Lex Mercatoria



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Leaving the Shadow for the Test of Practice - On the Future of the Principles of European Contract Law*

Friedrich Blase#

1. Introduction

2. History and State of Affairs of the PECL

3. The Success Story of the UPICC

4. Specific Value of the PECL

5. Necessary Steps for the Future

6. Endnotes




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Leaving the Shadow for the Test of Practice

On the Future of the Principles of European Contract Law

Friedrich Blase

copy @ Lex Mercatoria

Leaving the Shadow for the Test of Practice - On the Future of the Principles of European Contract Law*

Friedrich Blase#

1. Introduction

The post war period has seen a vigorous debate on the existence and the value of a lex mercatoria. Its protagonists  1  lit the fire by developing theories of a transnational commercial law or modern  2  lex mercatoria. Although the various theories differed widely with respect to the terminology and legal nature of a lex mercatoria, all approaches shared the view that it is derived from a comparative analysis and application of a set of common principles, rules and standards of international commercial law.  3  The raison d'etre of a lex mercatoria is that its application to cross-border transactions and their dispute settlement procedures is economically sound.  4  Thus, their application would produce superior results compared to the application of a national law.

The analysis of a lex mercatoria came to a first climax in 1994, when the International Institute for the Unification of Private Law (UNIDROIT) in Rome presented its Principles of International Commercial Contracts (hereinafter UPICC).  5  These principles which intend to set forth 'general rules for international commercial contracts'  6  were developed by an intensive  7  study of the national laws of many nations, the 1980 UN Convention on Contracts for International Sale of Goods (hereinafter CISG) and widely acclaimed customs and usages in international trade.  8  Since their introduction in 1994 the UPICC have received wide recognition both in academic research  9  and teaching  10  as well as in the practice  11  of international contract drafting and commercial dispute resolution.  12 

The post war period also saw the building of the European Communities and the European Union (hereinafter EU). With the Economic and Monetary Union well underway, enlargement towards middle and eastern Europe apparently poses as one of the principal challenges for the EU in the forthcoming years.  13  However, a voice has been raised that the EU must tackle another - somewhat less apparent - problem. It is in need of greater harmonisation of its various national legal systems.  14  Particularly the contract law has been harmonised only in a fragmentary fashion with much emphasis laid on the protection of consumers.  15  Certainty on the legal basis for cross-border transactions is one of the main catalysts of trade. However, there is no European-wide regulation of general contract law which applies in these transactions. While the 1980 Rome Convention on the Law Applicable to Contractual Obligations provides for a uniform conflict of laws approach,  16  this may not be enough. Harmonisation with respect to the private international law does not mean that the same case will receive the same judgement anywhere in the EU.

These circumstances led Ole Lando in 1976 to the conclusion that Europe must move beyond harmonisation in private international law and must prepare for the establishment of a body of uniform contract law.  17  He founded the Commission on European Contract Law  18  with the goal to work out common principles of contract law for the countries of the EU. The commission presented the first part of its Principles of European Contract Law (hereinafter PECL) in spring 1995  19  - shortly after UNIDROIT had released its set of principles. In their first part the PECL cover some fundamental principles of contract law and rules concerning performance, non-performance and remedies in case of non-performance. In 1997 this work was released in French - the second official language of the commission.  20  In November 1999, a new book covering Part I and II of the PECL was released.  21  The PECL therefore now cover also the aspects of formation, interpretation and validity of contracts as well as the authority of agents. While an 'unofficial preview of the provisional complete and revised version' that featured only the black-letter-rules but not the commentary could have been obtained through the Internet,  22  the publication of the new version of the PECL was unexpectedly delayed for far too long.

 1. Fragistas, Arbitrage étranger et arbitrage international en droit privé, Rev.cit.dr.int.priv. 1960, at 1 et seq., Goldstaijn, The New Law Merchant, J.Bus.L. 1961, at 12 et seq., Schmitthoff, International Business Law: A new Law Merchant, Current Law and Social Problems, 1961, at 129 et seq.; Goldman, Frontières du droit et lex merctaoria, Archives de philosophie du droit 1964, at 177 et seq.

