Lex Mercatoria



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The "Transnational" Political Economy:

A Framework for Analysis.[*]

Jarrod Wiener, University of Kent at Canterbury[**]


Private International Trade Law:

The Positivist Perspective.

The Autonomist Perspective.

The Sources of the Lex Mercatoria: "Lex", or "Principa".

Applicability and Coercive Force.

"Delocalised International Commercial Arbitration":

Preliminary Observations:

Public International Trade Law.

Normative, Structural Imperatives of the Transnational Political Economy.

Conclusion: The Agenda for Research:




Sovereignty, Authority, and Governance:





SiSU Metadata, document information


SiSU Manifest, alternative outputs etc.

The "Transnational" Political Economy: - A Framework for Analysis.

Jarrod Wiener

copy @ Lex Mercatoria

The "Transnational" Political Economy:

A Framework for Analysis.[*]

Jarrod Wiener, University of Kent at Canterbury[**]

The Positivist Perspective.

Clive M. Schmitthoff is the principal advocate of the positivist conception of the lex mercatoria. He argues that it has its origins in the Medieval "law merchant", but in principle only. According to him, the modern lex mercatoria is a "new law merchant", which is the third stage of an historical process that blends features of the previous two. In the first, pre-national, stage in Europe, the "law merchant" consisted of a "body of truly international customary rules governing the cosmopolitan community of international merchants"  7  on the high seas and in the conduct of fairs. The Carta Mercatoria (1303), and the Statute of the Staples (1353) assured the application of the lex mercatoria in the court of Piepowder, the equivalents of modern permanent arbitral tribunals. The notary public also contributed to the harmonisation of such practices by creating model contracts which were observed by the commercial community at large. The second stage consisted of the consolidation of state power and the unification of municipal laws. Thus, from 1606 to 1640, the King' Bench and Courts of Common Pleas replaced the merchant courts, and under Chief Justice Mansfield, the law merchant was absorbed into common law that became applicable to all citizens. The third stage, according to Schmitthoff, consists of a reversion to the principle of a truly international commercial law. He stated, "[w]e are beginning to rediscover the international character of commercial law... the general trend of commercial law everywhere is to move away from the restrictions of national law to a universal, international conception of the law of international trade".  8 

Schmitthoff seems to be somewhat ambiguous about the standing of this legal order. On one hand, he states that the "new law merchant is in the nature of an 'autonomous law' [with] its own legal regulation without reference to, and independent of any municipal system of law".  9  Yet, Schmitthoff accepts only three aspects of commercial practice in support of this. The first are the principles that are so universally recognised as to make them independent of any particular legal system: that of pacta sunt servanda, and party autonomy to chose the law applicable to their contract (subject to issues of legality and mandatory public law rules). The second is the standard form of contract, which, he contends, create a law unto themselves, and "render it redundant to refer to any legal system". He continues, "the proper law of the contract is determined by ascertaining the free will of the parties and applying it to the contract... the parties... can generally make their own law and this need not be a system of national law".  10  The third aspect of commercial practice is the growing popularity of international commercial arbitration, which gives parties the freedom to chose the forum to hear their disputes (ie., the London Court of Arbitration (LCA), the International Chamber of Commerce in Paris (ICC), or the World Bank's International Centre for the Settlement of Investment Disputes (ICSID)).

On the whole, this theory concentrates on the unification and harmonisation of international trade law~e, and is very firmly based on national jurisdiction, as he admits. Schmitthoff stated that the "autonomous law of international trade is derived from two sources, viz, international legislation and international commercial custom".  11  Examples of the former include international conventions and uniform laws, particularly those formulated by the United Nations Commission for International Trade Law (UNCITRAL): the Convention on the Limitation Period in the International Sale of Goods (1974); the Convention on the Carriage of goods by Sea (1978); the Vienna Convention for the International Sale of Goods (1980); the Convention on Contracts for the International Sale of Goods (1980); and the Convention on International Bills of Exchange and International Promissory Notes (1988). On the latter sources of the lex mercatoria, international customs, Schmitthoff attributed great importance to those "formulated by international agencies", such as the International Chamber of Commerce (ICC), which has elaborated INCOTERMS (1990); Uniform Customs and Practice for Documentary Credits (UCP, 1983); ICC Rules for Conciliation and Arbitration (1988); Uniform Rules for a Combined Transport Document (1975); and Uniform Rules of Conduct for Interchange of Trade Data by Teletransmission (1988). There are also customs incorporated into standard contracts, as issued by international commodity traders, such as the London Corn Trade Association, the International Air Transport Association (uniform air way bills), and the Lloyds Marine Insurance Policy.

