Volume 42 | Number 3 Summer 2007
Developing Global Transnational Harmonization Procedures for the Twenty-First Century: The Accelerating Pace of Common and Civil Law Convergence
I. Procedural Options – The New Challenge
Transnational harmonization results from either planned changes in legal systems aimed at achieving harmonization or from interaction that spontaneously occurs between different legal systems. The latter phenomenon may be described as ‘osmotic’ harmonization.
Unique challenges and opportunities were presented to comparative and international lawyers after the transition year of 1990 generated by the collapse of the Soviet system. With the twenty-first century upon us, the globalization of the world economy continues unabated and profound geopolitical changes continue to simultaneously occur.
European developments by themselves suggest the vast scope of the changes involved. The phenomenon of Eastern European countries and the former republics of the former Soviet Union moving from controlled to free economies and developing multi-party democratic governments is only an example of these changes. The unification of Germany also generated a wave of public and private comparative and international legal problems all demanding instant attention. Massive privatization and democratization issues had to be addressed. More recently the effort of the European Union to implement a constitution for twenty-five member states, with twenty-one different languages, over four hundred fifty million people, and individual national cultural traditions, continue to require coordination of the legal systems of the member states.
Commenting as early as 1978 on the pervasive importance of Community Law to member states, Lord Denning stated:
. . . all this shows that the flowing tide of Community Law is coming in fast. It has not stopped at the high water mark. It has broken the dykes and the banks. It has submerged the surrounding land. So much so that we have to learn to become amphibious if we wish to keep heads above the water.1
What do such developments mean for comparative lawyers? A plethora of constitutional and administrative (that is, taxation, environmental law, labor law, social security, and so on) public law issues arose as new governments were created or old governments were restructured. Simultaneously a plethora of private law issues arose with the use of new trading entities and new contract procedures as free economies replaced controlled economies. These issues have generated rethinking of traditional categories of international and comparative law. A half century ago Phillip Jessup stated:
The subject to which these chapters are addressed is the law applicable to the complex interrelated world community which may be described as beginning with the individual and reaching on up to the so called “family of nations” or “society of states”. . . . Part of the difficulty in analyzing the problems of the world community and the law regulating them is the lack of an appropriate word or term for the rules we are discussing. Just as the word “international” is inadequate to describe the problem, so the term “international law” will not do. . . . I shall use, instead of “international law”, the term “transnational law” to include all law which regulates actions or events that transcend national frontiers. Both public and private international law are included, as are other rules which do not wholly fit into such standard categories.2
Are the traditional techniques and categories of law for producing harmonized international legislation responsive to the needs of the twenty-first century?
A. General Considerations – Key Actors – Selecting Harmonization Areas and Procedures
Primary actors in the process of producing transnational harmonized legislation such as the Hague Conference,3 UNIDROIT,4 UNCITRAL,5 the International Chamber of Commerce,6 the Council of Europe,7 the European Union,8 and so on, have attempted to identify the need for proposed legislation and the likelihood of its acceptance and adoption before allocating limited resources to such projects. These organizations have generally avoided the pitfalls created in attempting to harmonize areas of law primarily to achieve logical symmetry or to achieve limited purposes not important to a sufficiently large base of proponents. They have instead first generally established real need for the harmonization project and the existence of proponents and a climate likely to assure acceptance of the finished product.
After completing the process of identifying an area for preparation of harmonized transnational legislation, a choice must be made regarding the form, which such legislation should take. Traditional techniques involve use of Conventions or Model Laws. However, effective use has been made of other techniques involving preparation of (1) restatements of principles or uniform practices which contracting parties may incorporate into their contracts, or (2) publication of “Guidelines” which can be consulted by contracting parties in drafting contracts. Use of “recommendations” and “exchange of views” by the Council of Europe should also be noted.
B. Conventions: CISG and European Convention on Human Rights
Preparation of international rules in the form of conventions requires states to ratify or accede to language identical to the terms of the convention, subject only to reservations, which the convention might permit. If properly administered and interpreted a convention provides uniformity and predictability for contracting parties.
