Introduction

The purpose of the current analysis is to depict, as broadly and as soundly can do it, the current use of the Lex Mercatoria as a possible legal instrument for a further and more complete integration of the EU market. Our argument, and our ultimate conclusion, is going to be that: EU will profit the most, if its legal procedures regarding private commercial transactions within EU market will posit Lex Mercatoria at the centre of the EU commercial policy, for the creation of a more functional environment for commercial transactions, and for the establishment of a faster, smoother and friendlier to the merchant people, adjudication system.

At the first part we will analyse the meaning, the legal nature and the limits of the Lex Mercatoria, mainly underscoring the current pragmatic use of Lex Mercatoria as: a) a creator of model contracts, b) a law that governs contracts referring to commercial transactions, c) a reference law to state adjudication, d) a reference law to arbitral awards and e) a useful resource of legal practices specified to help and endorse merchants and their transnational commercial activity.

At the second part we will proceed to analyse specific parts of: a) the United Nations Convention on Contracts for the International Sale of Goods, b) the UNIDROIT Principles of International Commercial Contracts and c) the Principles of European Contract Law, Parts I, II and III.

At the third part we will continue by referring to commercial international arbitration as an efficient and crucial factor for the establishment of a transnational legal procedure regarding transnational commercial transactions. We will, in addition, mention the main institutions which provide dispute resolution services. In our epilogue we will conclude by pointing out that EU, being, by definition, a transnational political, social, economic and legal community belongs to what we just called ‘transnational commercial community’. In this manner we will synoptically spell out the reasons regarding why the current use of the Lex Mercatoria can be of great importance for the further integration of the EU market.

Part 1: Lex Mercatoria

1.1: Reasoning

There are two main reasons that we have to deal with Lex Mercatoria. The first one -which is the most important in a pragmatic sense-, is that commercial actors do refer, at least sometimes, to Lex Mercatoria in the process of their commercial transactions. The second one –which is the most significant in legal terms-, is that Lex Mercatoria is mentioned in arbitral awards, state adjudications and internationally ratified conventions as a law that can either be the main legal ground for transnational commercial transactions or can be a supplementary legal source to private international law and state law regarding transnational commercial transactions.

Lex Mercatoria thus cannot apriori be legally ignored or invalidated. We are living in a world which constantly and strongly transcends national limits. Internet and the commercial transactions that are made within cyberspace cannot be accurately located in a specific region and even less in a particular state. Multi-national commercial agents do depict a vivid commercial activity which takes place in numerous state regions and simultaneously evolves too many state laws to be easy and prudent to define a specific law which could, alone, define and govern a multi-national commercial activity. We are suddenly finding ourselves in a world within which we cannot any longer depend on our old fashioned legal ‘armour’. Lex Mercatoria seems to better fit within this new transnational commercial horizon.

1.2: Meaning

The problem with Lex Mercatoria is that, not only we have different and opposed legal opinions as to its legal nature, we also have different opinions regarding its very meaning. The most obvious meaning is that Lex Mercatoria means ‘merchant law’, a law that refers to people of commerce and their commercial activities. This meaning however is neither an accurate one nor a useful one. Lex Mercatoria refers mainly to commercial transactions that exceed the national limits of any given state.[1] A ‘merchant law’ can refer to basic commercial activities that are under the state legal supervision and authority and thus are wholly and purely governed by the national commercial laws.

One possible depiction of the vagueness of the very meaning of the Lex Mercatoria is its definition by Alec Stone Sweet:

The Lex Mercatoria…is a multi-faceted term which…describes the totality of actors, usages, organizational techniques, and guiding principles that animate private, transnational trading relations, and it refers to the body of substantive law and dispute resolution procedures that govern these relations.[2]

Lex Mercatoria is described by Stone as a ‘multi-faceted’ term which covers generally private transnational trading relations and includes a rather loose group of people, organizations, laws and dispute resolution procedures. This definition is, at least, too general and rather ‘loose’, leaving us with many questions regarding the exact concept of the Lex Mercatoria. Ana Mercedes Lopez Rodriguez bluntly states that we cannot expect any unique and fully clarified concept of the Lex Mercatoria. She claims instead that:

The lex mercatoria may be generally defined as the body of rules, different in origin and content, created by the trade community to serve the needs of international trade. A settled definition of the lex Mercatoria upon which the majority of the doctrine agrees cannot be found. There are as many possible concepts of the lex Mercatoria as there are authors having dealt with the subject.[3]

Regardless the vagueness and generality of the above stated definitions of the meaning of the Lex Mercatoria, we can surely detect two main attributes of the Lex Mercatoria, namely: a) it is created by trade community and it is for the trade community and b) it refers to international trade. Trans-nationality and law which is focused on trade community are two of the characteristics we can find in the meaning of the Lex Mercatoria. Even if these two attributes cannot suffice to give us a clear, distinct and unique concept of the Lex Mercatoria, we can, at least, acquire a basic understanding of what Lex Mercatoria is. It is a bunch of commercial usages, techniques, legal procedures and dispute resolution procedures, which are created by merchant community and are used to help this trade community to proceed in transnational commercial transactions.

These attributes are the only two that are accepted by the majority of the law scholars even if some of these scholars tend either to decrease the legal value or even to deny the legal existence of the Lex Mercatoria. Gilles Cuniberti, for example, who is obviously opposite to the idea of the Lex Mercatoria being an autonomous legal order, accepts that:

One of the most remarkable developments in international commercial law over the last fifty years has been the gradual acceptance of the existence of a new merchant ‘law’, or lex mercatoria, spontaneously generated by the international community in the shadow of national legal order.[4]

Without, at the moment, going to a further discussion of Cuniberti’s analysis, the Lex Mercatoria is recognised as a certain legal procedure which refers specifically to international trade community. Michael Mustill, (another stated opponent of the Lex Mercatoria regarding main features of its legal existence), in his admirable and indeed flawless, in its concise analysis, article for the first twenty-five years of the ‘new’ Lex Mercatoria help us understand the general problem regarding any given definition of the Lex Mercatoria:

A useful starting-point would be a definition. Unfortunately, there appears to be none which accommodates all opinions as to the nature of the doctrine. The same turn of phrase means different things to different scholars. The following may however serve to give the flavour;… A set of general principles, and customary rules spontaneously referred to or elaborated in the framework of international trade, without reference to a particular national system of laws. A single autonomous body of law created by the international business community. This phenomenon of uniform rules serving uniform needs of international business and economic co-operation… The customs of the business Community may combine all general principles of law to create a system of commercial self-determination…. an anational lex mercatoria or …hybrid legal system finding its sources both in national and international law and in the vaguely defined region of general principles of law called “Transnational Law.[5]

 

Lord Mustill summarises the theories regarding the meaning of the Lex Mercatoria and he gathers together almost all the variant definitions. With one important notice, that since 1986 many things have changed, especially when we refer to written codifications of the Lex Mercatoria, (something that we will examine in depth in our next paragraphs), Mustill surely is able to give us a thorough picture of the general problem. The fact is that we cannot aspire, even today after another twenty-five years since Mustill’s article, of arriving at one clear, distinct and universally accepted definition of the meaning of the Lex Mercatoria. What we can safely notice is that Lex Mercatoria is characterised as something that corresponds to international trade community and to its transnational activities.

1.3: Legal Nature

Instead, then, of trying to continue this sisyphean deed and continue elaborating a possible concept of the Lex Mercatoria that could make everybody, within our legal community, happy, we choose to clearly depict and concisely analyse the on-going debate as to which is the exact legal nature of the Lex Mercatoria.  We will thus discuss the general ‘factual containment’ of the Lex Mercatoria, the possibility of the legal autonomy of the Lex Mercatoria, its possible legal sources, its exact position within the hierarchy of recognised legal sources, its legal status as law or, at least, as a specific legal procedure, and we will try to elucidate the reasons behind the different opinions in regard with the legal nature of the Lex Mercatoria.

1.3.1: Factual Containment

We admit that the expression ‘factual containment’ is a rather awkward expression, especially from a legal point of view. What we intend however to underscore with this unusual expression is that Lex Mercatoria is, if nothing else, a series of facts that pertain to commercial international activity. Trade usages, model contracts, standard clauses, general legal principles and international commercial arbitration are the very actual hypostasis of the Lex Mercatoria. These practices are the spine of any given legal nature of the Lex Mercatoria. No matter if someone agrees with the existence of the Lex Mercatoria or if he argues against its legal substance, international commercial activity and international commercial actors do use such practices. This is why Oliver Volckart and Antje Mangels give us this definition of the Lex Mercatoria:

The modern lex mercatoria can be more exactly defined as an institutional set consisting of trade usages, model contracts, standard clauses, general legal principles, and international commercial arbitration.[6]

Trade usages comprise the alpha and omega of the lex Mercatoria. To make it as simple as possible and to stress the undeniable and vital importance of the trade usages for the Lex Mercatoria we must realise that what we, so far, found regarding the Lex Mercatoria begins and ends with the trade community and their way of doing international commercial transactions. Trade usages are practices and ways of doing that the trade community fully acknowledges or are practices and ways of doing that the trade community expects its members to fully acknowledge and indorse.

These trade usages are so common and general within a certain trade community that constitute a binding rule to its members. It is in this way that common and usual practices within a certain commercial trade community become binding rules that can bear legal sanctions in the case of being ignored. As Klaus Peter Berger states:

In order to be recognized as the basis for a true legal system, the collective expectations of the members of that community with respect to compliance with certain rules of behavior have to be intensified in a way that these rules and principles are regarded as binding and mandatory upon each member. This requires a basic consensus of common values and convictions and the readiness of every member of that community to comply with the relevant rules and principles even at the risk of losing or doing damage to individual interests. From an individual perspective, the ‘validity’ of a legal system means nothing more than ‘being motivated through the existence of legal principles and rules’. With this mandatory element, the law carries an ‘unfriendly moment’ in the regulation of social life. This is also true in international trade where the businessmen’s consciousness of the validity of trade usages, customs, contract practices and similar rules is guaranteed through ‘black lists’, withdrawal of membership rights, forfeiture of bonds and similar dangers to the commercial reputation.[7]

We do want to stay, at the moment, in the crucial role the trade usages play for the formation of the Lex Mercatoria. The reason that makes us wanting to stay in the specific use of the trade usages within the Lex Mercatoria is that here we have a strong indication as to which is the legal nature of the Lex Mercatoria. The trade usages always refer to certain behaviours and specific activities, which through the continuous use by a specific trade community and through the conscious will of the members of this community become a binding rule. In the case of the trade usages, to be a binding rule means, for sure, three things, namely: a) to constitute a certain way of acting or not acting, b) to become an important element in the practice of a certain commercial activity in such a way that, even if a member of the community claims that he is not aware of this rule, its community nonetheless should have expected him to knew it, and c) the violation of the trade usages will definitely bring certain sanctions in the member that violated them.

