The Lex Mercatoria and Private International Law

AuthorFriedrich K. Juenger
PositionEdward L. Barrett, Jr., Professor of Law, University of California at Davis
Pages1133-1150

Page 1133

Edward L. Barrett, Jr., Professor of Law, University of California at Davis. This contribution to the special issue of the Louisiana Law Review dedicated to Dean Symeonides is based on a paper I delivered, on November 5, 1999, at a conference on "International Uniform Commercial Law Conventions, Lex Mercatoria and Unidroit Principle"organized by the Verona University School of Law.

I Conflictualism And Internationalism

At first blush, the title of this article appears to be paradoxical because private international law (a term used here in to connote choice-of-law rules applied to international transactions) and the lex mercatoria1 represent radically different approaches to the same problem. Whereas private international law submits these transactions to the law of a particular state or nation, the lex mercatoria, a concept that connotes a set of transnational norms,2 would govern them directly, without the intervention of choice-of-law rules. To link these divergent approaches with the conjunctive "and" may look odd given the abyss that, in the opinion of representatives of these two approaches, separates their respective schools of thought.

There are, on the one side, the internationalists, such as the late Berthold Goldman3 and, on the other, the "conflictualists,"4 such as the late Francis A. Mann.5 The scholars found in one camp have little use for the views of those from the other and sometimes mince no words when expressing their mutual disdain, witness the following observation of the late comparativist René David:

[T]he lawyer's idea which aspires to submit international trade, in every case, to one or more national systems of law is nothing but bluff. The practical men have largely freed themselves from it, by means of standard contracts and arbitration, and states will be abandoning neither sovereignty nor prerogatives, if they open their eyes to reality and lend themselves to the reconstruction of international law.6 Page 1134 No less scathingly, Mann rejected the notion of a non-national law merchant, saying that the lex mercatoria "is as obscure as the equally unfortunate word 'transnational.'"7 These remarks suggest that private international law and the lex mercatoria are incompatible notions, between which there cannot be any common ground. How, indeed, should it be possible to reconcile the internationalists' idea to submit transactions that transcend national frontiers to an overarching law merchant, and the conflictualists' insistence that one or the other domestic law must of needs govern because such a body of transnational law simply does not exist?

Wherever one's sympathies lie, however, neither of these two approaches is indefensible and both of them have long been used in practice. The idea of a legal order specifically designed for transfrontier transactions is the older one. It dates back to the ius gentium developed by the praetor peregrinus, who devised rules that had a universal purport to govern disputes with and between non-Romans.8 It can of course be argued that these were in fact domestic Roman rules, rather than some kind of common law divorced from the society of which he was a functionary.9 The ius gentium, however, not only differed from the ius civile used for purely domestic consumption, but it also contained foreign (especially Greek) elements.10Moreover, its rules were conceived for the express purpose of dealing with the "transnational" transactions of the times, and it came to be considered as a natural law, which could serve mankind at large.11 In fact, the idea that it represented a universal law persisted over the centuries, as shown by the fact that the term ius gentium was later used to connote both public and private international law.12

A lex mercatoria with universal purport, which Maitland called the "'private international law' of the Middle Ages,"13 developed after the Dark Ages, when trade and commerce once again brought together merchants from many parts. The rules that governed their transactions were not purely local in nature.14 Nor, however, were they derived from the other supranational systems of the times, the revived ius civile elaborated by law teachers in Upper Italy15 and the Catholic Church's canon law. Rather, the emerging law merchant, which amounted to a "rebirth of the old jus gentium of the Mediterranean,"16 had to develop institutions, such as negotiable Page 1135 instruments, for which these legal systems offered no counterpart to deal with the exigencies of commercial transactions that did not respect territorial boundaries. 17 Maritime commerce, in particular, by its very nature called for universal rules In fact, to this day the international conventions that govern this world-wide activity still reflect many of the rules maritime tribunals elaborated, by means of the comparative method, from a wide variety of sources as the Usatges of Barcelona, the Rôles d'Oléron and the law of the Hanse towns. 18 As these examples show, the idea of supranational norms of commercial law developed through practice rather than legislation19 is hardly novel.

Once nation states emerged and the notion of sovereignty spread, however, the idea of a transcendental law lost appeal; the common law absorbed the lex mercatoria and civil law countries nationalized it20 by putting its rules and institutions between the covers of domestic commercial codes. Thus, while recognizing the difference between ordinary local rules of private law and those dealing with commerce-which, by its very nature, cannot be confined within a particular territory-the codifiers, proceeding from the premise that commercial law as well required the state's imprimatur, put a domestic stamp on rules and principles derived from international practice, as did the English judiciary.21 Indeed, so strong was the pull of the notion that only the state can make law that jurists doubted the existence, or at least the legal character of public international law, whose rules and institutions were, after all, not enacted by a "sovereign."22 Even those who accepted that international law does amount to a legal system nevertheless took the position that it was ultimately derived from the law-making power of nation states, whose consent furnished the basis for its authoritative quality.23 Individuals and enterprises, however, were not considered to be "subjects" of international law; only nation states could qualify as such.24 In those positivistic times, the very idea of a supranational lex mercatoria or ius gentium to govern private transactions was anathema because "if it is assumed that law can only be made by nation-states, then of course it 'follows' that law cannot be made by communities that transcend nation states."25 Since private dealings, including commercial transactions, were not Page 1136 subject to public international law, they had to be controlled by the law of some sovereign; the only question being which sovereign.

II The Problems With Private International Law

To answer the question which domestic law should govern a particular multistate transaction, courts and legislatures have looked to the writings of conflict of laws scholars. Ironically, the glossators and commentators were the first to discuss choice-of-law issues. Although their primary activity had been the elaboration of a universal law, the ius commune that once prevailed throughout continental Europe, these medieval jurists dealt with the subject because they were of course familiar with the diversity of the legal rules and institutions found in the statuta of the cities of Upper Italy, where they taught and practiced. 26 Building on their efforts, successive generations of authors from many nations further developed and refined their contributions to the conflict of laws 27

The intricate problems posed by the attempt to deal with multistate activities by applying domestic rules attracted some great legal scholars, such as Bartolus of Sassoferrato,28 Friedrich Carl von Savigny29 and Joseph Story. 30 As might be expected, not only the rules they advocated but also their fundamental approaches to the choice-of-law problem differed considerably. Nor have these differences of opinion been resolved. Thus, to this day it remains doubtful whether the statutist's unilateralist approach-recently revived by American conflicts scholars such as Brainerd Currie-which attempts to determine the spatial reach of substantive rules,31 the multilateralist methodology Story32 and Savigny33 advocated, or perhaps an admixture of the two, is the most appropriate one to accomplish this delicate task. Obviously, methodological uncertainties of this kind hardly serve the needs of international commerce between enterprises that treasure certainty and predictability in legal relationships. 34

The clash of different schools of thought is not the only problem with private international law. Unilateralism as well as multilateralism are beset by a number of inherent difficulties, which the proponents of these choice-of-law methodologies have yet to resolve in a satisfactory fashion. I have discussed these conundrums elsewhere;35 for present purposes it may suffice simply to refer to them There is, Page 1137 first of all, the multilateralists' "General Part"36 of the conflict of laws, which contains an odd assortment of constructs as characterization,37 renvoi,38 public policy,39 the preliminary (or "incidental") question40 and other puzzles41 engendered by the...

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