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"Lex Mercatoria and Lawyers- Moving Away from Traditional Legal Theory"

Edited version of the Lex Mercatoria Discussion on the OGEMID (Oil-Gas-Energy-Mining-Infrastructure Dispute Management [OGEMID@JISCMAIL.AC.UK]) Discussion Forum between November 5, 2003 and November 11, 2003 (also published in OGEL vol. 2 issue 1, February 2004)

(compiled by Klaus Peter Berger, CENTRAL, Cologne University)

5.11.03, 4:24 pm
(Thomas Waelde)

I have had several requests for a book review I wrote some time ago on two "lex mercatoria" books and which is apparently difficult to find in most law libraries. They are published in Business Law International (Edited by William Rowley) and now about to be published directly by the International Bar Association. Here is the book review:

Book Reviews:

The Lex Mercatoria in the Global Economy:

Thomas Carbonneau, Lex Mercatoria and Arbitraiton, A Discussion of the New Law Merchant, Revised Edition, Kluwer Law London 1998, 279 pages plus index; ISBN: 90411-0586-7; Ursula Stein, Lex Mercatoria, Realitaet und Theorie, Vittorio Klostermann, Frankfurt 1995, 259, plus index, bibliography, list of judicial & arbitral decisions, ISBN 3-465-02820-1

Both books discuss an issue that is of considerable doctrinal and theoretical interest - the issue of lex mercatoria/law merchant as the autonomous law of international business, and in combination with this conceptual question many questions of considerable practical interest to scholars and practitioners in international business law - arbitration, state contracts, maritime law and the international commercial law harmonisation movement (M.J. Bonnell, 249-257; B. Audit, 173-195 in Carbonneau-book). The Carbonneau-book is a reader collecting already published papers, many by eminent scholars and practitioners, on lex mercatoria and international commercial arbitration. The original version was published in 1991 and the new version contains some additional notes. The monograph by Stein is based on a German "Habilitationsschrift". It obtained an academic award and as such it is based on comprehensive and exhaustive research and written in the particular style required of this type of thesis. It adds value to the Carbonneau-reader as well by its much more extensive incorporation of German, French and Italian sources. Both books are good quality and provides most relevant sources of views, argument and useful information on both the lex mercatoria and international commercial arbitration.

One needs to place the lex mercatoria debate into both a historical, economic and philosophical-political context. The law merchant antedates the legal nationalism of the 19th century - still for most of us the key point of conceptual reference (and as well some sort of intellectual prison). When no coherent, relevant and accepted national law suitable for traders existed in the Middle Ages, the inter-regional and inter-national merchant communities constructed their own (Tetley in Carbonneau, 43-53; Berman/Dasser, 53-71). It was based on usages, custom and customary law (let us disregard fine distinctions) and in essence was the type of dispute settlement service the trading community needed and expected. The emerging state structures had little, if anything to do with it. Reputation and membership in the trading community counted more for its effectiveness than the formal methods of law enforcement which now dominate our thinking about what law is, using the tail of enforcement to qualify the head of the legal principle. As the sun of the sovereign nation state came into its glorious and gory fullness, the non-state autonomous law merchant's fate waned. Its content entered into national commercial codes or common law; its character did not fit into the then modern concept of formal, positive law created and legitimated by the state and presented in a hierarchical normative structure.

But the law merchant came back. From the 1950s, French scholars (Goldmann, Introduction) proposed that there was some system of law that was outwith the reach of national legislation, based on the particular practices of international commerce and industry, shaped by an extensive contracting practice with growing uniformity for very specific types of transactions, supported by uniform terms from a growing multitude of international public and private/professional organisations and applied mainly by international commercial arbitration. International commercial arbitration has vastly expanded over the last decades; national judges have, often grudgingly and under the pressure of law reform, international conventions and most of all competition in legal services, been made to accept a growing autonomy of arbitration, reduce their substantive and procedural control powers and move towards a position of support with procedure and enforcement. State contracts between investors and governments (Delaume, 111-133) have seen the exercise of control by international tribunals over acts of sovereign governments, and various arguments (among them a non-national international economic law based on contract and arbitral practice) have emerged to justify such control contrary to notions of sovereignty and supremacy of national law.

