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Revisiting the Autonomous Contract (Draft 0.90 - 2000.08.27 ;)

Transnational contract "law", trends and supportive structures

1. Reinforcing trends: borderless technologies, global economy, transnational legal solutions?

2. Common Property - advocating a common commercial highway

3. Modelling the private international commercial law infrastructure

4. The foundation for transnational private contract law, arbitration

5. "State contracted international law" and/or "institutionally offered lex"? CISG and PICC as examples

6. Contract Lex design. Questions of commonweal

6.1 The neutrality of contract law and information cost
6.2 Justifying mandatory loyalty principles

7. Problems beyond uniform texts

7.1 In support of four objectives
7.2 Improving the predictability, certainty and uniform application of international and transnational law
7.3 The Net and information sharing through transnational databases
7.4 Judicial minimalism promotes democratic jurisprudential deliberation
7.5 Non-binding interpretative councils and their co-ordinating guides can provide a focal point for the convergence of ideas - certainty, predictability, and efficiency
7.6 Capacity Building

8. Marketing of transnational solutions

9. Tools in future development

10. As an aside, a word of caution

11. Endnote




SiSU Metadata, document information


SiSU Manifest, alternative outputs etc.

Revisiting the Autonomous Contract

Transnational contracting, trends and supportive structures

Ralph Amissah

copy @ Lex Mercatoria

Revisiting the Autonomous Contract (Draft 0.90 - 2000.08.27 ;)

Transnational contract "law", trends and supportive structures

5. "State contracted international law" and/or "institutionally offered lex"? CISG and PICC as examples

An institutionally offered lex ("IoL", uniform rules and principles) appear to have a number of advantages over "State contracted international law" ("ScIL", model laws, treaties and conventions for enactment). The development and formulation of both "ScIL" and "IoL" law takes time, the CISG representing a half century of effort  29  and PICC twenty years.  30  The CISG by UNCITRAL represents the greatest success for the unification of an area of substantive commercial contract law to date, being currently applied by 57 States,  31  estimated as representing close to seventy percent of world trade and including every major trading nation of the world apart from England and Japan. To labour the point, the USA most of the EU (along with Canada, Australia, Russia) and China, ahead of its entry to the WTO already share the same law in relation to the international sale of goods. "ScIL" however has additional hurdles to overcome. (a) In order to enter into force and become applicable, it must go through the lengthy process of ratification and accession by States. (b) Implementation is frequently with various reservations. (c) Even where widely used, there are usually as many or more States that are exceptions. Success, that is by no means guaranteed, takes time and for every uniform law that is a success, there are several failures.

Institutionally offered lex ("IoL") comprehensive general contract principles or contract law restatements that create an entire "legal" environment for contracting, has the advantage of being instantly available, becoming effective by choice of the contracting parties at the stroke of a pen. "IoL" is also more easily developed subsequently, in light of experience and need. Amongst the reasons for their use is the reduction of transaction cost in their provision of a set of default rules, applicable transnationally, that satisfy risk management criteria, being (or becoming) known, tried and tested, and of predictable effect.  32  The most resoundingly successful "IoL" example to date has been the ICC's Uniform Customs and Practices for Documentary Credits, which is subscribed to as the default rules for the letters of credit offered by the vast majority of banks in the vast majority of countries of the world. Furthermore uniform principles allow unification on matters that at the present stage of national and regional pluralism could not be achieved at a treaty level. There are however, things that only "ScIL" can "engineer", (for example that which relates to priorities and third party obligations).

PICC: The arrival of PICC in 1994 was particularly timely. Coinciding as it did with the successful attempt at reducing trade barriers represented by the World Trade Agreement,  33  and the start of general Internet use,  34  allowed for the exponential growth of electronic commerce, and further underscored the transnational tendency of commerce. The arrival of PICC was all the more opportune bearing in mind the years it takes to prepare such an instrument. Whilst there have been some objections, the PICC (and PECL) as contract law restatements cater to the needs of the business community that seeks a non-national or transnational law as the basis of its contracts, and provide a focal point for future development in this direction. Where in the past they would have been forced to rely on the ethereal and nebulous lex mercatoria, now the business community is provided with the opportunity to make use of such a "law" that is readily accessible, and has a clear and reasonably well defined content, that will become familiar and can be further developed as required. As such the PICC allow for more universal and uniform solutions. Their future success will depend on such factors as: (a) Suitability of their contract terms to the needs of the business community. (b) Their becoming widely known and understood. (c) Their predictability evidenced by a reasonable degree of consistency in the results of their application. (d) Recognition of their potential to reduce transaction costs. (e) Recognition of their being neutral as between different nations' interests (East, West; North, South). In the international sale of goods the PICC can be used in conjunction with more specific rules and regulations, including (on parties election~e) in sales the CISG to fill gaps in its provisions.  35  Provisions of the CISG would be given precedence over the PICC under the accepted principle of specialia generalibus derogant 36  the mandatory content of the PICC excepted. The CISG has many situations that are not provided for at all, or which are provided for in less detail than the PICC.

