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
II. Specific Harmonization Areas
A. Case Law as a Source of Law
1. The “Goodhart” and “Zweigert-Kötz-Cappelletti” Eras and Entry into the Third Millennium
In 1934, Arthur Goodhart, the renowned English comparatist, stated that the fundamental difference between common and civil law was the common law doctrine of stare decisis, i.e., the binding force of precedent.73 Konrad Zweigert and Hein Kötz disputed this fundamental difference advocated by Goodhart.74 They argued that the methods of finding law in common and civil law systems were gradually moving closer together and leading to the same result.75
Mauro Cappelletti, in a substantially concurring but to some extent dissenting perspective, maintained that not as much convergence had occurred as Zweigert and Kötz suggested. He argued that major differences continue to exist between the two traditions leading to varied precedential weight of case law.76 Today, some would contend that convergence has accelerated at an unprecedented rate due to recent developments in European and International law. In addition, the creation of constitutional courts in civil law nations has led to a virtually binding force of their decisions.77 Additionally, European Union member-states, who originate from both common and civil law traditions, are collaborating by using aspects of both traditions to achieve identical goals. Vigorous efforts are also underway to develop a European Civil Code, a European Contract Code, and even a Global Commercial Code, which will further advance the convergence of the two traditions. UNIDROIT has also developed Principles of International Commercial Contracts. In addition, other international organizations like UNCITRAL and the World Trade Organization, made up of both common and civil law participants, have contributed to the accelerating convergence. Harmonization of common and civil procedural law has also advanced in recent years. The joint project of the American Law Institute and the UNIDROIT Working Group has furthered this harmonization through the creation of the Principles and Rules of Transnational Civil Procedure. New technology is also significantly impacting the convergence of common and civil law. Development of electronic reporting systems, such as those already in existence for the Convention on Contracts for the International Sale of Goods, will further facilitate harmonization of legal norms.78
2. Goodhart Era
In 1934, Professor Goodhart discussed the differences between common and civil law. He believed that the fundamental difference between civil and common law is the binding force of precedent.79 The common law doctrine of stare decisis states that every court is bound by the decisions of courts superior to it in hierarchy.80 A previous decision is binding even if it was decided a century earlier or if the rule seems inappropriate.81 There is no equivalent doctrine in civil law; thus, civil law judges are free to decide each case independently by applying their domestic code without being bound by previous decisions.
3. Zweigert-Kötz-Cappelletti Era
The era that followed Goodhart produced new practices and customs of common and civil law. The dependence on case law was greatly reduced in the United States during the New Deal Era when Congress passed a tremendous amount of legislation to deal with social problems. Civilian courts, on the other hand, were developing new practices that began to rely on the persuasive weight of previous cases. Konrad Zweigert and Hein Kötz believed the doctrine of stare decisis no longer represented a fundamental difference between the common and civil law.82 The methods of finding law in common and civil law generally led to the same result.83 Mauro Cappelletti disputed Zweigert and Kötz’ analysis and argues that not as much convergence had taken place as they suggest.84
Based on new practices in common and civil law, Zweigert and Kötz recognized that civil and common law methods of finding law were gradually moving closer together.85 Despite the existence of the doctrine of stare decisis and the absence of an equivalent civil law doctrine, the practice of both court systems generally led to the same result.86 They stated:
To sum up: on the Continent the days of absolute pre-eminence of statutory law are past; contrariwise, in the common law there is an increasing tendency to use legislation in order to unify, rationalize, and simplify the law. On the Continent, law is increasingly being developed by the judges and consequently there is more room for an inductive method and style related to the actual problems; contrariwise, the common law is seeing the need to bring the rules developed by the judges into systematic order by means of scholarly analysis and legislative action, so as to make them easier to understand and master. There are therefore grounds for believing that although the common law and the civil law started off from opposite positions, they are gradually moving closer together even in their methods and techniques.87
Furthermore, in England, the doctrine of stare decisis is not as widely accepted as it had been years earlier.88 In 1966, the Lord Chancellor issued a Practice Statement recognizing the importance of certainty in the law but abandoning the rule that the House of Lords was strictly bound by its own previous decisions.89 He declared:
Their Lordships regard the use of precedent as an indispensable foundation upon which to decide what is the law and its application to individual cases. It provides at least some degree of certainty upon which individuals can rely in the conduct of their affairs as well as a basis for orderly development of legal rules.
Their Lordships nevertheless recognize that too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law. They propose, therefore, to modify their present practice and, while treating former decisions of this House as normally binding, to depart from a previous decision when it appears right to do so.
