Introduction
Many countries do not have a separate body of laws for dealing with international trade transactions. Nonetheless, this absence of a separate code or body of rules does not prevent those countries in dealing with international trade transactions. They can use alternative sources of international trade law to resolve their legal problems. This paper is going to analyse the principal sources of international trade law that apply in the domestic jurisdiction, especially when there is no separate body of law in a country for dealing with international trade transactions. Also, it is going to analyse the relevant parts of municipal law that can apply to the governance of international trade transactions. The questions that this essay is going to analyse are: What are the sources of international trade law? What are the alternatives available for countries to deal legally with international trade transactions? What alternative is most recommended for international trade law? When do relevant parts of the municipal law apply for the governance of disputes arising from international trade transactions?
The alternatives and sources of international trade law
It is common known that source of law means the origin from which rules of human conduct start to exist, deriving legal force or binding characters.
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This paper attempts to demonstrate that there are more than one alternative of rules applying to international trade transactions that bind parties of international commercial transactions.
The first alternative is the application of parts of the municipal contract law for governing international trade transactions where there is the absence of a separate body of rules. According to Berman[1], the municipal contract law of each country can govern the international trade transactions. This alternative may rely on the universal understanding of contract terms. Due to the considerable risks of international trade law, solely applying this alternative may not be recommendable for the diligence of international trade transactions.
It can be noticed that international trade law differs from other parts of the general law. This type of law is constantly developing according to the uses and customs provided by trade. This strong idea reflects in both the study and practice of international trade transactions.
The next alternative and source of international law is the ‘lex mercatoria’. This term also can be referred as the “law of the trade customs or customary commercial law”. The ‘lex mercatoria’ produces legal effects in several countries’ legal systems. According to Berman, this law was ‘ founded on the commercial understandings and contract practices of an international community composed principally of mercantile, shipping, insurance, and banking enterprises of all countries’[2]. For this author, it should be seen as an autonomous body of law, binding upon national courts.
For the purpose of justifying that possibility of absorption of ‘lex mercatoria’ by the States, it is interesting to recover to the theory of incorporation of international laws. According to the theory of incorporation, ‘customary rules become part of the municipal legal system’[3]. The International Court of Justice and the United Nations recognize this possibility[4].
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Countries may accept its applicability as a primary source of international trade law or as a supplemental source of international trade law. As a primary source, the law of merchant should apply directed to the international trade contracts. As a supplementary source, it may apply in the absence of municipal law when dealing with international trade transactions.
The third alternative relates to the powers of the parties of an international trade contract to choose which set of rules should apply to their contract. This decision is guaranteed on the Title II, Article 3 (1), of the Convention on the Law Applicable to Contractual Obligation (Rome 1980)[5]. In most cases, the parties can negotiate the burden of the contract’s risks, the costs obligation and more. The parties may deliberate upon the substantive and procedural laws that are going to govern the international trade contract and its transactions. International trade entities, such as UNICITRAL and ICC[6], play a considerable role in the international trade environment. They may be responsible for ‘formulating modern, fair, and harmonized rules on commercial transactions’[7]. As well, it is included in this alternative, the presence of decisions of arbitration tribunals where which the trade disputes can be submitted. It can be noticed that the parties have broad freedom over the contract of sales and the rules that are going to govern its transactions. They also have considerable predictability and security upon the interpretation of that rules since there were due opportunity for choosing them. For that reason, this alternative is recommendable for the governance of several of the international trade transactions.
Another alternative is the rule of conventions regarding international trade transactions. This paragraph refers to broad matters of international law. It deals with the idea of harmonization of the international trade rules[8]. For instance, the international sales transaction can be used as a parameter in this case. In this context, there are two highlighted international conventions. They are the 1964 Uniform Law on the International Sales of Goods (ULIS) and the 1980 United Nation Convention on Contracts for the International Sales of Goods (CISG).
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The Uniform Law on the International Sales of Goods, also recognized as The Hague 1964, treats the issue of its application at its Annex, Chapter 1 that its title is ‘Sphere of Application of the Law’. The CISG has its related disposition in Part 1, Article 1. These two treaties discipline a wide range of international trade transactions. According to Lookosky, ‘the CISG contracting States account for more than two-thirds of all word trade’[9]. Thus, for instance, it can be considered that the CISG has been recognized as source of international trade in most of Countries.
Wolf provides an argument that ratifies the idea of harmonization realized in the paragraphs insofar stated, He says that, ‘… it is to be expected that the mercantile customs of the dominant traders are elevated to the status of legal norms. Indeed this normative process is supported by a number of international conventions such as the Vienna Convention on the Law of Treaties, and the Vienna Convention on Contracts for the International Sale of Goods, together with UNIDROIT and UNCITRAL’[10].
