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
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