The Carbonneau-book contains a representative presentation of the vigorously opposed views on lex mercatoria. The opponents - represented by eminent and senior scholars such as Lord Mustill, F.A. Mann (Introduction), Keith Highet and George Delaume - argue that there simply is no lex mercatoria. They view all law as being by logic and necessity emanating from the state, and rules produced outside this context simply as non-law. They object to the use of the lex mercatoria in academic writing, in contractual choice of law clauses and in arbitral and (rare) judicial reasoning that the use of such an ambiguous concept would only introduce uncertainty and risk into contract practice. If the lex mercatoria had any substantive principles to offer, then - so Highet (133-143) - they were - as for example the principle of good faith - unspecific and therefore unable to contribute any substance. But advocates (Lowenfeld, 71-92; Tetley, 43-53) argue that the specific practices and customs as applied in numerous, often very specialised, arbitration settings, are as specific, and often much more specific and trade-user friendly than national law. The great predictability and certainty of national law, when applied to an international business context, may be as much a myth as Delaume makes out the lex mercatoria concept. In criticising the advocates of lex mercatoria, Delaume in effect ridicules the search for a consensus among national laws through comparative methodology in a number of cases as an amateurish effort. But he then suggests that a more professional comparison would have yielded better results - in essence undermining his own claim that the search for a lex mercatoria through comparative law would not work. He identifies properly that a good part of the momentum for lex mercatoria in the 1970s came from its usability to counter confiscatory and revocatory deployment of national law by developing countries (with support from the UN General Assembly) by controlling government conduct towards foreign investors by legal principles beyond their reach. But his suggestion that the provision of investment insurance by MIGA now obviates the need for a legal instrument of controlling state misconduct in the global economy is an illusion - the fact that some investors manage in some countries to insure some projects at considerable cost and may be able to recoup political risk losses (with great efforts and expnse) is no sensible argument against developing law in the global economy to discipline state misconduct. Opponents argue that for reasons of not obstructing enforceability of arbitral awards, arbitrators should refrain from using any law but a national law. A careful analysis and examination of conflict of law rules would indicate the right law (F.A. Mann; Highet; Delaume). But the examination of arbitral practice (Lowenfeld, 71-92; Juenger, 265-279) seems rather to indicate that arbitrators may often, for the sake of facilitating enforceability, pretend to apply national law, but that in reality they choose the national law and develop its applicable substantive content rather as a function of the solution trade practices and expectations suggest, in other words: National law acts as a camouflage for lex mercatoria solutions. In this, moderating, view national law exercises a relatively weak formal suzerainty over lex mercatoria, and such suzerainty is meant to minimise conflict and facilitate collaboration and enforcement between these different legal systems.

To us, it is not clear if there are serious practical differences between the various views. All, including opponents, agree that there are, out there in the international business arena, numerous practices, standard terms, formulated industry expectations and principles which count when a judge or arbitrator should and does make a decision. From a lex mercatoria point of view, they would count because they are applied directly and overtly; from a national law perspective, they count as well - but rather through their incorporation into national law by codification, international commercial law conventions, judicial practice, gap-filling, explicit or implicit reference in contractual text and by the need to interpret national law so it is as much as possible in conformity with what the transnational business community expects. If judges do not satisfy such demands, regulatory competition will work its way and the legal services business will relocate to a friendlier shore.