In this connection they will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property and fiscal arrangements have been entered into and also the special need for certainty as to the criminal law.
This announcement is not intended to affect the use of precedent elsewhere than in this House. ([1966] 1 WLF 1234).90
In response to the Lord Chancellor’s Practice Statement, support increased in England for further restriction of the doctrine of stare decisis.91 Lord Denning continuously advocated that the Court of Appeal should also be free to depart from strictly following previous decisions.92 He contended that if adhering to precedent too rigidly leads to injustice and restricts the development of the law in the House of Lords, it will do the same in the Court of Appeal.93 However, Lord Denning’s view was ultimately rejected by a unanimous House of Lords in Davis v. Johnson in 1979.94
Mauro Cappelletti advocated a different position in the matter of the convergence of common and civil law. He maintained that not as much convergence had occurred as Zweigert and Kötz suggest and the precedential authority of civil law decisions do not compare to the common law doctrine of stare decisis.95 Major differences continue to exist between the two systems that lead to varied precedential authority of previous decisions.96
The first difference, according to Cappelletti, exists in the organization of higher courts in common and civil law systems.97 While common law nations have a compact unitary system with a single highest court, civil law nations do not have a similar court structure.98 Rather, civil law nations have a diffuse court system with numerous high courts.99 France and Italy have three different court systems, one for ordinary civil and criminal matter, one for administrative matter, and a constitutional court.100 The Constitutional Court in Italy, La Corte Costituzionale, has the authority to resolve controversies on the constitutionality of laws and enactments issued by the State and the various regions, to resolve conflicts arising from allocation of powers, and to deal with accusations made against the President of the Republic.101 The constitutional court in France, le Conseil Constitutionnel, has limited constitutional power, but has consultative powers as well as judicial authority over normative and abstract proceedings and electoral and referendum disputes.102 Germany has five different court systems, one each for ordinary civil and criminal, administrative, tax, labor and social matters.103 Germany also has a constitutional court, the Bundesverfassungsgericht, whose sole task is judicial review.104 This diffuse organization leads to diffuse authority of high court decisions.105
A second difference that leads to varied precedential authority of previous decision is civil law’s historical bias against judicial discretion.106 Traditionally, civil law nations distrust judges, and therefore, do not want to grant them too much power.107 No writ of certiorari exists in civil law high courts that gives judges discretion to choose certain cases to hear.108 Rather, civil law courts are courts of mandatory jurisdiction, must hear every case brought before them and decide thousands of cases each year.109 The result of the tremendous number of cases decided yearly by civil law high courts is that many of the cases are unpublished, unknown, and forgotten.110 The minimal precedential authority of civil law high court decision does not compare to the precedential authority of common law high court decisions decided under the doctrine of stare decisis.111
The third difference, cited by Cappelletti, is the use of sociological considerations regarding the judiciary in common and civil law Systems.112 He contends that civil law career judges are trained to develop technical skills to mechanically apply the law.113 The judges are neither trained nor equipped to make policy-related decisions.114
4. Entry into the Third Millennium
The era following the writings of Zweigert, Kötz and Cappelletti reveal an accelerated convergence of common and civil law due in part to developments in European Union and International law. In addition, the development of constitutional courts in Europe provides judges with the power to deliver decisions with great precedential weight.115 Additionally, the decisions of ordinary and administrative courts in civil law nations have gained greater persuasive weight over the years.116
The European Union is an example of convergence of common and civil law in practice. Judges and lawyers from both traditions are working together in the European Court of Justice. The development and discussion of European Principles of Contract Law, a European Civil Code, and a Global Commercial Code further facilitate harmonization of common and civil law. Additionally, international organizations, such as UNCITRAL, UNIDROIT, and the World Trade Organization, have contributed to the accelerated convergence by joining representatives from both common and civil law traditions to create international policies for the benefit of all contracting states. The harmonization of common and civil procedural law has made less progress compared to its substantive counterpart.117 However, harmonization in this area is occurring and has been accelerated by the joint project between the American Law Institute and the UNIDROIT Working Group creating Principles and Rules of Transnational Civil Procedure.
Technological revolution is also significantly impacting the convergence of common and civil law. The emergence of electronic reporting systems of texts and cases in areas such as the Convention on Contracts for the International Sale of Goods, enhances access to statutory material and case law. The development of these reporting systems in other areas of international law will ultimately lead to greater convergence of legal systems.
