The Uniform Law of Trade
Uniform law means that
it is equal in all corners of the world; its expression, interpretation and
application is identical, irrespective of the place in which it is being
applied. As the world of the Law is quite wide, in this blog I will only
deal with the uniform law of trade.
The main benefit of
uniform law is that it provides legal certainty; all transactions must be
equally valid and no party should be taken by surprise. That happens when
domestic legal obstacles arise and frustrate the expectations that a party in
good faith entered into, when it agreed to become part of a contract, a
business alliance or a joint venture, make an investment, etcetera.
The legal obstacles
seldom are hidden in statutes, precedents, and domestic or regional practices.
Suddenly, the foreign party finds that its business became frustrated,
totally or partially, by virtue of a legalistic application of
a harmful nationalist system. That way is not possible to make
business. Should the foreign decision makers had known there was an
obstacle, they should have not enter into the deal. Also, a
country known by its nationalism, is not an attractive place to make business
and invest.
Inconveniences of
Legalism and Nationalism
It is difficult to
imagine someone who may support, seriously and with good reasons, that uniform
law not only is not useful, but pernicious. Notwithstanding the
above, in practice it is really tortuous to write, interpret and
apply uniform law. Impasse, nationalisms, dogmatic adherence to legal
doctrines, pride and whatever else you may imagine, obstruct all ways
and muddle all communication efforts.
By instance, the
academy. Try the following experiment: take one or several books on
domestic trade law or arbitration and find which of them systematically recur
to the 'travaux preparatoires' of the uniform legal instruments and to the
international case law that interprets them. Find a book, in Mexico,
commenting the Mexican law of arbitration that incorporated the UMLA, whose systematic
source be the Secretariat commentary, the Holtzmman and Neuhaus commentary
or the case law reported in the CLOUT. It is my experience that they have
sporadic quotations to a few famous cases (generally well known cases) and
repeated paraphrasings from the work of other authors, academic ones, many of
them recasting the opinions of the leading authorities.
The
pernicious effect is expansive. Those local books are the source of
information of national lawyers that, for obvious reasons, only invoke Mexican
case law and doctrine. Thus, judges and arbitrators fail to have the
information and support to decide in accordance to uniform law.
The experience in the
uniform international law is that, little by little, domestic systems follow
different paths and the desired uniformity disappears. It is urgent that
we Mexicans adopt measures to vaccinate ourselves against forum nationalism.
The Peace of Commerce
The main concern of
business people is to make business and to expand markets.
History demonstrates
that the trade law is pioneer in the creation of uniform law. From remote
times, merchants have been the communication channel between
civilizations; it's natural, because their interest is to expand
their markets by means of exportation and to enrich internal market by
means of importation. Merchant, throughout history, have been messengers,
diplomatics and, in many occasions, spies.
There are plenty
examples of these; from the times of the Phoenicians with the Code of
Hammurabi, Romans with the 'ius gentium'' which was indeed an
'international lex mercatoria', the trade law of Europe at the end of
the Middle Ages, which is the foundation of contemporaneous trade law, and many
more.
My case is a good
example. I was a litigator in commercial and private law and
professor in some of those subjects, on which I researched and wrote
papers. I was totally uninterested in international law; what I knew
on the subject was what I learnt it in law school. Suddenly, I
was sent to UNCITRAL because I knew the law of negotiable instruments. A
new world opened to me and I found myself blowing the dust of my all books on
international law and reading new ones unknown to me.
The Innovative Trade
Merchants and business
people have the good custom of investing in the invention and development
of new goods and services. Without commercial investment there would not
be any transport of goods and people, communications, plenty of food,
electric energy and lamps to see in the darkness, cars, internet, computers,
smart phones and whatever you may imagine.
Because of the same
reasons, merchants invent agreements and ways of trading that serve as a
chanel of their business and that frequently end up being adopted for other not
commercial activities. Typical examples are the bills of exchange and the
stock corporations. For centuries only merchants, and not all,
had checking accounts. Now everybody has bank accounts and draw
checks. By the way, checks and checking are on their way out because
merchants and bankers invented and implemented the use of wire transfers
(credit transfers).
The Uniform Law of
Soccer
Notwithstanding many
differences, soccer may serve me to exemplify. No only its unification,
but also the local disparities.
By example, is rather
easy to agree uniform rules of soccer: the FIFA Rules. It has all the
ingredients: (i) it is easy to agree, because its narrow scope: the game of
soccer; (ii) it has indisputable economic incentive, because the owners of
the teams have large earnings, as well as the national and international
organisms and peripheral business
like TV; and (iii) governments are interested because it is one of the
most popular entertainments in the world.
