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Progressive Development of the Law of International Trade:
Report of the Secretary-General of the United Nations, 1966

Introduction

I. The law of international trade

A. Concept of "law of international trade"

B. Legal techniques used to reduce conflicts and divergencies

1. Choice of Law Rules

2. Harmonization and Unification of Substantive Rules

C. Development of the law of international trade

1. Similarity

2. Application

3. Formulation

II. Survey of the work in the field of harmonization and unification of the law of international trade

A. Inter-governmental organizations

1. The International Institute for the Unification of Private Law

2. The Hague Conference on Private International Law

3. The League of Nations

(a) The Geneva Conventions on the unification of the law relating to bills of exchange (1930) and to cheques (1931)

(b) The Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927

4. The United Nations

(a) The Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958

(b) Industrial property legislation

(c) United Nations regional economic commissions

(i) Economic Commission for Europe (ECE)
a. The ECE General Conditions of Sale and Standard Forms of Contract
b. European Convention on International Commercial Arbitration
(ii) Economic Commission for Asia and the Far East (ECAFE)
(iii) Economic Commission for Latin America (ECLA)
(iv) Economic Commission for Africa (ECA)

(d) United Nations Conference on Trade and Development (UNCTAD)

(e) Centre for Industrial Development

5. The United Nations Specialized Agencies

(a) International Bank for Reconstruction and Development (IBRD)

(b) Inter-Governmental Maritime Consultative Organization (IMCO)

(c) The International Civil Aviation Organization (ICAO)

6. United International Bureaux for the Protection of Intellectual Property (BIRPI)

B. Regional inter-governmental organizations and groupings

1. The Council for Mutual Economic Assistance (CMEA)*

2. The European Economic Community (EEC)

3. The European Free Trade Association (EFTA)

4. The Latin American Countries

(a) Unification of conflict rules

(b) International commercial arbitration

(d) Other activities

5. The Council of Europe

6. The Benelux Countries

7. The Nordic Council

8. The Organization of African Unity (OAU)

9. The Asian-African Legal Consultative Committee

C. Non-governmental organizations

1. The International Chamber of Commerce (ICC)

(a) The Court of Arbitration

(b) Incoterms 1953

(c) Uniform customs and practice for documentary credits

2. The International Maritime Committee (IMC)

3. The International Association of Legal Science

4. The International Law Association (ILA)

5. The Institute of International Law

D. Summary: main areas of harmonization and unification

III. Methods, approaches and topics suitable for the progressive harmonization and unification of the law of international trade

A. Methods

B. Approaches

C. Suitable topics

IV. Role of the United Nations in the progressive harmonization and unification of the law of international trade

A. Progress and shortcomings of the work in the field of harmonization and unification of the law of international trade

B. Desirable action to remedy the existing shortcomings

C. Role of the United Nations

1. Is the Unification and Harmonization of the Law of International Trade an Appropriate Subject for United Nations Action?

2. Would a United Nations Participation in this Activity Unnecessarily Duplicate the Work of Existing Agencies and Reduce or Abolish their Usefulness?

3. Would the United Nations be in a Position to Make a Significant Contribution to Furthering Unification on A World-Wide Scale or Otherwise?

4. Should the Functions of the United Nations be Confined to Co-Ordination or Should they Also Encompass Formulation?

5. Is There a Realistic Chance of Success or is the Task too Diffficult for Tangible Results?

D. Establishment of a United Nations Commission on International Trade Law

E. Financial implications of the establishment of a United Nations commission on international trade law

Endnotes

Endnotes

Concordance (wordlist)

Manifest (alternative outputs)

Metadata

Progressive Development of the Law of International Trade: Report of the Secretary-General of the United Nations, 1966

United Nations (UN)

copy @ Lex Mercatoria

II. Survey of the work in the field of harmonization and unification of the law of international trade

A. Inter-governmental organizations

4. The United Nations

(c) United Nations regional economic commissions

(i) Economic Commission for Europe (ECE)
a. The ECE General Conditions of Sale and Standard Forms of Contract
b. European Convention on International Commercial Arbitration
(ii) Economic Commission for Asia and the Far East (ECAFE)
(iii) Economic Commission for Latin America (ECLA)
(iv) Economic Commission for Africa (ECA)

65. The functions of the United Nations regional economic commissions, which have been established in accordance with resolutions of the Economic and Social Council, are to assist in raising the level of economic activity in their respective regions and to strengthen economic relations on both an intraregional and an interregional level.