If, as we claim and as the majority of the scholars believe, the trade usages become a binding rule within a certain international commercial community and if the Lex Mercatoria is, if nothing more, something that it is created by the international commercial community for the international commercial community, there appears to be a direct and very strong connection between trade usages and the Lex Mercatoria. What really matters regarding the legal nature of the Lex Mercatoria is that the trade community abides by the binding force of the trade usages and the Lex Mercatoria stems from the trade usages. Here, what grounds and what signifies the Lex Mercatoria is the will of a certain trade community to consider certain behaviours as legally binding rules for its activities. If this is really the case, then the Lex Mercatoria derives its normative power not from a state sovereignty but from the trade community.

Of course this is anathema for those who believe that only states have the power to create laws. We will say more about these opinions when we will conclude the brief analysis of the ‘factual containment’ of the Lex Mercatoria. To continue our analysis, model contracts, within our current context of the international commercial community, are certain forms of contracts especially designed to serve specific commercial agreements. We must underscore that party autonomy is the grounding force behind these agreements. The parties who make an agreement are able to freely design the specific terms of their agreement.[8] If and when certain commercial agreements tend to be guarded by certain preformed contracts, then the continuous use by the trade community of these model contracts characterises a specific conscious behaviour.

Standard clauses might refer: a) to the Lex Mercatoria as the law which governs a certain agreement, b) to the Lex Mercatoria as a supplemental to other laws law regarding the legal ground of a certain agreement and c) to the need of resorting to commercial arbitration in case of existence of any dispute and this clause might further states that the Lex Mercatoria will be either the only reference law that the arbitrator can use or the Lex Mercatoria will be one possible choice for the arbitrator. In any case, when we read in contracts and standard clauses about the Lex Mercatoria, both model contracts and standard clauses de facto refer to the legal use of the Lex Mercatoria. In this way we can understand both of them as part of a certain conscious and continuous effort by the trade community to include the Lex Mercatoria in their transactions. We can thus understand why model contracts and standard clauses are actual parts of the Lex Mercatoria.

Pacta sunt servanda is a general legal principle. In general it means that agreements must be kept. This general legal principle, as everybody can easily understand, apart from being a vital part of civil and international law represents the most crucial element in any kind of commercial agreement. It is in this way that we can understand why general legal principles of that sort are part of the Lex Mercatoria. Now, of course, comes naturally the question why do we need in the first place to refer to the Lex Mercatoria as the law which includes and uses such general legal principles. The most obvious answer would be that the Lex Mercatoria uses these principles in a different way and within a different context from both the civil law and the international law.[9]

We should have added here: a) the ratified international conventions which they refer to the Lex Mercatoria such as the United Nations Convention on Contracts for the International Sale of Goods (hereafter CISG), b) private efforts to codify certain principles which they apply to the international commercial activities such as the UNIDROIT Principles of International Commercial Contracts (hereafter UNIDROIT Principles) and c) awards from international private arbitral institutions such as the International Chamber of Commerce (hereafter ICC). All these three activities are part of the factual containment of the Lex Mercatoria as long as they specifically refer to the Lex Mercatoria as a possible legal procedure which pertains to the international commercial activity. We will analytically refer to each one of them further down in our analysis. For the time being it is sufficient to synoptically refer to them.

1.3.2: Legal Autonomy

Someone might have chosen to continue by analysing first the legal status of the Lex Mercatoria and then to analyse the problem of its legal autonomy. We choose to first refer to the problem of the Lex Mercatoria’s legal autonomy, only because we believe that in this way we will be able to draw the big picture behind the furious debate regarding the legal nature of the Lex Mercatoria.

Another objection might be that if we are not able first to fully know the exact legal nature of the Lex Mercatoria there is no, (right), way of dealing with problems and opinions referring to its legal autonomy. What we claim is that the most crucial characteristic of the Lex Mercatoria and its legal nature it is not if it is a law or a legal chimera or which other thing a legal mind might consider it but from where the Lex mercatoria derives its normative force to regulate international commercial transactions. The reason for our claim is that, no matter what the scholars say, the Lex Mercatoria does play such a role. In this context, the problem of the legal autonomy of the Lex Mercatoria becomes, for us, the key to better figure out how the Lex Mercatoria is actually playing its role in the transnational commercial reality. This is why any, so far, theoretical attempt to analyse the Lex Mercatoria focus mainly in its legal relation to national law and to private international law.[10]

The legal autonomy of the Lex Mercatoria can be viewed under two different and distinct perspectives, namely: a) Lex Mercatoria operates as a legal procedure and as a binding law without needing to depend on state laws and state sovereignty and b) Lex Mercatoria relies on the state courts regarding the execution of any arbitral awards which have applied the lex Mercatoria but nonetheless constitutes an independent and unique legal order which can regulate and govern private international commercial transactions if the commercial actors will it.

It is quite obvious that the problem of the Lex Mercatoria’s autonomy can be accurately restated as the problem of Lex Mercatoria’s autonomy from national legal systems. If we believe that only the states and the national legislators are legally entitled to produce valid laws then we must refute and decline any possible legal view that could recognise the autonomy of the Lex Mercatoria. Under this view the Lex Mercatoria is a legal myth or, at the best, a legal irregularity which national legislators do recognise from time to time by incorporating some of its usages in their laws in order to further promote world trade.

On the other hand, if we choose to carefully look at the way international commercial transactions take place and at the way dispute resolutions of these transactions normally occur, then we can acquire a totally different stance regarding the possible autonomy of the Lex Mercatoria from the state sovereignty and the national legislators.

We can see, for example, contracting parties to choose Lex Mercatoria as the law that will govern their contract instead of state laws or instead of the private international law. We can also see arbitral awards being based solely on the Lex Mercatoria instead of any of the above mentioned laws.[11]

What, at first glance, looks like a matter of legality, it is, in reality, a matter of which actor can and, should continue to, play the most significant role at the international commercial activities. Trade community on the one hand tries to wean from the national constraint and national legislators refuse to abandon their established power over trade activities in general.

Legal positivism is totally blind to the very existence of the Lex Mercatoria. National legislators are willing, from time to time, to incorporate in their laws some of the common trade usages but they still deny any legal autonomy to the Lex Mercatoria. Private international law and its rules on conflicts of laws still claims that can regulate and solve any possible disputes that will arise from international commercial activities. Trade community wants to be autonomous, secure and self-regulated.

This is, in general, the reality and this is mainly the reason why we still need to discuss the legal autonomy of the Lex mercatoria. It is, purely, a matter of raw power. Our stance in this conflict can be summarised in this way: commercial activities need a grade of freedom to be fully actualised. Here the opponents of the Lex Mercatoria could argue that party autonomy and the regular incorporation by the national legislator of trade usages do guarantee the necessary freedom to the trade community. Trade community however needs to feel safe in regard with the laws which govern their activities. When it comes to transnational commercial activities they start feeling confused as to which exactly is the law which should govern their activities. This is why the Lex Mercatoria in the form of certain written principles, the UNIDROIT Principles for example, makes them feel more comfortable.

As Stone underscores:

The priorities of transnational commercial activity remain autonomy, security, certainty, and efficiency…The indicators of dysfunction in national regimes are clear enough. On the one hand…’litigation means entanglement with a judicial process that is time-consuming…conflict of laws techniques are in deep crisis…In private international law adjudication, judges must decide which foreign law is to be assigned to the case, according to a complex set of criteria…[12]

The problem of the autonomy of the Lex Mercatoria refers to power conflicts. The Lex Mercatoria, as long as it offers a viable, resourceful, realistic and simple way of resolving problems that occur to the international trade community, it can be viewed as a sufficient legal ‘instrument’. What we will choose to name it is important but not crucial. This view of the Lex Mercatoria constitutes our argument in the whole current analysis.

1.3.3: Legal Sources

We need here to further clarify two possible issues that might arise in someone’s mind when he will take notice of our so far analysis: a) we are making a legal approach to the Lex Mercatoria even if we argue that problems referring to legal definitions are not the most crucial ones, and b) our claim that the Lex Mercatoria can be securely viewed as a ‘legal instrument’ means that from the point of view of which is exactly the state of autonomy of the Lex Mercatoria, our claim considers the Lex Mercatoria as a de factο autonomous legal practices. This autonomy however does not mean that national law and private international law are ‘enemies’ of the Lex Mercatoria. What constitutes the legal heart of the matter is how we are going to make the legal environment of the international/transnational commercial community a safer one for the sake of the world-trade economy.

To prove ourselves sufficiently legal we will continue our analysis by bringing to fore the possible legal sources of the Lex Mercatoria. Lord Mustill can, again, be of great help here. This is the list of the legal sources of the Lex Mercatoria Mustill comprised:

Reduced to its bare headings, this list is as follows:

A.

Public International Law

B.

Uniform Laws

C.

The General Principles of Law

D.

The Rules of International Organisations

E.

Customs and usages

F.

Standard Form Contracts

G.

Reporting of Arbitral Awards

To this list one must evidently add the public policy of the country in which enforcement of the award is likely to be requested.[13]

With the provision that Lord Mustill could not, (or he did not want to), anticipate the creation and the successful use of set of principles like the UNIDROIT Principles, his list represents all the necessary legal sources of the Lex Mercatoria. An obvious remark on the above mentioned list is that the Lex Mercatoria does have strong legal roots to the established legal order. Public International Law and the General Principles of Law represent the golden heart of the established legal order referring to international transactions of any kind. Another important remark is that even Mustill adheres to a certain mixture of law, general and common practices and arbitral awards. This alone can point to the specific legal nature of the Lex Mercatoria as a legal procedure which uses all the necessary legal sources it finds appropriate and convenient to its purposes.