5. Experience of Constitutional Courts in Europe and Case Law in Civil Law Systems
The development of a centralized system of judicial review in civil law nations has accelerated the convergence of common and civil law. The experience of constitutional courts in Europe has led to greater precedential weight of decisions emanating from those constitutional courts, giving them a “stare-decisis like authority.”118 While civil law nations have a centralized system of judicial review with power entrusted to a special constitutional court, common law nations have a decentralized system of judicial review with all courts given the power of judicial review.119 Constitutional courts have developed in civil law nations like Austria, Germany, Italy, and Spain because ordinary and administrative courts are not prepared to participate in judicial review.120
Civil law differs from common law because judicial decisions are generally not a source of law and the doctrine of stare decisis does not formally exist. However, some civil law nations, including France and Mexico, both informally and formally recognize the persuasive effect of previous decisions in ordinary and administrative courts. France explicitly rejects the doctrine of stare decisis because the principle of separation of power prevents French courts from formally creating legal rules.121 The role of French courts is to solve disputes brought before them, not to make law.122 However, judicial precedents may be cited in court and often affect French courts’ ultimate decisions because there is a natural tendency to follow precedent, despite Article 5 of the French Civil Code.123 In Mexico’s civil law tradition, the doctrine of stare decisis is likewise not formally recognized, but the Supreme Court and collegial circuit tribunals can establish a binding precedent by issuing five consecutive decisions, with no incompatible rulings in between, on a certain point of law.124 This binding precedent, known as Jurisprudencia, is binding on the court that establishes it and all lower state and federal courts that lie within the court’s geographic jurisdiction.125
However, not all civil law nations have recognized the persuasive weight of previous decisions even though in practice, attorneys look to reported cases in interpreting statutes and codes. The sources of Italian law are statutes, regulations, corporative norms, and usage.126 The Italian Code makes no mention of judicial decisions as a source of law; thus, the Doctrine of stare decisis is in theory rejected.127 Italian law officially emphasizes strict separation of power, which justifies restricting courts to mere interpretation and application of the law, not making the law.128
6. Case Law Experience of the European Union: An Example of Civil and Common Law Convergence in Practice
An example of the convergence of common and civil law in practice is the European Union. The European Court of Justice (ECJ) is the judicial branch of the European Union. The ECJ plays a significant role in European integration.129 Its formal role is to ensure that the interpretation and application of European Union treaties are within the proper bounds of the law.130 Today, the ECJ consists of twenty-five judges, one selected from each member-state, and eight advocates general.131 Thus, judges come from both common and civil law traditions because, while most of the member-states have a civil law tradition, England and Ireland are common law nations. Therefore, judges from different legal traditions must accommodate and work together in the European Court of Justice.
There are two stages of procedure in the European Court of Justice, a written stage and an oral stage.132 The written stage of the proceeding is the most thorough and most important stage in the proceeding, which is consistent with civil law tradition.133 The oral stage of the proceeding is limited and short, in which the interested parties merely restate their positions already presented in their written submissions.134 The ECJ may even propose to cancel the oral proceeding if the parties agree.135 During the oral stage, the judges and the advocate-general ask the advocates questions to clarify and focus the issues that are specifically important to them.136 This practice is also consistent with civil law tradition. Additionally, consistent with civil law judicial decisions, no dissent or concurring opinions are permitted in the European Court of Justice.137 The deliberations of the Court are kept secret and the decision is made by consensus and given in a unanimous opinion of the Court.138
The common law doctrine of stare decisis does not formally exist in the European Court of Justice’s practice; therefore, the Court is not bound by its own precedent.139 However, precedent has become increasingly important in the ECJ since the United Kingdom entered the European Community in 1973.140 Although precedent is not a formal source of ECJ law, the Court often specifically refers to previous decisions141 and advocates cite cases freely in written briefs and during the oral stage of the proceeding. Thus, the procedure and practice of the European Court of Justice is a practical example of the convergence of common and civil law necessary for a successful judicial system in the European Union.
7. Other Perspectives: The Role of Precedent in Mexico
While Goodhart believes that the application of the doctrine of stare decisis is the major difference in the common and civil law system, Zweigert and Kötz point out that because of the evolution of the two systems they may not be as divergent as once believed. The Mexican system is an additional example of the convergence occurring between civil and common law systems. By definition, Mexico is a civil law country, relying on codes and statutes to provide legal sources. However, it has adopted and adapted some of the practices of its northern neighbors. Through the process of convergence, the antithetical aspect of civil law, the doctrine of stare decisis, is being absorbed into Mexican legal culture.
