The content of the lex mercatoria

The next key issue is defining the substance of the lex mercatoria. There are again three main hypotheses. In the first the lex mercatoria encompasses the whole of transnational commercial law. This view is probably the least popular. Lando identified 8 elements of the lex mercatoria:

• • Public international law aspects
• • Uniform laws

• • General principles of law
• • Rules of international organisations
• • Uncodified customs and usages
• • Codified customs and usages
• • Standard-form contracts
• • Reported arbitral awards.^[1]

This thus means that all transnational commercial rules, public international law, and arbitral awards should be considered lex mcrcatoria. Dalhuisen also includes elements of EU law and domestic law in his classification. Following his work, in order of importance, the lex mcrcatoria consists of:

• • Fundamental basic principles like pacta sunt servanda
• • Custom and practices of a mandatory nature including proprietary restrictions
• • Uniform substantive treaty law of a mandatory nature such as certain EU laws
• • Mandatory general principles such as good faith
• • Contractual terms including the applicable law
• • Directory customs and practices
• • Uniform treaty rules of a directory nature like the CISG
• • Directory general principles of particular legal structures.

The lex mcrcatoria would thus consist of most elements of international commercial law and constitutes a legal system that can be ordered and hierarchised.

The intermediary view identifies the lex mcrcatoria as all non-statc rules. This would include usages and practices, general principles, model contracts, restatements of laws, codified usages, arbitral awards, but not public international law or international conventions.

The most restricted definition reduces the lex mcrcatoria to uncodified non-statc rules. It omits codified non-state rules: ‘none of these norms qualify as lex or even ius, and many of them are not mercatoriae. For example, although the UNIDROITPrinciples are limited to international ‘commercial’ contracts, neither the Principles of European Contract Law nor the credit card association rules are so limited.’ The lex mcrcatoria should thus be restricted to: ‘what Roman lawyers described as ius non scriptum and thus [...] that part of transnational commercial law which consists of the unwritten customs and usages of merchants.*² The essence of the new lex mercatoria as being ‘uncodified, non-statutory, and non-conventional.*²

Within this approach there is a sub-discussion on whether general principles of law should be included. The lex mercatoria would in that view, be confined to the practices, usages, and customs exclusive to international commerce.^[2] The inclusion of general principles is questioned because they vary between jurisdictions as does their interpretation and they arc thus not truly uniform.

General principles of law can originate within the international legal order or within the domestic legal order. They do not originate within the practices of the merchant community. At the same time, it can be considered that the general principles of international commercial law arc different to these two concepts. They might start as public international law or domestic law, but they can develop into common principles applicable to the practices of international commerce. Merchants would expect courts to interpret their contract in light of principles such as reasonableness and good faith. The value that the business community attaches to these principles would warrant their inclusion in the lex mercatoria.

Standard contracts and conditions do not have a customary origin, yet Goldman proposes these could be included in the lex mercatoria because they originate within the business community. This serves as an illustration that although there might be three broad theories on the substance of the lex mercatoria, within these three theories there are also different viewpoints on what should be included.

In conclusion there are three key issues that shape our understanding of the lex mercatoria. The first is whether the lex mercatoria can exist. The second is whether it is a distinct legal order. The third issue is establishing the substance of the lex mercatoria. There is no consensus on any of these issues. Berger notes that a worldwide survey amongst legal practitioners found that the vast majority' would not recommend choosing the lex mercatoria as the applicable law as it is not well defined. Defining the lex mercatoria is thus

Defining non-state rules 29 not only of theoretical importance, but also of practical importance because it solves the unpredictability that prevents its usage. For this purpose, the first two issues are mainly of academic interest whilst the question of the actual content of the lex mercatoria is also of practical interest. Businesses will not be as interested in theoretical debates on the existence of the lex mercatoria, and whether it should be classified as an autonomous system. They do want to know what they can expect if they use the lex mercatoria or if the court/arbitral tribunal applies it, and therefore it is important to have a workable definition of its contents.

If one adheres to the wider views of what the lex mercatoria consists of this moves it further away from the medieval lex mercatoria. In the lex mercatoria the object (the regulation of international commerce), and the origin (customary) are important: it is 'an ensemble of general principles and legal rules growing out of a process of spontaneous, institutional law making.’^4S If the lex mercatoria is equivalent to all transnational commercial law or even to just all non-statc rules (including codified) it means that custom is no longer its primary origin. It means that the lex mercatoria can be deliberately created by states and (international) organisations and the merchant community will no longer determine the content. Thus, by adopting the wider approach one changes the nature of the lex mercatoria.

If one sees the new lex mercatoria as a continuation of the medieval lex mercatoria it would be logical to take the medieval lex mercatoria as a starting point. Mitchell defines 5 characteristics of the medieval lex mercatoria:

• • Transnationality
• • Custom as the primary source
• • A spirit of equity
• • Self-administered by merchants
• • Speedy and informal procedures.^[3]

If one would define the lex mercatoria according to the above criteria the closest definition is that of an unwritten law which is spontaneously created and is formed by the customs, trade usages and practices of merchants, as well as by the general principles of transnational commercial law and that through its usage gains in legal authority. The concept of non-statc rules is thus broader than that of the lex mercatoria as it encompasses a wider range of sources (including codified non-statc rules). Whilst the lex mercatoria consists of non-state rules, not all non-statc rules can be considered lex mercatoria.

• [1] Ole Lando, 'The Lex Mcrcatoria in International Commercial Arbitration’ (1985) 34 International & Comparative Law Quarterly 747, 748. 2 Jan Dalhuisen, On Transnational and Comparative Commercial, Financial and Trade Law Volume I, - The New LexMcrcatoria and its Sources (Hart Publishing 2001) 169-171. 3 Roy Goode, ‘Usage and Its Reception in Transnational Commercial Law’ (1997) 46 International & Comparative Law Quarterly 2. 4 Symeon C Symeonides, 'Party Autonomy and Private-Law Making in Private Law: The Lex Mercatoria that Isn’t’ published in Liber Amicorum Konstantinos D Kerameus (Sakkoulas/Kluwer Press 2006) 6.
• [2] Roy Goode, Herbert Kronke, Ewan McKendrick and Jeffrey Wool, Transnational Commercial Law: Text, Cases and Materials (Oxford University Press 2007) 6. 2 Roy Goode, ‘Usage and Its Reception in Transnational Commercial Law’ (1997) 46 International & Comparative Law Quarterly 2. 3 This view is for instance espoused by Goode et all who write that general principles of (international) law should be seen as a separate source within transnational commercial law: Roy Goode, Herbert Kronke, Ewan McKendrick and Jeffrey Wool, Transnational Commercial Law: Text, Cases and Materials (Oxford University Press 2007) 6 and 50. 4 Jan Ramberg, International Commercial Transactions (ICC Kluwer Law International Norstedts Juridik AB 1998) 21. 5 Berthold Goldman, ‘Lex Mercatoria: Lecture’, Forum Internationale 3, (Kluwer 1983), 5/6. 6 Klaus Peter Berger, ‘The New Law Merchant and The Global Market Place: a 21“ Century View of Transnational Commercial Law’ in Klaus Peter Berger ( Editor), The Practice of Transnational Law (Kluwer Law International 2001) 6.
• [3] Ibid. 2 William Mitchell, An Essay on the Early History ofthe Law Merchant (Cambridge University Press 1904) 13.