 2. The term 'modern' is used to distinguish the idea of a contemporary lex mercatoria from the lex mercatoria which was the commonly accepted body of law governing trade in Europe in the Middle Ages.

 3. Berger, Creeping Codification of the Lex Mercatoria, at 1 et seq.

 4. Ibid.

 5. The Principles are abbreviated in number of ways. The abbreviation UPICC is not common although it mirrors the common form of abbreviation used for conventions and bodies of national law.

 6. UNIDROIT (ed.), Principles of International Commercial Contracts, 1994; for an overview see Berger, Die UNIDORIT-Prinzipien für Internationale Handelsverträge, Zeitschrift für Vergleichende Rechtswissenschaft 1995, at 217 et seq.; for a detailed study of the UNIDROIT-Principles see Bonell, An International Restatement of Contract Law, 1997, at 1 et seq.

 7. Cf. Preamble of the UNIDROIT Principles of International Commercial Contracts.

 8. Work started in 1971 when the Governing Council of UNIDROIT decided to include the elaboration of 'Principles of International Commercial Contracts' in the Work Programme of the Institute, cf. Introduction, UNIDROIT (ed.), Principles of International Commercial Contracts, 1994, at vii.

 9. Cf. Introduction, UNIDROIT (ed.), Principles of International Commercial Contracts, 1994, at vii et seq.

 10. See the exhaustive bibliography in Bonell, An International Restatement of Contract Law, 2nd ed., 1997, at 527 - 561.

 11. For example the Annual Willem C. Vis International Commercial Arbitration Moot held annually since 1993 in Vienna, Austria; for a report see Bergsten, The Fifth Moot and Plans for the Sixth, 2 Vindobona Journal (1998) at 51 et seq.

 12. See Bonell, The UNIDROIT Principles in Practice: The Experience of the First Two Years, Uniform Law Review 1997 at 34 et seq.; Mayer, Die UNIDROIT-Prinzipien für internationale Handelsverträge, AJP 1998 at 499 et seq.

 13. See also infra at The Success Story of the UPICC.

 14. On 13 October 1999 the European Commission proposed doubling to 12 the number of countries negotiating to join the European Union. They include Cyprus, the Czech Republic, Estonia, Hungary, Poland as well as Slovenia and now also Bulgaria, Latvia, Lithuania, Malta, Romania and Slovakia; see Norman, Brussels adds six to EU fast track, in Financial Times, 14 Oct. 1999, at 1. For the general issues relating to enlargement cf. Hamkens/Röttgers (ed.), Reform der EU - Mit oder ohne Mittel- und Osteuropa, 1996.

 15. See the discussions in Capeletti (ed.), New Perspectives for a Common Law of Europe, 1978; for a more recent analysis see Hartkamp/Hesselink et al. (eds.), Towards a European Civil Code - Second Revised and Expanded Edition, 1998.

 16. Lando, Unfair Contract Clauses and a European Uniform Commercial Code, in: Capeletti (ed.), New Perspectives for a Common Law of Europe, 1978, at 267 (282).

 17. For a detailed study cf. Reithmann/Martiny, Internationales Vertragsrecht, 5th edition 1996, at 1 et seq.

 18. Lando, Unfair Contract Clauses and a European Uniform Commercial Code, in: Capeletti (ed.), New Perspectives for a Common Law of Europe, 1978, at 267 (282 et seq.); Lando, Principles of European Contract Law, RabelsZ 1992, at 261 et seq.

 19. Also known as the Lando-Commission in honour of its founder and chairman.

 20. Lando/Beale (eds.), Principles of European Contract Law - Part I: Performance, Non-performance and Remedies, 1995.

 21. Cf. de Lamberterie/Rouhette/Tallon (eds.), Les principes du droit européen du contrat - L'exécution, l'inexecution et ses suites, 1997.

 22. Lando / Beale (eds.), Principles of European Contract Law - Parts I and II, prepared by The Commission on European Contract Law, Kluwer Law International: The Hague, London, Boston, 1999.

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