1.3.4: Hierarchy

If the Lex Mercatoria is not a law then there is no need to discuss the problem of where exactly in the hierarchy of laws the Lex Mercatoria belongs. The Lex Mercatoria simply has no place at all in the legal hierarchy. If, on the other hand, the Lex Mercatoria is a legal order and constitutes a substantive legal law we must try to define where exactly is its place in the hierarchy of the laws that apply to transnational commercial transactions. If now, as we claim, the Lex Mercatoria is simply a legal procedure which combines different elements from different legal orders, then what we need to do is to see how the specific will of the commercial actors uses the Lex Mercatoria in their activities.

For the legal positivist, who needs national sovereignty to recognise a law as a law, the Lex Mercatoria is ‘excommunicated’. There are only two indirect ways of bringing the Lex Mercatoria within the established legal hierarchy, namely: a) by the incorporation in the national laws of some trade usages and b) by the validation and the execution, through national court decisions, of certain arbitral awards which are based in the Lex Mercatoria. In any case, within this context, the Lex Mercatoria is, in legal perspective, an irregular and problematic product of the private transnational commercial activity.

From the point of view of the proponent of the theory that the Lex Mercatoria is a substantive law, we must acknowledge three possible cases, namely: a) the Lex Mercatoria is the exclusive law which governs a certain commercial agreement; b) the Lex Mercatoria is a supplemental to other laws law, and c) the Lex Mercatoria should be a potential and possible law which can be used by an arbitral tribunal as a reference law.

We will analyse our opinion regarding the possibility of being the Lex Mercatoria a substantive law in the very next part of our analysis where we will specifically refer to the legal status of the Lex Mercatoria. For the time being what we can do is to try to find where to put the Lex Mercatoria in the hierarchy of laws in each one of the above mentioned three cases.

Even in the first case, where the Lex Mercatoria is considered to be the exclusive law of a certain agreement, we cannot put the Lex Mercatoria at the top of the hierarchy of legal rules. As we have already briefly mentioned, there are always certain mandatory rules that cannot be ignored or surpassed through the reference of party autonomy. We cannot abate rules that refer to matters of public policy, general rules of public international law or certain rules that come from ratified international conventions. The Lex Mercatoria in this case then must be of less legal normative power than these rules and the Lex Mercatoria cannot function in a legal ‘vacuum’. International commercial activities and transactions along with the international trade community cannot legally exist without the pre-given legal context that public policy and public international law create.

In the second case, where the Lex Mercatoria is recognised as a law but nonetheless as a law which can only be supplemental to other laws, we, again, should put the Lex Mercatoria under the national laws, the private international laws and the public international laws which mainly regulate the specific commercial activity.

In the third case, where the Lex Mercatoria can only be a potential and possible law which can be used by an arbitral tribunal as a reference law, the Lex Mercatoria is, again, of less normative power than the rules that govern public policy and the general rules of the public international law. No matter how hard someone wants to see the Lex Mercatoria as a legal order equally important as the national legal order or the public international legal order, we cannot consider the Lex Mercatoria a totally independent and self-sufficient legal system. As Ralf Michaels points out:

All of this suggests that this new new lex mercatoria is not a self-sufficient legal system independent from the state. National laws are legal systems because they create a clear distinction between domestic law and foreign law. While domestic law is always applicable, foreign law is applicable only if referred to by domestic choice of law rules…That the new new lex mercatoria is not autonomous from the state but rather contains both state and non-state norms and institutions becomes even clearer if we view it from the perspective of international commerce itself.[14]

The last remark from the above mentioned quotation is of great importance to our analysis because what makes the Lex Mercatoria being a ‘lex’ is, beyond any legal consideration, the very will of the international commercial community.

From the point of view that considers the Lex Mercatoria a legal procedure which combines different elements from different legal orders, the problem of hierarchy is not an important one. In this context, the Lex Mercatoria’s usefulness consists in its capability to borrow elements from various legal orders in order to successfully aid the transnational commercial activities. The matter of its legal place in the hierarchy of the laws is, in a way, being transcended.

1.3.5: Legal Status

Now that we have clarified critical elements of the legal nature of the Lex Mercatoria, we can briefly and conclusively present our approach to the problem of the legal status of the Lex Mercatoria. Our claim is that the Lex Mercatoria cannot be considered a self-sufficient, independent and completed legal system. Matters of public policy, the need of the national adjudication for executing the arbitral awards, lack of internal consistency regarding the interpretation of the Lex Mercatoria by the arbitral tribunals and the very need of the Lex Mercatoria to always re-inventing itself in order to better facilitate trade community’s purposes, renders the Lex Mercatoria incapable of being a law or a complete and autonomous legal order.

We cannot however agree with the positivists who, like a mingy old maid, refuse to accept the new world of the transnational commercial reality. So far, we have claimed that the Lex Mercatoria is de facto a legal reality because the world trade community wanted so. Now we also claim that the Lex Mercatoria is de jure a legal reality, especially designed to accommodate the needs of the international commercial community. Arbitral tribunals apply the Lex Mercatoria to certain disputes concerning commercial conflicts. The national courts do accept these arbitral awards. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, (New York, 1958), (hereafter New York Arbitration Convention), applies to the recognition and enforcement of foreign arbitral awards and the referral by a court to arbitration.

The UNIDROIT Principles have successfully performed their task to make the things easier between the transnational commercial actors. The vagueness and the lack of written accuracy that Mustill and others among him found to the Lex Mercatoria gives its place, little by little, to a new set of uniform rules that apply to transnational commercial activities. Without needing, for the time, to further expand our analysis on the critical contribution of the UNIDROIT Principles to the Lex Mercatoria, we can surely point out that we cannot any longer view the Lex Mercatoria as the illegal child of the private avidity of the trade community.

The Lex Mercatoria’s legal status is that of a legal ‘procedure’. It incorporates a variety of legal practices in order to smooth disputes which arise from certain transnational commercial agreements. In a way, it is a legal ‘chimera’; its only purpose in life is to better legally serve the needs of the world trade community.

1.3.6: Reasons Behind the Debate

We have already argued that the real reasons behind the furious debate on the nature and even on the very existence of the Lex Mercatoria are mainly political. States and national legislators do not wish to lose control of the commercial activities or to see their overall power as makers of law to be questioned.

Now we will, in addition, argue that there are also very important economic reasons that continue to put charcoal in the fire of this on-going debate. Merchants wish to take absolute control of their agreements without having to worry too much about any possible national legal restraints.

 Private institutes who either create model contracts and general principles or sell their arbitration to whoever needs it, want to make themselves as valuable as possible through the manifestation of the Lex Mercatoria as an independent to national laws legal order. Lawyers specialised in the ‘new new Lex Mercatoria’ (like the UNIDROIT Principles), and wannabe arbitrators who wish to establish themselves as possible and useful mediators for any given transnational commercial dispute, constitute a nexus of a new legal profession which makes a name for itself by advertising the usefulness and the autonomy of the Lex Mercatoria.

The stakes are too high for both sides to stop trying either to convince us that the Lex Mercatoria is a legal phantom or to persuade us that the Lex Mercatoria is the Holy Grail of the world-trade community. Our conclusion, indeed obvious we believe, is that the Lex Mercatoria is a relatively new legal instrument, which, under certain conditions and under certain provisions, can make the legal environment of the transnational commercial transactions more effective and less complicated.

1.3.7: Final Conclusion

The most valuable and useful characteristics of the Lex Mercatoria are two, namely: a) its neutrality and b) its specialisation. In what it follows we will concisely depict these two critical elements of the Lex Mercatoria.

When we have to regulate multi-national commercial agreements and especially when these agreements represent a multi-million financial investment, the commercial actors who are parts of this deal need to find a common ground regarding the law which will govern the specific agreement. They need to feel safe and secure. This will not happen if the law who will govern the agreement belongs to a single national legal system, especially if only one actor, or very few of the totality of the actors concerned with this agreement, is a citizen of the state which has this specific national legal order. The other parts of the deal might be afraid that some kind of partiality will favour this specific actor. The same will normally occur in any dispute resolutions might be grounded on a single national legal system.

A possible solution to this problem could be the finding of a national legal system which is equally extrinsic to all the parts of the agreement. Again, however, we would have to deal with a certain kind of suspiciousness that could put everything in jeopardy. The private international law on the other hand might prove to be over-complicated and slightly, at least, dysfunctional.

The Lex Mercatoria, especially in the form of specific general terms, (like the UNIDROIT Principles for example), could supply the necessary neutrality which is always desirable from every commercial actor when he is involved in multi-national agreements. This, alone, can help the transnational commercial activity by creating a safety-net of legal neutrality among the different commercial actors.

The Lex Mercatoria, as we have already mentioned, is expressed in the form of: a) model contracts, b) law that can govern a contract, c) reference law to state adjudication, d) reference law to arbitral awards, and e) useful resource of legal practices specified to help and endorse merchants and their transnational commercial activity.

What we continuously point out in our current analysis is that the Lex Mercatoria can be a very practical legal solution to many problems that can arise during the process of a transnational commercial activity. Lex Mercatoria came from the trade community and serves the trade community. In other words, the Lex Mercatoria is specifically designed to operate within the unique environment of a transnational commercial community.

Model contracts offer a safe, ready-to-work and relatively cheap option for the commercial actors who do not know much about private international commercial transactions. The Lex Mercatoria as the main governing law of multi-national commercial contracts guarantees, if nothing else, the desirable legal neutrality to all the concerned parts of the agreement. The Lex Mercatoria, especially in the form of pre-given written general terms, can greatly help the national judge to better serve justice in a legal multi-national context within which feels rather a stranger. Arbitral tribunals can use the Lex Mercatoria and save time and money to their clients. In general, in our strange new world of globalisation, the Lex Mercatoria can prove to be a practical and useful resource of legal practices especially designed to function without any problems of inappropriate dysfunctionality that, usually, the legal dinosaurs of the national legislation and of the private international law have in a world that continuously transforms itself and effortlessly transcends the traditional national limits.