The structure of the Mexican legal system is similar to that of its civil law brethren. Historically, there has been a strict division of legislative and adjudicative functions of government.142 The Mexican Supreme Court has had the power to create precedent in circumstances of amparo143 decisions since 1909, but the Constitution did not recognize this power until the 1950-1951 amendments.144 When the Constitution was further amended in 1968, the precedent-creating power was not specifically mentioned.
However, it was taken as an assumption and extended to include Collegial Circuit Tribunal decisions.145 Though there has never been consensus concerning the exact application and use of precedent, the 1951 amendments made the precedents a legitimate source of law. This explicit recognition is a unique feature in a civil law country and a large step toward convergence of civil and common law traditions.
Though Mexico has adopted the unique blend of civil and common law, the law created by the courts does not hold the same status as judge made law does in common law countries. The Mexican Supreme Court has recognized that the application of jurisprudencia should never encroach into legislative functions. The jurisprudencia must only be used to interpret, never create law.146 As Merryman and Clark state, jurisprudencia is always to be considered an “auxiliary,” never an “autonomous” source of law.147 Though the jurisprudencia may appear to be of similar weight and influence of that of the U.S. Supreme Court decisions, civil law traditions still constrain the application of the decisions to impact far less than the decisions of American courts. Mexican jurisprudencia has been effectively used to clarify ambiguities and fill in gaps, but it could not be used to create law as seen in American courts.
Precedent plays a unique role in Mexico’s civil law system. The Mexican model draws from the rich traditions of both civil and common law countries. Civil law countries do not follow the doctrine of stare decisis. Mexico has blended the doctrine of stare decisis into its civil law tradition. While not technically binding, higher court decisions based on similar facts and law carry very persuasive authority.148 These persuasive decisions are known as ejecutorias. If an ejecutoria is followed the requisite number of times and with the proper procedure, it can create precedent.149
Cases decided by the Supreme Court and Federal Circuit Collegiate Courts have the ability to create jurisprudencia. A jurisprudencia is a “term of art used to refer to the event whereby five uninterrupted and consecutive judicial resolutions rendered by the Supreme Court of Justice, or by a Circuit Collegiate Tribunal, sharing the same legal holding, become obligatory to all lower courts, provided that said federal resolutions had been approved by eight of the eleven Justices (Ministros) when decided by the Supreme Court en banc, or by four Justices of the relevant panel when generated by a Supreme Court Chamber.”150 If a case is decided by a Collegial Circuit Tribunal, the decision must be unanimously approved by all three magistrates.151 As each ejecutoria is repeated in its progression toward jurisprudencia it gains persuasive authority on the lower courts.152 If an ejecutoria is interrupted in its progression toward becoming jurisprudencia, the process must begin anew. There must be five more consistent opinions for that point of law to become binding as jurisprudencia. Once a jurisprudencia is created, however, a decision that contradicts its holding can have the effect of repealing it.153 To overrule a jurisprudencia, the contradictory ruling must be supported by at least fourteen Ministros.
Once a court is authorized with the power of creating jurisprudencia, that court is bound by its own internal decisions, but not decisions by other courts.154 Jurisprudencia of the Supreme Court is binding on all lower courts. Jurisprudencias created by the Collegial Circuit Tribunals are binding on lower district courts.155 Though the jurisprudencias created by higher courts are binding upon the subordinate judiciary, this binding effect does not extend past the court systems. Unlike common law systems where judicial decisions will influence, if not bind the executive or legislative functions, the jurisprudencias in Mexico do not reach past the judiciary.156 For example, if the Mexican Supreme Court declared a legislative act to be unconstitutional, it is unlikely that the legislative branch would be inclined to conform its legislation with the judicial decision unless there was a policy reason for doing so.157 When a Mexican court has declared a law unconstitutional and one of the other branches has failed to comply with this determination, a person aggrieved by this action has no choice but to file another amparo action.
The 1995 reforms expanded the Supreme Court’s authority.158 These amendments granted the Supreme Court, when approved by a majority of eight judges, the power to create precedent in a single decision. This power was limited, however, to four types of cases:
(1) a controversy between the executive and legislative branches; (2) a conflict between two authorities of a single state regarding the constitutionality of acts of general provisions; (3) a dispute between two authorities of the federal legislative district; or (4) controversies involving the federal government violating the general provisions of Mexican states of municipalities.159
Without the requisite vote and in all other types of cases, the Supreme Court’s decision is binding only on the parties presently in litigation.160
B. Status of Selected Current Substantive Harmonization Projects
The following is a comment on the Principles of European Contract Law, a European Civil Code, a Global Commercial Code, and the UNIDROIT Principles of International Commercial Contracts and how they facilitate common and civil law.
