11
Volume 04 Issue 04-2022
The American Journal of Political Science Law and Criminology
(ISSN
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2693-0803)
VOLUME
04
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SSUE
04
Pages:
11-17
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I
MPACT
FACTOR
(2020:
5.
453
)
(2021:
5.
952
)
(2022:
6.
215
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OCLC
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METADATA
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Publisher:
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ABSTRACT
This particular paper attempts to outline the specific problems in the application of lex mercatoria in international
commercial arbitration and suggests the way how the legislation of Uzbekistan should navigate in the existence of
those problems in order to ensure its attractiveness as the seat of arbitration. The structure of the article is as follows.
It first describes the historical evolution of the lex mercatoria until it finds its place in international commercial
arbitration and later is mentioned in a number of international instruments, and more importantly, is implemented in
the national laws consequently. The article then addresses modern sources of the lex mercatoria and specifically
mentions the elements of lex mercatoria in the legislation of Uzbekistan. The paper also addresses the consequences
such as setting aside the awards which were issued applying lex mercatoria. The paper concludes with the proposals
of the author concerning the adaptation of Uzbekistan to the above-mentioned problems in the application of lex
mercatoria.
KEYWORDS
Lex mercatoria, applicable law, annulment of awards.
Research Article
LEGAL ISSUES CONCERNING THE APPLICATION OF THE LEX
MERCATORIA IN INTERNATIONAL COMMERCIAL ARBITRATION
Submission Date:
March 30, 2022,
Accepted Date:
April 11, 2022,
Published Date:
April 24, 2022
|
Crossref doi:
https://doi.org/10.37547/tajpslc/Volume04Issue04-03
Zarif Juramirzaev
Master’s student, Tashkent State University of Law, Uzbekistan
Journal
Website:
https://theamericanjou
rnals.com/index.php/ta
jpslc
Copyright:
Original
content from this work
may be used under the
terms of the creative
commons
attributes
4.0 licence.
12
Volume 04 Issue 04-2022
The American Journal of Political Science Law and Criminology
(ISSN
–
2693-0803)
VOLUME
04
I
SSUE
04
Pages:
11-17
SJIF
I
MPACT
FACTOR
(2020:
5.
453
)
(2021:
5.
952
)
(2022:
6.
215
)
OCLC
–
1176274523
METADATA
IF
–
7.659
Publisher:
The USA Journals
INTRODUCTION
There are numerous approaches on the question of
how long before the emergence of lex mercatoria
started to exist regardless of its different nature and
names. The common approach which suits most of the
approaches is that the existence of lex mercatoria
should be divided into three periods: ancient, medieval
and modern lex mercatoria.
A number of scholars strongly believe that the roots of
lex mercatoria come from the ancient period of the
Roman Empire. It is suggested that there was a
separate existence of ius gentium from the ius civile,
which are aimed to regulate the relations between the
citizens and the laws regulating the relations between
citizens and non-citizens in the Roman Empire.
1
Ius
civile was created and codified by state while ius
gentium based on the precedents of practice between
the commercial actors of society, thus had developed
independently from the state control. However, from
the beginning of 3th century the significance of ius
gentium lowered as all the residents of the empire had
been granted citizenship
2
.
Although the opponents of lex mercatoria believe that
lex mercatoria has nor ancient and medieval roots,
3
it
is a widely confirmed concept that the most significant
history of it relates to the medieval age. After the
collapse of the Roman Empire, the concern to keep
commercial transactions safe led to the integration of
1
Baddack, F. (2005).
Lex mercatoria: scope and
application of the Law Merchant in arbitration
(Doctoral
dissertation, University of the Western Cape) 6.
2
Baddack, F. (2005).
Lex mercatoria: scope and
application of the Law Merchant in arbitration
(Doctoral
dissertation, University of the Western Cape) 6.
3
Keli-Georgiou, I. (2016) Lex mercatoria: an unsettled
concept. available at: https://www.researchgate.net/
3.
merchants in guilds which later created their own
commercial rules.
4
Medieval national laws could not satisfy the needs of
merchants and guilds as they lacked the norms
regulating international commercial transactions.
Therefore, the commercial rules of guilds played a
significant role in deciding disputes between the
member-merchants
within
the
guild.
These
commercial rules were applied and enforced by the
guilds themselves by influencing the member-
merchants, for example by removing the member from
the guild.