 

Part 2: The Written Corpus

2.1: Reasoning

Opponents of the Lex Mercatoria stress the vagueness of the Lex Mercatoria and, in subsequence, the lack of predictability in regard with the possible various interpretations of the Lex Mercatoria, especially by arbitral tribunals. They also point out that what proponents of the Lex Mercatoria call as ‘Lex Mercatoria’ is in reality a peculiar mixture of general principles of law and arbitrary interpretations of them.[15]

The opponents of the Lex Mercatoria also point out that the commercial actors do not, or they should not, feel so comfortable with this lack of predictability referring to the possible interpretations of the Lex Mercatoria by arbitral tribunals. They further state that the Lex Mercatoria, instead of making the things easier and safer for the commercial actors, complicates the matter. 

Cuniberti, for example, claims that:

Although its proponents have argued for fifty years that lex mercatoria is beneficial for commercial parties, available data suggests that the latter have voted with their feet and there is still a long way to go before they are convinced. As long as the content of lex mercatoria remains so vague and/or complex to determine, it is hard to see how it can become more appealing to its alleged beneficiaries.[16]

In order to clarify the issue, we will now turn to three important written volumes of codified principles of law which they are specifically targeting the problem of how to regulate transnational commercial transactions. We will thus closely examine parts of the CISG, the UNIDROIT Principles and the Principles of European Contract Law, (Parts I, II, III), (hereafter PECL).

What we hope to accomplish is to see if and in which degree these written volumes succeed to: a) establish a certain outline of the Lex Mercatoria and b) offer a specific practical use of the Lex Mercatoria. We chose these specific written volumes because: a) they are universally known, if not accepted, b) they all focus on international commercial transactions and c) they all make a specific use of the Lex Mercatoria.

PECL is of great importance for our current analysis, because what we want to do is to present the possible use of the Lex Mercatoria as a legal ‘instrument’ for a further integration of the EU market. The UNIDROIT Principles, however, will give us the main arguments to defend our thesis that the Lex Mercatoria has the potentiality to become a very useful legal instrument for the metamorphosis of the environment of the transnational commercial activities from a very risky one to a safer and easier to be handled one. CISG will give us the necessary help to see how the international community of the nations of this world view the specific needs of the international commercial community, even if the convention mainly focus on the international sales of goods only.

2.2: CISG

In the ‘Explanatory Note by the UNCITRAL Secretariat on the United Nations Convention on Contracts for the International Sale of Goods’, Part One, Section D, with the title: ‘Interpretation of the contract; usages’ we read:

The Convention contains provisions on the manner in which statements and conduct of a party are to be interpreted in the context of the formation of the contract or its implementation. Usages agreed to by the parties, practices they have established between themselves and usages of which the parties knew or ought to have known and which are widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned may all be binding on the parties to the contract of sale.[17]

Here we have, in an international convention under the aegis of the United Nations, a written reference to trade usages which ‘may all be binding on the parties to the contract of sale’. These usages refer to practices that the parties know or should know. As we have already argued, trade usages comprise the most critical part of the Lex Mercatoria, if the Lex Mercatoria is to be viewed as something that came from the trade community and it is for the trade community. The most important conclusion that we can have out of this paragraph is the ‘binding’ force of the trade usages. The most important characteristic in a law is its binding force. Here then, even if we refer only to an explanatory note, and even if we cannot consider the expression used here as an expression that makes trade usages equal to laws, we can find a certain practical use of the Lex Mercatoria in the form of binding trade usages. The matter of the binding force of the trade usages should be deemed as an important legal statement which, if nothing else, can make us realise how the merchant people view trade usages. More than that, here we have a written referral to a commercial practice which de facto is used by the trade community as a kind of law which binds the parties of a contract.

To anticipate one obvious objection to our remarks, we do agree that the expression is: ‘may all be binding’ and thus its referral to a compulsory element of the trade usages is indeed less forceful but yet, we can clearly understand the possible legal use of the trade usages in the process of doing a commercial contract.

In the Part Three, of the same explanatory note, in section D, paragraph 31, we read:

Determining the exact moment when the risk of loss or damage to the goods passes from the seller to the buyer is of great importance in contracts for the international sale of goods. Parties may regulate the issue in their contract either by an express provision or by the use of a trade term such as, for example, an INCOTERM. The effect of the choice of such a term would be to amend the corresponding provisions of the CISG accordingly.[18]

The use of a pre-defined trade term can fully replace any other provision referring to ‘passing of risk’ matters. This use belongs to the use of the Lex Mercatoria. INCOTERMS[19] and other pre-defined commercial terms have a long history in the international commercial practice. The INCOTERMS, for example, were first published in 1936 and they successfully continue their course.[20]

The set of the uniform rules set by the CISG maybe are not universally accepted, but a considerable majority of the nations of our world have ratified this convention and, more than this, the most powerful in terms of commercial activity nations have agreed that the need for the creation of a set of uniform rules pertaining to international commercial activity is needed. This alone can, at least, guide us to realise that today’s commercial reality in a globalised world cannot any more regulated by national laws alone. Our international commercial reality needs other legal agreements and the CISG convention fully acknowledges it.

The Lex Mercatoria in the form of trade usages and trade terms is, undeniably, present in the written content of the convention. More than this, what is inarguably obvious is the need of a legal transcendence of the national legislation. This is what we read in the preamble of the CISG convention:

Being of the opinion that the adoption of uniform rules which govern contracts for the international sale of goods and take into account the different social, economic and legal systems would contribute to the removal of legal barriers in international trade and promote the development of international trade…[21]

 

To put it as simply and as clearly as possible: new commercial reality, new rules. This is the reality which is the driving force behind the CISG convention. To, once more, anticipate the most obvious objections: a) the CISG indeed is referring only to sales of goods but nonetheless recognises the need for a legal transcendence of national laws; b) the term ‘Lex Mercatoria’ is missing from the text but binding trade usages and trade terms do appear; c) the CISG convention is not universally accepted but points to a very certain direction and this is the surpassing of national limits; d) the CISG convention is indeed a product of compromise between the different states who took place in its actual configuration but this is another point which clearly indicates the need of a further communication between different commercial actors.

What we can undeniably conclude from this, very brief, approach to the CISG convention, is that national laws are, usually, a barrier to international commercial activities and even the nations themselves have realised that it is for their own good to, (partially at least), transfer the legal matter of international commercial activity from the national law to a set of uniform rules. There is apparent the practical need to legally move further than the national laws if we want to follow the rapid changes in the international commercial reality. This is where the Lex Mercatoria can be of practical (and legal) usefulness.

Bernard Audit eloquently summarises the direct and strong connection between the CISG convention and the Lex Mercatoria while he underscores that the Lex Mercatoria: ‘is the chief source of the applicable law for international transactions…’:

The relationship between the Convention and the lex mercatoria can be summarized by outlining the hierarchy of norms that may apply to an international sales contract under the Convention:

  1. The “mandatory norms” of domestic law, which prevail over the rules of the Convention (art. 4[a]);
  2. Trade usages, either expressly referred to by the parties (art. 9[l]) or found applicable by a court or arbitrator (art. 9[2]);
  3. Contract provisions (art. 6);
  4. The rules of the Convention;
  5. The “general principles” on which the Convention is based (art. 7[l]);
  6. If no such principles are identified, the non-mandatory norms of the law applicable under the conflict rules of the forum (art. 7[2]).

Although domestic laws appear at the top of the hierarchy, their application should be the exception. Under the Convention, the lex mercatoria is the chief source of the applicable law for international transactions either directly as trade usages (the second heading) or indirectly through the application of the principle of party autonomy in contract (the third heading). The Convention elaborates the common law and practices of international sales and the common core of domestic commercial rules. The Convention itself purports to formulate the most common practice and therefore qualifies as an expression of lex mercatoria. But, as its place in the hierarchy indicates, the Convention is above all a recognition by states of the paramount importance of existing and more specific commercial practices, to which the Convention gives the force of law.[22]

The quotation, admittedly, is a rather long one, but we believe that Audit locates with legal accuracy the reasons which make the CISG a serious and strong proponent of the use of the Lex Mercatoria in the transnational commercial activities.

We will close our current analysis of the CISG convention quoting Kazuaki Sono, who tell us why and how the CISG convention really meets the necessity of moving forward through making useful compromises. We refer to this quotation only to depict how nations cannot but thing of moving forward when it comes to global commercial reality:

The last fifty years, which were necessary to come up with the present text of the Vienna Sales Convention, represented a series of precious efforts to unwind such sophisticated localization of the law in favour of delocalization and the restoration of the rule of reasons in order to eliminate unnecessary legal obstacles to the flow of trade. When delegates participate in the elaboration of international legal texts, it is understandable for them first to compare a proposed rule with their domestic counterpart. However internationally minded they may be, their basic commitment is after all to their sovereign, particularly when they represent their governments. Those who concentrate on nothing but how the reasonable global rule should be must learn the need for patience when they hear such statements as “My delegation fully supports the proposed rule because it corresponds to our law.” At the same time, however, the “compromise in the constructive spirit” has been one of the important driving forces for delocalization.[23]

The reality, a new global reality, cannot be ignored. The CISG convention is, on the part of the nations, an important legal step towards a greater freedom from the restrains of the national laws.