The underlying issue of the debate seems rather to be one of which paradigm is to dominate language and analysis of international business law. The traditional paradigm - a comprehensive and consistent way to view and explain - is that of the state being the exclusive creator of law. Non-state actors have no place in this view. Communist countries in particular (Pechota, 257-265; Madl, 231-249) have absolutely focused law as something that is created and legitimated only by the state, and developing countries, in particular under the influence of the NIEO , have taken a similar view of international arbitration outside the power of government (J.L. Siqueiros, 219-231). A statist view must therefore deny the existence of legal rules outside the grasp of states, and deal with their existence in reality by bringing them under the umbrella of national law and conflict of law rules. The opposite paradigm is that of law created autonomously by and for the global economy. With the acceleration of integration of national economies into the global economy ("globalisation") and the exponential growth of international business transactions, states - and this is recognised - lose power to influence commerce domestically and internationally . But, in reverse, the power of transnational communities to influence such relations grows. Such influence will grow, in the natural course of evolution of law, from principles developed in particular situations, to more general rules of an ultimately codified character. But these rules do not constitute a state-like world law of the same hierarchical, well ordered character as national law of old. They constitute rather a multitude of regulatory claims by particular transnational groups - various sector of industry and business, with their values, expectations, all under the influence of the technical, financial and economic logic of the particular industry and transaction. These claims compete - the principles put forward by environmental NGOs are likely to clash with the principles articulated by industry associations. Adjudicatory bodies, such as arbitral tribunals, have to find their way through a maze of conflicting normative claims. They will as a rule choose those which are closest to the expectations of their own transnational constituency. The view in this paradigm is not ordered, hierarchical, but rather cosmopolitan, pluralistic, centrifugal and confusing. It also conforms better to the reality of the application of law to international business. It is for this reason that it does not appeal where a need for an image or order and clarity is felt; it does equally not appeal where the attitude towards economic globalisation is not positive, but rather negative. In both cases, recourse to the familiar conceptual comforts of national law and the supremacy of the state is a likely reaction. But while such retreat may offer comfort, it does not offer a better and more realistic image of reality. The comforts of national law and the state are often only illusions - the paradigm of centrifugal forces claiming for normative attention in the global economy, in our view, represents better the reality of the world. The Middle Ages in Europe may provide a better parallel for the role of law in the global economy than the concepts, and illusions, of the nation state of the 19th century: There, we had numerous communities - ethnic, geographic, professional, religious and so on, each with their normative claim. These claims tended to be respected and enforced better at the core than at the competitive margin of a community. Law merchant was the system of law for one of these communities where their members, traders, interacted with each other. The future may hold one, or rather many, leges mercatoriae as regimes for international business transactions, but in competition with other normative orders - of the now weakened state, of international or collaborative inter-state regulation and of the value systems propounded by the environmental and human rights NGOs. Enforcement of law will be by traditional means of judicial enforcement using the machinery of a willing state, but also by non-legal means, such as reputation, blacklisting and the sanctioning power of the markets.

The Carbonneau-book is too classical to place the lex mercatoria debate in the context of economic globalisation. But Ursula Stein (256, 257) sees the context of globalisation where national law has lost is regulatory power and where the contribution of practical and theoretical lawyers must be to help the emergence of an effective and just system of law for the global economy - a renaissance of a global ius communis. With the increase in arbitral experience, growing familiarity with international contracts' practice and scholarly analysis and reflection, transnational business law may well acquire some of the certainty which national law was supposed - probably unrealistically - to have provided. Both books (Juenger, 265-279: Smith 93-111 - but also Stein, 255) contribute another significant finding: It appears that the national systems of conflict of laws - to select the proper law of a transaction - have become too complex to be of intrinsic help. Arbitrators seem to be influenced in choice of law decisions less by intrinsic conflict of law rules than by the need to find the law which is most relevant for a situation, i.e. which most readily meets the expectation of the relevant business community. So conflict of laws thinking needs as well to undergo a change of paradigm: From focusing on - real, perceived or fictitious - state interests as the guiding criterium it needs to move rather towards meeting the interests of the relevant transnational business community. Such change of approach corresponds again to the reality of the legal services business. Such business moves as well according to the logic of the market to such providers (courts; tribunals; practitioners; laws and legal methods) which respond best to its needs.

Both books are recommended for both scholars and practitioners wishing to reflect on the underlying issues of international business law. But the lex mercatoria concept requires updating by positioning it in the economic globalisation paradigm. The opposing view is far from dead, and likely to ally itself with the critics of globalisation.

Thomas Waelde, CEPMLP/Dundee

6.11., 10:30
(Geoffrey M. Beresford Hartwell)


There have always seemed to me to be two problems with the concept of a Lex Mercatoria.

