Structure of the remainder of the book

In order to understand the legal authority of non-state rules in international commercial contracts this book answers certain core questions: what is the nature of non-state rules and what does this mean in terms of how we should measure their legal authority? Having concluded that the legal authority of non-state rules should be measured by reference to their application, the book asks in what circumstances they can be applied as the governing law of the contract; and in what other ways they can be applied. The book is divided into three parts that address these questions in turn. Each of these parts consists of three chapters.

Part one (chapters 2, 3 and 4) explores the nature of non-state rules. The aim of this part is to first define what non-state rules are and explain what their place is in international commercial law; and second to consider how the legal authority of non-state rules can be understood and measured. To these ends chapter 2 explores the characteristics of non-state rules and their relationship with the lex mercatoria, before beginning to examine the concept of legal authority in relation to non-state rules. It explores whether law has legitimacy beyond the state; how that legitimacy can be understood; and how the concept of legal authority can be understood in relation to non-state rules. Crucially it introduces the idea that the legal authority of non-state rules is heavily dependent on their acceptance in the business and legal communities; which in turn means that key to understanding their authority must be their application. Chapter 3 takes a broader approach to the question of non-state rules. Whereas chapter 2 focused on defining these rules; chapter 3 focuses on the wider role that non-state rules have in both international commercial law and transnational commercial law. It does this through first exploring the place of non-state rules in international commercial law, before discussing legal harmonisation in international commercial law and the contribution of non-state rules to this process. Chapter 3 thus complements chapter 2 by ensuring an understanding of the wider context in which non-state rules function. Legal harmonisation being a crucial function of non-state rules, is key to creating an understanding of the functioning of non-state rules in this context. Non-state rules can only contribute to harmonisation if they are used by the business community and by courts. This usage includes when they are applied. Through this application they gain legitimacy, and this enhances their role in international commercial law. This in turn makes them more authoritative which makes it more likely that courts will apply them. Legal harmonisation is thus both caused and strengthened through applying non-state rules.

Chapter 4 narrows the focus to consider the different roles that non-state rules have within the contract and their status as a source of law. This brings Part 1 to a close with the conclusion that the legal authority of non-state rules can be determined in several ways: first through understanding the different concepts of what a source of law is (origin, process of how they were created, reason why the rule was created, and substance of the rule); and second through understanding how they can gain in legal authority (through support by the business community and legal professionals and their application in state courts and arbitral tribunals). Amongst these factors, it is argued that application is of overriding importance. This is because application demonstrates how non-state rules are used, how frequently they are used, in what manner they are applied, how their origin and substance is understood by legal professionals, and the support they have from the business community and legal professionals.

After establishing that the application of non-state rules is key to understanding their legal authority the second part of the book analyses the circumstances in which non-state rules arc applied. This part focuses on the agency of the contracting parties to include non-state rules in the choice of law clause as well as the agency of the courts and tribunals to apply non-state rules as the governing law. Chapter 5 starts with an analysis of how non-state rules could be applied as the governing law and then discusses party autonomy in international commercial contracts and the agency of the parties to choose non-state rules as the applicable law of the contract. It concludes that this is usually not possible in litigation, although the parties may choose to include non-state rules by reference in supplement to the applicable law. Chapter 6 analyses in more detail the links between private international law and non-state rules. The purpose is to understand why private international law generally does not allow for their usage as the applicable law and whether there are any exceptions to this overall rule. Chapter 7 examines the agency of the parties and tribunals to choose non-state rules in international arbitration and how courts deal with the enforcement of arbitral awards where non-state rules are the applicable law. This chapter confirms that in arbitration, the parties and the tribunal can usually choose non-state rules as the governing law. The conclusion from these chapters is that within private international law there is very limited scope to use non-state rules as the governing law of the contract and that the reasons for this arc linked to the fundamental principles underlying private international law even though these reasons arc not necessarily compelling. Things arc substantially different in international commercial arbitration where the parties and the tribunal have considerably more agency to use non-state rules as the governing law. Based on arbitration laws that allows for this usage, courts arc then for the most part willing to enforce an award, based on non-state rules.

Part three examines the application of non-state rules in ways other than as the governing law of the contract. It focuses on the application of non-state rules in addition to or as part of the applicable domestic law. It analyses how different categories of non-state rules are applied; notably trade usages, accepted principles and practices of international commercial law, and codified non-state rules. Chapter 8 considers the application of non-state rules through the applicable domestic law. It focuses on the application of trade usages, which arc considered as a source of law in most jurisdictions. Chapter 9 focuses on how courts use non-state rules as international commercial practices and principles. This can be to interpret domestic law, international conventions, or the contract. Non-state rules arc also used as a point of reference to show that domestic law is cither in line with internationally accepted practices or differs significantly from this. Chapter 10 analyses how courts apply codified non-state rules as an expression or reflection of the lex mcrcatoria, general principles of law, or trade usages. The court/tribunal applies codified non-statc rules given their coherency, consistency, and completeness. Furthermore, they are easy to uncover as they arc written down. This solves the difficulties of finding the concrete substance of the lex mercatoria. Codified non-state rules therefore play an authoritative role in defining the lex mercatoria.

Overall Part 3 concludes that non-state rules play a key role in international commercial contracts and arc regularly applied in state courts as either a source of law or to interpret the contract and the law. Non-statc rules gain in legal authority through regular application as a source of law, accepted commercial law practices, and as a reference point for interpreting the law and the contract. Courts use them as a reference point against which the suitability of domestic law in relation to international commerce is measured. Codified non-statc rules especially gain in legal authority through their application as an expression/reflection of uncodified non-state rules. Their substantive quality, ease of access, and the concrete solutions they propose lead to a more consistent approach to the application of non-statc rules.

Finally, the concluding chapter draws upon the previous chapters to conclude as to how the legal authority of non-state rules in international commercial contracts can be measured and understood. It concludes that non-state rules fulfil several roles and that the legal authority differs depending on the role. They may have legal authority as contractual provisions, as the applicable law of the contract, as sources of domestic law, and as accepted commercial law practices. They can be employed as contractual rules and derive their authority from the contract; they can be the governing law of the contract and derive their authority from private international law; they can be considered sources of domestic law and derive their authority from domestic law; they can be used to interpret the law and the contract and derive their authority from being considered general principles and practices of international commercial law. They are law; rules of law; contractual rules, and/or normative practices depending on the situation. Overall, considering the range of important ways in which non-statc rules can be applied, they arc undoubtedly of significant legal authority.