UNCITRAL Model Law On International Credit Transfers, 1992
Explanatory Note by the UNCITRAL Secretariat on the Model Law on International Credit Transfers
C. Scope of Application
2. Portions of an international credit transfer
16. Once it was decided that the Model Law should be drafted to apply to the entire "series of operations ... made for the purpose of placing funds at the disposal of a beneficiary", and not just to the payment order that passed from a bank in one country to a bank in another country, it was necessary to decide whether every aspect of a given international credit transfer should be subject to the Model Law as enacted in a given country. It was recognized by all concerned that such a result would be desirable, since it would ensure the application of a single legal regime to the entire credit transfer. At one stage a proposal was made that a rule to that effect should be included in the Model Law. UNCITRAL decided that such a rule, although desirable in the abstract, was neither technically nor politically feasible. Therefore, it was accepted by UNCITRAL that each of the operations carried out in the credit transfer would be subject to the law applicable to that operation. It was hoped, of course, that the Model Law would be widely adopted so that the different operations in a given credit transfer would be subject to a consistent legal regime.
17. Throughout the period that the Model Law was in preparation UNCITRAL implemented its decision that each of the operations carried out in the credit transfer would be subject to the law applicable to that operation by means of an article on conflict of laws. That article allowed the parties to choose the law applicable to their relationship. Such a choice would probably be included in an agreement that pre-existed the credit transfer in question. In the absence of an agreement, the law of the State of the receiving bank would apply to the rights and obligations arising out of the payment order sent to that bank.
18. At the 1992 session when the Model Law was adopted, it was decided to delete the conflict-of-laws provision from the Model Law proper. However, the article was included in a footnote to Chapter I of the Model Law "for States that might wish to adopt it".
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