One is theoretical. In concept, the idea of an autonomous system of law derived from the freedom of human individuals (and hence the group entities they create for themselves) to communicate mutual intentions, is essentially a naturalist concept. On the other hand, it falls to be analysed in the positivist context of state laws.

The second problem is that none of the attempts to identify a Law Merchant that I have seen have involved merchants. A Natural Law is derived from the people who will exercise and apply it. Excellent though they may be, documents such as the UNIDROIT principles and the CISG (Vienna Convention) are the product of thoughtful and skilled lawyers, practitioners and academics, but owe nothing to the constituency for whom they are intended. Early codes of conduct came from merchant guilds and trade associations; today they are largely sidelined.

If I may say so, the failure of the legal community to engage the people, or the communities for which laws are intended, is a serious shortcoming. It is one of the reasons why legal communities, throughout the world, have such a poor press.

It is easy to reply that traders and businessmen seem disinclined, or too busy, to take part in academic legal debate, but the truth is that lawyers, by and large, do not respect the thought processes of laymen. I remember hearing distinguished counsel at the ICC saying, not many years ago, "of course, only a lawyer would be capable of chairing a meeting"; and he believed that.

Precisely what is to be done about this, if anything is to be done about it, is perhaps another matter. Perhaps groups (such as UNIDROIT) should be encouraged to create consultative committees which draw upon other professions. I do not suggest popular representation, because popular representation is almost always soon corrupted by politcos and the taint of party politics.

The views of friends and colleagues would be welcome.

6.11., 11:16
(Friedrich Blase)

If I may add a lateral observation on the "lex mercatoria evolution":

The vague concept of the lex mercatoria has been propelled forward by the creation of so called "private codifications" such as the Unidroit Principles or Lando’s European Principles. They were created, because the market "wanted it" or at least that was the only way that the lex mercatoria concept could become marketable. In so far, the drafters might have listened to laymen.

However, the time of each development cycle for a new version of these "codification attempts" is - in line with industrial practice, such as cars for example - decreasing consistently. Whereas it took Unidroit and the Lando-Commission more than 10 years to come up with the first version, the updates are coming at shorter intervals. Something similar to a "race to the market" has been observed with respect to the private codifications. Producers of industrial goods are facing the problem of deficiently tested and tried products. The elk test for the Mercedes A-Class was a prime example; product liability cases give further evidence. Are the drafters of the new law merchant facing the same difficulty? Could one reason of not involving laymen be the delay that such "pre-launch testing" would cause?

And there is at least one related subtle difference between industrial goods and a codification attempt: You can recall a car, when you discover its defect. But what do you do with a code?

Kind regards

Friedrich Blase

6.11.03, 11:47
(Thomas Waelde)

I have a certain difficulty in excluding lawyers from the process of formulating and applying standard practices in international commercial law. I am also not sure the analogy to Mediaeval practices helps that much. It may have been the case that in Mediaeval times merchants did not use lawyers to formulate, apply, comply with and adjudicate their deals using increasingly standardised conditions reflecting the expectations of the merchant community - though I am not sure they did not use lawyers at all or that what now would be termed legal expertise was not part of their dealings with each other.

But in today's international business transactions, lawyers are present at any stage. I have not seen a large-scale transactions were lawyers were not present, at least in negotiating and formulating in detail the transaction, in advising on how to comply especially in case of disputes and certainly in the management once disputes have arisen. If a company carries out a transaction, surely its in-house lawyers would be the equivalent of the "merchant" in mediaeval times and I see no reason not to include in this notion outside legal counsel recruited not full-time, but for a particular transaction or part of it.

If this is so, modern international business transactions - and the forms, standard terms, expectations - they produce, or are associated with, are naturally formulated most of all by staff within and outwith commercial companies with a special legal qualification. This naturally extends as well to the more institutonalised model rules/ standard terms produced in the many associations or institutions of international business. The modern business lawyer is part and parcel of the primary actors in modern business.

I therefore have difficulty in simply rejecting the idea of a modern lex mercatoria because lawyers are involved. They are involved, naturally, they have to be involved and they are the principal actors.