2.3: UNIDROIT Principles

As we have already mentioned, we consider the UNIDROIT Principles a very important step towards the legal refinement of the Lex Mercatoria and we strongly argue that with the UNIDROIT Principles we can significantly decrease the legal vagueness of the Lex Mercatoria. As Gesa Baron points:

The longlasting and vivid debate concerning the lex mercatoria as autonomous body of law had somewhat reached a deadlock, because both opposing sides of arguments were incompatible with each other. As much as the commercial realities supported the idea of a lex mercatoria, at least the criticism of vagueness, incoherence and unpredictability seem to be serious objections. With the publication of the UNIDROIT Principles, the scenery has changed. On one hand, being transnational, common in origin, open to customs and especially tailored to the needs of international commercial transactions, the Principles meet all the substantive requirements of a true law merchant. Their autonomous and yet non-binding character is very attractive for the business community.[24]

What makes the UNIDROIT principles very important is their legal possibility to create a safe legal environment for global transnational commercial transactions. We have, in this world, many different and, quite often, opposed legal cultures. Private international law or, even worst, domestic system of laws, cannot help the international commercial community to overcome problems of legal antithesis that occur when commercial actors belonging to different legal cultures meet. As Michael Joachim Bonell points out, the UNIDROIT Principles seem, at least, to offer us a practical legal solution:

The UNIDROIT Principles, as the result of the work of a group of experts acting under the auspices of an intergovernmental organisation such as UNIDROIT with no legislative power, may have appeared at first sight to a sceptical observer to be little more than an academic exercise of no practical utility. The experience of the first two years since their publication has shown that this is not the case. Their success in practice has gone beyond all expectations. The reasons for the favourable acceptance of the UNIDROIT Principles in practice are manifold. One might be their intrinsic merits. As pointed out by an eminent Swiss arbitrator, “[t]he UNIDROIT Principles, are likely to find a quite universal acceptance, since they have been worked out […] with the contribution of over seventy well known specialists from all major areas and legal systems of the world, including formerly socialist countries, Latin America countries and countries of the Far East.” Yet there might also be more practical reasons for the success of the UNIDROIT Principles. To quote an experienced American lawyer, “[…][t]he great importance of the [UNIDROIT] Principles is that the volume exists. It can be taken to court, it can be referred to page and article number, and persons who are referred to its provisions can locate and review them without difficulty. This alone is a great contribution towards making lex mercatoria definitive and provable.”[25]

The UNIDROIT principles however do not limit themselves in a simple state of existence waiting for a possible legal referral. They are used by commercial actors in order to make their life easier, safer and more comfortable. Eckart Brodermann, a lawyer who practices successfully and energetically in the field of the international commercial law gives us his experience from using the UNIDROIT principles. In his introduction summarises efficiently the problems that the current international commercial reality creates to a lawyer and recommends the UNIDROIT Principles as a possible neutral legal solution:

Globalisation and worldwide trade between market participants from over 200 nations and legal orders have caused international trade and investment to become highly complex. This includes the law as a service discipline to such trade and transactions. No single legal mind can now master all necessary aspects. For example, within the European Union no brain is able even to read the law in all applicable European languages which, for the purposes of interpretation, have equal meaning and importance. The lawyer, acting like a scout in a jungle and maze of information, needs to compare the different laws that might be applicable and to choose the one best suited to the circumstances of the case. Often, the parties wish to compromise on a neutral law. It is in this context that the UNIDROIT Principles of International Commercial Contracts…come in helpful as a neutral set of rules.[26]

Different and sometimes even opposed legal traditions, economic and political conditions which change from country to country and from continent to continent do constitute a major hindrance to the transnational commercial community. The UNIDROIT Principles being by definition a set of uniform rules which are neutral and flexible have the legal ability to serve better the needs of the transnational commercial community.

…UNIDROIT Principles are intended to provide a system of rules especially tailored to the needs of international commercial transactions…The objective of the UNIDROIT Principles is to establish a balanced set of rules designed for use throughout the world irrespective of the legal traditions and the economic and political conditions of the countries in which they are to be applied.[27]

2.3.1: Purpose of the Principles

In order to depict how the UNIDROIT principles can be of use for the international commercial community and because we want to see how these principles can promote the use of the Lex Mercatoria in practice, we will synoptically analyse the purposes of the UNIDROIT Principles as we find them specifically expressed at the preamble of their written exposition. What we hope to achieve is to underscore their legal potentiality as a vital alternative to national legislation and to private international law.

We find at the preamble seven expressed purposes. The first defines the UNIDROIT Principles as a set of ‘general rules for international commercial contracts’.[28] The international character, according to the preamble, excludes ‘only those situations where no international element at all is involved, i.e. where all the relevant elements of the contract in question are concerned with one country only.’[29] In this way however, the character of ‘internationality’ is as broad and as general as can be. In fact here, the UNIDROIT Principles set up themselves as a set of uniform rules which can apply to all commercial transactions but those which specifically belong to the legal pertinence of a single country. Even in the case however, that all the parties of a contract belong to the same country, the UNIDROIT Principles still set themselves as a possible set of rules that the parties can choose to govern their agreement with the provision that: ‘Any such agreement would however be subject to the mandatory rules of the domestic law governing the contract.’[30]

The commercial character of a contract includes any kind of commercial transactions, (economic included as investments for example), and excludes only the so-called ‘consumer transactions’, which are usually subjected to special rules of mandatory character.

The second purpose refers to the application of the UNIDROIT Principles to contracts as their governing law as long as the parties have expressed their will that the UNIDROIT Principles will be the governing law of their agreement. In the case however that the Principles are the express choice by the parties, we have the suggestion that the parties ‘are well advised to combine such a choice of law clause with an arbitration agreement.’[31] In this way the UNIDROIT Principles can legally be applied to the contract ‘to the exclusion of any particular national law, subject only to the application of those rules of domestic law which are mandatory irrespective of which law governs the contract…’[32]

The third purpose states that the UNIDROIT Principles may be applied when the parties have agreed that their agreement will be subject to ‘general principles of law, the lex mercatoria or the like.’[33] Here we have the most practical use of the UNIDROIT Principles. So far, the opponents of the Lex Mercatoria have accused it of vagueness, legal uncertainty and, accordingly, of lack of legal practical use. Now:

Parties to international commercial contracts who cannot agree on the choice of a particular domestic law as the law applicable to their contract…[I]n order to avoid, or at least to reduce considerably, the uncertainty…it might be advisable…to have recourse to a systematic and well-defined set of rules such as the Principles.[34]

We argue that with the UNIDROIT Principles a significant amount of legal uncertainty is removed from the legal use of the Lex Mercatoria. The systematic and well-defined character of them can give an extremely valuable legal aid to the people who are involved in transnational commercial activities and they do not wish their agreement to be governed by a specific national law. The accusations of uncertainty and vagueness start losing their validity and the Lex Mercatoria start really being a practical legal aid.

The fourth purpose states that the UNIDROIT Principles may apply even in the absence of any choice of law by the parties, as long as arbitral tribunals are permitted to apply ‘the rules of law which they determine to be appropriate’.[35] We face here the possibility of the application of the `UNIDROIT Principles to a contract even when the parties have not specifically expressed a relevant will. This can occur only if there is an arbitration clause and only if the arbitral tribune is permitted to determine itself which law is deemed applicable. While we have to be very cautious in regard with this intended purpose, because we give to the arbitral tribunal too much freedom which might be contrary to the parties’ autonomy, we must underline that this scenario might occur only when we can deduct from the general terms of the contract that the parties do not welcome the application of a domestic law. It is obvious however, that here we are stretching far enough the legal possibilities of the UNIDROIT Principles.

The fifth purpose states that the UNIDROIT principles can also be used ‘as a means of interpreting and supplementing international uniform law instruments’.[36] In practice, here we have another possible legal dimension of the UNIDROIT Principles, as a means of helping judges and arbitrators to find autonomous principles and criteria for the interpretation and supplementing of which exactly international uniform law instrument have had to be found in each single case.

The sixth purpose states that the UNIDROIT Principles ‘may also be used to interpret and supplement domestic law.’[37] We can understand here how the Lex Mercatoria can be used not as a legal ‘opponent’ to domestic laws but as a helpful and useful legal ‘instrument’. Especially:

…where the dispute relates to an international commercial contract, it may be advisable to resort to the Principles as a source of inspiration. By so doing the domestic law in question would be interpreted and supplemented in accordance with internationally accepted standards and /or the special needs of cross-border trade relationships.[38]

The seventh purpose expressed at the preamble refers to the possible use of the UNIDROIT Principles as a ‘model for national and international legislators’.[39] When it comes to the need to legally regulate the new global transnational commercial transactions, national and international law-makers could find it extremely difficult to easily cope with the new multi-national commercial reality. Especially when we refer to countries which have not yet managed to develop a complete body of legal rules relating to multi-national contracts. The most useful and practical use of the UNIDROIT Principles as a model law refers to the creation by the UNIDROIT principles of a neutral and specifically designed for transnational commercial activities terminology:

So far the terminology used to express the same concept differs considerably from one instrument to another, with the obvious risk of misunderstandings and misinterpretations. Such inconsistencies could be avoided if the terminology of the Principles were to be adopted as an international uniform glossary.

Other possible uses of the UNIDROIT Principles, as they expressed at the preamble, could be: a) guide for drafting contracts, b) substitute for the domestic law otherwise applicable, whenever ‘it proves impossible or extremely difficult to establish the relevant rule of that particular domestic law with respect to a specific issue’[40], and c) course material in universities and law schools with the specific intention to ‘promoting the teaching of contract law on a truly comparative basis.’[41]

The UNIDROIT Principles are in the beginning of their legal life but nonetheless they are currently being used by the commercial actors in order to smooth the ‘rough-and-tumble’ transnational commercial environment. Its neutrality along with its specifically designed use for multi-national commercial activities renders the UNIDROIT Principles an irreplaceable legal aid. We can monitor and regularly observe its use by the commercial actors in this site: http://www.unilex.info/dynasite.cfm?dssid=2377&dsmid=13617 .[42]

The UNIDROIT Principles, in our opinion, have the potentiality to establish the Lex Mercatoria as a modern and up to date legal instrument for the global transnational commercial community. What seems to be its most desirable characteristic it is its flexibility and its capacity to accommodate the needs of a world which is in a constant change. The national legislation cannot, or does not want to, follow the on-going changes in a globalised economy.

2.4: PECL

 

2.4.1: Reasoning

The European Principles of Contract Law Parts I, II and III (PECL) ‘could function as the governing law of intra-community contracts so choose.’[43] This possibility is what provides us with our main argument during our current analysis. There is an on-going discussion as to if we can consider PECL a part of a universal Lex Mercatoria or we should consider them as an autonomous Lex Mercatoria but, nonetheless, PECL do constitute Lex Mercatoria especially designed to bring a further integration of the European Union economic market.[44]

Before however begin to examine and analyse PECL it would be wise and necessary for the purposes of our analysis to briefly refer to the two different core legal systems which constitute the European Member States Union, namely: a) civil law and b) common law.

Civil law is based on a written code, derived from Roman law while common law is grounded on precedents, judicial interpretation and legislation. The PECL, by definition, should be able to bring together these two different legal cultures. The Lex Mercatoria, especially in the form of the UNIDROIT Principles does the same, i.e. it brings together different legal cultures. Vijay Kamath quotes Maria del Pilar Perales Viscasillas:

…the entire text of the PECL, were created on the basis of “melds” or “patches” by selecting the most appropriate civil law or common-law rules, or the rules common to the different legal systems.[45]

The unified European Market includes many nations which they have totally different legal cultures. The PECL wants to harmonise this market in regard with the commercial contracts. 