1. Principles of European Contract Law
The discussion and development of the Principles of European Contract Law is an effort by the Lando Commission to harmonize the varying contract laws of European countries.161 Harmonization of European commercial law is necessary because economic pressures exist in the European Union concerning the open market and facilitation of trade. Similar economic pressure and need for uniformity accelerated the establishment of the National Conference of Commissioners on Uniform State Laws when the first efforts were made in 1889 to unify individual state law in the United States.162 The Conference of Commissioners on Uniform State Laws began its effort to develop uniform state laws to facilitate interstate commerce.163 In response to major commercial problems in the United States, the Conference decided in 1940 to create comprehensive legal solutions to those problems and began a project to produce the Uniform Commercial Code.164 The UCC took ten years to complete; it took another fourteen years before every state in the United States, with the exception of Louisiana, enacted it with or without modification.165 The purpose of developing the Principles of European Contracts is to provide a restatement of the law of contracts, similar to the Restatements in the United States and to enact the Principles and give them the force of law.166 The Principles are not the codification of existing contract law, but rather are a new, complete set of rules to govern all aspects of contracts.167 The drafters attempt to modernize existing European contract law with solutions that may exist in some European States, but tend to be a desirable development of European contract law.168
2. European Civil Code
Since 1997, the idea of a European Civil Code has been actively discussed by Europeans.169 The discussion surrounding the development of a European Civil Code focuses on unification and harmonization of all aspects of European private law, which would in turn lead to unification and harmonization of common and civil law systems. In 1997, the symposium Towards a European Civil Code occurred in Den Haag.170 The Minister of Justice marked the opening of the symposium with a speech advocating the need for a European Civil Code171 According to the Minister, overall harmonization of private law in Europe is both possible and necessary to strengthen Europe’s internal market.172 However, he recognized that a European Civil Code must bridge the gap between different legal traditions in Europe, including the common and civil law.173
Unification seems possible and most urgent in the law of obligations and movable property.174 On the other hand, unified rules relating to immovables, family law, and succession law seem less realistic and less urgent.175 The purpose of developing a Civil Code for Europe is similar to the purpose for developing European Principles of Contract Law, but on a broader scale. The goal is to provide a Restatement of the various civil laws throughout Europe and eventually enact the Civil Code, giving it the force of law.176 A reason asserted for codification of European Private Law is to reduce high transaction costs and enhance legal security within Europe.177 Codification would reduce transaction costs because civil laws in each member state differ and the uncertainty surrounding each member state’s particular law hinders cross-border exchange in the European Union.178 Furthermore, unifying European civil law will increase the effectiveness of a single European market.179
However, not all Europeans are convinced that a European Code is desirable.180 Some skeptics fear the cultural identity of individual European States will be endangered if its own civil law is supplemented and absorbed by European law.181 Another source of opposition deals with the potential difficulties of working within two legal cultures.182 Many argue that common law nations will reject the idea of a Code based on their tradition of predominance of case law. However, common law nations in the European Community, including England and Ireland, are increasingly accepting the written law, while the influence of case law in civil law nations is increasing.183 Furthermore, the two opposing legal systems work together in the application of the Convention on Contracts for the International Sale of Goods,184 which shows that they are able to work together in the application of a European Civil Code as well.
While the majority of academics in Europe agree that the current acquis in that area is inconsistent and fragmented and that this is the inevitable effect of the “piecemeal approach” towards harmonization in the civil law area, the opinions regarding the Common Frame of Reference, its contents and its role—as well as the possibility of creating some kind of codified instrument based on it at a later stage—vary greatly. Professor Pierre Legrand directly opposes the idea of a European Civil Code and represents the group of academics in Europe who believe that Europe should be the way it is—a continent that consists of multiple legal orders.185 Others, like Professor Jan Smits are against the idea for the creation of a European Civil Code in a wrong way and for the wrong reasons. Professor Smits opposes the idea of a binding European Civil Code forced from above—the institutions of the Union.186 But he embraces the idea of the creation of an optional code, a “26th regime,” which the contracting parties will be free to choose if they so desired. He takes a very economic and competitive view—that the best solution for the parties should emerge through free competition of the legal orders in the Union. This will benefit both the parties and the national legal systems. The parties will benefit from the fact that they are able to choose freely the best option for themselves. The national legal systems will be forced to improve their regimes in order to make their environment more attractive for businesses and thus will become more competitive and constantly self-improve. In other words, “[t]hose for whom the law exists should decide which rules serve their interests best.”187 Professor Smits also doubts the ability of the Common Frame of Reference to solve the problems with the current acquis and to improve the future acquis. Instead, his proposal centers around the idea of combining all relevant directives in the area into a single “codified” directive.