The idea that the "state" is an essential part of any "law" is a product of the statist period in European (mainly) history - say from 1648 to 1945 and somewhat beyond. It is deeply anchored in our mental apparatus because we have been brainwashed to see the state as an essential part of law. But - Jan Dalhuisen's book is I think the best explanation of this - this is not written in stone, but the product of a particular period in history. States did exist before 1648 and are likely to exist after 2003, but it seems they do have a somewhat lessened role in omnipotent regulation of everything in transnational business relationships. This process - can be called globalisation - is what explains why the lex mercatoria concept is re-emerging, with the idea that as in other sectors of society, many relationships are in the process of privatisation, or de-nationalisation. This does not mean that the state - or states acting in coordiantion through international organisation are about to dissappear, but simply that we have to understand that the current and evolving organisation of transnational business relationships involves less of a role of the state and the states than it used to be. And this, naturally, requires an intellectual concept to free oneself from the intellectual concepts we are used to and which reflect a now past organisation of the economic relationships. Karl Marx, were he a neo-liberal global economist would have no problem in understanding that as the economic relationships and the role of state changes, so the understanding of the system of legal rules governing such relationships has to change as well.

6.11. 03, 15:28
(Friedrich Blase)

A number of thoughts and questions arise:

The development of lex mercatoria is not about excluding lawyers in formulating and applying standard practices, but it is about including business people. Yes, lawyers are needed to put the regulations in place, but business people should be encouraged to tell lawyers what they need. Lawyers create the law for them, not for themselves. Are lawyers good at asking business people questions or are they more inclined to tell them what they need?

If lawyers have a business mind, why do so many clients complain about their lawyers’ lack of understanding of their business? Why do many clients’ also criticise that their lawyers are predominantly concerned with the technical quality of their work product rather than the clients’ needs? Maybe lawyers like to think that they are part of the business community, but do they spend enough time getting familiar with that community?

Is it correct that in today’s international business transactions lawyers are present at any stage? Are they present, when the business people discover the business opportunity that leads to the transaction? Are they present, when the managers sit around the spreadsheet with the fundamentals of a possible transaction? My limited experience tells me that, on balance, they come in after that. But is it not the initially discovered opportunity that drives the client into the transaction? If this is so, are lawyers absent when it matters most from a business perspective?

It is easy to proclaim the end of the states’ monopoly over the creation of laws, but it seems much harder to replace that with something adequate. States have made good law and bad law. So the lex mercatoria should not be measured against a different yardstick. However, the states have (mostly?) had in place mechanisms of consulting those affected in the community. Their case would be heard, their concerns could be raised - before the law was made. Whether that improved the law, is a question for the individual law. But should not the development of the lex mercatoria provide for a similar mechanism? And if their laws were terribly bad, most could get fired - at the next election. That is a fundamental principle of democracy. Is it possible to include such mechanisms in the development of the lex mercatoria? Who will judge its quality - lawyers or those affected by the lex mercatoria?

(For the above observations on clients and their legal advisers, see the many references in David Maister, Managing the Professional Service Firm, 1997)

6.11., 2:21
(Klaus Peter Berger)

I think we all agree that lawyers and businessmen have to work together in developing a truly transnational commercial law. After all, it's not just "lex" but "lex mercatoria". One basic problem remains, though: in the eyes of many scholars and practitioners the traditional theory of legal sources stands in the way of developing a truly transnational approach to the evolution of the law. I think that the work of UNIDROIT and Lando has done a great deal to overcome this theoretical obstacle. These Working Groups did not enter into lengthy discussions on the dogmatic quality of what they were doing. Instead?.they just did it. Today, this new sense of "cartesian pragmatism" has gained ground both in legal theory and legal practice. Philip Nouel, member of the negotiation team of the Channel Tunnel Contract has given us a fascinating account of this modern pragmatic approach in International Business Lawyer 1996, at 22.