In other words, the Lex Mercatoria is specifically used to build a smoother, safer and more efficient legal environment within the EU with the specific purpose of a further integration of the EU market.

2.4.2: The Text

In chapter one, section one, article 1.101 (1) of the PECL we read about the possible applications of the PECL principles.[46] The first application states that the PECL principles are intended ‘to be applied as general rules of contract law in the European Communities.’[47] The generality of the PECL principles directly refers to their need to sufficiently cover the general legal context, within which the commercial contracts, which are made within EU, will be able to function and produce legal commitments. We should not however take their general character as a sign of vagueness. The PECL, as the UNIDROIT Principles, constitute a specific, and given by written words, set of uniform rules which intend to provide the EU with a specific legal environment regarding contracts.

We can also add that, although the PECL principles are intended to be applied ‘in the European Communities’, if arbitration tribunals want to base their award on PECL, they can do so, even if their decision concerns disputes that have arose from transnational commercial agreements outside the European Union. This can occur because the PECL can be used as part of the world Lex Mercatoria. 

The second application, 1.101 (2) concerns the parties’ agreement to either incorporate the PECL principles in their contract or to decide that their contract is to be governed by the PECL. The possibility of the incorporation of the PECL in a commercial agreement means that the parties recognise the legal usefulness of the PECL in terms of facilitating a neutral legal ground for their agreement. As we have already noted, even within the European Union exist too many and too different legal cultures and the neutrality of the PECL has the capacity to smooth the possible differences between the legal cultures of the parties. In regard with the choice on behalf of the parties involved in a commercial agreement to choose the PECL as the governing law of their agreement, we can only notice that this clearly indicates the legal potentiality of the PECL, and of the Lex Mercatoria of course, to legally function as the governing law of a contract. No matter, then, where we stand in the matter of the legal status of the Lex Mercatoria, we see in practice that both the UNIDROIT Principles and the PECL, as a completed set of uniform rules relating to transnational commercial agreements, do have the legal potentiality to function as a law. Here of course, we have always to remember that the arbitration clause is necessary to administer the necessary legal context within which the PECL will be able to overcome possible problems referring to domestic laws and national legislation.

The third application, 1.101 (3), refers to when the PECL can be applied in regard with the expressed will of the parties. We read so 1.101 (3a) that the PECL principles may apply when the parties ‘have agreed that their contract is to be governed by “general principles of law”, “lex mercatoria” or the like’.[48] We find thus here the same provision, as to the possibility of the PECL to replace the general and legally vague terminology usually used in the contracts, as we found it in the UNIDROIT Principles’ preamble. Because, and this is crucial, the PECL and the UNIDROIT Principles aspire to form a Lex Mercatoria that will not be any more subject to accusations of vagueness and legal uncertainty.

In 1.101 (3b), we read that the PECL principles may be applied when the parties ‘have not chosen any system of rules of law to govern their contract.’[49] We are going to make the same remark as we did in the similar provision of the UNIDROIT Principles, that we must be very careful when we want to interpret the will of the parties that constitute an agreement. We cannot unconcernedly adhere to the application either of the UNIDROIT Principles or the PECL in a commercial contract within which we cannot find any specifically written will of the parties to do so. We admit, and this is something that someone can easily deduct from our so far analysis, that we consider the Lex Mercatoria, especially in the form of the UNIDROIT Principles and the PECL, a substantial advancement of our legal culture referring to transnational commercial activities, but, nonetheless, we cannot but be extremely cautious when we try to freely interpret the parties’ will. Party autonomy is the very cornerstone of the making of a commercial contract and we cannot afford to effortlessly exceed in our interpretation of the parties’ will.

The fourth application 1.101 (4) exhibits, once again, the possible legal usefulness of the PECL. We thus read that the PECL principles ‘may provide a solution to the issue raised where the system or rules of law applicable do not do so.’[50] The legal reality of the commercial activities which take place within the European Union’s market brings to light many legal inconsistencies. How are we going to regulate, for example, a contract which involves commercial actors from West Europe and China? The same legal problems may surface in a commercial transaction which involves actors from the United Kingdom and the Germany. The national law systems which are supposed to regulate these transnational commercial transactions may prove to be either inexpedient or too ‘local’ to be able to be used in such transnational commercial activities. The EU market has not yet delectate a harmonious legal environment able to fully endorse transnational commercial transactions within its sovereignty. The Lex Mercatoria does solve many problems, which of course does not mean that we should get rid of national legislation or private international law, but surely points to a more proper legal solution.

We cannot view the Lex Mercatoria as a direct opponent of the national legislation or the European Community’s laws. In 1: 103 (2) we read that:

Effects should nevertheless be given to those mandatory rules of national, supranational and international law which, according to the relevant rules of private international law, are applicable irrespective of the law governing the contract.[51]

We should take special notice of the specific referrals to: a) national law, b) supranational law, c) international law and d) private international law. These referrals are not adventive; they are specifically designed and expressed to draw the right legal relation of the PECL principles to national legislation (EU’s different countries/members of the union), supranational laws (EU’s legal ground referring to the specific EU’s legal production), international laws (with special reference to international treaties) and rules of private international law.

What we have here then, with the PECL principles, is an EU legal effort to drastically provide another useful legal instrument which could and should be used in order for the EU to succeed a further integration of its economic market.

The Lex Mercatoria can function thus in the EU market either as an autonomous set of uniform rules which can smoothly regulate transnational commercial transactions that take place within the EU’s market or can function as a legal aid supplemental to national, supranational and international laws. In any case, we do not have the luxury of continuing the same endless discussion regarding the Lex Mercatoria’s legal status or legal nature.

We must understand that the Lex Mercatoria can fully and without any problems cooperate with national and international legislation. There should be no more fear about the Lex Mercatoria’s vagueness, generality and uncertainty. The Lex Mercatoria is, by definition and by nature, predestined to help transnational commercial community. In order to do it however we must allow Lex Mercatoria the possibility of quickly adapted to an ever-changing and global commercial reality. The national legislation is too domestic to succeed in such an effort. Rules of private international law are already, almost at least and in the most time, out of the current global economic reality. The Lex Mercatoria, if we choose to see it as a purely specialised legal instrument, can greatly help us to cope with this new economic reality.

European Private Law and conclusively the EU’s economic market can really profit from the use of the PECL. As Vijay Kamath underscores PECL:

It has been of immense help to arbitrators and international business community…by reducing transaction costs in global business, by generating legal certainty. One of significant accomplishments of PECL is harmonisation of civil and common law to form common civil law for all the Member States…PECL is indeed a saviour for the differences in contract law for EEC.[52]

This constitutes the main argument and continuous claim of our analysis. Lex Mercatoria, especially in the forms of the UNIDROIT Principles and PECL do help towards a further integration of the EU market by making safer and more efficient the legal environment of the commercial transactions that are made in the European Union, either between only people from Member States or between people from Member States and people from other countries.

Part 3: International Commercial Arbitration

3.1: Reasoning

As we have noted, international commercial arbitration is a critical and most vital part of the Lex Mercatoria. It is obvious and self-evident that, if we aspire to come to a certain dispute resolution that will stay away from national courts, it will be as neutral as possible and it will try to quickly come to a resolution, we need to use the services of an international commercial arbitration. In what it follows, we will briefly analyse and clarify the exact role of an international commercial arbitration to the practice of the Lex Mercatoria, and we will mention the most known and well-established, in the minds of the global commercial community, institutes which provide such services.

Our main analysis is going to be mainly based in the text International Commercial Arbitration, which was created by Eric E. Bergsten for the purposes of the United Nations Conference on Trade and Development (UNCTAD).[53] We are doing so because this text is a fine summary of the theory and the current practice of international commercial arbitration and also because this text was created under the auspices of the United Nations and for the UNCTAD and thus is of world-wide recognition.

3.2: Main Analysis

The UNIDROIT Principles and the PECL refer specifically to an arbitration clause in a contract, if the parties involved are willing to settle their possible future disputes without needing to resort to any domestic legislation and if they do want to apply the Lex Mercatoria as the governing law of their contract.

The Lex Mercatoria then cannot be actualised without the use of international commercial arbitration. International arbitration is the sine qua non legal instrument for any dispute resolutions want to be settled away from national legislation.

 To start with the most obvious precondition of any arbitration: ‘If there is no dispute, there can be no arbitration.’[54] The arbitration is consensual. ‘An arbitration must be found on the agreement of the parties.’[55] Arbitration should lead to ‘a final and binding determination of the rights and obligations of the parties.’[56]

Arbitral tribunals are consisted of specialised people with great experience in the specific kind of disputes. ‘Arbitrators are chosen for a specific dispute.’[57] The procedure is, usually more flexible and quicker than the procedures followed in a national court. ‘…[T]he parties can have a relatively speedy arbitration at lower costs if that is what they want.’[58] When it comes to disputes that arise from international commercial agreements, neutrality and relevant safeguard against any possible occasions of inequality cannot be guaranteed by any national court.

To conclude, arbitration is:

…a dispute settlement procedure that, like litigation in the State courts, leads to a final and binding result that will be given execution by the courts. The primary difference between arbitration and litigation is that arbitration is consensual and the final award may treat only those matters that were referred to arbitration by the parties.[59]

The New York Convention is ‘the foundation stone on which the entire edifice of international commercial arbitration is built. The 135 States that have ratified the Convention have committed themselves to recognizing arbitral agreements’.[60]

The arbitrations usually take place within an arbitration institute. We have however the possibility of ad hoc arbitrations which they can happen without referring to an arbitration institution. Nowadays, we have ‘the ECE Arbitration Rules and the UNCITRAL Arbitration Rules. The parties can provide in the arbitration clause in their contract that any dispute they may have will be settled by arbitration in accordance with the Rules.’[61]

3.3: Main Concerns, Objections and Reserves

If neutrality, speediness, and a better facilitation of conditions that safeguard parties’ equality are the advantages of the international commercial arbitration and consequently the advantages of the Lex Mercatoria against an ‘outmoded’ legal system which is not prepared to cope with the new global economy, there are also many reserves, concerns and objections against the sufficiency and the effectiveness of the international commercial arbitration.