5
It should be stated that the disputes between the
merchants and non-merchants were settled by feudal
laws, although they were not suitable for the
commercial character of disputes. Later on, in the
period of city-states, attention to merchants increased
and the city-states tried to attract more merchants by
establishing fascinating dispute settlement methods,
which took a shorter period of time and the decision
could not be overturned.
6
They included Piepowder
Courts and Staple Courts in England where disputes
were resolved by an arbitrator who was familiar with
trade usages and practice
7
.
Albrecht Cordes suggest to divide the fields of
medieval lex mercatoria into the following groups:
4
Güçer, S. (2009). Lex Mercatoria in International
Arbitration.
Ankara Bar Review
,
2
(1), 32
5
Güçer, S. (2009). Lex Mercatoria in International
Arbitration.
Ankara Bar Review
,
2
(1), 32.
6
Güçer, S. (2009). Lex Mercatoria in International
Arbitration.
Ankara Bar Review
,
2
(1), 33.
7
Baddack, F. (2005).
Lex mercatoria: scope and
application of the Law Merchant in arbitration
(Doctoral
dissertation, University of the Western Cape) 9-10.
13
Volume 04 Issue 04-2022
The American Journal of Political Science Law and Criminology
(ISSN
–
2693-0803)
VOLUME
04
I
SSUE
04
Pages:
11-17
SJIF
I
MPACT
FACTOR
(2020:
5.
453
)
(2021:
5.
952
)
(2022:
6.
215
)
OCLC
–
1176274523
METADATA
IF
–
7.659
Publisher:
The USA Journals
procedural law of market courts;
internal merchant law;
external merchant law.
8
The above-mentioned “attractive” legal order
established by city-states around the 10th century
belongs to the first field of merchant law. The laws
within the guilds and customs specifically relating to
merchants within a state fall to the second field of
merchant law. The third field, external merchant law,
involved the rules concerning the international
transactions within the commercial actors of different
states.
Also the states tried to adjust to the development of
trade relations, all they could do for commercial actors
of society was contributing to the procedural law of
market courts, however the other two fields of
merchant law were still developing without any
involvement of states. At the peak of international
trade relations there were a number of elements of
commercial trade practice, including Rolls of Oleron
(maritime judgements), Laws of Wisby, Westcapelle
and Consulate del Mare (maritime transport usages in
trade).
9
It should be mentioned that the function of medieval
lex mercatoria was different than that of today, as the
medieval lex mercatoria filled in the gaps of national
8
Cordes, A. (2016). The Future of the History of
Medieval Trade Law.
American Journal of Legal History
,
56
(1), 17.
9
Baddack, F. (2005).
Lex mercatoria: scope and
application of the Law Merchant in arbitration
(Doctoral
dissertation, University of the Western Cape) 8.
10
Galgano, Francesco (1995) "The New Lex
Mercatoria," Annual Survey of International &
Comparative Law: Vol. 2: Iss. 1, Article 7, 108.
laws of that time while the modern lex mercatoria
exists parallelly with national laws.
10
Professor Berger mentions that the rebirth of idea of
lex mercatoria relates to the works of Berthold
Goldman who has referred to “new lex mercatoria” in
an article devoted to the legal status of the Suez Canal
Company, where it has described the company to have
a transnational character regardless of its territorial
relevance.
11
In contrast to the old one, the circumstances for the
creation of modern lex mercatoria was unwillingness
of the participants of trade communities to follow the
commercial rules established by states.
12
They tried as
much as possible to avoid the involvement of the state
in their commercial disputes. The reasons which led for
this avoidance were firstly, late and inadequate
reaction of states for immensely growing commercial
transactions and secondly, the states tried to put their
political purposes above the interests of parties of
commercial transactions.
At the same time, neither the regulation of
international commercial transactions with the help of
international instruments and choice of law rules could
satisfy the needs of commercial society as it took a
significant period of time to create the version of
international instruments which would be acceptable
by different states with different jurisdictions.
13
At the
11
Berger, Klaus Peter, Berthold Goldman, Philippe
Fouchard and Philippe Kahn - The Rebirth of the Lex
Mercatoria by the Dijon School available at:
https://www.trans-lex.org/1 1.