The ambiguity comes when Schmitthoff accords primary importance to the state. Having said that the sources of the lex mercatoria are truly international, Schmitthoff goes on to say that it owes its existence, in one way or another, to the state. At first glance, this appears to be a fundamental conflation between "levels". That is, a conflation between individuals apparently superseding the authority of municipal systems of law by exercising their autonomy to create self-contained law in their contracts, and of the lex mercatoria owing its existence to the state.

Schmitthoff resolves this tension in favour of the state. International conventions - "deliberate" law creation - are given effect by their acceptance by states and depend on their being ratified into municipal law (either multilaterally, in the case of conventions, or unilaterally, as with model laws). International customs do not depend on the state to bring them into being. Agencies, such as UNCITRAL, ICC, Unidroit, the Hague Convention on Private International Law and the International Maritime Committee articulate these, and parties give them effect by inserting them into their contract.  12  Schmitthoff explained, "international legislation applies.. by virtue of the authority of the national sovereigns but international custom is founded on the autonomy of the will of the parties who adopt it as the regime applicable to the individual transaction in hand".  13  Yet, even then, Schmitthoff stated that this aspect of the lex mercatoria owes its existence by virtue of the stability accorded by sovereign states. Having on one occasion stated that parties are free to make their own law in a contract, that the contract becomes regulated by the clauses that are contained within it and need not make reference to a national law~e, he elsewhere states that parties "cannot provide for every detail, but can in practice make the proper law dormant".  14  Finally, Schmitthoff drives the final nail in the coffin of any allusion to an autonomous law by declaring that: "It is... wrong to attribute the character of.. supranational law to international trade law. It acquires its autonomous character by leave and licence of all national sovereigns. Ultimately, it is founded on national law".  15 

In summation, Schmitthoff defines the lex mercatoria as a process of harmonising municipal trade laws on the one hand, and, whereas he begins to develop a theory of an autonomous law based on the free will of contracting parties on the other, he ultimately retreats from this position by refusing to relinquish his belief in a "proper law" of a contract that, at best, parties can only bury underneath standard trade usages and customs as articulated by international agencies. It is for this reason that the present writer categorises Schmitthoff's theory as holding to a positivist conception.

 7. Filip De Ly, International Business Law and Lex Mercatoria, North-Holland, London, 1992, p.58.

 8. Schmitthoff, "International Business Law: A New Law Merchant", Current Law and Social Problems, v. 129, 1961 (Reprinted in Chia-Jui Ceng (ed.), Clive M. Schmitthoff's Select Essays on International Trade, Martinus Nijhoff Publishers, London, 1988, pp.20-37, at p.20); and Schmitthoff, "The Unification of the Law of International Trade", Journal of Business Law, 1968, pp.105-119 (Reprinted in Chia-Jui Ceng, ibid., pp.105-119). For a more detailed exposition of the Medieval mercantile law, see Harold J. Berman and Colin Kaufman, "The Law of International Commercial Transactions (Lex Mercatoria)", Harvard International Law Journal, Vol.19, No.1, 1978, pp.221-277.

 9. "Schmitthoff, "International Business Law: A New Law Merchant", op. cit., p.27.

 10. Ibid., p.31.

 11. Ibid., p.32.

 12. Schmitthoff, "Export Law - Then and Now", "Export", Journal of the Institute of Export, vol.48, No.9, 1985, pp.34-35. Reprinted in Chia-Jui Ceng (ed.), op. cit., pp.123-127, at p.123.

 13. Schmitthoff, "International Business Law: A New Law Merchant", op. cit., pp.34-36; Schmitthoff, "The Law of International Trade, Its Growth and Operation", in Schmitthoff (ed.), The Sources of International Trade With Special Reference to East-West Trade, Stevens and Sons Ltd., London, 1964, pp.3-38 (Reprinted in Chia-Jui Ceng, op. cit., pp.137-169, at p.148); Schmitthoff, "The New Sources of the Law of International Trade", International Social Sciences Journal, Vol. XV, No.2 (Reprinted in Chia-Jui Ceng, op. cit., pp.131-136); and Schmitthoff, "The Unification of International Trade, The Unification of the Law of International Trade, Handelshögskolan Skrifter 1964-1965, Gotherburg School of Economics and Business Administration Publication, 1964, pp.5-28 (Reprinted in Chia-Jui Ceng, op. cit., pp.170-187).

 14. Schmitthoff, "The Unification or Harmonisation of Law by Means of Standard Contracts and General Conditions", International Comparative Law Quarterly, Vol.17, 1968, p.551 (Reprinted in Chia-Jui Ceng, op. cit., pp.188-205).

 15. Schmitthoff, "The Law of International Trade, Its Growth, Formulation, and Operation", op. cit, p.149.

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

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1993 - 2010

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hosted by The University of Oslo, Norway, since 1998
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Lex Mercatoria