University Of East Anglia

Norwich Law School

LAW- M585

FOUNDATIONS OF
INTERNATIONAL COMMERCIAL LAW I
PG COURSEWORK 2009-2010

STUDENT REGISTRATION NUMBER [4230531]

The twentieth century saw the resurgence of a truly transnational commercial

law and all the indications are that the twenty first century will be the century of a
truly global commercial law
Discuss.

WORD COUNT 3965

Table Of Contents

1. Introduction

2. Nature of The Transnational Commercial Law.

2.1. Definition of Transnational Commercial Law.

2.2. The Importance of Transnational Commercial Law.

2.3. The Role of Merchants in Comprising Transnational Commercial Law.

2.4. The History of The Transnational Commercial Law.

3. The Resurgence of Transnational Commercial Law in the20th Century.

3.1 The Impact of Political and Economical Changes on Transnational

7
7

Commercial Law.
3.2 Examples of The Prosperity of Transnational Law in The 20th Century.

3.3 The Urge of The Prosperity of Transnational Law in The 20th Century.

4. The Global Commercial Law.

4.1.The Theory of Global Commercial Law.

4.2. The Fertility of The approaches of Global Commercial Law.

10

5. Conclusion

11

6. Bibliography

12

1. Introduction
It is generally recognised that the transitional commercial law has experienced a dramatic transition
during the twentieth century. This transition was not coincidental. In fact, there are many economic
as well as political factors that could be involved in this legal revolution. In addition some scholars
claim that this continuing transition is high likely to lead us towards a global commercial law. This
essay will attempt to provide a profound analysis of the transition of transitional commercial law,
particularly in the twentieth century and also examine the consequences that may result later from
this transition. In doing so, I will provide a brief overview of the nature of transnational commercial
law including definition ,sources and historical background. Then I will consider the resurgence of
transnational commercial law in 20th century by focusing on the impact of political and economic
changes on the transnational commerce law. Also, I will present a number of examples of the
prosperity of transnational commercial law in that century. After that I will proceed to evaluate
whether such legal transition could be culminated in creating global commercial law in the 21th
century. Finally, I will provide several sets of conclusions.
2. Nature of The Transnational Commercial Law
2.1. Definition
While a variety of definitions of the phrase transnational commercial law have been suggested, this
paper will use the definition first suggested by Goode who saw it as: 'Set of private law principles
and rules, from whatever source, which governs international commercial transactions and is
common to legal systems generally or to a significant number of legal systems'.1 Three sets of
conclusions can be drawn from his definition. First, transnational commercial law ,in essence, evolve
around private law which could mean in this context the rules and regulations devised by citizens or
legal entities of different nations. The transnational commercial law, therefore, could be seen as a
spawn of the convergence of considerable number of jurisdictions. Second, the subject of
transnational commercial law is merely cross-border transactions. Thus, it is not necessary to be
similar to the national commercial law besides it may deal with different sorts of intricate issues
which probably not seen in local law. Third, the transnational commercial law needs to be
recognised and ratified from considerable number of nations before coming into operation ,otherwise
there will not be a genuine value of its law2. These points raised above would be the intrinsic features
1

See Roy Goode, Herbert Kronke and Ewan Mcendrick, Transnational Commercial Law: Text, Cases and Materials
(OUP, Oxford 2007) p 4
2
See Alastair Mullis, Why harmonise transnational commercial law ( University of East Anglia 2009 )

of transnational commercial law and could present an outline for the nature of transnational
commercial law. However, the obvious question may arise in this context is why we need
transnational commercial law. In other ward to what extent transnational commercial law is
important.
2.2. The Importance Of Transnational Commercial Law
The importance of transnational commercial law reflected in its benefits to international trade. These
benefits could be observed clearly through four factors. First, reduction of legal risks and the
transactions costs which often involved in international commerce. Due to the nature of international
trade law which entails considerable number of risks, parties are bound to be concerned about the
applicable law and jurisdiction in case things go wrong. Also they bear in mind issues such as
mandatory law, government interference, public policy etc. These inherent risks in turn leads to
increasing the expenses of international trade transactions. Transnational commercial law plays
permanent role in reducing these risks as well as its associated expenses through unifying the
multiple jurisdictions governing the whole international commerce process3. Second, the Protection
of fledging parties. Given the wide diversity of legal systems mastering the international commerce,
the risk of existing divergence among these systems is very high. Such divergence could be used
opportunistically from some parties. So, transnational commercial law is very likely to be a
contributing factor in precluding fledgling parties from falling prey to this opportunism and hostility,
thanks to the high level of certainty and clarity provided by transnational law4.
Third, refinement of the commerce law. By virtue of the process of making transnational commercial
law which involved many talent expertise from all over the world, the quality of these devised laws
is high. These high quality laws are not just taking part in facilitating international commerce but
also filling the legal vacuum, which may exist in national legal systems dealing with cases which
have a foreign element, through presenting neutral commercial rules tailored to meet the
international trade needs5.