12
Galgano, Francesco (1995) "The New Lex
Mercatoria," Annual Survey of International &
Comparative Law: Vol. 2: Iss. 1, Article 7, 109.
13
Алимова, Я. О. (2010). Практика международного
коммерческого арбитража как источник lex
14
Volume 04 Issue 04-2022
The American Journal of Political Science Law and Criminology
(ISSN
–
2693-0803)
VOLUME
04
I
SSUE
04
Pages:
11-17
SJIF
I
MPACT
FACTOR
(2020:
5.
453
)
(2021:
5.
952
)
(2022:
6.
215
)
OCLC
–
1176274523
METADATA
IF
–
7.659
Publisher:
The USA Journals
same time with international commercial transactions,
intensified investment relations also contributed to the
emergence of modern lex mercatoria as the investors
were not willing to apply national laws while entering
into relations with governments.
14
Modern lex mercatoria developed with arbitration at
the same time as there was a common circumstances
for them to flourish as the parties of disputes tried to
avoid the rules of countries. At the same time, the
difference among the national laws of the modern
states reached its critical level, therefore there was a
great concern to unify the rules of trade. As the party
autonomy permitted in international commercial
arbitration the actors of the commercial community
searched for specific rules capable of regulating
international transactions and which were sufficiently
unified to avoid the legal barriers caused by the
difference in legislation between jurisdictions.
As Frank Baddack provides,
15
Grossmann-Doerth first
mentioned that at the same time with international
commercial arbitration, autonomous laws consisting
of trade usage and customs started to develop without
a state involvement.
16
As discussed above, lex mercatoria was mentioned
with different terms such as the “law of merchants”,
“ius mercatorum”, “a-national law”, “transnational
mercatoria.
Актуальные проблемы российского
права
, (3), 341.
14
Elcin, M. (2012).
Lex mercatoria in international
arbitration theory and practice
(Doctoral dissertation)
23.
15
Baddack, F. (2005).
Lex mercatoria: scope and
application of the Law Merchant in arbitration
(Doctoral
dissertation, University of the Western Cape) 17.
16
Grossmann-Doerth, “Der Jurist und das autonome
Recht des Welthandels”, Juristische Wochenschrift
(1929), 3447.
law”, “transnational commercial law”, “sub-law”,
“supranational law”, “customary mercantile law” and
so on. However, the lex mercatoria is most often
mentional by scholars. The term “lex mercatoria”
itself, according to many, was first noticed in Fleta laws
which were written in the late 13th century in England.
17
Similarly with its history, the ideas concerning the
existence of lex mercatoria are also subject to
significant discussions, on one hand, there a the group
scholars supporting the today’s importance of lex
mercatoria as the parallel law for the national laws,
while on the other hand, another group of them refute
that it exists, and some of the call it an “enigma”
18
.
Going on with the definition of lex mercatoria, the
mostly accepted view is that lex mercatoria comprises
“
public international law, certain uniform laws, general
principles of law, rules of international organizations,
customs and usages of international trade, standard
form contracts and arbitral case law
”
19
.
One of the most problematic aspects of the theory of
lex mercatoria remains the uncertainty of sources
containing norms that can be attributed to lex
mercatoria. According to the theory, the “legal system
lex mercatoria” will be distinguished by a huge variety
of forms of expression of its rules. Among the sources
of lex mercatoria are international conventions
17
Volckart, O., & Mangels, A. (1999). Are the roots of
the modern lex mercatoria really medieval?.
Southern
economic journal
,
65
(3), 443
18
Highet, K. (1988). Enigma of the Lex Mercatoria.
Tul.
L. Rev.
,
63
, 613.
19
Rivkin, D. W. (1993). Enforceability of Arbitral Awards
Based on Lex Mercatoria.
Arbitration International
,
9
(1), 67.
15
Volume 04 Issue 04-2022
The American Journal of Political Science Law and Criminology
(ISSN
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VOLUME
04
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Pages:
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SJIF
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FACTOR
(2020:
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)
(2021:
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952
)
(2022:
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–
7.659
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containing unified substantive norms, model laws,
generally recognized principles of law, international
trade customs, trade usages, common commercial
practice, arbitration awards.
