Legal Certainty and Predictability
Uniform interpretation is so important that I will delve in the
theme more than I intended to do. I will refer to interpretation
practices whose use has incremented in international law. Furthermore,
the natural law tendency towards uniformity has permeated those practices into
domestic systems.
For business people, contracts are their uniform law; what it
matters is that they be performed as agreed, without being frustrated by
internal domestic legal obstacles. So, uniform interpretation should
not remain solely in the realm of legal texts.
Disparity generates legal obstacles; the more damaging is that
it compromises legal certainty. But, also, it feeds other
demons. For example, stimulates forum shopping, by means of which
the interested party search for the jurisdiction whose interpretation of the
relevant legal texts fits better its interest in the case.
Players in international commerce may perform different roles:
(i) negotiating treaties, model laws, rules of law, legal guides and
guidelines; (ii) as national lawmakers implementing those instruments; (iii) as
commercial parties, negotiating covenants and contracts, their amendment,
rescission or termination; (iv) as negotiators or mediators, cooperating in the
implementation of alternative methods of dispute resolution; and (v) as judges
or arbitrators, deciding the disputes that are submitted to them.
All those participants come from different cultural, legal and
economic traditions and environments, speak different languages and should
understand between themselves through a common language; generally, English.
To reach such aim, participants rely on strategies such as use
of a language simple and descriptive, avoiding terms with legal meaning within
the different legal systems and other drafting techniques, that may appear
sophisticated or strange to those who are not familiarized with uniform law.
La donna è mobile
In Verdi's opera, the Duke of Mantua excuses (or celebrates)
himself, singing with frivolity that women are voluble. I disagree,
but I do not have doubts that legal interpretation is
voluble. Indeed, from a practical point of view, the written text is
not the effectively aplicable law, but the way that contracting parties use them and judges
apply them.
Example: Law of Bankruptcy
By the end of the 1980-decade, Salvador Rocha was the legal
counsel of the Secretaría de Gobernación (Ministry of the
Interior). He had an intelligent idea to amend the bankruptcy law
then in force. It consisted in providing that only chambers of
commerce or industry could be sindicos (bankruptcy administrators),
and banking institutions (by then nationalized) in bank insolvency
cases. This way it would be avoided that undesirable persons could
be appointed as sindicos. He asked my help to draft the legal
proposal to the Congress. Then, I took advantage of the opportunity
and proposed him another amendment regarding the way of giving notice to
creditors of the bankruptcy judgement. He agreed, I wrote the
proposal, which was approved and I had the satisfaction of seeing my draft
incorporated in the law.
Some time later I filed a reorganization proceeding and the
judge ordered to notify the creditors following the old repealed
provision. When I addressed the judge, he stopped me and overwhelmed
me with a tirade about litigators complaining before bothering themselves
reading the law. I partially agreed with the judge, but told him
that not in that case, because I was the pen that wrote the applicable
provision. He was surprised and, after an interchange with me,
decided I was right. Since then we have had a very nice
relationship. Once, in a seminar, I heard him commenting the
incident.
By the way, the Rocha amendment failed. Chambers of
commerce and banks, skip their responsibility by naming the old sindicos as delegates. So, things remained unchanged.
Example. Case Law on Bills of
Exchange
In 1928 was published the Ley de Títulos y Operaciones de
Crédito (Law on negotiable instruments and credit operations, LNICO)
that enter into force in 1932. On those times, bills of exchange or
drafts (letras de cambio) were regularly issued and
circulated. After centuries of use and evolution, bills of exchange
were known under different names, in Spanish they were called libranzas,
primera [segunda] de cambio, cambial and others I do not remember.
The LNICO introduced the novelty that the express mention of
being a letra de cambio, inserted in the text of the document was an essential
requisite for the instrument to be a bill of exchange (a.
76). Notwithstanding the legal text, the case law immediately
following the entrance into force of the new law, validated the use of
equivalent expressions; for example, "por esta única de cambio"
(for this unique of exchange"). But at the beginning of the
1950-decade, the jurisprudence was modified and, since then, the literal magic
words are deemed essential; absent the inserted mention of being a letra de
cambio, it is not what it purports to be.