(i) Economic Commission for Europe (ECE)

66. The activities of the Economic Commission for Europe (ECE) in the development of the law of international trade have been primarily in the field of international contracts and commercial arbitration. These activities have been initiated in most cases by the Committee for the Development of Trade. In addition to its activities with respect to international contracts and commercial arbitration, ECE through its Inland Transport Committee, has engaged in efforts toward the simplification and standardization of export documents and has concerned itself with the problem of insurance and re-insurance, of trade in machinery and equipment, the improvement of payment arrangements and other items. It also sponsors periodic consultations of experts in intra-European, and especially East-West, trade.

a. The ECE General Conditions of Sale and Standard Forms of Contract

67. Since the end of the nineteenth century, trade associations have come into existence in many European trade centres and have concerned themselves especially with the international commodity trade. This development has been particularly prominent in the United Kingdom, where influential organizations operate, such as the Timber Trade Federation of the United Kingdom, the London Corn Trade Association, the Incorporated Oil Seed Association (London), and many others. Most of these trade associations have devised their own contract forms. There is "a surprisingly large number of these forms of contract on the market that not only differ from trade to trade but also from country to country. The would-be user is very often confronted with an embarrassingly large choice of forms of contract which he could use. He is also confronted with the fact that nearly all these instruments refer to one legal system alone, and have been drawn solely with that system in view, namely, that of the country of the trade association or organization that drafted them.  34  In an effort to meet these conditions, ECE has formulated and disseminated the General Conditions of Sale and Standard Forms of Contract. It is to be hoped that in the course of time these will replace the numerous contract forms issued by trade associations. A list of the forms issued by ECE is found in annex I. Among the most important of these are General Conditions for the Supply of Plant and Machinery for Export (Form No. 188) (March 1953); General Conditions for the Supply and Erection of Plant and Machinery for Import and Export (Form No. 188A) (March 1957); General Conditions for the Supply of Plant and Machinery for Export (Form No. 574) (December 1955); General Conditions for the Supply and Erection of Plant and Machinery for Import and Export (Form 574A) (March 1957); General Conditions of Sale for the Import and Export of Durable Consumer Goods and of Other Engineering Stock Articles (Form No.730) (March 1961).

68. It is to be noted that Forms 574 and 574A are alternatives to Forms 188 and 188A. The latter are used when both parties reside in countries of free enterprise economy and the former are used when one party or both parties are foreign trade organizations having centrally planned economies.  35  Form 730, on the other hand, is adapted for use in all transactions irrespective of the economic order of the country in which the contracting parties reside.

69. The ECE General Conditions of Sale have been drafted by working parties composed of businessmen. Representatives from almost every European country, including countries having free-enterprise economies as well as those having centrally planned economies, have served on the working parties since 1951. Many national trade associations have lent their support and assistance in this work. Thus when the forms of contract for the sale of cereals by sea were prepared, more than eighty national forms of contract were sent in, of which some fifty were the forms of contract drawn up by the London Corn Trade Association.  36 

70. The use of the General Conditions of Sale and Standard Forms of Contract sponsored by ECE is optional. This is a characteristic which they share with the formulations of the International Chamber of Commerce (see paras. 147-166 below).

71. Two features of this work of ECE should be noted. First, the General Conditions represent a projection on the international level of work begun by the trade associations on the national level. Secondly, some of the trade association contracts undoubtedly favoured the sellers or buyers, according to the balance of interests in the trade associations. This factor was removed when the forms were studied by a working party composed of suppliers and consumers and eventually approved by ECE.

72. From the viewpoint of the progressive development of the law of international trade, the most important feature of the General Conditions is that, as one writer has indicated they "render it somewhat redundant to refer to a national legal system".  37  In brief, the General Conditions attempt to provide such a complete regulation of the rights and duties of the contracting parties that a need to refer to a national legal system will arise only in exceptional circumstances. While it may not be possible to make a contract completely self-regulatory, it is noteworthy that at least an attempt is made by means of the ECE forms to achieve that aim.