Work on PICC and PECL under the chairmanship of Professors Bonell and Ole Lando respectively, was wisely cross-pollinated (conceptually and through cross-membership of preparatory committees), as common foundations strengthen both sets of principles. A couple of points should be noted. Firstly, despite the maintained desirability of a transnational solution, this does not exclude the desirability of regional solutions, especially if there is choice, and the regional solutions are more comprehensive and easier to keep of uniform application. Secondly, the European Union has powers and influence (within the EU) unparalleled by UNIDROIT that can be utilised in future with regard to the PECL if the desirability of a common European contract solution is recognised and agreed upon by EU member States. As a further observation, there is, hypothetically at least, nothing to prevent there in future being developed an alternative extensive (competing) transnational contract lex solution, though the weighty effort already in place as represented by PICC and the high investment in time and independent skilled legal minds, necessary to achieve this in a widely acceptable manner, makes such a development not very likely. It may however be the case that for electronic commerce, some other particularly suitable rules and principles will in time be developed in a similar vein, along the lines of an "IoL".

 29. As examples of this, it seeks to give effect to the parties' agreement upon: the lex mercatoria as the law of the contract; the number of, and persons to be "adjudicators"; the language of proceedings; the procedural rules to be used, and; as to the finality of the decision.

 30. UNCITRAL Convention on Contracts for the International Sale of Goods 1980 see at ‹http://www.jus.uio.no/lm/un.contracts.international.sale.of.goods.convention.1980/

The CISG may be regarded as the culmination of an effort in the field dating back to Ernst Rabel, (Das Recht des Warenkaufs Bd. I&II (Berlin, 1936-1958). Two volume study on sales law.) followed by the Cornell Project, (Cornell Project on Formation of Contracts 1968 - Rudolf Schlesinger, Formation of Contracts. A study of the Common Core of Legal Systems, 2 vols. (New York, London 1968)) and connected most directly to the UNIDROIT inspired Uniform Law for International Sales (ULIS ‹http://www.jus.uio.no/lm/unidroit.ulis.convention.1964/› at and ULF at ‹http://www.jus.uio.no/lm/unidroit.ulf.convention.1964/› ), the main preparatory works behind the CISG (Uniform Law on the Formation of Contracts for the International Sale of Goods (ULF) and the Convention relating to a Uniform Law on the International Sale of Goods (ULIS) The Hague, 1964.).

 31. UNIDROIT Principles of International Commercial Contracts commonly referred to as the UNIDROIT Principles and within this paper as PICC see at ‹http://www.jus.uio.no/lm/unidroit.contract.principles.1994/› and ‹http://www.jus.uio.no/lm/unidroit.international.commercial.contracts.principles.1994.commented/

The first edition of the PICC were finalised in 1994, 23 years after their first conception, and 14 years after work started on them in earnest.

 32. As of February 2000.

 33. "[P]arties often want to close contracts quickly, rather than hold up the transaction to negotiate solutions for every problem that might arise." Honnold (1992) on p. 13.


 35. See Amissah, On the Net and the Liberation of Information that wants to be Free in ed. Jens Edvin A. Skoghøy Fra institutt til fakultet, Jubileumsskrift i anledning av at IRV ved Universitetet i Tromsø feirer 10 år og er blitt til Det juridiske fakultet (Tromsø, 1996) pp. 59-76 or the same at ‹http://www.jus.uio.no/lm/on.the.net.and.information.22.02.1997.amissah/

 36. Also consider present and future possibilities for such use of PICC under CISG articles 8 and 9.

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( International Trade/Commercial Law & e-Commerce Monitor )

W3 since October 3 1993
1993 - 2010

started @The University of Tromsø, Norway, 1993
hosted by The University of Oslo, Norway, since 1998
in fellowship with The Institute of International Commercial Law,
Pace University, White Plains, New York, U.S.A.



Ralph Amissah

Lex Mercatoria