Professor Norbert Reich expresses pessimistic views on the possible creation of a European Civil Code but for other reasons. According to him, the competence of the Community in the area of contract law is limited to certain areas where contract law may have a specific impact on other Community policies like internal market, competition, consumer protection, and social policy.188 Thus, no horizontal competence in contract law exists for the European Community.189 However, he proposes an idea like that expressed by Professor Smits, that competition of legal orders and not harmonization might actually be a solution to the problems raised in the Commission’s Communication of 2001.190
The group of optimists on this initiative consists mainly of the academics involved in the research teams throughout Europe. Their belief is that the twenty-five different legal orders present an obstacle to cross-border transactions mainly through the fact that it increases the costs of transactions and because the parties are unfamiliar with the other legal system. Thus, the twenty-five different legal systems can hinder the functioning of the internal market. According to this group of academics, creating a codified instrument that will employ common terms, principles, and definitions will be able to solve those problems. However, internally, this group is divided into small groups. While some believe that a mandatory code is needed for the problems to be solved,191 others like Professor Martijn Hesselink, think that while the drafting of European Civil Code involves many choices that are essentially political, the technocratic approach adopted by the Commission in its Action Plan of 2003 effectively excludes most stakeholders from expressing their views.192 He suggests that the Commission should try to re-politicize the process and thus increase the democratic basis of the European Civil Code and consequently its legitimacy.193
Professor Christian von Bar, the Chairman of the Study Group on a European Civil Code, expressed the joint view of the group by stating that
the partial and fragmentary nature of EU competence in the field of private law encourages a segmental approach to harmonization which disturbs the coherence of the interlocking concepts and principles in the national jurisdictions. A general and transparent empowerment of the EU in this field is needed to facilitate general measures on the basis of a wider and more systematic vision which do not cut across or undermine the existing sophisticated apparatus of private law in the Member States.194
3. UNIDROIT Principles 2004: A Further Step Toward a Global Contract Law
The Principles of International Commercial Contracts created by the International organization UNIDROIT (UNIDROIT Principles) address contracts between merchants in an international context. The UNIDROIT Principles attempt to present rules common to most existing legal systems, but also select the most adaptable solutions to the requirements of international trade.195 The majority rule is not necessarily chosen; rather, the Principles reflect the most persuasive rule that is best suited for cross-border transactions.196 In drafting the UNIDROIT Principles, the group considered national codifications or compilations of law, such as the United States Uniform Commercial Code, the Restatement (2nd) of the Law of Contracts, and other similar efforts.197 The 1980 United Nations Convention on Contracts for the International Sale of Goods was also referred to in drafting the UNIDROIT Principles.198 The UNIDROIT principles are drafted in the style of the European Codes, rather than the elaborate style of common law statutes.199 The UNIDROIT Principles also avoid using terminology peculiar to any specific legal system.200 The scope of the UNIDROIT Principles is limited to International Contracts because great differences continue to exist between nations and regions regarding the contract law applicable to their economic and political structure.201
The UNIDROIT Principles are used in practice as a model for legislators, a guide for drafting international contracts, a choice by parties to govern their contract, and applications in judicial proceedings.202 Other nations have referred to the UNIDROIT Principles in reports or interpretive rules and some have even used the Principles as a model to reform domestic law.203 In addition, if international parties use the terminology present in the UNIDROIT Principles, they will have neutral terminology with a uniform definition to control their contract.204 Furthermore, if international parties agree that UNIDROIT Principles govern their contract, a choice between competing domestic laws to govern the contract will be unnecessary.205 Finally, the UNIDROIT principles are often cited in arbitration proceedings and in domestic courts.206
4. Global Commercial Code
In 1970 the Secretariat of UNIDROIT submitted a note to the newly established United Nations Commission on International Trade Law (UNCITRAL) in justification of a code of international trade law.207 The proposed code was composed of two parts. Part one would deal with the law of obligations generally. Part two would relate to specific kinds of commercial transactions.208 The UNIDROIT note did not address which type of instrument (i.e., convention, model law, soft law, etc.) should be used by the proposed code. The Progressive Codification was not given priority due to limited resources and skepticism as to its feasibility.209 However, support remains for the idea that globalization of the world entails a need for uniform rules.
