Interpreting the lex mercatoria through codified non-state rules
After reviewing these cases it can be asserted that there is a trend to assimilate the application of unwritten non-state rules with codified non-state rules. They are applied as a reflection and as an expression (source) of the lex mercatoria. This trend is mostly observed in arbitration as tribunals more frequently apply non-state rules as the applicable law. The available court cases follow this trend.
The assimilation of codified non-state rules and the lex mercatoria especially happens with the UPICC and the CISG. This can be explained by several factors. The PECL is comparable in scope, but for the reasons explained in Section 4.6 the PECL have not had the same recognition. The PECL have received significantly less acknowledgment than the UPICC, both in theory and in practice.[1] Furthermore, the PECL are a regional instrument so to consider them, as an expression/reflcction of a global lex mercatoria would be problematic although they could be used as an expression/reflcction of a regional lex mercatoria. These doubts about the position of the PECL are reflected in a ruling from an ICC Arbitral Tribunal where the applicable law was the lex mercatoria. The claimant argued that this meant the application of the UPICC and the PECL. The tribunal agreed with regards to the UNIDROIT Principles but stated with regards to the PECL: ‘ they constitute an academic research, at this stage not largely well-known to the international business community and are a preliminary step to the drafting of a future European Code of Contracts, not enacted yet.*3
Nonetheless, the PECL are used in some cases as an expression/reflcction of the lex mercatoria and its elements: often in conjunction with the UNIDROIT Principles. Courts and tribunals quote these instruments together to show that these propagate the same solution. Using several internationally recognised instruments that express the same solution adds legitimacy, for if different experts agree it is more likely that this is indeed a generally recognised principle of law.
The PLACL were published very recently and therefore their potential impact is not yet clear. The Incoterms cover a limited area of the contract and the UCP only cover documentary credits, but in those areas they have been used as an expression or reflection of the lex mercatoria as some of the cases discussed above have shown. The Incoterms could stand up as trade usages and indeed, as Section 8.2 examines, they are used in this capacity.
Codified non-state rules arc thus used as a reflection or as an expression of uncodified non-state rules. It is not clear whether tribunals and courts
The application of codified non-state rules 201 distinguish between the concepts of expression and reflection or that they use these words interchangeably without attaching any further meaning to it.
Whether the assimilation of the UPICC, the CISG, and similar instruments to the lex mercatoria is progress is debatable. By using codified nonstate rules to define the lex mercatoria there is a risk that the lex mercatoria loses its flexibility and becomes assimilated to codified and conventional laws.[2] This would change the essence of the lex mercatoria and reduces it to written instruments that are drafted and modified by international organisations. It does not emerge spontaneously from within the merchant community. If the lex mercatoria is reduced to one or more instruments, even a qualitative instrument like the UPICC then there is no longer a real law merchant that draws from a plurality of principles and usages. Yet, this core quality of the lex mercatoria is also its weakness: it is difficult to apply the lex mercatoria in a consistent and clear manner if it comes from a vast array of sources that change over time, space, and trades. Using the UPICC gives the courts an almost complete restatement of law, including official commentary and examples on how the law should be applied. It makes it far more feasible to apply the lex mercatoria as the governing law, in a concrete, consistent, and coherent manner.
Tribunals apply codified non-state rules as a reflection/expression of the lex mercatoria because there is a need for a clear and concise lex mercatoria. In a 2003 arbitration case the tribunal stated that the UPICC were preferable to other transnational principles and rules because they arc much more precise. Parties seldom seem to object to the use of codified non-state rules as lex mercatoria even though they rarely include these codified non-state rules in a choice of law clause. When arbitrators/courts apply the lex mercatoria without reference to codified non-state rules it can be difficult to find the applicable rules and principles and this creates inconsistency. The lack of case law based on the lex mercatoria (and the lack of access to complete published awards) also contributes to the lack of predictability and uncertainty what to expect when the tribunal or the court applies the lex mercatoria.
When the court applies codified non-state rules as a reflection/expression of the lex mercatoria it is much easier to find the concrete rules. These rules are written down, coherent, and systematic. Another advantage of using codified non-state rules in lieu of the uncodified elements of the lex mercatoria is the enhanced predictability and certainty that they bring for both the courts and the parties.
- [1] Friedrich Blase, ‘Leaving the Shadow for the Test of Practice - On the Future of the Principles of European Contract Law’ (1999) 3 Vindobona Journal of International Commercial Law and Arbitration 3,6. 2 ICC Award No. 12111 (2003). 3 Michael Joachim Bonell and Ole Lando, ‘Future Prospects of the Unification of Contract Law in Europe and Worldwide’ (2013) 18 Uniform Law Review 17, 23.
- [2] Ralf Michaels, ‘The True Lex Mercatoria: Law Beyond the State’ (2007) 14 Indiana Journal of Global Studies 447,462. 2 ICC Award No. 11575 (2003).