See Roy Goode, Herbert Kronke and Ewan Mcendrick, Transnational Commercial Law: Text, Cases and Materials
(OUP, Oxford 2007) p 192. Also, Alastair Mullis, A Typical International Trade Transaction ( University of East Anglia
2009 )p 2-5
4
See Roy Goode, Herbert Kronke and Ewan Mcendrick, Transnational Commercial Law: Text, Cases and Materials) p
192. Also, Alastair Mullis, A Typical International Trade Transaction ( University of East Anglia 2009 )p 2-5
5
See Paul B. Stephan, 'The Futility of Unification and Harmonization in International Commercial Law' [fall 1998]
Virginia Journal of International Law 743,743-750. Also, Alastair Mullis, Why harmonise transnational commercial law (
University of East Anglia 2009 ).

The fourth factor is the dissemination of legal knowledge. Regardless of the efficacy of the
transnational commercial law or not, legal advisers from all over the world will find themselves
driven to understand these specific widespread laws and their applications, besides the conformity of
these laws to their national law or not. This need will help to disseminate legal knowledge in a more
comprehensive and broader way. Also it may be a good opportunity to narrow the wide gap between
international attorneys themselves which may arise naturally due to cultural and linguistic diversity
among these lawyers. In order to master these laws, lawyers will seek to work with other attorneys
around the world. As a result of such legal cooperation, as well as comprehensive understanding of
the international commercial law, the products of legal counsels almost certain to be improved which
, respectively, will affect the world trade6.
2.3. The Role of Merchants in comprising transnational commercial law
For the sake of comprehensive understanding of the transnational commercial law, it is vital to
recognize that the purpose of commercial law, in general, was to meet merchants legitimate and
practices requirements. It is, therefore, fair to say that the main source of commercial law is
merchants themselves in tandem with international legislation . The commercial law could be seen as
a product of their peculiar way to left the trade barriers which they may encounter while producing
their products, whether it were goods or services, in a more attractive, competitive and cost-effective
forms. For example, the forming of the bill of lading 'a document signed on behalf of the company
carrying the goods, acknowledging that the goods have been shipped on board a particular vassel
bound for a particular destination and stating the terms on which the goods are received'7 ,in general,
was as a response to the middle ages merchants needs. Because of the lacking of a specific
mechanism through which the goods could be sold in transit, merchants created the bill of lading
which provides an absolute control of the goods to whoever the holder of the bill of lading, even
before the goods have actually arrived. This flexible mercantile mechanism entitled the buyer of the
goods to sell them in transit or even use the bill of lading as collateral for a loan8. This previous
example explicitly showed to what extent transnational commerce law is derived from merchants
needs, customs and usages.

See Paul B. Stephan, 'The Futility of Unification and Harmonization in International Commercial Law' [fall 1998]
Virginia Journal of International Law 743,743-750
7
See Alastair Mullis, A Typical International Trade Transaction ( University of East Anglia 2009 ) p 20.
8
See Roy Goode, Herbert Kronke and Ewan Mcendrick, Transnational Commercial Law: Text, Cases and
Materials p 6,7.
5

2.4. The History of The Transnational Commercial Law

It is certainly correct that transnational commercial law has been existent since immemorial time. By
one way or another the commercial law often is coupled with international trade due to its vital role
in facilitating such trade. The Code of Hammurabi ,believed to date back to 1900 BC, could be
considered as the oldest existing commercial law. This code has indeed many of the rules of
commercial law which affect both local and international trade. In the second or third century BC,
the existing of transnational commercial law could be more discernible through the Rhodian
Maritime Code which was accepted by Greeks and Roman and lasted somehow1,000 years. This
code constitutes the first known law to represent the principles of general average in maritime
insurance. Between the eleventh and fifteenth centuries, a number of compilations have appeared
such as Rolles of Oleron ,in the twelve century; Black Book of the Admiratly ,in the med- thirteenth
century; the Laws of Wisby, in the fourteenth century; and, the Consulate of the Sea , in the
fourteenth or fifteenth century9. The main subject of these compilations above is maritime law.
Notably, lexmactoria (mercantile customs and usages) could be a predominant factor by which these
completions were formed.
Also, one of the most explicit evidence in this field is The Great Fairs of Europe. The powerful
contribution of these medieval centuries fairs in developing merchant law is undeniable. These fairs
have not just facilitated international commerce through devising a significant number of
transnational commercial laws but also have played a permanent role in creating conducive
environment for international transactions, by sporting the ideas of good faith and loyalty. With the
passage of time this conducive environment led to increased international commerce, which in turn
increased the issuance of transnational commercial laws in order to maintain the security element
and the high level of the regulations of these fairs 10.

