The roles of non-state rules in the contractual relationship

Introduction

This chapter analyses the role of non-state rules within the contractual relationship; and how in this context we can measure authority through application. Whereas chapter 3 focused on the broader role of non-state rules in international commercial law, this chapter focuses more narrowly on the type of legal authority' that can be attributed to categories of non-state rules. Non-state rules are a diverse group of sources and the first part of this chapter establishes how non-state rules can be classified. The second part then examines the different types of non-state rules respectively; international conventions, uncodified non-state rules (trade usages and general principles of law), codified non-state rules in the form of model laws, model contract terms and clauses, guidelines and opinions, and finally, restatements of law. It analyses for each of these categories how they function as a source of law and their role within the contract and how this influences their legal authority. This discussion is necessary because of the diffuse standing of non-state rules as a source of law. The discussion is even more pertinent as codified non-state rules are a relatively recent development and their role as a legal source is not (yet) clear.

This chapter forms the conclusion to Part 1 and demonstrates further how the application of non-state rules is the most important way in which their legal authority can be established. This is because non-state rules are not static entities that derive their authority from their existence within an established legal framework like state law. Rather, their legal authority' is far more situation dependent and changes through time and space. This chapter shows that how non-state rules are applied in relation to the contract determines how their legal authority' in a specific situation can be measured. It examines how specific non-state rules have legal authority either directly because of their status as a source of law in a specific jurisdiction, because they are used as contractual rules, or finally because they have become accepted international commercial practices and principles.

Classifying sources of international and transnational commercial law

Goode discusses how a traditional hierarchy of sources of transnational commercial law would be first international conventions, then trade usages, and in the last place restatements of law.^[1] However, this hierarchy is more diffuse in practice: for instance when a ratified convention is expressly excluded from the contract whereas a restatement of law is incorporated, the latter takes precedence over the first. Where sources of law fit in the hierarchy also depends on the jurisdiction. In common law jurisdictions scholarly contributions are secondary sources of law (if sources at all) whereas in Germany they are considered primary sources of law. Therefore enumerating sources of international commercial law should not be done in a strict hierarchy as the practice is more dynamic and differs depending on the situation, the contract, and the jurisdiction. Although establishing a hierarchy of sources would not be beneficial, classifying sources of transnational commercial law is necessary to understand the place and nature of non-state rules:

‘When the distinction between law and other social norms disappears, when every social actor who is creating social norms and who has the power to execute them is treated as a legislator, when the validity of positive law goes side by side with other types of legitimate validity (for example, factual acceptance by a majority), and, finally, when negotiating processes between various social actors make valid law - then it makes no more sense to speak of ‘the law’, and one has to give up the principles of equal adjudication and of the democratic legitimacy of legislation.’

An attempt should be made to distinguish between law and social norms. The first can be enforced. The second cannot be. In order to define the legal authority of non-state rules it is hence necessary to analyse their role as a source of law.

Below is a first classification based on the distinction between international commercial law and transnational commercial law:

• International commercial law (domestic legislation, international conventions once ratified and entered into force)

• Transnational commercial law. This includes non-state rules (custom, trade usages and practices, general principles of law, restatements of law, model laws, model contracts, model contract terms) and international conventions.

The first type of sources has the state as origin or as enactor. Even if the state was not involved in making the rules, the state will need to ratify the legislation before it becomes part of domestic law. The second type is not ratified or enacted by the state. It represents a bottom-up approach of legislation whereas the first category represents a top-down approach. They can be qualified as material sources rather than formal sources.^[2] There is a cross over between these categories and some rules can be recognised as a source of domestic law and can also be a source of transnational commercial law (such as trade usages and conventions.)

To further classify non-state rules Busseuil distinguishes between ‘sources négociées’ (international conventions), spontaneous sources (such as trade usages), and ‘sources réfléchies’ (such as the UPICC and PECL). He thus divides non-state rules into three categories: international conventions, uncodified non-state rules, and codified non-state rules. The next sections of this chapter follow these three categories.

• [1] Roy Goode, ‘Usage and its Reception in Transnational Commercial Law’ in Jacob S Ziegel and Shalow Lerner (editors), New Developments in International Commercial and Consumer Law, proceedings of the 8th Bienal Conference of the International Academy of Commercial and Consumer Law (Hart Publishing 1998) 6. 2 Ibid. 3 Larry A DiMatteo, ‘The Scholarly Response to the Harmonization of International Sales Law’ (2012) 30 Journal of Law 8c Commerce 1,3. 4 Klaus Giinther, ‘Legal Pluralism or Uniform Concept of Law: Globalisation as a Problem of Legal Theory’ (2008) http://www.helsinki.fi/nofo/NoFo5Gunther.pdfl3. 5 Although some laws are also social norms and vice versa.
• [2] Bruno Oppetit, ‘Le Droit International Privé, Droit Savant’ (1992) 234 Droit Savant recueil Cours de l’académie de DIP de la Haye 331. See section 2.5. 2 Guillaume Busseuil, ‘L’Avenir des Principes Unidroit Relatifs aux Contrats de Commerce International et des Principes Européens du Droit du Contrat : du Droit Mou ou Droit Dur ?' [2004] Centre de Droit Civil des Affaires et du Contentieux Economique 1 http://www.glose.org/CEDCACE4.pdfLast accessed: 27 February 2016. 3 Camilla Baasch Andersen, ‘Uniformity in the CISG in the First Decade of its Application’ in Ian F Fletcher, Loukas Mistelis and Marise Cremona (editors) Foundations and Perspectives of International Trade Law, (Sweet & Maxwell 2000) 296.