Is there still room for the coexistence of legal systems in today's global economy?

• Author: Canivet, Guy

Chief Justice Canivet originally presented this article as the Keynote Address to the IADC's 2011 International Corporate Counsel College held in Paris on 6 October 2011.

IN TODAY'S global economy, a common assumption is that few legal traditions remain competitive at the international level. The law of the United Kingdom and of the state of New York, both coming from the common law tradition, are said to dominate the world of business as they are chosen to govern the majority of international contracts, while continental legal systems are said to be declining, dominated or inferior. In this context, arguing that civil law has a future as an efficient and modern legal tradition and that there is still room for the coexistence of legal systems is a particularly perilous task.

With Clausewitz and Napoleon, the art of war teaches that one should not accept confrontation on a field prepared by the enemy and that taking the offensive is the best strategy. With that in mind, the assumption that there is less room for the coexistence of legal systems can be challenged from two different standpoints: either directly, by challenging the alleged domination of common law over other legal systems; or indirectly, by disputing the idea that the relative advantages offered by a system of law has a decisive influence on its popularity in the business world.

1. Challenging the Alleged Superiority of Common Law

   The first question to ask is whether it is really indisputable that the laws of the United Kingdom or of the State of New York are more often chosen for the resolution of international contractual disputes. Put differently, does common law really dominate today's business world? The answer to this question should certainly shed more light on whether there is still today effective competition between common law and civil law.

   In a global market economy, more than ever economic actors have the possibility to choose a specific law to govern their contractual relationships to avoid the application of national laws or rules of conflict of laws. Commercial partners are free to choose when they initiate commercial transactions. Competition, therefore, exists between various legal instruments. The next section will examine the popularity of the various legal systems as perceived by the business community and compare this perception with the reality.

   1. The Perception of a Domination of the Common Law System is Incorrect

      Those who have defined the topic and established the programme of this symposium probably had the perception that common law dominates all aspects of commercial law in Europe and the test of the world. Their opinion could be based on a recent publication of the Law Society in which Jack Straw, the Minister of Justice of the UK, boasted the superiority of the British judicial and legal system. (1) According to this publication, no one can dare dispute the immense reputation of the English common law system of of the London Commercial Court. However, this perception is not totally verified as doubts have been expressed as to the domination of English law in the business world, in two different sources: one is English and the second, international.

      In the French economic newspaper > in 2009, an article discussed a survey conducted by an English institute of in-house lawyers practising in major European corporations. (2) According to this article, more than 80% of the corporate counsel surveyed believed that there are significant differences between legal and judicial systems within the European Union and that these differences justify the choice of substantive law applicable to corporate contracts as much as the choice of the appropriate forum. A majority of these practitioners thus believe that there is a meaningful coexistence of different legal systems in the business world.

      In addition, the survey suggests that a majority of these practitioners ate convinced that common law is the most often the legal system chosen to govern international contracts concluded by European companies (59% for English law and 11% for U.S. law). However, in their perception of their everyday practice, the superiority of common law was largely defeated. Indeed, the civil law system of continental European countries continues to lead common law countries. According to survey, common law actually only governs about a third of international contracts, which represents less than half of the perceived magnitude of the choice of common law by practitioners.

      The same divergence can be found with respect to the choice of forum. While corporate counsel believe that the forum that is the most often chosen in Europe is by far English tribunals, the reality is somewhat different. Only 17% of the practitioners admit referring their disputes to English courts, while Swiss courts have the highest percentage with 21%. French courts, for their part, ate chosen by 15% of them and German courts 9%. Courts of continental European countries attract the majority of commercial cases and remain the forums selected by most parties for the resolution of their commercial disputes.

      The results of this survey are confirmed by the last statistics of the International Chamber of Commerce. The statistics of the ICC for the year 2009 show that, among the 91 applicable laws which have been identified in the cases referred to the institution, English law represented 14.3% of these cases, Swiss law 13.1%, French law 7.2%, U.S. law 7.1%, German law 6% and Brazilian law 2.6%. (3) Of the 7.1% of arbitration clauses containing a choice of U.S. law as applicable substantive law, the law of New York represents 44%, the law of Delaware 14% and the law of California 9%. (4) These statistics should not be surprising because, contrary to common belief, more than 150 States representing 60% of the world population have adopted a system based on pure or mixed written law. (5) In its purest form, civil law represents 24% of the world population whereas 6.5% of the world lives under a common law system. (6) Naturally, this...