The United Nations Convention on Contracts for the International Sale of Goods (CISG),9 ratified by sixty-seven states as of June 7, 2006,10 is one of the major harmonization achievements involving use of the convention technique. It is worth noting that over a period of more than fifty years, three major organizations (that is, UNIDROIT, the Hague Conference, and UNCITRAL) were involved in gradually developing the consensus required for its preparation.11 The advantages of harmonizing such text and the resulting facilitation of achieving certainty and predictability in the law governing sales transactions are obvious. However, the more than half-century required to achieve consensus on the text is a matter of concern. Future demands for operative uniform rules may not afford the luxury of such a long lead-time between conception and finalization of projects.
Another example of how the convention technique could be used for achieving harmonization is the European Convention on Human Rights.12 It was adopted under the auspices of the Council of Europe and established the first international legal instrument safeguarding human rights.13
The European Court of Human Rights was established with the Convention.14 Any person who feels their rights have been violated under the Convention by a state party can take a case to the Court.15 The decisions of the Court are legally binding and the Court has the power to award damages. State Parties can also take cases against other State Parties to the Court, although this power is rarely used.
The Convention has five main sections. The main rights and freedoms are contained in Section I, which consists of Articles 2 to 18.16 Originally, Section II (Article 19) set up the Commission and the Court, Sections III (Articles 20 to 37) and IV (Articles 38 to 59) included the high-level machinery for the operation of, respectively, the Commission and the Court, and Section V contained various concluding provisions.17 Many of the Articles in Section I are structured in two paragraphs: the first sets out a basic right or freedom (such as Article 2(1) - the right to life) but the second contains various exclusions, exceptions or limitations on the basic right (such as Article 2(2) - which excepts certain uses of force leading to death).18
The Convention has been amended several times by means of protocols. The protocols required universal ratification to enter into force, in order to maintain the institutional unity of the Convention machinery. For example, prior to the entry into force of Protocol 11, individuals did not have direct access to the Court; they had to apply to the European Commission on Human Rights, which if it found the case to be well-founded would launch a case in the Court on the individual’s behalf. Protocol 11 abolished the Commission, enlarged the Court, and allowed individuals to take cases directly to it.
However, in some instances fundamental, irreconcilable differences in national legal systems may mandate use of a model law rather than a convention harmonization process.
C. Model Laws
In 1985, UNCITRAL adopted a Law on International Commercial Arbitration as a model law rather than a convention.19 Legislation based on it has been enacted in Australia, Azerbaijan, Bahrain, Bangladesh, Belarus, Bermuda, Bulgaria, Canada, Chile, in China: Hong Kong Special Administrative Region, Macau Special Administrative Region; Croatia, Cyprus, Egypt, Germany, Greece, Guatemala, Hungary, India, Iran (Islamic Republic of), Ireland, Japan, Jordan, Kenya, Lithuania, Madagascar, Malta, Mexico, New Zealand, Nigeria, Oman, Paraguay, Peru, Republic of Korea, Russian Federation, Singapore, Spain, Sri Lanka, Thailand, Tunisia, Ukraine, parts of the United Kingdom (the overseas territory of Bermuda and Scotland); five states of the United States: California, Connecticut, Illinois, Oregon and Texas; Zambia, and Zimbabwe.20 Since it is a model law, legislative bodies of the enacting states can therefore enact it as is, or with changes. This flexibility gives states enacting model laws the option of incorporating changes they deem desirable. In addition, in contrast to cumbersome procedures needed to modify a convention, future changes can be made as needed in a model law simply by using the existing normal legislative process of the enacting state.
D. Guidelines
Use of the Guidelines procedure is illustrated by the UNCITRAL Legal Guide on Drawing Up International Contracts for the Construction f Industrial Works.21 These Guidelines are neither a set of rules nor of principles. They are instead a systematic treatment of matters to be addressed in large-scale construction contracts, with specific suggestions on the matter in which they may be treated. Evidence thus far available on the use of the Guidelines indicates that they are particularly helpful to developing countries involved in large-scale construction contracting.