73. It is too soon to assess whether the standard conditions sponsored by ECE will be as widely accepted by the international commercial community as are the formulations published by the International Chamber of Commerce although so far the result appears to be encouraging. Over a million copies have been sold of the various ECE Conditions for the Supply of Plant and Machinery. National trade associations have utilized them for their own standard contract forms, and they have been translated into various unofficial languages, including German, Italian, Portuguese, Spanish, Turkish and various Scandinavian languages. (The official languages are English and French and, for some forms, Russian. )

74. Detailed explanations are to the practical application of the General Conditions of Sale and Standard Forms will be published by the ECE in near future on the "Preface to the General Conditions of Sale and Standard Forms of Contract".

b. European Convention on International Commercial Arbitration

75. The Commission was responsible for the preparation of this Convention which was signed on 21 April 1961 and came into force on 7 January 1964.  38  Of the eighteen signatory States, eleven have ratified this Convention, namely Austria, Bulgaria, the Byelorussian SSR, Czechoslovakia, the Federal Republic of Germany, Hungary, Poland, Romania, the Ukrainian SSR, the USSR and Yugoslavia. Of these eleven countries nine are countries of centrally planned, and two of free enterprise economy. In addition, Cuba and Upper Volta have adhered to the Convention. The seven outstanding ratifications are those of countries of free enterprise economy. In addition to the eighteen signatory States, the following States have nominated "Appointing Authorities" for the purposes of the Arbitration Rules of January 1966 made under the Convention. Ireland, the Netherlands, Sweden, Switzerland and the United Kingdom.

76. The Convention pursues purposes different from those of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 (see paras. 57-60 above). The European Convention on International Commercial Arbitration has a twofold purpose: first, to overcome the problem of appointing arbitrators in cases where the parties to an arbitration agreement fail to agree, a particularly difficult problem if the parties reside in countries having a different economic structure, and secondly, to facilitate recourse to commercial arbitration irrespective of the economic structure of the countries in which the parties reside.  39 

77. The Convention, like the General Conditions of Sale sponsored by ECE, thus aims, inter alia, at reducing some of the obstacles to the flow of trade between countries of free enterprise economy and countries of centrally planned economy.

78. A valuable innovation created by the Convention is the establishment, provided for in article IV, of a special Committee to which the claimant may apply if the respondent does not co-operate in the appointment of the arbitrator. The Special Committee consists of three members elected for four years. One member is elected by the Chambers of Commerce of countries in which National Committees of the International Chamber of Commerce exist, and one by the Chambers of Commerce of countries in which no such National Committees exist. The third member, who acts as chairman, is elected for two years by the Chambers of Commerce of the first group of countries and for the next two years by the Chambers of Commerce of the second group. This is the only arbitral institution common to the countries of free enterprise and centrally planned economy.

79. The Convention is supplemented by the ECE Arbitration Rules of January 1966.  40 

(ii) Economic Commission for Asia and the Far East (ECAFE)

80. The Economic Commission for Asia and the Far East (ECAFE) has been active in the field of international commercial arbitration for several years. A study on arbitral legislation and facilities in certain countries of the ECAFE region was, for example, completed in 1958 by the ECAFE secretariat and the Office of legal Affairs of the United Nations.

81. In 1962 a Centre for Commercial Arbitration was established within the ECAFE secretariat at Bangkok. The Centre, which co-operates with the Office of Legal Affairs and with commercial experts and national correspondents designated by the member countries, promotes the wider use of commercial arbitration and the creation and improvement of arbitral institutions and facilities in the region.

82. Mention should be made of the ECAFE Conference on International Commercial Arbitration which met at Bangkok in January 1966. The Conference recommended the preparation of a set of ECAFE Rules for International Commercial Arbitration to be brought to the attention of chambers of commerce, legal and business associations, universities and other appropriate bodies throughout the ECAFE region. These rules have now been prepared on the basis of standards adopted by the Conference, and will be published shortly.

83. The Conference also considered it advisable that separate lists of arbitrators and appointing authorities (authorities entrusted with the function of appointing arbitrators) be prepared and maintained by the ECAFE Centre in consultation with Governments, national correspondents of the Centre and other appropriate institutions. In another recommendation the Conference dealt with the dissemination of model arbitration clauses. The Conference also agreed on certain standards for conciliation which would be appropriate as a guide to parties who wish to have recourse to conciliation for the settlement of their disputes. The Conference recommended that the standards should be adopted by the ECAFE Centre and disseminated throughout the region, in the same manner as the rules for arbitration. The Conference also proposed that the ECAFE Centre should invite each of the main chambers of commerce of the region, through their respective Governments, to constitute panels of businessmen who would be prepared to sit on conciliation committees whenever so requested by parties.

84. The recommendations of the Conference were approved by ECAFE's Committee on Trade and, thereafter, by ECAFE itself at its twenty-second annual session in New Delhi.