See Roy Goode, Herbert Kronke and Ewan Mcendrick, Transnational Commercial Law: Text, Cases and Materials
(OUP, Oxford 2007) p 12,13.
10
See P- Huvelin, Essai historique sur le droit des marchs et des foires (Paris,
1897) 594-7.
6

3. The resurgence of transnational commercial law in the 20th century.

3.1 The impact of political and economical changes on transnational commercial law
It is conceded that the twentieth century saw a considerable number of radical changes on several
levels in the whole world. On the political level, world war I and the second besides the decolonisation decades (between 1960s and 1970s) were enough to change the political map of the
world. As a result of these changes, three worlds were formed. In addition, the collapse of the Soviet
Union in 1990s. And the enormous increase in the number of members of the United Nations ( from
50 states in the 1950s to 188 states in the late 1990s). These political events in one way or another,
have contributed in forming a new transnational commercial law. The advent of a number of markets
and its legal regimes could be seen also as a prelude to the legal revolution. This revolution
stemming manly from national laws, foreign laws and transnational law which were devised by
international formulating agencies. As a result, considerable numbers of transnational laws were
drafted in the first half of the 20th century by relatively a limited number of states, as many states
had not acquired their independence yet . 11
In the second half of the 20th century, in the wake of many countries gaining their independence and
formulating their own legal systems, as well as an increased incidence in emerging markets, the
desire to comprise a new neutral transnational commercial laws has been increased. The needs for
unified trade regulations sensitive to natural diversity among these markets became more urgent
particularly with the buoyancy of international trade in that time.12 This desire has been interpreted
later primarily by creating a number of global conventions such as UNIDROIT, UNCITRAL and
Hague Conference, as well as regional agreements such as the Organization of American States
(OAS) and the European Community (EC).
3.2 Examples of the prosperity of transnational commercial law in the 20th century
In the late twentieth century, transnational commercial law had been promoted by generating a wide
spectrum of conventions. The eminent transnational laws enacted by such conventions had hoped to
keep pace with rising economic growth and concomitant regulations needs at that stage. There are
many success stories in this field. The cross-border contract law devised by the United Nations
Convention on Contracts for the International Sale of Goods (founded in 1988)was a loud example
of the modern legal transition in the 20th century. This convention had ratified as a law in 54
11

See Lukas Mistelis, 'Regulatory Aspects: Globalization, Harmonization, Legal Transplants, and Law Reform - Some
Fundamental Observations' [spring 2000]International Lawyer 156,157
12
See Loukas Mistelis, Is Harmonisation a Necessary Evil?( Sweet & Maxwell 2001)
7

countries and Its contract of sale has been considered as the most essential commercial contract. It is
worth menting that this transaction contract law is in reality a pure international law. Remarkably, it
is not derived from any national or foreign laws13. Also, the International Institute for the unification
of private laws, known as UNIDROIT, was founded in 1962 as an organ of the league nations. In
1940 after the end of the league, the UNIDROIT was re-founded on the basis of a multilateral
agreement (statue of UNIDROIT) which was amended in 1993. At present the number of member
states of UNIDROIT is sixty-one member from all over the world. This organisation still
contributes in considering ways of unifying and coordinating the national private laws, and to set up
progressively for the international acceptance of transnational laws14.
Another success story is the United Nations Commission of International Trade Laws (UNCITRAL)
which was founded by the General Assembly of the United Nations in 1966. The effects of
UNCITRAL on promoting transnational commercial law could be divided into two distinct
functions. The first function is to provide many commercial legislations and rulings which codify the
commercial processes worldwide. The second function is unifying and coordinating the transnational
commercial laws and conventions among the international commercial community which
presumably reflect positively on commercial progression for the member states15. These conventions
raised above take a vital part in the development of substantive transnational commercial law not just
by providing a considerable number of transnational commercial rules but also through rising the
quality of these laws. Thanks to the international expertise involved in such conventions. In addition
the success of these institutions and other global conventions was basically due to a willingness by
the international trade community to provide a number of rules governing international commercial
transactions.
3.3 The urge of the prosperity of transnational commercial law in the 20th century
One of the main reasons for this high leap of the transnational commercial laws in the twentieth
century may be lied in international impulse. The aspiration to left the international trade barriers
,namely national frontiers was overridden. This international aspiration mainly includes two prime
elusive goals. The first is to generate an international devised legal system dealing with cross-border
13

