A comparative study of Security right against right to payment evidenced by a negotiable instrument under UNCITRAL Model Law on Secured Transactions and the Law on Financing Production and Infrastructure

Document Type : Academicm and Research

Author

Department of Law, Faculty of Humanities, University of Zanjan, Zanjan, Iran

10.22091/csiw.2026.12435.2692

Abstract

In its specific sense, a negotiable instrument refers to a check, promissory note, or bill of exchange. All three embody a specific type of monetary obligation whose creation and transfer are contingent upon compliance with specific formal requirements prescribed by law. Both the UNCITRAL Model Law on Secured Transactions (adopted 2016) and the Law on Financing Production and Infrastructure (adopted 2023) provide for the possibility of creating a security right over this monetary obligation. This research, employing a descriptive-analytical method with a practical objective, conducts a comparative study of the provisions of these two laws.The findings indicate that both laws, by adopting the theory of the non-possessory security right, . This shift has made it possible to create a security right not only over tangible assets but also over monetary obligations, including negotiable instrument. Accordingly, the creation of a security right is possible only through a security agreement. Furthermore, a created security right becomes effective against third parties only upon its registration in the designated system (registry), although the Model Law also foresees the possession of the negotiable instrument as an alternative method for achieving this effectiveness.Finally, the Model Law refers the provisions governing the enforcement of a negotiable instrument after the default of the secured obligation to the domestic laws of enacting States. Therefore, in Iranian law, one can refer to the provisions of the Commercial Code and the Check Issuance Law for the enforcement of these documents.

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Comparative Studies on Islamic and Western Law

Articles in Press, Accepted Manuscript
Available Online from 25 February 2026

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