E. Voluntary Contractual Applicability Texts: Incoterms, Uniform Customs and Practices, Arbitration Rules
The UNIDROIT project on Principles of International Contracts involved preparation of a Restatement of international contract law.22 This project fulfilled several practical needs. Professor Joachim Bonell has noted that the Principles can elaborate general principles and rules relating to the law of contract in order to provide the necessary legal environment for the interpretation of uniform laws governing special types of transactions.23 He noted that harmonization of specific areas of law such as sale of goods, negotiable instruments, modes of transport, intellectual property, and so on had been effective on a sectoral basis.24 However, as discussed by René David, the limited nature of unification poses the problem of how to use national rules and techniques which have escaped unification to supplement uniform law.25 The Principles supplement areas of law, which have been harmonized on sectoral basis.
The Principles also serve as a guideline for national legislative bodies (particularly in developing countries) in enacting a basic code of contract law. In addition, having been prepared by a prestigious independent international organization in co-operation with a broad base of other academic, governmental, and private groups, parties to international contacts may see fit to incorporate the Principles into their contracts as applicable law even though they might not be enacted as legislation.
Widespread recognition and use of rules drafted by respected and prestigious international organizations on a voluntary basis by contracting parties is an important source of harmonized international rules. This procedure is further exemplified by the International Chamber of Commerce through its Incoterms26 and Letter of Credit Uniform Customs and Practices.27 Similarly, the much used 1976 UNCITRAL ‘Arbitration Rules’ offer parties the option of making applicable a carefully prepared set of arbitration rules to initiate a private arbitration process, in lieu of utilizing institutional arbitration offered by organizations such as the International Chamber of Commerce, American Arbitration Association, and other institutionalized arbitration centers in major cities of the world.28
This voluntary application technique is an alternative procedure by which parties have achieved order and predictability in their international contracting. The ‘Principles of International Contracts’ provide an additional source of orderly contract rules for interested parties.
F. Use of Regulations, Directives, and ‘Mutual Recognition’ Procedures in the European Union
The artificial cleavage often made between public and private law harmonization efforts is blurred by the intensely pragmatic work of the European Community29 and the Council of Europe (with its historic European Convention on Human Rights30 and its many private law accomplishments). The framework of the Union, initially provided by the 1957 Treaty of Rome31 was later amended by the Maastricht Treaty32 (subsequent amendments followed with the Treaty of Amsterdam in 1997 and the Treaty of Nice in 2001). In October 2004 a Treaty Establishing a Constitution for Europe was signed. The ratification process continued with ten states having ratified the constitution prior to the negative votes in the referendum in France on May 29, 2005 and in Holland on June 1, 2006. No further action has been taken subsequent to these negative votes.33 The treaties create a unique division of legislative, executive, and judicial powers, which facilitates the effective use of the Union’s institutions for achieving harmonization or unification of legislation in areas where the Union has power (i.e., competence). Under the current treaties, the European Commission has executive power coupled with the power to initiate legislative proposals.34 Its primary roles are to propose and enact legislation, and to act as guardian of the treaties. It currently consists of twenty-five Commissioners, one from each member state. Each Commissioner takes responsibility for a particular area of policy, and heads a department called a Directorate General. The Commission is headed by a President.35 The Council is the Union’s main decision-making body. The main roles of the Parliament are to share with the Council the power to legislate, to exercise democratic supervision over all EU institutions, in particular the Commission, and it to authorize the budget together with the Council.
Much of the EU legislation is adopted jointly by the Council and Parliament. As a rule, the Council only acts on a proposal from the Commission, and the Commission normally has responsibility for ensuring that EU legislation, once adopted, is correctly applied. The rules and procedures for EU decision-making36 are laid down in the treaties. Every European law is based on a specific treaty article, referred to as the “legal basis” of the legislation.37 The main procedures for enacting new EU laws are co-decision, consultation, and assent. The main difference between them is the way Parliament interacts with the Council. As a rule the European Commission proposes new legislation, but it is the Council and Parliament that pass the laws.