In 2000, Gerold Hermann, long time Secretary of UNCITRAL, proposed the idea of a global commercial code to compile special rules governing the most important commercial transactions.210 He proposed something different from the original UNIDROIT proposal.211 The code should be composed of the existing rules of international conventions and model rules. He conceived of it as an open-ended instrument intended “to weld together into a logical and integrated work” existing and future uniform laws in the field of international trade law.212 In Hermann’s proposed code there could also be a provision permitting parties to an international contract to choose the UNIDROIT Principles as the law applicable to their contract. Alternatively the code could provide that the UNIDROIT Principles are applicable unless parties explicitly exclude them by choosing another applicable law or otherwise.213 However, Herrmann envisioned that the code would become a model law adopted by States. He cited the adoption of the U.C.C. by the states in the United States as support for his idea that the code could “advance international codification . . . by serving as an example of a successful unification of the laws of many jurisdictions.”214
Michael Joachim Bonell followed up on this idea of a Code to apply to cross-border transactions between business people and between individuals. Leaving open the question of its applicability to so-called consumer contracts, he suggests that the Global Commercial Code should avoid interfering with existing or future domestic rules for the protection of consumers.215 It should not be a strict commercial code conceived as a special set of rules conceived for merchants distinct from the general civil code because no such civil code exists at the international level and also because of the difficulties of distinguishing between “civil” and commercial parties and transactions.216 Unlike Hermann, he felt that the existing instruments would have to be coordinated, rather than just transplanted into the Code, and should include the general contract law.217 He agreed that the Global Commercial Code should be model law like the UCC but should be different than the UCC in that its scope should be limited to cross-border transactions.218 This Global Code would be binding among nations that adopted it. He stressed that it should not be a comprehensive code that purports to provide answers to all legal disputes.219 Additionally, he advised that the Global Commercial Code should not be mandatory and nations should not be prevented from modifying it.220 Nations should be free to adopt it as proposed or modify it to account for the varying legal traditions and already adopted regional or universal laws dealing with identical areas.221 Something such as the UNIDROIT Principles of International Contracts 2004 (UPICC) would remain as soft law separate from the Global Code. These features would prevent such a Code from being overly ambitious.
Ole Lando supports Bonell’s ideas that the existing instruments will need to incorporate the general law of contracts in order to achieve the uniformity that is the underlying goal of the Code.222 However, Lando seems to envision a less flexible version of the code and insists that if uniformity is to be achieved it would be necessary to make existing rules like the UNIDROIT Principles part of the Code and binding on the courts.223 Lando suggests in detail the scope, substance and content, interpretation, mandatory rules, and other specific topics of the Code.224 He argued that the Code should be limited to private law and analyzed the way the international law should interact with the laws of different countries.225 He proposes that some of the rules of the CISG be adopted along with rules now contained in UNIDROIT Principles of International Contracts 2004 (UPICC) and the Principles of European Contract Law (PECL) to become part of the Code.226
5. Other International Regimes’ Impact on Convergence: UNCITRAL and the World Trade Organization
The United Nations Commission on International Trade Law (UNCITRAL) is a body of member-states representing various regions which was established in 1966 to further the harmonization and unification of the law of international trade.227 Since its creation, UNCITRAL has established conventions, model laws, and other instruments to modernize laws.228 These instruments are utilized by private parties in international trade transactions.229 UNCITRAL creates solutions acceptable in different legal systems, including common and civil law systems.230 One of the five regional groups within UNCITRAL is “Western European and Other States,” which includes both common and civil law nations such as the United States, the United Kingdom, France, Italy, Spain, and Germany.231 Once a text is adopted by UNCITRAL consensus, the choice of whether a State will officially adopt it is made by lawmakers of the individual States.232
An example of a text adopted by UNCITRAL that has been widely accepted and led to harmonization of opposing legal systems is the CISG, adopted in 1980. The CISG focuses on the development and unification of international trade. The CISG adopts uniform rules which govern contracts for the international sale of goods.
Another international organization which facilitates convergence of common and civil law systems is the World Trade Organization (WTO). The WTO is an international organization established in 1995 that develops global rules of trade between nations.233 The WTO has 150 members, coming from all legal systems, including common and civil law, which account for over 97% of world trade.234 These members must work together towards the primary objectives of the organization—helping trade flow smoothly, freely, fairly, and predictably.235 Major functions of the WTO are to administer WTO trade agreements, provide a forum for trade negotiations, handle trade disputes, monitor national trade policies, provide technical assistance and training for developing countries, and cooperate with other international organizations.236 These activities require cooperation of all members and facilitate the convergence of legal systems.
