1. Lex Mercatoria Hans van Houtte KU Leuven - Belgium

2. Basic Questions What is Law ?What is Law ? What is a Legal System ?What is a Legal System ? Does law require sanctions ?Does law require sanctions ? Ibi societas, ubi iusIbi societas, ubi ius

3. Lex Mercatoria ? Applied in ArbitrationApplied in Arbitration Content:Content: –contract –customs and usages of international trade international conventions –general principles of law –equity

4. The Society of Business Men Non LawyersNon Lawyers Trade Usages and CustomsTrade Usages and Customs Lex MercatoriaLex Mercatoria

5. Lex Mercatoria ? Content:Content: –contract –customs and usages of international trade –Standard conditions and contracts of trade –general principles of law –international conventions – CISG –Equity – fairness

6. Courts vs. Arbitration CourtsCourts –Rome Convention 1980 ? –Incorporation Arbitration :Arbitration : ICC Art. 178 The parties shal be free to agree upon the rules of lawto be applied by the Arbitral Tribunal to the merits of the dispute. In the absence of such agreement, the Arbitral Tribunal shall apply the rules of law which it determines to be appropriate.”

7. Arbitration Statutes Uncitral Model Law Art. 28 :Uncitral Model Law Art. 28 : The arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute. English Arbitration Act 1996 :English Arbitration Act 1996 : The arbitral tribunal shall decide the dispute— (a) in accordance with the law chosen by the parties as applicable to the substance of the dispute, or (b) if the parties so agree, in accordance with such other considerations as are agreed by them or determined by the tribunal.

8. Contract Contract in national law ?Contract in national law ? ICC Arbitration Rules – art. 17.2 :ICC Arbitration Rules – art. 17.2 : In all cases the Arbitral Tribunal shall take account of the provisions of the contract …”

9. Custom and Trade usages Custom and trade usage in national law ?Custom and trade usage in national law ? ICC Arbitration Rules – art. 17.2 :ICC Arbitration Rules – art. 17.2 : In all cases the Arbitral Tribunal shall take account of the provisions of the contract …” CISG Art. 9CISG Art. 9

10. CISG Art. 9 Article 9Article 9 (1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves.(1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves. (2) The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.(2) The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.

11. General Principles UNIDROIT PRINCIPLES OF INTERNATIONALUNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS 2004COMMERCIAL CONTRACTS 2004 PREAMBLEPREAMBLE (Purpose of the Principles)(Purpose of the Principles) These Principles set forth general rules for international commercial contracts.These Principles set forth general rules for international commercial contracts. They may be applied when the parties have agreed that their contract be governed by general principles of law, the lex mercatoria or the like.They may be applied when the parties have agreed that their contract be governed by general principles of law, the lex mercatoria or the like.

12. General Principles Pacta sunt servandaPacta sunt servanda Rebus sic stantibusRebus sic stantibus Performance in good faithPerformance in good faith Not opposed behavior may change contractNot opposed behavior may change contract Effet utileEffet utile Use creates presumption of acceptanceUse creates presumption of acceptance Actori incumbit probatio Force majeure Mitigation of damages Foreseeability of damages Exceptio non adempleti contractus estoppel

13. Equity ??? Equity in national law ?Equity in national law ? Equity infra legemEquity infra legem Equity contra legemEquity contra legem

14. Lex Mercatoria = Equity ??? Specific agreement forSpecific agreement for –Amiable composition –Ex aequo et bono Applicability lex mercatoria without agreementApplicability lex mercatoria without agreement

15. Transnational public policy ? Not regional ( e.g. antitrust)Not regional ( e.g. antitrust) Truly transnationalTruly transnational –Corruption ? –Human trafficking –Drugs –Arms traffic ??? –Money laundering ??? –Respect of IP ???