6.11., 21:56
(Hans-Werner Wabnitz)

Correct - Professor Berger's remarks -what is interesting, though, is that at the other end of the spectrum, the economic bottom of litigation - meaning the legal services for the poor - alternative avenues of service delivery are also sought: village tribunals, neighborhood mediation forums, legal clinics and associations' advise - all under the radar of the formal tribunals. Which begs the question: what's wrong with the perception of judicial institutions ? of the Law as an institution in the sense of North and Olson ? Maybe that those contemplating these things are all European centric - believing "their" institutions are the only ones possible for everybody else ?

6.11.03, 22:22
(Haig Oghigian)

Ditto Hans Wabnitz and K.P.Berger. In Japan ,to this day, unless there's a complete breakdown in the various communication channels between companies ( or individuals for that matter), the basic concepts of the marketplace are ( at least attempted to be) applied to commercial "irritants". Albeit this is breaking down as those ties ( in their most extreme form, the "keiretsu" system) begin to break down. It's the same old wine ( or sake) .

8.11.03, 11:15
(Geoffrey Beresford Hartwell)

I wonder if the problem is one of Euro-centricity or of, what shall I say, the difficulty of conceiving law beyond the notion of the nation state? Modern law is, after all, a creation of nation states, or rather of their courts. Remember Holmes - the prediction of what a Court will do . . .

We saw, in 2003, the death of the idea that there could be legal validity in a trans-national context. There is now no authority which legally can enforce right or rights outwith the nation state, only the laws of nation states which are free to do as they see fit under the broader constraints of the power of others (an, of course, one imperial power).

So, perhaps, trans-national rights and understandings should be created in some new way, beyond the constraints of the necessarily internally focussed thinking of positivist lawyers, by persons who are not limited by their personal formation within a state legal framework, i.e. laymen who are not prejudice by legal training. There will be, can be, no imperium in a trans-national context, only jus, but, of course that is one way of describing the arbitral process, which suggests that a system without force could be conceived and might work on moral pressures alone.

Maybe it's an ideal. But if only one could engage ordinary people, merchants and professionals, in the debate.

I am just musing, for which I apologise. I dare say it is unreasonable to ask my learned colleagues to act as turkeys voting for Christmas. There is a limit to any theoretical notion.

8.11.03, 8:32
(Jamal Seifi)

I have little difficulty in accepting that lex mercatoria, as also evidenced through codification efforts of private or international institutions, may constitute substantive legal standards, because they are accepted as such commonly by the pertinent national legal systems, or by international law for that matter, or by the relevant actors. However, I hope I am not contradicting myself when I say that I have difficulty in considering lex mercatoria as an autonomous legal system. Here I feel justified, without subscribing to a strictly positivist view of law, to borrow from certain important aspects of Hart's "Concept of Law", which I feel have applications beyond merely a positivist approach to law. These are the rule of recognition and the rule of change. I believe in order to have an autonomous legal system, there should, inter alia, be a mechanism of recognition of the rules of a legal system and a mechanism for change of such rules. I am afraid lex mercatoria does not have any of such characteristics to enjoy the status of an autonomous legal systm. Absent such mechanisms we may end up with arbitrary conclusions to the effect that every individual lawyer or every individual institution may brand its own understanding and interpretation of the rules and practices of international trade as the rules of lex mercatoria.

8.11.03, 11:35
(Geoffrey Beresford Hartwell)

If I may say so, I think you are right to refer to the rule of recognition and the rule of change. However, if there is a Natural Law, a law inherent in the nature of humanity and the human condition, it can only be found by scientific logical processes. It must be derived from analysis. That, I think, means that it is necessarily subjective, to be found in the context of the immediate circumstances. I think I equate Natural law with Justice. If that is right then there will not be a code that stands to be recognised, nor a mechanism for change.

If there is a Natural Law in commerce, guided by the conduct of 'commercants', it will necessarily be fluid, adapting itself as customs and practices adapt themselves. Recognition, in Hart's terms is the point at which the natural becomes a part of or adopted by, the positive. That recognition, I suggest, can only be a 'snapshot' of how things are at the instant of adoption.