See A Watson, 'Legal transplants and European privet law' (December 2000) 4.4 EJCL
<http://www.ejcl.org/ejcl/44/44-2.html> accessed 20 Dec 2009
14
See Roy Goode, Herbert Kronke and Ewan Mcendrick, Transnational Commercial Law: Text, Cases and Materials
(OUP, Oxford 2007) p 134,203.
15
See United Nations, 'The UNCITRAL Guide Basic facts about the
United Nations Commission on International Trade Law'(United Nation publication,Vienna 2007) p 2.
8

transactions, at the same time does not expose to national laws to local transactions. This purport has
been achieved by creating a number of global conventions. The second purport is to find a common
political and economic ground by which transnational commercial law would govern the local
transactions besides the cross-border transactions. Thus, the barrier of national frontiers would begin
to fade16. This purport has been fulfilled by forming many regional agreements. However, such
motivation is not very likely to lead the world community to create and accept a conception of global
commercial laws for many practical reasons.
4. The Global Commercial Law.
4.1.The Theory of Global Commercial Law
The purport of the global commercial law may indicate a set of commercial rules adopted
internationally and applied domestically all over the world. This universalistic view of law appeared
clearly with comparative law studies which had been set out in Paris in 1990 by two well-known
French jurists EDOUAED LAMBERT and RAYMOND SALEILES who showed enthusiasm
towards promoting a universal common law through comparative law studies:
A world law must be created-not today ,perhaps not even tomorrow-but created it must be,
and comparative law must create it. As LAMBERT put it ... comparative law must resolve the
accidental and divisive differences in the laws of peoples at similar stages of cultural and
economic development, and reduce the number of divergences in law, attributable not to the
political, moral or social qualities of the different nations but to historical accident or to
temporary or contingent circumstances.17
However, This universalistic theory has attracted many criticisms and its realistic is questionable.
Basically, This theory premised on a doctrine of the unity of humankind but the facts of life is, such
theory is very likely to be overambitious. There are many intrinsic differences in national mind-sets
as a natural result of the existence of diversity in languages, traditions and habits as well as the
variations in legal systems dut to its sources, structures and technique differences18. Moreover, some
legal systems, at the present, are derived mainly from religions such as Islamic law. So, it is very
difficult if not impossible to create universal law on the basis of compromising.

16

See Roy Goode, Reflection on the harmonisation of Commercial law ( OUP 1990 )
See Konrad Zweigert and Hein Kots, An Introduction to Comparative Law, (Tony

17

Weir tr)(3rd

edn,Clarendon Press, Oxford,1988)2-3

18

See Harold Gutteridge, Comparative law: an introduction to the comparative method of legal study,(2nd edn,
Auvermann,1971)6-7
9

4.2. The Fertility of The approaches of Global Commercial Laws.

Basically, the global commercial law could be achieved through three main suggested methods. First,
by international adoption of a specific uniformed substantive law governing the international
transactions or both domestic and international transactions. This method is time consuming. Given
to the disparity between the legal cultures, the required time to elicit a necessary support for such
universal substantive law is excessive long and discouraging. For example, the success of the United
Nations Convention on Contracts for the International Sale of Goods (CISG) could be seen as a
product of twelve years of international co-ordinations ( from 1968 to 1980). Furthermore, in the
way toward uniformed substantive law, optimal rules, which domestically improved by local
expertise, may be jettisoned, as the price of producing such global law19. Second, international
adopting of uniformed choice of law rules in which the parties could select a particular substantive
national law to govern their transactions (irrespective of any other essential elements such as the
location of dispute).20 Such method are neglecting the sensitivity of sovereignty issues which may
arise by applying a choice of law rules. In other words, the reluctance of embracing the conception
of choice of law is predominant among legal systems which prefer to wield enormous influence by
applying their sets of rules (mandatory rules) in order to remain the 'national interest'. So, its
generally agreed that as long as global conventions do not expose to sovereignty issues, the
possibility of success such conventions is high.21
Third, by enforcing a supranational ' lex mercatoria'. In the last thirty years, many European scholars
alleged that there are a sufficient commercial rules and general principles derived from lex
mercatoria (mercantile customs and usages) which could regularise the international commercial
contracts. This argument is premised on the fact that arbitrators often draw upon the customs and
general principles of merchants in dealing with contract disputes. Notwithstanding, it could be
argued that CISG is an optimal alternative and practical solution then lex mercatoria because of the
widely accepted of CISG. Whereas the lex mercatoria lacking of such international acceptance,
besides that lex mercatoria is still unwritten.22 In the light of these shortcomings, it is fair to say that
the capability of these methods to achieve a global commercial law are under consideration.
19

