “Procurement” means the acquisition by any means of goods, construction or services;

(b) “Procuring entity” means:

(i) Option I

Any governmental department, agency, organ or other unit, or any subdivision thereof, in this State that engages in procurement, except …; (and)

Option II

Any department, agency, organ or other unit, or any subdivision thereof, of the (“Government” or other term used to refer to the national Government of the enacting State) that engages in procurement, except …; (and)

(ii) (The enacting State may insert in this subparagraph and, if necessary, in subsequent subparagraphs, other entities or enterprises, or categories thereof, to be included in the definition of “procuring entity”);

(c) “Goods” means objects of every kind and description including raw materials, products and equipment and objects in solid, liquid or gaseous form, and electricity, as well as services incidental to the supply of the goods if the value of those incidental services does not exceed that of the goods themselves; (the enacting State may include additional categories of goods)

(d) “Construction” means all work associated with the construction, reconstruction,

demolition, repair or renovation of a building, structure or works, such as site preparation, excavation, erection, building, installation of equipment or materials, decoration and finishing, as well as services incidental to construction such as drilling, mapping, satellite photography, seismic investigations and similar services provided pursuant to the procurement contract, if the value of those services does not exceed that of the construction itself;

(e) “Services” means any object of procurement other than goods or construction; (the enacting State may specify certain objects of procurement which are to be treated as services)

(f) “Supplier or contractor” means, according to the context, any potential party or the party to a procurement contract with the procuring entity;

(g) “Procurement contract” means a contract between the procuring entity and a supplier or contractor resulting from procurement proceedings;

(h) “Tender security” means a security provided to the procuring entity to secure the fulfillment of any obligation referred to in article 32 (1) (f) and includes such arrangements as bank guarantees, surety bonds, stand-by letters of credit, cheques on which a bank is primarily liable, cash deposits, promissory notes and bills of exchange;

(i) “Currency” includes monetary unit of account. (artical-2)

The objectives of the Law


LAW (UNCITRAL), each text contains statements of its objectives.

The Model Law has five main objectives, which are set out in its Preamble:

“(a) Maximizing economy and efficiency in procurement;

(b) Fostering and encouraging participation in procurement proceedings by suppliers and contractors, especially where appropriate, participation by suppliers and contractors regardless of nationality, and thereby promoting international trade;

(c) Promoting competition among suppliers and contractors for the supply of the goods, construction or services to be procured;

(d) Providing for the fair and equitable treatment of all suppliers and contractors;

(e) Promoting the integrity of, and fairness and public confidence in, the procurement process; and

(f) Achieving transparency in the procedures relating to procurement”. (The objectives of the Model Law and of the GPA,p-6)

Degree of persuasiveness

The rules are constructive, shrewd, and seem in line with UNCITRAL’s stated purpose of resolving practical issues to enhance the operational efficiency of the trade and commerce. The UNCITRAL law simultaneously accomplishes different levels of harmonization. The 119 imperative recommendations provide “unification over time” with the specificity and range that closely resemble model legal provisions coupled with a guide to enactment. The remaining recommendations – those that constrain, focus and set policy norms – may not lead to a single international standard, even when considered in light of long stretches of time, because they sit comfortably within a range of national variation. Nonetheless, these more flexible recommendations nearly all “reduce differences over time,” and so “harmonize” consistent with the goal of modernization. Even the recommendations that are devoid of content, such as the architectural recommendations, and the norms of minimalism and disclosure, “harmonize” in the broadest sense of the term “as the process through which domestic laws may be modified to enhance predictability in cross-border commercial transactions.”

The law makes a persuasive case for the modernization of insolvency law, but only time will tell which recommendations nations will implement and, thus, whether it will have a harmonizing effect. Regardless of whether the Guide should be viewed as an instrument of “unification over time” or “reduction of differences over time”—and it is both—the harmonizing effect of the Legislative Guide on Insolvency Law will only be felt “over time.” To assess the harmonizing effect of the Guide, we will need to wait to judge the influence of the Guide “on the ground;” we will need to study the legislation it inspires and the implementation of that legislation by courts, insolvency representatives and insolvency professionals.



As the UNCITRAL Rules serve as a benchmark for other arbitration rules, are intended to apply to ad hoc arbitrations, and offer worldwide applicability and scope, this is exactly what the revision process of the Rules should be tailored towards. That is, the achievement of a largely constant, mature base of arbitral best practice. The Rules should be built on durable foundations and not on experimental provisions. Instead, stability and predictability allow the Rules to be more broadly applicable – from all forms of commercial arbitration disputes, through to the more specialized State-State or investor-State disputes. Contracting parties also face greater certainty, as they can more readily define and predict their exact obligations and rights under the Rules, and how particular provisions are likely to be interpreted and applied by an arbitral tribunal.


1.Patnaik, D.S. (2006). From the Selected Works of Dabiru Sridhar Patnaik. ISSUES OF HARMONISATION OF LAWS ON INTERNATIONAL TRADE FROM THE

PERSPECTIVE OF UNCITRAL: THE PAST AND THE CURRENT WORK, 5.Retrieved from works.bepress.com/cgi/viewcontent.cgi?article=1009&context=Sridhar

2. Patnaik, D.S. (2006). From the Selected Works of Dabiru Sridhar Patnaik. ISSUES OF HARMONISATION OF LAWS ON INTERNATIONAL TRADE FROM THE

PERSPECTIVE OF UNCITRAL: THE PAST AND THE CURRENT WORK, 7.Retrieved from works.bepress.com/cgi/viewcontent.cgi?article=1009&context=Sridhar


LAW (UNCITRAL). UNCITRAL Model Law on Procurement of Goods, Construction and

Services with Guide to Enactment, 2, retrieved from siteresources.worldbank.org/INTECACOSUPROC/Resources/776023-1271709540888/UNICTRAL3.pdf


Services with Guide to Enactment, 6, retrieved from siteresources.worldbank.org/INTECACOSUPROC/Resources/776023-1271709540888/UNICTRAL3.pdf