3JM Company Inc.

3JM Profile
Credit Dynamics
Published Articles
Related Site
For More Info
Tel: 214-914-1311

Published Articles by David Balovich

Title: Time For An International Commercial Code
Published in: Creditworthy News
Date: 5/12/05

As reported in the last edition of CW News, the United States Commission on Uniform Commercial Code has approved revisions of Article Two (sales and contracts) and passed it on to the state legislatures for review and adoption.

Meanwhile, from 1950 to 1998, worldwide exports have more than tripled in terms of worldwide gross domestic product and overall, total worldwide trade has increased 1,400 percent over the same time period. Federal Reserve Chairman Alan Greenspan has commented that the accelerated rates of economic production and communication increasingly render national borders obsolete.

Efforts have been under way over the last 50 years to create a uniform international system of commercial law to govern the new global economy. During the process several laws have been created. ULIS, Uniform Law on the International Sale of Goods and ULFIS, Uniform Law on the Formation of Contracts for the International Sale of Goods were early attempts at such uniform laws beginning in 1964. Because ULIS and ULFIS were not widely adopted, The United Nations Commission on International Trade Law (UNICITRAL) combined the text of ULIS and UFLIS, made some changes, and formed a new treaty – the United Nations Convention on Contracts for the International Sale of Goods (CISG). The CISG was first adopted by 42 nations in 1980 and as of 2001 more than 60 nations have subscribed to the CISG. Although other drafts of international contract law have been submitted, the CISG is the only actual, operating international commercial law at this writing.

While the CISG is the sole uniform commercial law that is applicable on a global scale, and for all practical purposes, the first such law in the modern-state era. A problem exists in that there is no current uniform interpretation of CISG. This is because of two dominant, widely practiced and different, legal systems in the world today -- Common Law and Civil Law. It is necessary one understands the fundamental differences between the two systems to grasp the problems facing the CISG and any future attempts at international uniform laws.

The Common Law originated in England. It was developed there, and then exported throughout the world as a result of British imperialism in the days when the sun always rose and set on the Union Jack. The English courts eventually declared the doctrine of stare decisis, as the “doctrine of precedent, under which it is necessary for a court to follow earlier judicial decisions when the same points arise again in litigation.” This is the defining characteristic of the Common Law system – it is “judge-made law.” Cases are law. Although there are statutes, legislation, in Common Law jurisdictions, these do not generally supersede the case law.  The Common Law is the legal system practiced in England, the majority of the United States, Canada, Australia, and most of the rest of the English-speaking world, and in part some other nations, including India.

The Civil Law originated in the Roman Empire and was greatly emulated by the French Civil Code also known as the “Napoleonic Code” so named for its foremost advocate Napoleon Bonaparte.

The Civil Law code is designed to be thoroughly comprehensive and unifying. There are courts in a Civil Law system; however, all decisions are to be found in the code. There is no stare decisis in Civil Law jurisdictions. Thus cases are not law, the code is the law.

The Civil Law system is practiced in nearly all corners of the globe not previously reached by British imperialism, including most of Continental Europe, Asia, Central America, South America and the State of Louisiana.

The CISG is very thin legislation. Moreover, the CISG is silent on how the code is to be interpreted, which was designed to be a compromise between the Common and Civil Law from which the nations came. The courts in the various nations have recognized a solution is necessary due to the lack of a uniform standard to follow.

Given the contrast between Civil and Common Law, especially with regard to their treatment of cases as authority, it would appear that any hybrid solution would be difficult to work out. Selecting either the Common Law or Civil Law as the paradigm for a new international commercial law makes more sense. Between these two systems, it may surprise those of us in the Common Law world that there is much to consider in the implementation of a Civil Law solution for any future international commercial law system. The reasons for this opinion are as follows:

A united law is essential. Civil codes tend to be more unifying in nature. They not only are designed to unify various sources of law but also bring together different geographical regions under one law. An international Civil Law commercial code would likely have the same unifying effect on a global scale.

A Civil Law code would limit the delegation of sovereignty of nations. Nations have an interest in seeing that any delegation of their power to an international regime of law be limited and defined. An international Civil Code law would accomplish this better than common law. A code is fixed. However, under Common Law, because of stare decisis, a nation would be indefinitely bound to whatever course the law took in subsequent years in the form of future cases decided in foreign nations. A Civil Law code would accomplish limited delegation of sovereignty more effectively.

There has been a trend toward codification in many areas of the law in both the United States and elsewhere. One only has to look at the changes in the Uniform Commercial Code and the trend away from stare decisis. The United States Supreme Court in 2003 stated, “Stare decisis is not an inexorable command” (see Lawrence, et al. v. Texas, 539 U.S. 558). Thus, Common Law jurisdictions may be surprisingly open to a Civil Law international system.

The global economy is growing and will continue to do so. A legal structure is necessary in order to regulate commercial transactions which transcend national borders that ASEAN, NAFTA and MERCOSUR has failed to address. There is reason to consider implementing a Civil Law code of international commercial law that would reduce obstacles to international commerce and thereby improve international relations.

This column was written with the assistance of Wayne Barnes, Associate Professor of Law at Texas Wesleyan in Fort Worth, Texas.

I wish you well.  

The information provided above is for educational purposes only and not provided as legal advice. Legal advice should be obtained from a licensed attorney in good standing with the Bar Association and preferably Board Certified in either Creditor Rights or Bankruptcy.  

This site is copyrighted (C) by 3JM Company Inc., Lake Dallas, Tx
Website by Creditworthy Co.