When citing sources, lex mercatoria is especially
frequently mentioned in documents developed by
international both intergovernmental and non-
governmental organizations. Among such documents
are standard contracts reflecting the features of
certain types of commercial relations pro forma,
standardized conditions and, above all, unified rules for
various forms of settlement e.g. INCOTERMS. Berger
notes that the publication of the Principles of European
Contract Law and the UNIDROIT Principles has
changed the scene of discussions dramatically as they
were the first official codifications of the lex
mercatoria.
As noted, within the framework of the theory of lex
mercatoria, a separate place is occupied by the
position of authors who consider lex mercatoria as a
method of resolving disputes using the rules
established in the process of comparative legal
analysis. At the same time, the followers of this board
are characterized by the refusal to use the term
“source”, rather they suggest using the terms
“element” or “instrument”.
O. Lando, noting the impossibility of providing an
exhaustive list, offers an approximate list of
instruments in the comparative legal analysis of the
elements of lex mercatoria:
a)
The norms of public international law which may
also be used to resolve disputes between actors of
trade. An example of those norms can be the
20
Lando, O. (1986). The law applicable to the merits of
the dispute.
Arbitration international
,
2
(2), 145.
Vienna Convention on the Law of Treaties, which is
comprised of the foundations of legal systems;
b)
Unified laws which aim to regulate transactions in
international trade;
c)
General principles of law, which arbitrators can
derive from even the literature;
d)
Rules of international organizations, which include
various kinds of resolutions, recommendations,
codes of conduct affecting contractual issues -
these documents are not binding, but often reflect
provisions of fairness and commercial decency;
e)
The customs and usages of international trade, e.g.
INCOTERMS.;
f)
Standard contract forms and clauses, or rather,
interpretations given in their decisions by national
and arbitration courts to certain provisions of the
contract forms used (for example, FIDIC model
contracts);
g)
Published awards.
Another supporter of the “method lex mercatoria”, E.
Gaiad, adds scientific monographs to the list of O.
Lando, affecting numerous specific problems. From O.
Lando’s explanations for each of the proposed
elements of the lex mercatoria, one can deduce some
semblance of their hierarchy based on the obligatory
nature of one or another element for an arbitrator
resolving an international commercial dispute. The
norms of international public law that which are
considered mandatory for arbitrators, the general
principles of law, model contracts and reservations of
states go to the first part. The unified laws, rules of
international organizations, customs and usage trade,
interpretations of model contracts, published
arbitration awards go the second part of sources
20
.
16
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Pages:
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FACTOR
(2020:
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(2021:
5.
952
)
(2022:
6.
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As discussed above, the widely accepted practice is
considered to be one of the elements of lex
mercatoria. Article 6 (1) of the Civil Code
21
defines the
term “business practice” as “a rule of conduct that has
developed and is widely used in any area of business”.
The same article refers that it is not necessary for
business practice to be recorded in any document,
however, it must not be mentioned in the legislation of
Uzbekistan. It can be concluded that if any practice
used within the business community is transferred to
the legislation, it loses its status as a business practice.
This particular requirement of civil legislation prevents
the parallel existence of business practice with the law
of the Republic of Uzbekistan.
Article 6(2) of the Civil Code separately mentions “local
customs and traditions”, which allows distinguishing
the separate nature of business practice with local
customs and traditions. That is to say, we can deduce
that permission of the Civil Code to apply business
practice does not contain any local character and even
the practice widely established within the international
business community also meets the requirement of
Article 6(1) of the Civil Code.
As for the application of the principle in arbitration, the
following methods of have been noticed in practice:
a)
Express choice;
b)
Implied choice;
c)
Applying lex mercatoria against parties will.
The wording of the Article 44 (1) of Arbitration Law
22
allows an arbitral tribunal to decide cases applying
“rules of law”, which is the exact repition of the Article
28(1) of Model Law. According to many authors, the
21
Civil Code of the Republic of Uzbekistan
22
The Law of the Republic of Uzbekistan “On
International Commercial Arbitration”
usage of the term “rules of law” rather than the term
“law” can be construed as making lex mercatoria
appropriate to be an applicable law of a dispute.
23
However, Article 44(3) of the Arbitration Law of
Uzbekistan requires to apply a “law” which is subject
to determination pursuant to choice of law rules in the
event the parties failed to designate any applicable law
to their dispute. According to this provision, the power
of an arbitral tribunal to apply lex mercatoria as the
governing law of a dispute is limited.
