Roderick A. Macdonald

President Law Commission of Canada*

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11. Achieving a federal law that is explicit about its finalities will improve Canadian law by avoiding the duplication and confusion caused by attempts simply to incorporate diverse provincial definitions of key legal concepts. This achievement will also be of fundamental importance in enhancing Canada's leadership role in developing the new lex mercatoria. Canadian law will then not only be well suited to facilitating international trade by domestic manufacturers and service providers, but also can then serve as a template for reconciling the conceptual, institutional and methodological divergences between the Romano-Germanic and Anglo-American legal traditions in a transnational legal regime.

Both the private law in Quebec and federal commercial law contribute to this leadership role. Of all Civil law jurisdictions with significant international commercial activities Quebec has the most sophisticated legal regime of sales and sales financing. The law of secured financing is driven by the economic need of debtors to obtain credit to finance the acquisition of property and the hire of services, combined with the economic need of creditors to minimize their risks in the event of their debtor's insolvency. The concept of the moveable hypothec set out in the Civil Code of Quebec is perfectly attuned to this economic logic. It is, moreover, functionally coherent with the well-known concept of security interest in modernized Common law regimes, while retaining its distinctively civilian character. Hence the new Quebec code can play a key role in reorienting the Civil law to the demands of the international lex mercatoria.

12. An equally important Canadian contribution to this lex mercatoria is being made through the "demonstration effect" of federal legislation. For over 100 years the Parliament of Canada has, by and large, negotiated a workable marriage of Romano-Germanic and Anglo-American legal traditions in its commercial legislation regimes of bankruptcy and insolvency, negotiable instruments, banking, corporate governance and intellectual property. But the effort has not been uniformly successful and several commentators have pointed out where harmonization is incomplete. The advent of the new Civil Code of Quebec offers a stunning opportunity for the Parliament of Canada to correct these remaining anomalies, and take leadership in shaping the international lex mercatoria, by obliging Parliament to recast federal legislation to accommodate the world's most sophisticated and modernized Civil law regime of commercial transactions. How might this be done?

To begin, federal law can illustrate how divergent legal traditions may be transcended - for example, by showing how Mexican law can speak to New York law. But this is only part of the task of building a lex mercatoria. It is also necessary to ensure that the regime in place is multilingual and that there exists an adequate vocabulary to convey in several languages the legal ideas being presented. Here again Canada's experience with legal bilingualism across both Civil law and Common law traditions is a fundamental advantage. Finally, in the commercial law field, it is the actual practices and expectations of lenders and borrowers, buyers and sellers that are central. They care less about the fact that Mexico, Louisiana and Quebec are essentially Romano-Germanic jurisdictions, while Ontario, Newfoundland and Missouri are of the Anglo-American legal tradition, than they do about the detailed prescriptions of the law in force in the particular state in question. And here is where the Canadian experience is most helpful. Because Canadian federal law must model unreformed Common law, reformed Common law and the new Civil law it can provide textual models that reassure trading partners as to the specific detail of that law in force, whatever the jurisdiction.

13. The Canadian example reveals that the real international commercial law is not just doctrinal. Rather it also comprises the ideas and institutions of law as they are deployed in practice. For example, it may be that seemingly identical legal prescriptions produce radically divergent practical consequences. These divergences can arise because of background socio-economic considerations, or because of the effect of other legal institutions that impinge on the effectiveness of the legal prescription in question (a situation that arises frequently when the rules and practices of civil procedure are factored into the equation), or even because contractual and industry practice varies (a situation that one finds frequently in relatively closed industries such as the needle-trades, or quasi-monopolies such as the automobile manufacturing and retailing sector).

Conversely, it may be that divergent legal institutions may be adjusted by contractual practice so that they produce identical results. For example, the hypothecary regime in Quebec historically did not give a creditor the right to foreclose upon the debtor's immoveable property. Yet, the practice of inserting contractual giving-in-payment clauses into deeds of hypothec served to generate such a foreclosure right to complement the enforcement regime set out in the Civil Code of Lower Canada. The point is, of course, that in any field of law that has an important contractual dimension, in order to really assess legal institutions, it is necessary to account for the way in which these institutions are modified by contract, or by implicit professional practice. Only when these practices are also evaluated can the impact of apparently sharp conceptual differences be measured.

14. To summarize, Canadian law can serve as a model for other Civil law jurisdictions that are attempting to bring their laws in line with the requirements of a modern commercial economy. Here the complementarity of the Civil Code of Quebec and modernized regimes of sales and sales financing elsewhere in North America is exemplary. And Canadian federal commercial law can reveal the need for deriving coherent basic concepts of the international lex mercatoria. Indeed, the present exercise of harmonizing federal commercial law with both Romano-Germanic and Anglo-American conceptual apparati attests to how this might be done.

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* Notes for a lunchtime address at the Symposium "The Harmonization of Federal Legislation with Québec Civil Law and Canadian Bijuralism" held on November 24, 1997 at the Hotel Radisson Gouverneur, Montreal; formaly published on the homepage of the Law Commission of Canada (www.lcc.gc.ca ).