Non-state rules, private international law, and legal harmonisation

Currently in most jurisdictions it is not possible to choose non-state rules as the governing law of the contract nor would it be possible for the court to apply these in absence of a choice of law. Is this something which is likely to

Ascertaining the legal authority of non-state rules 217 change in the near future? In order for the court to apply non-state rules in the absence of a choice of law clause private international law would need to be overhauled, including the underlying principles. This has as drawback that it would probably decrease certainty and predictability as to establishing the applicable law.

Enlarging party autonomy to include non-state rules as a choice of law has more potential. This is already possible in certain jurisdictions (Oregon, Louisiana, Venezuela, Paraguay, and Mexico are the examples mentioned throughout this work.) The publication of The Hague Principles on Choice of Law in International Contracts could also potentially be a positive development. So, although there are jurisdictions that allow for parties to choose non-state rules as the lex contractus there is no strong trend towards enlarging private international law to allow for this possibility.

As this research shows the issue of extending party autonomy is of subsidiary importance. The demand to have the possibility of choosing non-state rules as the applicable law in court litigation seems to be low although it is difficult to draw any real conclusions, as parties would not choose it in the first place if it were not permissible. In arbitration, this choice is made more regularly, but this cannot be equated one on one with the potential interest for this in litigation. Parties might choose non-state rules as the applicable law in arbitration because they wish to delocalise their dispute to the transnational sphere or to have more flexibility in the procedure.

So, should party autonomy be enlarged to include non-state rules? As was discussed in chapter 6 the objections raised against extending party autonomy to include non-state rules can be negated. The issue is of subsidiary importance as the demand seems to be limited so it is not recommended to re-draft legislative instruments just for this reason as the cost-benefit analysis would not be favourable. However, when private international law is updated it would be a sensible recommendation to consider this issue and enlarge party autonomy to allow a choice of law for non-state rules. The articles on choice of law in The Hague Principles could be taken as model. This would be advantageous as consistent usage of the Hague Principles on Choice of Law will, as intended, lead to a more harmonised concept of choice of law worldwide which would increase security and predictability for international commerce.

A few brief conclusions can be made on harmonisation and non-state rules. If non-state rules are applied to interpret a contract, they contribute to harmonising the underlying principles of international commercial law. This influences the development of international commercial law within domestic law and in the long-term leads to further transnational convergence. When non-state rules are applied as contractual terms or as the law governing the contract this influence is weaker as their authority comes from the contract (and the procedural laws of the forum) and not from their status as accepted international commercial principles.

The application of codified non-state rules as elements of the lex mercato-ria contributes to harmonisation of transnational commercial law. If courtsapply elements of the lex mercatoria without resorting to codified non-state rules there is a risk of greater divergence. If courts consistently apply codified non-state rules that are developed by international organisations as the lex mercatoria then this would lead to a more harmonised interpretation. Although as discussed there are disadvantages to applying codified non-state rules as lex mercatoria it does contribute further to the harmonisation of international commercial law as it allows for a more consistent and similar application of the lex mercatoria across countries.

As arbitral awards are confidential, their contribution to legal harmonisation is more diffuse than court decisions. Yet, they do contribute because abstracts from awards are regularly published (and collected on case law digest sites such as UNILEX) which influences future arbitrations and scholarly works and leads to increased acceptance of non-state rules. They shape what arbitrators consider accepted interpretations of non-state rules.