The most common legislative procedure in the Union is so called “codecision.”38 Under the co-decision procedure, the Parliament and the Council share legislative power. The Commission sends its proposal to both institutions. They each read and discuss it twice in succession. If they cannot agree on it, it is put before a “conciliation committee,” composed of equal numbers of Council and Parliament representatives.
Under the consultation procedure, the Commission sends its proposal to both the Council and Parliament, but it is the Council that officially consults Parliament and other bodies.39 In some cases, consultation is compulsory because the legal basis requires it, and the proposal cannot become law unless Parliament has given its opinion. In other cases consultation is optional and the Commission will simply suggest that the Council consult Parliament. In all cases, Parliament has the option of approving the Commission proposal, or rejecting it, or asking for amendments.
Under the assent procedure the Council has to obtain the European Parliament’s assent before certain very important decisions are taken.40 The procedure is the same as in the case of consultation, except that Parliament cannot amend a proposal. It must either accept or reject it. The acceptance (assent) requires an absolute majority of the vote cast.
The European Union has a unique system of internal law that has direct effect within the legal systems of its member states. The sources of Union law41 are the primary legislation—the treaties, the secondary legislation42—regulations, directives, decisions, recommendations and opinions made by the Union’s institutions in accordance with the treaties, and the decisions of the European Court of Justice and the Court of First Instance.
Regulations and directives bind everyone. Regulations have direct effect, i.e., they are binding as part of the national law, while directives require implementation in the national legislation in order to be effective. If a member state fails to implement directives through national law it could be subjected to a financial sanction by the European Court of Justice. Regulations have a general scope and are obligatory in all their elements; therefore they are directly applicable in all member states. Directives, on the other hand, are binding upon each member state to which they are addressed, but leave to the national authorities the choice of forms and methods. They allow member states considerable discretion in deciding how to implement the rules required by the directive.43
Decisions also have binding effect, but only on the parties to whom they are addressed, which can be individuals, corporations, or member states.
Recommendations and opinions differ from regulations, directives and decisions, however, in that they have no binding force and are instruments of indirect action.
The Union has also developed the important concept of Mutual Recognition.44 Under this concept, harmonization will be required in areas where health, safety, environmental, consumer protection, or similar concerns so mandate. Otherwise standards of each member state will be mutually recognized where national differences do not jeopardize health, safety, or other paramount concerns.
In 2001 the Commission of the European Community launched a process of consultation and discussion about the way in which problems resulting from divergences in national contract laws in the EU should be dealt with at the European level. Based on this discussions, in 2003 the Commission adopted an action plan suggesting both regulatory and non-regulatory measures in an attempt to resolve these problems.45 The plan proposes measures to increase the coherence of the EC acquis in the area of contract law,46 to promote the elaboration of EU-wide general contract terms, and to examine further whether problems in the European contract law area may require non-sector-specific solutions such as an optional instrument.47 The Commission proposed the establishment of a Common Frame of Reference as means to achieve an improvement in the contract law acquis.48 Through the establishment of common principles and terminology in the area of European contract law. As a follow up to the 2003 Action Plan, in 2004 the Commission issued a communication to the European Parliament and the Council.49
Harmonization efforts outside of the Union might profit by more careful definition and delineation of the precise area requiring harmonization and those areas best left to individual jurisdictions and the principle of mutual recognition.
