2. Lex Mercatoria A presentation at the EL§A seminar: Contracting in Europe in Tromsoe, 5 March 2003 by Associate professor, dr.juris Petri Keskitalo The faculty of Law, University of Tromsoe

3. 1) What is it? 3) How to use it? 4) When to use it? 2) Where do we find it? Lex Mercatoria 5) What advantages has it to offer?

4. 1) What is the lex mercatoria (LM) or law merchant? - The latter approach can have three alternative goals: i) LM merely as a trade usage ii) LM as an evolving autonomous a-national legal order iii) LM as customary law - As many definitions as there are writers and approaches - Basically there are two approaches: a) LM as a method b) LM as a body of legal norms that are created by the trade community to serve the needs of international trade - The concept of LM dates back to at least the Middle Ages and has been doing ”a comeback” since the 1960’s

5. 2) Where do we find the lex mercatoria? - Depending on the approach and goal chosen, the sources of the LM are various: i) general principles of international contract law ii) trade usage iii) arbitration awards iv) standard contracts v) standard legal instruments of international commercial law vi) international conventions - There are two alternative approaches to the compilation of the LM: a) “Restatements” b) “Creeping codification” - Three alternative “suppliers” of compilations of the LM: i) UPICC (UNIDROIT Principles of International Commercial ContractsUPICC ii) PECL (Principles of European Contract Law)PECL iii) TLDB (The CENTRAL database on Transnational Law)TLDB

6. 3) How to use the lex mercatoria? - Basically there are two alternative uses for the LM: either by the contract parties, arbitration tribunals or national courts b) LM as a source for gap-filling regarding contracts or the law either by arbitration tribunals or national courts a) LM as the (partial) law of the contract

7. 4) When to use the lex mercatoria? Contracting parties: - at any time as they please Arbitration tribunals: - when the contracting parties have so provided either by a) direct reference to LM or b) reference to general principles of international - when the contracting parties have given the arbitrator the powers of amiable compositeur or ex aequo et bono - when the procedural arbitration law makes a reference to ”rules of law” instead of ”rule of law” - when the law of the contract needs to be interpreted or gap-filled National courts: - occasionally

8. 5) What advantages has the lex mercatoria to offer? - Rules and principles that are designed for the purpose of modern international trade - Avoidance of the conflict of laws jargon? - Higher predictability and certainty? - Lower transactions cost: a) in negotiating? b) in interpretation? c) in litigation?

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