85. The Committee on Trade has received suggestions that ECAFE should initiate projects for the standardization of general conditions of sale for selected commodities and simplification of export documents,  41  similar to those sponsored by ECE. The Commission has also engaged in studies of the laws and regulations concerning customs administration in the countries of the region with a view to promoting uniform concepts and efficient procedures and has established the ECAFE Code of Recommended Customs Procedures.

(iii) Economic Commission for Latin America (ECLA)

86. The activities of the Economic Commission for Latin America (ECLA) in the field of trade have been directly related to long-term efforts toward increased economic integration within the region. In this connection, the secretariat of ECLA provides advisory services to the member countries of the Latin American Free Trade Association established on 2 June 1961 under the terms of the Montevideo Treaty of 18 February 1960. Studies carried out by the secretariat include research into the simplification and standardization of customs procedures, documentation and nomenclature.

87. The Central American Economic Co-operation Committee of ECLA has engaged in efforts toward wider ratification and implementation of the General Treaty on Central American Economic Integration, concluded on 13 December 1960,  42  establishing the Central American Common Market. In this connection, the Committee has engaged in studying standard customs codes and common tariff regulations.

88. Furthermore, ECLA has produced studies on the legal aspects of the utilization of international rivers and lakes, and on the terms of trade and their influence on the rate of economic development in the region, as well as on the establishment of a common customs code, and has sponsored seminars on coordination of customs administration.

89. With respect to maritime transport, research has been carried out by ECLA on the possibilities of standardization of bills of lading and other documentation.

(iv) Economic Commission for Africa (ECA)

90. The Economic Commission for Africa (ECA) has as its function to promote action among the African States toward the economic and social development of the region and to strengthen the economic relations of the countries concerned among themselves and in relation to other States. To this end, it undertakes studies of and disseminates information on economic problems and development in the area and assists in the formulation of policies to intensify economic development, inter alia, with respect to trade.

91. The secretariat of ECA has compiled surveys of intra-African trade and of its potentialities and of respective measures to stimulate trade. Studies have also been carried out on regional trade arrangements, particularly the trade grouping of Western Europe, and their impact on trade in Africa and on the trade of African countries with States having centrally planned economies. The ECA also publishes a survey of current trends in African trade and development in the Economic Bulletin for Africa. Included in ECA's current programme of work are studies of national legislation dealing with trade and such related fields as insurance law and investment codes whose purpose is to enable conclusions to be drawn regarding measures for the harmonization of such legislation, especially on a subregional basis. In connection with the foregoing project, ECA promotes the adoption of the Brussels Tariff Nomenclature,  43  among the member countries of ECA.

92. In connection with its resolution 140 (VII) dealing with the co-ordination of industrial incentives and legislation, ECA reviews legislation and practices with respect to investment incentives and industrial development and has studied the question of harmonization of these matters among the member States. In addition, studies have been initiated on the harmonization of legislation concerning maritime transport and on the constitutional and legal basis of public autonomous institutions and corporations. Arrangements have also been made between ECA and ECE for providing assistance to African States concerning the simplification and standardization of expert documents.

93. In co-operation with GATT, ECA sponsors annual courses in commercial policy for both French and English-speaking Africans. It also provides advisory services and organizes ad hoc courses and seminars in customs administration. The establishment, with ECA assistance, of inter-governmental machinery for economic co-operation at the sub-regional level, and the intensive sub-regional studies being carried out by ECA, particularly in industry, agriculture and transport, will no doubt serve as a useful adjunct to possible future participation by African countries in efforts toward the development of international trade law.


 34. See Peter Benjamin, "The ECE General Conditions of Sale and Standard Form of Contract" in Journal of Business Law (London, 1961), p. 119.

 35. On the difference between these two sets, see "East-West Trade and UN ECE Conditions" in Journal of Business Law (London, 1965), p. 100.

 36. See Peter Benjamin, op.cit., p. 123.

 37. Ibid., p. 116.

 38. United Nations, Treaty Series, vol. 484 (1963-1964), No. 7041, p. 349.

 39. See David A. Godwin Sarre, "European Commercial Arbitration" in Journal of Business Law (London, 1961), p. 352.

 40. United Nations publication, Sales No.: 66.11.E/Mim.4.

 41. See document E/CN.11/721, para. 54.

 42. United Nations, Treaty Series, vol. 455, (1963), No. 6543, p. 3.

 43. The Nomenclature for the Classification of Goods in Customs Tariffs was elaborated by the Customs Co-operation Council, which was established as an inter-governmental organization on 15 December 1950, in Brussels. The Brussels Nomenclature has been introduced in seventy-five countries.

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