In fine, I doubt if the link between a natural, instinctive law and the laws of states ever can be achieved. The one is necessarily subjective, drawn from the consciences of those concerned. The latter is objective, drawn from words intended, as an ideal, to be immutable, but subject, as you say, to a mechanism of change. (And subject also to the politics of the day - but that's another matter.)

By the way - we talk about "moving away from traditional legal theory", but is this not a discussion about business practice? Arguably, modern legal theory is moving, has moved, away from traditional business practice (to the detriment, incidentally, of traditional business ethics).

7.11.03, 3:09
(Jamal Seifi)

I see your point. However, I was wondering whether customs and practices of commerce are regarded as law because they are accepted as such through usage or whether it is possible to speak of a natural law in commerce?

10.11.03, 9:40
(Geoffrey Beresford Hartwell)

I think that is an interesting question, if I may say so. I suggest that the answer may be a matter of viewpoint. Whether or not customs and practices are recognised at law, i.e. in a court of law, is one aspect. In some trading communities (specialist trade associations for example) custom and practice are rules for that community and may be applied without recourse to the courts of the state, even to the point of expulsion from the community and effectively preventing the 'wrongdoer' from trading in the future.

An example is the Jockey Club in London which effectively controls horse racing and access to race courses. The English courts will not enforce gambling debts, but the Jockey Club can 'warn off' a person who breaks its rules and prevent them from access to racecourses and any form of participation.

Trade associations may 'post' the name of a defaulter - perhaps someone who has refused to honour an arbitration award - so that they cannot obtain further credit and thus become unable to trade.

Arguably, these are systems of law with no reference to state legal systems, but complete with workable sanctions. Whether or not they meet the subjective criteria of natural law (whatever those criteria may be) is, of course, another matter.

10.11.03, 12:51
(Klaus Peter Berger)

This is he reason why I said that a new form of "cartesian pragmatism" is gaining ground in the law and practice of transnational law. We should not discuss the very difficult question whether all these phenomena stand for "natural law". But we should agree and accept that these informal means of enforcing rights exist in the international business world. Think also of the fascinating informal mechanisms in the diamond trade industry. In all these branches, the notion of "my word is my bond" is not a mere empty shell. Rather, it seems to be at the root of a "creeping", i.e. informal, decentralized law creation process. Customs, whether they are sectoral or universal, are part of that process.

In the view of some proponents of the doctrine of transnational law, they represent a sort of transitory stage of a rule or a principle "on its way" to an integral part of transnational commercial law. In the eyes of others (particularly from the "French school"), they remain what they are, customs in the proper sense without any aspiration to become part of a legal system. In the eyes of those who follow the notion of "Cartesian pragmatism", businessmen follow these rules and trade association and arbitral tribunal enforce them immaterial of their exact qualification. Hence, there seems to be a process going on out there in the business world which escapes the categories of traditional legal theory.

10.11.03, 16:24
(Geoffrey Beresford Hartwell)

Yes. The only additional comment I would make is that the use of a word such as 'creeping' suggests a gradual process of decentralisation, whereas these processes have always existed and, if anything, are to be seen as resisting (or perhaps just ignoring) legal developments.

"Moving away from traditional legal theory", I suggest, may be what is being done by those who study these and other processes. It is not what the communities concerned are doing. They are merely holding their ground.

11.11.03, 7:28
(Jamal Seifi)

I too enjoyed the discussions, the idea of a conference on the law and practices of lex mercatoria sounds good.

10.11.03, 22:10
(Thomas Waelde)

There was a book on reputation and its relevance for observing commitments within various trading communities published in about 1999 by Tanja Rippgerger (correct name: Tanja Ripperger, Ökonomik des Vertrauens, Analyse eines Organisationsprinzips, Mohr Siebeck Publisher 1998, ISBN 3-16-148066-X, ISSN 0424-6985, the editor], also a contribution to a book on intl economic law-global economy by the economic analysis of law research group in Saarbruecken

10.11.03, 22:10
(Sophie Nappert)

From the very learned contributions made in this forum it looks like this topic is crying out for live discussion in a seminar.

11.11. 13:46
(Geoffrey Beresford Hartwell)

Well, yes, but a seminar of lawyers - or of merchants?

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