My mentor, Mantilla Molina, explained me the reasons: when the
LNICO entered into force, it was scarcely known and its disposition, although
good, departed from practices that followed the repealed law; to deny legal
value to such an amount of drafts, by applying literally the new law, would be
a real injustice. The case law changed when the LNICO was widely
known and applied: the mention of being a letra de cambio was
regularly observed and legal certainty required compliance with the legal text
as written.
Example. The Uniform Law of
Geneva
In 1930, in Geneva, were agreed treaties on the uniform legal
regime of bills of exchange and promissory notes. Bells rang across
de world celebrating the Uniform Law of Genève. A few years
later, Giuseppe Ferrara, a talented Italian, wrote about the disparate law of
Geneva (La legge diforme di Geneva); also, a German scholar, E. von
Caemmerer, wrote a famous work in two thick volumes, commenting the case law of
the different countries holding opposing interpretations. The Geneva
law was uniform only in its text.
Leading Role of the Law
All those previous statements are not a proclamation of legal
licentiousness, nor the absolute power of courts. Federal Civil Code
(a. 10) states that against the application of the law cannot be invoked lack
of use, custom or contrary practices. Written law is a mandatory
framework that provides direction to judges, and limits them. Judges
are obligated to apply the law and, in doing so, to abide by the general
principles of law on interpretation and enforcement.
Uniform Interpretation of the
Law: Convention on Treaties
With the purpose, among others, of unifying the interpretation
of international treaties, it was agreed the Vienna Convention on the Law of
Treaties (Vienna, 26 May 1969), which entered into force on 27 January
1980, and to which Mexico is a party (Diario Oficial 28 April 1988).
The ICCA's Guide to the interpretation of the 1958 New York
Convention, commenting the Convention on Treaties, offers a good
resume (pp. 13-14); the guide says: "In principle, the terms used in the
Convention have an autonomous meaning (article 31 Vienna
Convention). If the text of the New York Convention is ambiguous,
one should defer to its context, intent and travaux preparatorias (articles 31 and 32 Vienna Convention). The
terms must be understood taking into account the context and purpose of the
Convention. Therefore, courts should not interpret the terms of the
New York Convention by reference to domestic law. The terms of the
Convention should have the same meaning wherever in the world they are applied. This
helps to ensure the uniform application of the Convention in all the
Contracting States". (Emphasis added).
It is important to note article 32 of the Convention, on
supplementary means of interpretation, according to which "[R]ecourse may
be had to supplementary means of interpretation, including the preparatory
work of the treaty and the circumstances of its conclusion, in order to
confirm the meaning resulting from the application of article 31, or determine
the meaning when the interpretation according to article 31 (a) leaves the
meaning ambiguous or obscure, or (b) leads to a result which is manifestly
absurd or unreasonable." (Emphasis added).
Interpretation. Model Article
On 14 June 1974, in New York, it was convened the Convention
on the Limitation Period in the International Sale of Goods. Years
later, on 11 April 1980, a Protocol to the 1974 Limitation Convention was concluded
in Vienna, with the purpose of aligning the Prescription Convention with the
CISG.
At the date of this entry, the Limitation Convention has 22
States parties on the amended version, and 29 on the original
Convention. In Mexico is in force since 1 August
1988. (Diario Oficial, 6 May 1988).
Article 7 of the Limitation Convention states:
"In the interpretation and application of the provisions of
this Convention, regard shall be had to its international character and to the
need to promote uniformity".
When considering this provision, it was argued that it was
redundant, because uniform application was the purpose of any
law. Also that, absent an integrated courts system, uniform
interpretation was impossible to obtain. We have advanced a lot
since then.
The United Nations Convention on Contracts for the
International Sale of Goods (CISG) was adopted on 11 April 1980 and
entered into force 1 January 1989.
CISG Article 7, says:
"(1) In the interpretation of this Convention, regard is to
be had to its international character and to the need to promote uniformity in
its application and the observance of good faith in international trade."