The great progress made possible by adoption of the harmonization-mutual recognition process is illustrated by the Union experience in dealing with the matter of diploma recognition.50 The partial failure of the sectoral approach to the question of access and practice to a profession in a member state without any national discrimination led the Commission to propose a new system based on the general recognition of diplomas awarded in any member country. As a matter of fact, previous experience showed that it was not realistic to hope for the free movement of self-employed persons by continuing to apply the sectoral system.51 Indeed, some twenty-six years were required to promulgate the directive pertaining to architects.52
The directive that promotes the general system of recognition of diplomas was accordingly adopted by the Council on December 21, 1988. Directive 89/48 was to enter into force at the beginning of 1991.53 It covered all diplomas that were not affected by ‘sectoral’ directives already in force, and which were awarded on completion of a course of higher education at the university level or higher, comprising at least three years full-time study or the equivalent. Subsequently that Directive, and several others, were replaced by the Directive 2005/36/EC of the European Parliament and of the Council of September 7, 2005 on the recognition of professional qualifications, in OJ (L 255/22) of September 30, 2005.
This system is general in character, that is, it applies to all regulated activities not covered by sectoral directives. For instance, beneficiaries are teachers, engineers, opticians, lawyers, and so on. It is based on mutual confidence between member states and on assumed compatibility between levels of education and training. When a person is qualified to practice in a member state, having obtained a diploma and undergone any additional training required, he or she has the right to access the same profession in any other member state. A diploma obtained in a third country is accepted if recognized by a member state and supplemented by three years professional experience in that member state.54
In instances of important differences between types of education and training, the host member state may impose compensatory requirements as follows: (a) If the difference is more than a year, additional professional experience may be requested, but must be limited to twice the length of the missing training period; (b) in case of differences in course content the migrant may choose either an adaptation period of up to three years under the supervision of a qualified professional, or an aptitude test based on all or some of the missing material.55 As an exceptional measure, the host member state may make the choice, and impose an examination for the legal professions—members of which need a detailed knowledge of national law—and, with the agreement of the Commission, for other occupations.56
According to Directive 98/5/EC of the European Parliament and of the Council of February 16, 1998 to facilitate practice of the profession of a lawyer on a permanent basis in a member state other than that in which the qualification was obtained, lawyers may become integrated into the profession in the host member state, as provided for in Directive 89/48/EEC, in the language of the host member state.57 No condition of nationality remains. It allows duly qualified EU lawyers registered with an EU Bar to establish themselves in another member state.
G. Use of Conventions, Recommendations, and Exchange of Views in the Council of Europe
Conventions, recommendations to governments, and exchanges of views provide various means of achieving harmonization among the members of the Council of Europe. The particular means employed depends upon many variables, including the nature of the change that is desired, the legally binding effect of the instrument, and the time available to prepare the instrument. An excellent report by the Council of Europe entitled Methods and Instruments of Co-operation in the Council discusses the advantages, disadvantages, and circumstances under which each of these means is utilized.58 The need to obtain the requisite number of ratifications to bring a convention into force and possible extended length of the preparation phase were noted as possible disadvantages. However, once a convention is ratified, it has the merit of being legally binding and therefore can have far-reaching effects. For example, the Council of Europe’s historic European Convention on Human Rights, though a single convention, requires the constitutional systems of all forty-six member states who have ratified or acceded to the Convention to conform with the law of human rights set forth in its text.59
Recommendations of the Council of Europe’s Committee of Ministers to the Members are easier to prepare or amend since they are actions of the Committee of Ministers and no further act of agreement by member states is necessary. However, while such Recommendations may exert some pressure, the member states are not required to follow them. The legal duty to act on recommendations goes no further than to consider in good faith its possible implementation.
Unlike conventions and recommendations, exchanges of views are not expressly mentioned in the Statute of the Council of Europe.60 But they are nevertheless used to produce important practical results. In fact, due to their informal nature, exchanges of views entail a less arduous drafting process than that involved in the preparation of convention or recommendation. Generally suitable in generating discussion of new and unexplored topics or of new problems surfacing in familiar areas where there is a need to compare opinions and share experiences, they particularly serve as means to an end, such as development of a convention or a recommendation to governments.
