Volume 43 | Number 3

Developing Global Transnational Harmonization Procedures for the Twenty-First Century: The Accelerating Pace of Common and Civil Law Convergence

by Louis F. Del Duca

Summary

1. Procedural Options – The New Challenge
   1. General Considerations – Key Actors – Selecting Harmonization Areas and Procedures
   2. Conventions: CISG and European Convention on Human Rights
   3. Model Laws
   4. Guidelines
   5. Voluntary Contractual Applicability Texts: Incoterms, Uniform Customs and Practices, Arbitration Rules
   6. Use of Regulations, Directives, and ‘Mutual Recognition’ Procedures in the European Union
   7. Use of Conventions, Recommendations, and Exchange of Views in the Council of Europe
   8. Achieving Uniformity in Practice
2. Specific Harmonization Areas
   1. Case Law as a Source of Law
      1. The “Goodhart” and “Zweigert-Kötz-Cappelletti” Eras and Entry into the Third Millennium
      2. Goodhart Era
      3. Zweigert-Kötz-Cappelletti Era
      4. Entry into the Third Millennium
      5. Experience of Constitutional Courts in Europe and Case Law in Civil Law Systems
      6. Case Law Experience of the European Union: An Example of Civil and Common Law Convergence in Practice
      7. Other Perspectives: The Role of Precedent in Mexico
   2. Status of Selected Current Substantive Harmonization Projects
      1. Principles of European Contract Law
      2. European Civil Code
      3. UNIDROIT Principles 2004: A Further Step Toward a Global Contract Law
      4. Global Commercial Code
      5. Other International Regimes’ Impact on Convergence: UNCITRAL and the World Trade Organization
   3. Principles and Rules of Transnational Civil Procedure – An ALI and UNIDROIT Cooperative Harmonization Project
   4. Impact of Electronic International Reporting Systems on Convergence

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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.
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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.

Footnotes

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