Where the arbitral tribunal strongly insists on choosing
lex mercatoria as the governing law, it would be hard
to enforce the final arbitral award and there would
probably be two obstacles: either the revocation or
refusal to enforce.
To talk about the revocation of the arbitral award, the
Article 50 of the Arbitration Law establishes that it may
be revoked if the court finds that derogation from the
rules of the Article 44 of the Arbitration Law is a reason
to find the awards contrary to the countries public
policy.
To continue with the refusal to enforcement, the court
may base on the similar ground in Article 52 of the
Arbitration Law of Uzbekistan concerning the public
policy and refuse the enforcement of the arbitral
award under which lex mercatoria was chosen by the
tribunal as the governing law of the dispute.
Based on the aforementioned, it is concluded that for
Uzbekistan it is more beneficial to support the position
which suggests that lex mercatoria can act as an
applicable law. Including necessary amendments to
23
Born, G. B. (2020).
International commercial
arbitration
. Kluwer Law International BV, 2441.
17
Volume 04 Issue 04-2022
The American Journal of Political Science Law and Criminology
(ISSN
–
2693-0803)
VOLUME
04
I
SSUE
04
Pages:
11-17
SJIF
I
MPACT
FACTOR
(2020:
5.
453
)
(2021:
5.
952
)
(2022:
6.
215
)
OCLC
–
1176274523
METADATA
IF
–
7.659
Publisher:
The USA Journals
the Law of the Republic of Uzbekistan which consider
removing all barriers for the lex mercatoria to be
chosen as the applicable law may help to stand out
from the other legislations which attracts the parties of
the dispute to choose the country as the seat of
arbitration.
SUMMARY
This paper has attempted to analyze how it has
shaped through the different periods of time and how
it is now being suggested as a governing law to the
dispute. It seems to the author that the position of
the legislation of Uzbekistan in the issue should
encourage the norms of lex mercatoria to act as a
separate applicable law to disputes. The reason for
this conclusion is closely based on the ambition to
make the country as attractive as possible as a seat of
arbitration for the dispute.
REFERENCES
1.
Baddack, F. (2005). Lex mercatoria: scope and
application of the Law Merchant in arbitration
(Doctoral dissertation, University of the Western
Cape) 17.
2.
Berger, Klaus Peter, Berthold Goldman, Philippe
Fouchard and Philippe Kahn - The Rebirth of the
Lex Mercatoria by the Dijon School available at:
https://www.trans-lex.org/1 1.
3.
Born, G. B. (2020). International commercial
arbitration. Kluwer Law International BV, 2441.
4.
Civil Code of the Republic of Uzbekistan
5.
Cordes, A. (2016). The Future of the History of
Medieval Trade Law. American Journal of Legal
History, 56(1), 17.
6.
Elcin, M. (2012). Lex mercatoria in international
arbitration theory and practice (Doctoral
dissertation) 23.
7.
Galgano, Francesco (1995) "The New Lex
Mercatoria," Annual Survey of International &
Comparative Law: Vol. 2: Iss. 1, Article 7, 108.
8.
Grossmann-Doerth, “Der Jurist und das autonome
Recht
des
Welthandels”,
Juristische
Wochenschrift (1929), 3447.
9.
Güçer, S. (2009). Lex Mercatoria in International
Arbitration. Ankara Bar Review, 2(1), 32
10.
Highet, K. (1988). Enigma of the Lex Mercatoria.
Tul. L. Rev., 63, 613.
11.
Keli-Georgiou, I. (2016) Lex mercatoria: an
unsettled
concept.
available
at:
https://www.researchgate.net/ 3.
12.
Lando, O. (1986). The law applicable to the merits
of the dispute. Arbitration international, 2(2), 145.
13.
Rivkin, D. W. (1993). Enforceability of Arbitral
Awards Based on Lex Mercatoria. Arbitration
International, 9(1), 67.
14.
The Law of the Republic of Uzbekistan “On
International Commercial Arbitration”
15.
Volckart, O., & Mangels, A. (1999). Are the roots of
the modern lex mercatoria really medieval?.
Southern economic journal, 65(3), 443
16.
Алимова,
Я.
О.
(2010).
Практика
международного коммерческого арбитража
как источник lex mercatoria. Актуальные
проблемы российского права, (3), 341.