H. Achieving Uniformity in Practice
Measures will need to be taken to make the transition from successful convergence of language in uniform acts to actually achieving uniformity in practice. For example, while the Vienna Sales Convention is a major achievement in adopting uniform law, problems with achieving uniform application and interpretation of its provisions are likely.61 To some extent this is addressed by inclusion of statutory construction provisions in the convention itself, which attempt to guarantee the achievement of uniformity in practice.62 Incorporated into the Convention is the notion that in the event a problem is not readily answered by the text itself, resort should be to the principles of the Convention rather than to domestic law for its resolution.63 Along with course-of-dealing standards of construction,64 usages-of-trade65 criteria are also built into the Convention—as is a requirement of good faith66 interpretation. While these provisions are helpful and desirable, and may provide resolutions to some of the problems of achieving uniformity of interpretation in practice, experience teaches that such uniformity is not easily achieved.
For example, in the United States, we have built into our uniform acts rules of statutory construction that are comparable to those of the Convention. Additionally, we have had the benefit of a legal tradition, which is essentially the same in each of the forty-nine or fifty jurisdictions (Louisiana, which has a civil-law tradition, excepted). Notwithstanding that we have a core of similarity of tradition in teaching and practicing law and in our sources of law, we have encountered significant obstacles in achieving uniformity. In part, one of the reasons for developing the Uniform Commercial Code was the fact that the individual statutes that preceded it had been interpreted and reinterpreted so many times and so differently that there was massive confusion as to what they meant.67
The fact that a convention is already in force in states that have different legal traditions and a variety of techniques and sources of law from which they derive their principles and canons of construction and usage, creates an even greater possibility for non-uniform application of identical provisions.68
Because of these concerns, it is desirable to set in place an institutional framework to review the manner in which uniform laws are being applied after a consensus on the text of that uniform law has been adopted.
Experience in the United States teaches that in attempting to restate basic principles that may be extracted from a large, expanding body of law, it is helpful to restate the principles in a summary fashion and to indicate the alternatives utilized in the fifty states. This technique helps to provide a broad outline of available alternatives. In this way, while restatements are not compulsorily imposed upon any of the state supreme courts, they nevertheless are available to be considered. If a preferred view is established, the fact that it is presented after a careful consensus-building approach seeking a recommended solution to the problem may be persuasive to courts as they interpret the language of a uniform law.
This technique has not been utilized as frequently in the case of uniform acts as it has with case law in fields such as contracts, conflicts of law, property, and so on. It has been very helpful in achieving some degree of uniformity in the resolution of our case law problems. The procedure could also be applied to case-law-interpreting conventions or model laws. There are several groups presently involved in setting up reporting services to cover the case law for the Vienna Convention.69
When such decisions are collected, efforts should not stop at mere reporting. It would be of additional benefit if the decisions were systematically objectively analyzed so that problem areas could be identified and possible preferred interpretations could be developed. Of course, such interpretations could not be forced upon any national independent sovereign entity that is working with that body of law; rather it would be available as a persuasive source of authority as to what the desirable interpretation should be.70
Non-uniformity in application of European Community Law as it is incorporated into the domestic law of the member states also sometimes develops. The Union, however, has something working in its favour that is not available in other types of harmonization efforts. The European Court of Justice possesses the authority to interpret Union legislation and provide the ultimate legal norm to be applied.71 Neither the international community nor the member states of the United States have that kind of centralized authority to resolve such problems.
It is apparent then that in refining our harmonization procedures for future use, resources need to be allocated to achieving uniformity in practice as well as on the printed page. The type of institutional framework noted above is one step.
We also need to be continuously sensitive to the quality and quantity of comparative and international law courses taught in law schools and in continuing legal education courses in each of our countries.
Expansion of specialized comparative and international law courses and a programme of supplementing such courses with comparative and international components to be included in traditional law-school courses is needed. Development of materials to be used in teaching the content and practice of law under uniform laws in the law schools of the world and in international seminars for practicing attorneys, law professors, and judges should complement such a programme.72 Having harmonized codes or restatements in place does not achieve harmonization in practice in the absence of competent legal technicians sharing a common frame of reference and standards, which they can utilize in applying and interpreting the harmonized language.