Study Of Legal Issues Of The Assignment Of Accounts Receivable In International Factoring

In the process of economic globalisation, international trade hasbecome one of the most important aspects of world-economies. In the recenttwo decades, the ever-intensified trade competition and the simplificationof trading procedures challenge the traditional trade payment by way ofLetter of Credits (L/C). International factoring, with its advantages ofreducing the trade risk on open-account, is being accepted and utilisedworldwide. Currently, the industry of international factoring has developedits independent system of operations. Different countries, due to their different customs and history, havevarious definitions for "international factoring". From their practicaloperations, different countries employ different mechanism to regulate thisemerging industry. China's factoring services started from 1990s, when China joinedFactor Chain International (FCI). Nevertheless, up to now internationalfactoring has not been maturely developed, which was incompatible withChina's stunning increase in world trade volume. It is partly due toChina's underdeveloped legal environment, which cannot secure thelegitimate rights of the parties in international factoring. After China'saccess into WTO, it therefore, becomes an urgent task for China to upgradeits legislation, including the legislation for its various financial IIIsectors. This dissertation is aimed to discuss international factoring, oneof the newly emerging financial services in China. Starting with theidentification of its legal characterization, this dissertation willanalyse China's current legislative structures with the focus on itsapplication on international factoring with comparison to several developedcountries and international conventions. Further, this dissertation isgoing to advise on China's further improvement with regard to facilitatingthe development of China's international factoring industry. The first Chapter will discuss the general background of internationalfactoring, including the definition of international factoring, its originand development, service diversities, international factoring agreementand its basic legal relationships. In the second chapter, this dissertationwill study the legal characterization of international factoring, whichconcludes that the assignment of rights over accounts receivable from themanufacturer to the factor is the essence of international factoring. Withthe fundamental established, Chapter Three will discuss the specialproblems in the operation of international factoring with the theories ofdebt assignment. Chapter Four is focused on the study of internationalfactoring in China. Advice on further legislation improvement will bebrought up at the end of this dissertation.