Abul F. M. Maniruzzaman has successfully summarised these concerns and objections and he argues that the Lex Mercatoria and the institutions which provide international commercial arbitration are far from being, yet, capable of replacing national legislation and national litigation. In what it follows, we will examine his main concerns and objections, with the specific purpose of presenting not only the positive approaches to the Lex Mercatoria and to the international commercial arbitration which chooses to use it but the negative approaches too.

Maniruzzaman argues that there is a certain insufficiency in the reasoning in arbitral awards, which comes from what he calls ‘psycho-legal dimension of arbitral approach’:

In the particular circumstances of a case, arbitrators sometimes tend to be idiosyncratic to uphold their convictions in whatever way possible….This is where the fear lies about the arbitral development and refinement of the lex mercatoria…[T]he arbitrators’ role in the development of the lex mercatoria will be discredited if they are overtaken by their subjective convictions and are not careful and balanced.[62]

What Maniruzzaman fears about the possible subjectivity and partiality of arbitrators holds true for the national judges too with an extra objective fact: the arbitrators are chosen by the parties while the national judge will have to judge through the ‘coloured glasses’ of his nationality and his legal training in only his national law. Arbitrators are human beings with certain preconceived ideas about justice. They are however also well-trained professionals specialised in the kind of international disputes they view. The fear of biased arbitration awards is of the same kind as the fear of a biased national court decision. The Lex Mercatoria however is designed to guarantee a certain neutral legal environment even with the fear of a subjective arbitration. We cannot forget also that the parties can have a three-member arbitration scheme in which they can have one arbitrator that they will appoint with the extra guarantee of having as the president of the arbitral tribunal a neutral and well-experienced arbitrator.

Maniruzzaman points out the possible misuse of the international commercial arbitration by the ‘economic interests of Western corporations:

Thus, if arbitrators are perceived as the instrumentality of western economic and political power, arbitration as an institution will not prosper globally. Hence, it proves to be a challenge for arbitrators to develop a balanced arbitral jurisprudence that will be acceptable universally.[63]

We do agree with Maniruzzaman in this point. Western corporations usually take advantage of their political and economic power and arbitrators do tend to guard their interests. At least this was the fashion before the rise of the ‘third-world’ economies. Nowadays, however, in a world in which China, India and Brazil, (to mention few of the new economic players), are in a position to equally battle the economic and political power of the Western nations, we seriously doubt that the Western corporations have any legal advancement regarding possible arbitral awards concerning their disputes with corporations from China for example. More than that, the UNIDROIT Principles along with PECL leave no place for arbitrary arbitral awards which are based on them. Maniruzzaman refers to cases that occurred before 1980. He generally underscores the insufficient reasoning in the arbitral awards. As we have already argued, even if this used to be the fashion, nowadays, that we have a very hard competition among many different institutes which offer arbitration services and that we have commercial actors from outside West that they can show equal economic and political power, arbitral awards, (at least those who we can view, because, unfortunately, the parties involved do not wish, usually, any publication of the arbitration procedures), cannot afford of being insufficiently explained.

Maniruzzaman also underscores the lack of publicity in regard with the arbitration awards:

…there remains another important problem that proves to be a stumbling block for the growth and development of the lex mercatoria. A very significant number of arbitral awards are not reported and published for various reasons such as confidentiality, political considerations, and others. Furthermore, the awards that are published are found mostly in denatured versions, again for confidentiality, from which it is difficult to assess the exact factual matters and circumstances on which arbitrators based their legal reasoning. Additionally, there is no system of reporting the pleadings of the arbitral cases…[64]

In this occasion, we, wholeheartedly, agree with Maniruzzaman. What we have here is the necessity of finding a certain point of balance between the need of the commercial community for confidentiality and the need of the public to be able to have access in arbitral awards. In fact, we do argue that this one of the very few points that the national-justice system outmatches the Lex Mercatoria, even in the international commercial transactions. Publication and free access to court decisions are sine qua non elements of any kind of legal system. No matter if the parties are usually either individuals or private corporations; there is a certain matter of public policy that should be taken to notice, otherwise we can find our societies being ‘in the dark’ in matters that could affect their overall state of living. Lex Mercatoria cannot afford to ignore matters of public interest.

Along with the problem of the lack of publication of the arbitral awards comes the problem of the global institutionalization of arbitration. Maniruzzaman rightly points out that in a global economy it would be extremely useful if we could have a ‘global institute of arbitration’ instead of having too many private institutes which they offer their services while competing harshly to each other.

The importance of such an institution cannot be overemphasised at the threshold of the twenty-first century with the ever-increasing cross-border commercial transactions and activities. It may play a significant role in monitoring the sound growth of the international arbitral jurisprudence and the consistent development of the corpus of the lex mercatoria.[65]

The international commercial arbitration is a very important part of the Lex Mercatoria. It guarantees, usually, neutrality, speediness and safety. The UNIDROIT Principles and the PECL principles provide the arbitral tribunals with a written corpus which can be a secure and clear reference for their arbitral awards, if they wish to rely on the Lex Mercatoria or if the parties have specifically expressed their will that the Lex Mercatoria will be the governing law of their contract or the reference law of their arbitration.

The only problem that continues to jeopardise the general application of arbitration in transnational commercial disputes is the lack of publication, mostly due to confidentiality issues. Confidentiality is a very strong advantage, for the commercial community, of the arbitral awards against the mandatory publication of the national litigation but, at the same time, is a giant block towards a sheer transformation of the Lex Mercatoria to a solid legal system. In any case, only time can show us if and in which degree the international commercial community will choose to keep things away from the public knowledge.

3.4: Main Private Institutes of International Commercial Arbitration

Only because we wish to offer a complete picture of the on-going development of the Lex Mercatoria we have to present a, very short but representative, list of the most established private institutions which they provide arbitration services:

1) International Chamber of Commerce (ICC) and its International Court of Arbitration (ICA).

2) Permanent Court of Arbitration (PCA).

3) International Council for Commercial Arbitration (ICCA).

4) London Court of International Arbitration (LCIA).

5) World Intellectual property Organization-Arbitration and Mediation Center (WIPO Arbitration and Mediation Center.

6) International Centre for Settlement of Investment Disputes (ICSID).

7) World Trade Organization (WTO).[66]

Epilogue

The Lex Mercatoria is currently used in Europe in many cases:

In Europe, national adaptation to the Lex Mercatoria is most visible in legislative revisions to the relevant code law (commentaries and assessments of these revisions are regularly published…). By the end of the 1990’s, nearly all states in Western Europe, Central Europe…have adopted new legislation aligning their law with the UNCITRAL’s model law…[67]

Alec Stone Sweet describes three reasons which they can explain why the Lex Mercatoria can help towards a further integration of the EU market. These are:

1) The Lex Mercatoria and the operation of the EU’s legal system led to further expansion in trade.

2) PECL promote energetically the harmonization of European private law.

3) The more national law comes to recognise the contractual freedom of transnational firms, and the arbitral freedom of private courts, the more pressure there will be on the EU’s bodies to co-ordinate what should remain in the public interest to regulate.[68]

With PECL and the UNIDROIT Principles we have a very practical and distinct legal ‘weapon’ in our hands, in order to further integrate the EU market. The Lex Mercatoria is no longer vague or ‘unpredictable’. It is not, of course, a complete legal system, and in our opinion it should not be. The global economic reality needs flexibility and quick reflections. The Lex Mercatoria has these qualities, exactly because it is not a complete legal system. It is however a powerful legal instrument, or, in the words of Michael Frischkorn, a useful pool or toolbox of ideas:

However the largest difference is in the view on its [Lex Mercatoria’s] use as a kind of pool or toolbox of ideas from which practitioners, arbitrators and business people can draw when negotiating contracts or resolving disputes regarding those contracts.[69]

European Union needs this kind of flexibility in order to override its internal problems which they arise from not yet being able to fully harmonise its legal system. The Lex Mercatoria in the form of the UNIDROIT Principles and especially in the form of PECL is a necessary legal instrument towards a further integration of the EU’s market.

 

Bibliography

1) Audit, Bernard, ‘The Vienna Sales Convention and the Lex Mercatoria’, in Lex Mercatoria and Arbitration, Thomas E. Carbonneau ed., rev. ed., (Juris Publishing, 1998), pp. 173-194.

2) Baron, Gesa, ‘Do the UNIDROIT Principles of International Commercial Contracts form a new lex mercatoria?’, in: http://www.cisg.law.pace.edu/cisg/biblio/baron.html, (last accessed at 17/03/2014).

3) Berger, Claus, Peter, ‘The Creeping Codification of the Lex Mercatoria’, (London and Boston: The Hague, 1999).

4) Bergsten, Eric, E., International Commercial Arbitration, created for the purposes of the United Nations Conference on Trade and Development (UNCTAD), UNCTAD/EDM/Misc.232/Add. 38, United Nations, 2005.

5) Bonell, Michael, Joachim, ‘The UNIDROIT Principles in Practice—The Experience of the First Two Years’, Uniform Law Review (1997), pp. 34-45.

6) Brodermann, Eckart, ‘The Impact of the UNIDROIT Principles on International Contract and Arbitration Practice—the Experience of a German Lawyer’, Uniform Law Review, (2011), pp. 589-612.

7) Cuniberti, Gilles, ‘Three Theories of Lex Mercatoria’, forthcoming 52 COLUMBIA J.  TRANSN’L L. (2014).

8) Frischkorn, Michael, ‘Definitions of the Lex Mercatoria and the Effects of Codifications on the Lex Mercatoria’s Flexibility’, European Journal of Law Reform, Vol. VII, no ¾, pp. 331-351.

9) Kamath, Vijay, ‘An Analysis of Principles of European Contract Law as an Autonomous/Universal Lex Mercatoria’, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1613142 , accessed last time at 19/03/2014.

10)  Maniruzzaman, Abul, F. M., ‘The Lex Mercatoria and International Contracts: A Challenge for International Commercial Arbitration?’, American University International Law Review, 14, no. 3 (1999), pp. 657-734.