In the foundation of the
universal boom of soccer is the fact that the game is played under the
uniform FIFA rules. Should someone propose that soccer be played in
Mexico following the Mexican rules, in France the French, in Brazil the
Brazilian, etcetera, it would be considered to be something strange and a
little crazy.
No matter the playing
field, the rules are the same everywhere. The opposite would give the home team
more advantages than they already naturally have. Not only that, it would
force teams to design different strategies depending on where they are going to
play. They would have to hire local coaches for specific games and
maintain broader rosters of players to adapt to new strategies, and so on and
so forth.
Let’s suppose that a
country decides that within its boundaries, all national and international
soccer matches will be played according to its own national regulations; the
consequences would be disastrous for that country. The major participating
teams would have serious issues about participating in the territory of that
country. The investment they have in their teams would be put at risk by
playing in unfavourable and unknown
circumstances: it would affect their prestige and would put at risk the
safety of their players, and so forth. The teams would prefer to play
elsewhere or they would demand higher wages. It’s probable that they would
not send their first string roster again, and so on.
The rules of soccer
have evolved. In the old days the referee, without assistants, would run
without stopping back and forth during the game; at the end he had to keep
running to take seek refuge in the church and save himself from the fans
chasing after him. If you do not believe me, watch a scene of “The
Little World of Don Camillo” or in “The Return of Don Camillo”. I do not
remember in which of the two films it appears; but do not miss watch
them, you will learn and have more fun than reading what I write.
Things have evolved,
as I said. Without losing wicked umpires, now the referee has five assistants.
In official games changes or substitutions were not allowed; the
eleven who entered the field were the only ones who played. Now, changes
are allowed. And as such, there have been many other innovations; for instance,
now there is discussion as to of the use of electronic media to determine
whether the ball passed the goal line. But consistency is maintained and
the regulation applies equally worldwide.
Nobody thinks
otherwise but in maintaining uniform regulations. The costs and other
drawbacks of diversity would be a legal obstacle for soccer and one of the
tasks of FIFA is to remove such obstacles. The UNCITRAL, with less money and
power, is the FIFA of international trade law.
The target of
unification prevails and the rules apply the same around the world.
But not that much; by instance, it is known that referees apply
the rules differently in Europe than in America. Nasty knocks that
are consider licit in one place, are penalised in others. Arbitrators
are sensible to local pressures and veer to the local team. It is a
known fact: visitor teams play defensive. In a few words, domestic soccer case
law threatens and perturbs uniformity.
Nationalisms are encroached.
Nowadays the discussion on the number of foreign players in a team
and, ignoring the benefits of multiculturalism, the recurrence
to foreign couch, is considered by many as an offence to
mexicanity and, wrongly, as a cause of recoil.
But, gradually, the
barriers to foreigners have diminished. New instruments are invented,
like the regional passports in the European community, multiple nationality,
etcetera. While some look back to the glorious pass, others
look forward to a promising future.
A Few Manifestations
The manifestations of
uniform law and its advantages are many. For example, the UCP 600 Rules of
the International Chamber of Commerce (ICC) and its usage for
documentary credits (UCP 600 ICC Uniform Customs and Practice for
Documentary Credits). The ICC, who developed them, is a private
institution. However, the UCP 600 are applied when the parties agree
to its application; this is what happens with all the letters of credit
that are issued in the world. They also apply everywhere; the jurisprudence
generated is published regularly. Nobody disputes them; they are the uniform
universal law of letters of credit and one of the main vehicles of
international trade.
I imagine the
fuss that could be a Mexican lawyer requiring that in a letter
of credit, instead of making reference to the UCP 600, it had to be stipulated
the provisions of the Law of Negotiable Instruments and Credit Operations on
Letters of Credit and Confirmed Credits (Articles
314-320), or that a court shall apply them. I studied them in law school;
they are letra muerta and that's why we use letters of
credit in Mexico.
The importance and
extension of this subject forces me to spend this second edition
in an additional entry to be published next.
How a model law is cooked. Babel. The cultural gene.http://bit.ly/19lT7v8
Law is Cooked. The Importance of Interpretation. http://bit.ly/1bazA0y
How to Digest a Model Law. The Clout and Digesthttp://bit.ly/1c11MKl
How to Digest a Model Law. CLOUT and its Digests. Second Part http://bit.ly/1gReLeX
How to Digest a Model Law. The CLOUT. The Digests. Third Part http://bit.ly/1nnicyj
#Uniformity #UniformLaw #LegalCertainty #InternationalTrade #UNCITRAL
Holztmann & Neuhaus (A Guide to the UNCITRAL Model Law On International Commercial Arbitration)
ResponderEliminarAnalytical Commentary on Draft Text of a Model Law on International Commercial Arbitration Secretariat Commentary A/CN.9/264
As for CLOUT see the links at the end of the text of the entry