Drafting a Model Law on Warehouse Receipts

Warehouse receipts are documents issued by warehouse operators that entitle the holder to claim the goods stored in the warehouse and covered by the receipt. They can be traded or used as collateral to access much needed credit facilities, thereby boosting economic growth, particularly in, but by no means limited to, the agricultural sector. A major obstacle to achieving the full potential of warehouse receipt financing in domestic and international transactions is that the law and norms relating to warehouse receipts are sometimes undeveloped or unclear, and vary from jurisdiction to jurisdiction. Against this backdrop, the proposed UNCITRAL-Unidroit project for a Model Law on Warehouse Receipts will play a vital role in developing, clarifying and harmonizing the law in this area. This chapter discusses the first phase of the project, involving the preparation of a Draft Model Law of Warehouse Receipts by a Unidroit Working Group from 2020-2023. This chapter explains the background of the project and discusses the legal and commercial framework of warehouse receipts generally as well as some of the challenges faced in the process of harmonization. The main part of the chapter explains the key provisions of the Draft Model Law prepared by the Unidroit Working Group on A Model Law of Warehouse Receipts, including the issue and contents of warehouse receipts, the alteration and replacement of warehouse receipts, transfers of negotiable warehouse receipts and the rights and obligations of warehouse operators.