11) Mansoor, Zeeshan, ‘Principles of European contract Law: an autonomous lex mercatoria or part of a universal lex mercatoria?’, International Journal of Private Law, Volume 6 (1)-Jan. 1, 2013, pp. 24-37.

12)  Michaels, Ralf, ‘The True Lex Mercatoria: Law Beyond the State’, Indiana Journal of Global Legal Studies, Vol. 14, 2 (Summer 2007), pp. 447-468.

13)  Mustill, Michael, ‘The New Lex Mercatoria: The First Twenty-Five Years’, 4 Arbitration  International, 86 (1988), pp. 86-121.

14)  (PECL), The Principles of European Contract Law 2002 (Parts I, II, and III), European Union, copy@lexmercatoria.org .

15)  Rodriguez, Ana, Mercedes, Lopez, ‘Lex Mercatoria’, RETTID 2002, pp. 46-56.

16) Sono, Kazuaki, ‘The Vienna Sales Convention: History and Perspective’, in International Sale of Goods: Dubrovnik Lectures, Peter Sarcevic and Paul Volken eds., (Oceana, 1986), pp. 1-17.

17)  Sweet, Stone, Alec, ‘The new Lex Mercatoria and transnational governance’, Journal of European Public Policy, 13:5, August 2006, pp. 627-646.

18)  (UNIDROIT Principles), Art. 1.6 (2) UNIDROIT PRINCIPLES, 2010, published by the International Institute for the Unification of Private Law (UNIDROIT).

19)  United Nations Convention on Contracts for the International Sale of Goods, United Nations Publication, November 2010, (CISG).

20)  Uppiah, Marie-Valerie, ‘Critical analysis of the extent to which the lex mercatoria can be considered as an autonomous body of law’, paper published at the proceedings of the International Conference on International Trade and Investment (ICITI), 2013.

21)  Volckart, Oliver, and Mangels, Antje, ‘Are the Roots of the Modern Lex Mercatoria Really Medieval?’, Southern Economic Journal, Vol. 65, No. 3 (Jan., 1999), pp. 427-450.

22)  Electronic Resource Guide for International Commercial Arbitration (e-RG), which is created and is being updated from time to time by Gloria Miccioli, American Society of International Law, (this page was last updated at August 14, 2013).

23)  http://www.iccwbo.org/products-and-services/trade-facilitation/incoterms-2010/, (last accessed at 16/03/2014).

24)  http://www.unilex.info/dynasite.cfm?dssid=2377&dsmid=13617, (last accessed at 22/03/2014.

 

Appendix

Case Studies (2014)

                   
13.01.2014 Kyiv Commercial Court of Appeal
21.01.2014 Fifteenth Appellate Commercial Court
31.01.2014 Fourth Appelate Commercial Court
05.02.2014 Fifteenth Appelate Commercial Court
14.02.2014 Fourth Appelate Commercial Court

 

 

 

 

[1] Some may argue, reasonably, that the Lex Mercatoria refers generally to commercial transactions. Without claiming to have definitely resolved the matter, it is quite obvious that for commercial activities which take place within the sovereignty of a state and involves, partly at least, citizens of this state, the domestic commercial laws are sufficient and applicable. It is, of course, always a matter of further enquiry, to point out if there are any certain clauses which refer to the possibility of international commercial arbitration. Even in this case, however, the national laws do have the legal priority. The things become more blur and complicated when the commercial transaction takes place in many different states and/or when the actors (individuals or companies) belong to many different nationalities. The Lex Mercatoria, and this is something quite common in the whole discussion about Lex Mercatoria, comes into play when we cannot surely and bluntly refer to a certain national sovereignty.

[2] Alec Stone Sweet, ‘The new Lex Mercatoria and transnational governance’, Journal of European Public Policy, 13:5, August 2006, p. 629.

[3] Ana Mercedes Lopez Rodriguez, ‘Lex Mercatoria’, RETTID 2002, p. 46.

[4] Gilles Cuniberti, ‘Three Theories of Lex Mercatoria’, forthcoming 52 COLUMBIA J.  TRANSN’L L. (2014), p.1.

[5] Lord Justice Michael Mustill, ‘The New Lex Mercatoria: The First Twenty-Five Years’, 4 Arbitration  International, 86 (1988), pp.87-88. We have quoted such a long quotation only because in this specific fragment we can find a fine summary of the on-going debate regarding the definition of the Lex Mercatoria. Mustill was able to give us a clear synopsis of the variant approaches to the meaning of the Lex Mercatoria.

[6] Oliver Volckart and Antje Mangels, ‘Are the Roots of the Modern Lex Mercatoria Really Medieval?’, Southern Economic Journal, Vol. 65, No. 3 (Jan., 1999), p. 430.

[7] Klaus Peter Berger, ‘The Creeping Codification of the Lex Mercatoria’, (London and Boston: The Hague, 1999), p. 106.

[8] There are, of course, some mandatory rules that they cannot overstep, such as public policy but, again, we will discuss these matters further down in our analysis.

 

[9] We will say more about possible objections further down in our analysis.

[10] A simple overview of the general bibliography on the Lex Mercatoria suffices to affirm our claim.

[11] See also on this point: Marie-Valerie Uppiah, ‘Critical analysis of the extent to which the lex mercatoria can be considered as an autonomous body of law’, paper published at the proceedings of the International Conference on International Trade and Investment (ICITI), 2013, p.8.

[12] Alec Stone Sweet, supra note 2, p. 632.

[13] Lord Mustill, supra note 5, p. 77.

[14] Ralf Michaels, ‘The True Lex Mercatoria: Law Beyond the State’, Indiana Journal of Global Legal Studies, Vol. 14, 2 (Summer 2007), pp. 458-459.

[15] We admit, our depiction here is a rather exaggerated one. The essence of the accusations of the Lex Mercatoria’s opponents however is quite near to this depiction.

[16] Supra note 4, p.26.

[17] United Nations Convention on Contracts for the International Sale of Goods, United Nations Publication, November 2010, p. 36.

[18] Ibid, pp. 39-40.

[19] For their meaning, history and current use see: http://www.iccwbo.org/products-and-services/trade-facilitation/incoterms-2010/, (last accessed at 16/03/2014).

[20] Ibid.

[21] See supra note 17, p. 1.

[22] Bernard Audit, ‘The Vienna Sales Convention and the Lex Mercatoria’, in Lex Mercatoria and Arbitration, Thomas E. Carbonneau ed., rev. ed., (Juris Publishing, 1998), pp. 192-194.

[23] Kazuaki Sono, ‘The Vienna Sales Convention: History and Perspective’, in International Sale of Goods: Dubrovnik Lectures, Peter Sarcevic and Paul Volken eds., (Oceana, 1986), p. 12.

[24] Gesa Baron, ‘Do the UNIDROIT Principles of International Commercial Contracts form a new lex mercatoria?’, in: http://www.cisg.law.pace.edu/cisg/biblio/baron.html, (last accessed at 17/03/2014).

[25] Michael Joachim Bonell, ‘The UNIDROIT Principles in Practice—The Experience of the First Two Years’, Uniform Law Review (1997), p. 44.

[26] Eckart Brodermann, ‘The Impact of the UNIDROIT Principles on International Contract and Arbitration Practice—the Experience of a German Lawyer’, Uniform Law Review, (2011), pp. 589-590.

[27] Art. 1.6 (2) UNIDROIT PRINCIPLES, 2010, published by the International Institute for the Unification of Private Law (UNIDROIT), Rome, p. xxiii from the Introduction to the 1994 Edition.

[28] Ibid, p. 1.

[29]Ibid, p. 2.

[30] Ibid, p. 2.

[31] Ibid, p.3.

[32] Ibid, pp. 3-4.

[33] Ibid, p. 1.

[34] Ibid, p. 4.

[35] Ibid, p. 4.

[36] Ibid, p. 5.

[37] Ibid, p. 5.

[38] Ibid, pp. 5-6.

[39] Ibid, p. 6.

[40] Ibid, p. 6.

[41] Ibid, p. 7.

[42] Last accessed at 19/03/2014.

[43] Supra note 3, p. 56.

[44] See for example: Zeeshan Mansoor, ‘Principles of European contract Law: an autonomous lex mercatoria or part of a universal lex mercatoria?’, International Journal of Private Law, Volume g (1)-Jan. 1, 2013 and Vijay Kamath, ‘An Analysis of Principles of European Contract Law as an Autonomous/Universal Lex Mercatoria’, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1613142 , accessed last time at 19/03/2014.

[45] See supra note 44, p. 3.

[46] The Principles of European Contract Law 2002 (Parts I, II, and III), European Union, copy@lexmercatoria.org .

[47] Ibid, p. 1.

[48] Ibid, p. 1.

[49] Ibid, p. 1.

[50] Ibid, p. 1.

[51] Ibid, p. 1.

[52] See supra note 44, p. 14.

[53] Eric E. Bergsten, International Commercial Arbitration, created for the purposes of the United Nations Conference on Trade and Development (UNCTAD), UNCTAD/EDM/Misc.232/Add. 38, United Nations, 2005.

[54] Ibid, p. 5.

[55] Ibid, p. 6.

[56] Ibid, p. 8.

[57] Ibid, p. 15.

[58] Ibid, p. 15.

[59] Ibid, p. 17.

[60] Ibid, p. 29.

[61] Ibid, p. 31.

[62] Abul F.M. Maniruzzaman, ‘The Lex Mercatoria and International Contracts: A Challenge for International Commercial Arbitration?’, American University International Law Review, 14, no. 3 (1999), p. 717.

[63] Ibid, p. 719.

[64] Ibid, p. 729.

[65] Ibid, p. 731.

[66] The above list was taken from the Electronic Resource Guide for International Commercial Arbitration (e-RG), which is created and is being updated from time to time by Gloria Miccioli, American Society of International Law, (this page was last updated at August 14, 2013). In this guide we have together every single institute which provides international commercial arbitration. For our current analysis, we chose the most significant and the most established institutes.

[67] See supra note 2, p. 639.

[68] Ibid, pp. 640-641.

[69] Michael Frischkorn, ‘Definitions of the Lex Mercatoria and the Effects of Codifications on the Lex Mercatoria’s Flexibility’, European Journal of Law Reform, Vol. VII, no ¾, p. 347.