The place of non-state rules in international commercial law
Introduction
This chapter examines the place that non-state rules occupy in international commercial law. The starting point is to understand the differences between international commercial law and transnational commercial law and what place non-state rules occupy within those concepts. This discussion is closely linked to the harmonisation of law. Non-state rules play a key part in this process and make a significant contribution to the harmonisation of international commercial law. To understand the legal authority of non-state rules, it is thus not only necessary to know their place in international commercial law but also how they contribute to legal harmonisation. Understanding this contribution sheds light on the support that non-state rules have in the business community’. This support is one of the key factors to understanding the authority of non-state rules as chapter 2 established. Non-state rules represent a bottom up type harmonisation, that means that they are not imposed by the state but rather flow from the merchant community’ itself, which decides to use them. The consistent and repeated usage of non-state rules creates common legal principles and a common framework of understanding between merchants. This enhances their application in courts and in turn this application influences their legal authority. Non-state rules can only’ contribute to harmonisation if they are used by' the international business community, by states, and by courts. The more important the role of non-state rules in harmonisation, the more likely that they will be applied, which then furthers legal harmonisation and through these processes non-state rules gain in legal authority'.
International commercial law and transnational commercial law
The regulation of international commerce occurs on two different levels. The first is the international public law level where regulations are made through international organisations, including principally the World Trade Organisation, the World Bank, and the International Monetary Fund, as well as through bilateral and multilateral trade agreements. This area is commonly
The place of non-state rules 41 known as international economic law. Its goal is to organise the legal rules of the economy on a global and regional level through, for instance, tariff and custom regulations, and import and export agreements. The regulatory framework is aimed at the obligations of the state. Therefore, international economic law affects businesses indirectly.
The second level of organisation is that which is generally referred to as international commercial law. This concerns private law regulations in international trade and is applicable directly to businesses and other commercial private actors. It consists mainly of domestic law regulations; it is administered through the state.
Typically, the term international trade law is used synonymously with international economic law.[1] However, in the UK international trade law is regularly used as a synonym for international commercial law or to incorporate both international commercial law and international economic law. This means that within the UK context it is possible to find texts referring to international trade law but discussing international commercial law.
Overall, international economic law is public law whereas international commercial law is considered private law. This dichotomy is more nuanced when looking at the subject areas in more detail. Certain public aspects of company law, fiscal law, competition and intellectual property law could be included in the definition of international commercial law. There is no consensus on whether these subjects should be included within commercial law or should be seen as completely separate. Whilst the international contract contains a link to all these areas it is debatable how far that linkage should be extended to determine the exact boundaries of international commercial law. The boundaries between public law and private law arc fading and this leads to further convergence between international economic law and international commercial law.4
Contract law regulates the rights and obligations between the parties. Yet, the contract does not exist in a vacuum and obligations emanating from the contract extend beyond private law. These include fiscal obligations, obligations with regards to money laundering, fraud, corruption, import and export restrictions, as well as increasing human rights obligations for businesses, including non-financial reporting and due diligence on company and supply chain activities.[2] These elements all influence the international transactions between companies. Thus, it can be concluded that ‘international commercial transactions are the interchange between public and private law’
International commercial law is a branch of domestic law. There is no overarching international legislative body. Each state drafts and administers its own international commercial law. International commercial law is thus properly described as the domestic law that regulates international commerce.
The term international law is often used to refer exclusively to public international law. Textbooks titled ‘international law’ frequently focus only on public international law. Jessup wrote that the term international law is misleading when referring to international private law regulations, as the term seems to refer exclusively to interstate relations. Therefore, the perception of the term international does not necessarily match with the domestic law substance of international commercial law. However, as the aim of the subject is international, it is justified to use this term even if it can create some confusion.
International commercial law can be classified as a sub-branch of commercial law. Commercial law is defined as ‘the law relating to the facilitation and regulation of commerce’ and as ‘the totality of the law’s response to mercantile disputes, encompassing all these principles, rules and statutory provisions of whatever kind and from whatever source, which bear on private law rights and obligations of parties to commercial actions’^ International commercial law is then properly defined as the sub-branch of commercial law that regulates
The place of non-state rules 43 and facilitates international private commercial transactions and includes international elements next to domestic elements.
The term transnational commercial law is also regularly used to further distinguish between domestic international commercial law and the international aspects of international commercial law. The term transnational mainly became known through the works of Jessup who considered this more appropriate than the term international because of the way the latter is often used synonymously with public international law.[3] He defined this as: ‘all law which regulates actions or events that transcend national frontiers.' Transnational law is thus more inclusive than international law as it refers to a wider range of international legal interactions. Others took this definition and refined it such as Lalive who defines transnational law as between international law and domestic law and consisting of substantive rules rather than solely procedural rules like private international law.