Thus, the fact that a country does not have a domestic and a separate set of rules to govern international trade transactions is not a problem. It will lead that country to rely on one or more alternatives stated above. It cannot be affirmed in this paper if the alternatives are concomitant. They can be, or they cannot be. It will depend on the analysis of the case involving international trade transactions. It will depend also in the acceptability of the range of the international trade law sources by the countries. Last, it can be summarized that there is the possibility of applying contract law principles and rules, international mercantile customs, model law, international conventions and jurisprudence for governing international trade transactions.
The relevant part of municipal law
There are relevant parts of municipal law for the governance of a dispute arising from international trade transactions. This paper is going to detach one from the various possible occurrences. In accordance to the 1958 United Nation Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Article III[11], it is the rules of procedure of the territory where the arbitral award was issued that is going to govern its enforceability. Relevant parts of the municipal rules will govern the execution of the arbitral awards. The procedures shall vary in accordance to the municipal code of procedure of a specific place (e.g. Country, Federal State).
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Here is an example of a relevant part of municipal rule applying for fulfilling the purposes of the international trade related decision.
Conclusion
This paper has considered the implications of the alternatives that countries have when they do not counter on a separate body of laws for governing international trade transactions. Also, it has appointed the recommendations over the alternatives. It has incidentally defined the relevant terms of international trade law related to the topic. The country can rely on more than one alternative for governing international trade transactions. The features of the national contract law, international merchant customs (‘lex mercatoria’), international trade conventions, international model of laws can be considered as sources of international trade law. In a second part of the paper, it has considered the importance of the municipal procedural rules in enforcing the arbitral award. This hypothesis was used to demonstrate the importance of the municipal law for legally dealing with the international trade transactions, especially dealing with international decisions.
The current study adds substantially to the international trade law understanding, especially to its introductory part. The conclusions of this essay, however, could not count on the analysis of concrete cases. The base of the used evidences is articles and books written by international trade commentators, as well as, international trade conventions. In order to establish statistical data about the rate of the application of the proposed, it is recommended that further research should be undertaken in facing those alternatives, which Countries may have when applying international trade sources.
(Number of words: 2.025)
References
Ademola Abass, International Law – Text, Cases, and Materials (Oxford, 2012)
Harold J. Bernman, ‘Law of International Commercial Transactions (Lex Mercatoria)’ [1988], Vol. 2, Issue 2, The Emory Journal of International Dispute Resolution 235.
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Jason Chuah, Law of International Trade (3rd edn, Thomson and Sweet & Maxwell)
Joseph Lookofsky, Understanding the CISG (3rd edn, Kluwer Law International, 2008)
Organization of American States accessed 15 November 2012.
Ronald Charles Wolf, ‘Trade, Aid and Arbitrate: The Globalization of Western Law’ (Michael Blakeney ed, 2005) International Trade Law & Regulation, accessed 19 November 2012.
The United Nation Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958
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[1] Harold J. Bernman, ‘Law of International Commercial Transactions (Lex Mercatoria)’ [1988], Vol. 2, Issue 2, The Emory Journal of International Dispute Resolution 235, pp. 236.
[2] Harold J. Bernman, op. cit., 240-245.
[3] Ademola Abass, International Law – Text, Cases, and Materials (Oxford, 2012) 170-175.
[4] See the Statute of the International Court of Justice, Article 38 (1) states that, ‘The Court, whose function is to decide in accordance with international law such disputes as are submitted to it, shall apply: a. international conventions, whether general or particular, establishing rules expressly recognized by the contesting states; b. international custom, as evidence of a general practice accepted as law; c. the general principles of law recognized by civilized nations; d. subject to the provisions of Article 59, judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law.
[5] The Convention on the Law Applicable to Contractual Obligation (Rome 1980), title II, Art. 3 (1).
[6] UNICITRAL and ICC are the abbreviation of United Nations Commission on International Trade Law and International Chamber of Commerce.
[7] United Nations Commission on International Trade Law, About UNICITRAL accessed 14 November 2012
[8] Jason Chuah, Law of International Trade (3rd edn, Thomson and Sweet & Maxwell)
[9] Joseph Lookofsky, Understanding the CISG (3rd edn, Kluwer Law International, 2008)
[10] Ronald Charles Wolf, ‘Trade, Aid and Arbitrate: The Globalization of Western Law’ (Michael Blakeney ed, 2005) International Trade Law & Regulation, accessed 19 November 2012.
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[11] The 1958 United Nation Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Article III.