"(2) Questions concerning matters governed by this
Convention are to be settled in conformity with the general principles on
which it is based or, in the absence of such principles, in conformity with the
law applicable by virtue of the rules of private international law".
Similar texts continued to appear regularly in uniform trade law
conventions. For example, on the United Nations Convention on
International Bills of Exchange and International Promissory Notes (a.
4), and the United Nations Convention on the Carriage of Goods by Sea
(the "Hamburg Rules").
Interpretation of Model Laws
The Mexican government considered the model article on uniform
interpretation of the utmost importance. It was surprised that the
provision was only included in treaties but not in model laws.
When the Model Law on International Credit Transfers was
made, Mexico proposed to include a similar text on interpretation (UNCITRAL
Yearbook 1991, vol. XXII, page 120). The
Mexican proposal was rejected.
Years later (1997), and not without some debate, Mexico succeed
when it proposed the provision to be included in the UNCITRAL Model Law on
Cross-Border Insolvency.
Article 8 reads as follows:
"In the interpretation of this Law, regard is to be had to
its international origin and to the need to promote uniformity in its
application and the observance of good faith".
The Article Becomes a Must
Since CISG and the Model Law on
insolvency, in model laws, the interpretation provision became undisputed in both international conventions and in model laws, respectively.
It is worth noting that the UNCITRAL Model Law on International
Commercial Conciliation, which attached the utmost relevance to the freedom
of will, provided that parties may not exclude or vary the article on uniform
interpretation (aa. 1 and 3). It is amazing to see how, after being
rejected in a model law in 1992, it became mandatory in 2006.
Also, it is relevant to mention that, when in 2006 the UMLA was
amended, article 2A on interpretation was incorporated. In 1985,
when the original UMLA was made, the provision did not appear in model
laws.
Mexico still has not incorporated in its Code of Commerce the
2006 UMLA amendments, but there is out of the question that the principles of
uniform interpretation apply to the Mexican law of arbitration in the Code of
Commerce. This blog is devoted to demonstrate this true.
UNIDROIT. Interpretation of
Rules of Law
In 1994, the International Institute for the Unification of
Private Law (UNIDROIT), issued its first edition of the UNIDROIT
Principles of International Commercial Contracts (the
Principles). The Principles followed a similar
pattern. Thus, regarding the interpretation of the Principles, article 1.6, reads:
"(1) In the interpretation of these Principles, regard is
to be had to their international character and to their purposes including the
need to promote uniformity in their application".
"(2) Issues within the scope of these Principles but not
expressly settled in them are as far as possible to be settled in accordance
with the underlying general principles".
Harmony of Domestic Laws
A consequence of the globalization is that activities that
formerly only produced local or national effects, now may have trans-border
consequences. Unfortunately, it is not always feasible to reach
uniform laws on all cases; an example being the regulation of insolvency.
If not uniformity, legal harmonization is desirable. Thus, in those cases, legislative guides are
negotiated. These are documents whose purpose is to offer national
lawmakers, information on the problems and principles that is convenient to
consider when drafting those laws in harmony with the practices and
expectations of the international community.
For example, UNCITRAL has made three legislative guides on insolvency
(2004, 2010, 2013); also, among others, on Secured Transactions, the
Implementation of a Security Rights Registry, on Privately Financed
Infrastructure Project.
By the way, the information contained in those guides is valuable to any practitioner.
I will continue.
Useful
links
Uniform Law of Trade and Uniform Law of Soccer. FIFA is the UNCITRAL of Soccer. Second Edition November 5, 2015
How a Model Law is Cooked. The Importance of Interpretation.
How to Digest a Model Law. The Clout and Digest
How to Digest a Model Law. CLOUT and its Digests. Second Part
How to Digest a Model Law. The CLOUT. The Digests. Third Part
Table Talks. How to Demonstrate the Law. Jurisprudence
#UniformLaw #LegalCertainty #UniformInterpretation #UNIDROIT #Uniformity #UNCITRAL