Yet, transnational commercial law cannot be used as a synonym to international commercial law. They are different concepts. According to Goode transnational commercial law is more properly defined as ‘... not particular to or the product of any one legal system but represents a convergence of rules drawn from several legal systems or even a collection of rules which are entirely anational and have their force by virtue of international usage and its observance by the merchant community. In other words, it is the rules, not merely the actions or events that cross-national boundaries.*3 Mistclis defines transnational commercial law as follows: ‘the corpus of law resulting from the harmonisation or convergence of national laws, whether by international convention, conscious or unconscious judicial parallelism, uniform rules for specific types of contract and international restatements ofprinciples of contract law.*6
If one follows these definitions, transnational commercial law consists solely of those legal elements that arc transnational/international in origin, whereas international commercial law includes both these elements as well as domestic sources of law. Transnational commercial law is therefore the part of international commercial law that is international in origin and objective. Transnational commercial law is not a supranational law but exists in parallel to the nation state. It is intertwined with the state, as it is ultimately dependent on the state for enforcement.
To summarise the above, the conclusion is that international commercial law is a branch of domestic law. It is different from international economic law, which regulates relations between states, as it concerns private contractual relations. It mainly consists of private law but is connected to public law and international economic law and is a branch of commercial law. Each jurisdiction has its own international commercial law. Its objective is international, and it includes elements of both domestic law and international elements. Those international elements together are grouped under the term transnational commercial law.
- [1] Jan Hendrik Dalhuisen, On Transnational and Comparative Commercial, Financial and Trade Law (third edition, Hart Publishing 2007) 2. 2 Ibid. 3 See for instance: Indira Carr & Peter Stone, International Trade Law (sixth edition, Routledge 2017) and Carole Murray, David Holloway, Daren Timson-Hunt & Giles Dixon, Schmitthoff: the Law and Practice of International Trade (12’h edition Sweet & Maxwell 2012). 4 Klaus Peter Berger, The Creeping Codification of the Lex Mercatoria (Kluwer Law International 1999)160. 5 Pierre-Alain Gourion, Georges Peyrard and Nicolas Soubeyrand, Droit du Commerce International, (fourth edition, L.G.D.J. Lextenso Editions 2008) 86.
- [2] See for instance the UN Guiding Principles on Business and Human Rights (2011) See for a discussion on this subject: Denis G Arnold, ‘Corporations and Human Rights Obligations’ (2016) 1 Business and Human Rights Journal 255 Claire Methven O’Brien and Sumithra Dhanarajan, ‘The Corporate Responsibility to Respect Human Rights: A Status Review’ (2015) National University of Singapore, Faculty of Law Working Paper Series, Working Paper 2015/005 Examples of legislation include: The UK Modern Slavery Act 2015 The EU Non-Financial Reporting Directive (Directive 2014/95/EU) The French Due Diligence Law (La loi n°2017-399 Relative au Devoir de Vigilance des Sociétés Mères et Entreprises Donneuses d’Ordre). 2 Loukas Mistelis, Ts Harmonisation a Necessary Evil? The Future of Harmonisation and New Sources of International Trade’ in Ian F Fletcher, Loukas Mistelis and Marise Cremona (editors) Foundations and Perspectives of International Trade Law, (Sweet & Maxwell 2000) 5. 3 See for instance: Malcolm Evans, International Law, (Oxford University Press 2018), Malcolm Shaw, International Law (Cambridge University Press 2017), Antonio Cassese, International Law (Oxford University Press 2015), Jan Klabbers, International Law, (Cambridge University Press 2017). 4 Quoted in Roy Goode, ‘Usage and Its Reception in Transnational Commercial Law’ (1997) 46 International & Comparative Law Quarterly 2. 5 Nicholas H D Foster, ‘Comparative Commercial Law: Rules or Context?’ in Esin Orucii and David Nelken (Editors) Comparative Law, A Handbook ( Hart Publishing 2007) 263. 6 Roy Goode, Herbert Kronke, Ewan McKendrick and Jeffrey Wool, Transnational Commercial Law. Text, Cases and Materials (Oxford University Press 2007) 4.
- [3] Olugbenga Bamodu, ‘Extra-national Legal Principles in the Global Village: a Conceptual Examination of Transnational Law’ (2001) 4 International Arbitration Law Review 7, 7. 2 As quoted in Roy Goode, Herbert Kronke, Ewan McKendrick and Jeffrey Wool, Transnational Commercial Law: Text, Cases and Materials (Oxford University Press 2007) 4. 3 Jean-Flavien Lalive, ‘Contracts between a State or a State Agency and a Foreign Company’ (1964) 13 International and Comparative Law Quarterly 987, 1008-1009. 4 Roy Goode, Herbert Kronke, Ewan McKendrick and Jeffrey Wool, Transnational Commercial Law: Text, Cases and Materials (Oxford University Press 2007) 4. 5 Loukas Mistelis, ‘Is Harmonisation a Necessary Evil? The Future of Harmonisation and New Sources of International Trade’ in Ian F Fletcher, Loukas Mistelis and Marise Cremona (editors), Foundations and Perspectives of International Trade Law, (Sweet & Maxwell 2000) 10.