See Paul B. Stephan, 'The Futility of Unification and Harmonization in International Commercial Law' [fall 1998]
Virginia Journal of International Law 743,743-750
20
See John A. Spanogle, 'The arrival of international privet law' [1991-1992] George Washington Journal of
International Law and Economics 477,486
21
See Loukas Mistelis, Is Harmonisation a Necessary Evil?( Sweet & Maxwell 2001)
22
See John A. Spanogle, 'The arrival of international privet law' [1991-1992] George Washington Journal of
International Law and Economics 477,486. Also, See Roy Goode, Herbert Kronke and Ewan Mcendrick, Transnational
Commercial Law: Text, Cases and Materials p 6,7.
10

5. Conclusion.
This assay has briefly explored the nature of the transnational commercial law as a prelude and a
condition to the consideration of Manifestations of ,and reasons for the return of international law in
the last century. Also, it examined the allege that the 21th century could be the century of global
commercial laws. Fourth sets of conclusions can be drawn from the exposition above and some
forecasts will also be attempted. First, there are no doubts that transnational commercial law has
made a great progress in the last century. This great progress is evident in the number of global
conventions which have been held, as well as in regional agreements. The truly international
willingness and the need of new transnational commercial law can accommodate the surge in
international trade at that stage, both have contributed in developing transnational commercial law in
the 21th century. Second, it could be observed from this dramatic transition in the 20th century that
'national pride' did not hold as much weight as today. The sensitivity of globalization was not a
hinder to embrace internationally devised law.23 On the contrary, in this century many countries tend
to be averse to embrace none national commercial law because of their desire to preserve their
'national identities'.24
Third, it would appear that the approaches to achieve a complete global commercial law in this
century are sterile. The cultural and political hurdles are still very hard to jump. Moreover, the
compromise process to achieve such global law may involve many demerits. Fourth, it could be
argued that the near global conventions might be the optimal alternative of global law, owing to the
discernable capability of global conventions in raising the balance in favour of economic interests
compared with or against maintaining the national identity.

23

54 countries have ratified the United Nations Convention on Contracts for the International Sale of Goods, although it
is purely international law.
24
See Paul B. Stephan, 'The Futility of Unification and Harmonization in International Commercial Law' (1999)
University of Virginia School of Law Paper No. 99-10.
11

BIBLIOGRAPHY :

Roy Goode, Herbert Kronke and Ewan Mcendrick, Transnational Commercial Law: Text,
Cases and Materials (OUP, Oxford 2007)

Paul B. Stephan, 'The Futility of Unification and Harmonization in International Commercial

Law' [fall 1998] Virginia Journal of International Law

Lukas Mistelis, 'Regulatory Aspects: Globalization, Harmonization, Legal Transplants, and

Law Reform - Some Fundamental Observations' [spring 2000]International Lawyer

Loukas Mistelis, Is Harmonisation a Necessary Evil?( Sweet & Maxwell 2001)

A Watson, 'Legal transplants and European private law' (December 2000) 4.4 EJCL
<http://www.ejcl.org/ejcl/44/44-2.html> accessed 20 Dec 2009

Roy Goode, Reflection on the harmonisation of Commercial law ( OUP 1990 )

Konrad Zweigert and Hein Kots, An Introduction to Comparative Law, (Tony Weir tr)(3rd
edn,Clarendon Press, Oxford,1988)

Harold Gutteridge, Comparative law: an introduction to the comparative method of legal

study,(2nd edn, Auvermann,1971)

John A. Spanogle, 'The arrival of international private law' [1991-1992] George Washington
Journal of International Law and Economics

United Nations, 'The UNCITRAL Guide Basic facts about the United Nations Commission
on International Trade Law'(United Nation publication,Vienna 2007)

Alastair Mullis, A Typical International Trade Transaction ( University of East Anglia 2009 )

Alastair Mullis, Why harmonise transnational commercial law ( University of East Anglia
2009 )

12