C. Principles and Rules of Transnational Civil Procedure – An ALI and UNIDROIT Cooperative Harmonization Project
While the harmonization of substantive law has made great progress, harmonization of procedural law has been less successful.237 While differences in common and civil law procedure may seem great, Professor Vincenzo Varano contends that harmonization is occurring and the procedural models are less at odds than they were made out to be in the past.238 Both systems attribute the same purpose to civil procedure, which is to reach the efficient and just resolution of private disputes.239 Although differences still exist between the two models, these differences, according to Varano, no longer have the importance they once had.240 The major difference between the two systems is based on the central feature of common law procedure: the jury.241 The jury has produced features of the common law model of procedure that are distinct from the civil law approach, such as the importance of the oral stage of the proceeding, the sharp separation between the pre-trial state and the trial state, the passive role of the judge, and the detailed rules of evidence.242 However, Varano contends that the jury’s importance in common law procedure has been diminishing.243 The jury has disappeared in the English system and the written elements of procedure have acquired a greater importance in the United States procedural system.244 Additionally, recent reforms in common law nations, such as England, Australia, and the United States, grant the judge greater directional and management power, which decreases the adversarial nature of the proceeding.245
Procedural models vary not only between common law and civil law systems but also among civil law nations.246 Some nations rely heavily on the written elements of procedure, while others emphasize the oral element.247 Likewise, some civil law models are more inquisitorial while others are heavily influenced by the adversarial model.248 Thus, differences not only exist between common and civil law systems, but also exist among the civil law procedural systems.249
Despite the harmonization of common and civil law procedural systems that Varano contends has taken place, differences continue to exist which cause problems when legal conflicts cross these procedural boundaries. A joint project by the American Law Institute and UNIDROIT has produced the Principles and Rules of Transnational Civil Procedure which attempts to harmonize these procedural differences. The Project emerged due to the negative consequences, such as the costs and distress, of working within various procedural systems.250 These negative consequences can be mitigated by reducing the procedural differences so the same procedural rules apply wherever the conflict may be adjudicated.251 The Principles and Rules provide a system that nations can adopt and employ when faced with adjudication of international commercial disputes.252 The objective of these Principles and Rules is to offer a fair procedure to all parties and to reduce the uncertainty and anxiety resulting from litigation in unfamiliar surroundings.253
The Principles and Rules attempt to combine the best elements of the common law adversarial procedure with the best elements of the civil law judge-centered inquisitorial system.254 The project recognizes numerous fundamental similarities as well as differences in the two procedural systems and tries to harmonize these aspects into a single set of Principles and Rules.255 An example of an issue addressed by the Principles and Rules is the rules for the formulation of claims.256 The Principles and Rules require details with particulars regarding the basis of the claim; the particulars must also reveal a set of facts that would entitle the claimant to a favorable judgment.257 The Principles and Rules regarding the exchange of evidence requires disclosure of sources of specific proof supporting the allegations set forth in the pleadings, such as relevant documents, expert reports, and summaries of expected witness testimony before the plenary hearing.258 Therefore, the parties must have sufficient evidence to support their claims and be prepared to reveal all their evidence to the opponents without the opponents having to demand particular information.259 Additionally, the rules provide a limited right to document discovery and deposition.260 The Principles and Rules also address the procedure at the plenary hearing, second-instance review, and finality of decisions.261
D. Impact of Electronic International Reporting Systems on Convergence
The worldwide revolution in communication technology has injected a new potential and momentum for substantial progress in planned and spontaneous harmonization of legal systems. The successful emergence of transnational electronic reporting systems facilitates harmonization of common and civil law systems. Enhanced capacity to communicate across borders and among different legal systems and cultures fosters achievement of desirable policy goals in public and private law. It also leads to greater efficiency and lowered costs in the exchange of information, documents, and ideas, and lower transaction costs for the commercial world. In some instances it provides information that otherwise would not be available to areas of the world that cannot afford to maintain voluminous hard copy libraries.
Transnational electronic reporting systems facilitate universal access to legal systems. The data for identification of similarities and differences between legal systems is instantly available across distant borders and cultures for discussion and analysis, and it facilitates development of the consensus which is indispensable to achievement of successful harmonization. Ever-improving sophisticated electronic reporting is already available for the Convention on Contracts for the International Sale of Goods. Existing reporting systems include the Pace Law School CISG Database262, UNILEX263, and UNCITRAL CLOUT (Case law on UNCITRAL Texts)264. These linked transnational electronic reporting systems provide updated legislative text, legislative history, case law, and access to the voluminous CISG literature. These pioneering systems can serve as a prototype for worldwide electronic reporting systems covering other areas of harmonized transnational law as they develop to meet the needs of an increasingly globalized world.
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Footnotes
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