The Unidroit Principles of International Commercial Contracts as an Example of Non-State Rules of Law: A Rival or a Friend of Positive Law? (A. Mazzoni, журнал "Kutafin University Law Review", N 2 (Volume 2), October 2015)

The Unidroit Principles of International Commercial Contracts as an Example of Non-State Rules of Law: A Rival or a Friend of Positive Law?

A. Mazzoni (Italy),

President of the International Institute for the Unification of Private Law (UNIDROIT)

Журнал "Kutafin University Law Review", N 4, October-December 2015, р. 270-277.

The paper initially criticizes the ideological postulate, stemming from the legal nationalism and the legal positivism of the XIX and XX century, according to which law is either State law or international law applicable to States. Reference is made to certain historical distinctions, showing that law has always been and still is exposed to the tensions created by certain typical conflicting needs that are intrinsic within it, such as stability versus flexibility, formality versus substantial justice, positive law versus natural law and so on. The paper focuses on one of these tensions in particular, namely the tension between State law, envisaged as the sole positive law, and non-State rules of law that are rules factually observed as law in action but do not belong to any national system of State law. As an outstanding example of non-State rules of law, the paper argues that the UNIDROIT Principles of International Commercial Contracts (UPICC) present striking similarities with the lex mercatoria of the Middle Age, both in terms of the underlying goal (facilitating cross-border trade) and in terms of the method of formation (in the absence of converging national rules, the applicable better rule is sought at the higher level of a superior law based on reason). Similarly, in today's world judges and arbitrators may be inspired by UPICC in interpreting or supplementing the applicable national law, even in the absence of an express reference to such Principles by the parties. Conclusively, UPICC as non-State rules of law may operate more as a friend than as a rival of positive State law.

Table of contents

I. The tension between positive law and natural law

II. The tension between State law and non-State rules of law

III. The UPICC as the new lex mercatoria

IV. Positive law: prospects for the future

I. The tension between positive law and natural law

The nineteenth century saw the triumph of legal nationalism, followed by positivism and the strictly linked ideological postulate that law is not even conceivable unless it is envisaged as a State monopoly or as the result of relationships between or among States.

The main corollaries of this line of thought are twofold. In the perspective of each individual State, the State itself is the source of a totalizing national legal system whose rules are all either created or received and validated by it. In an international perspective, the universal space is entirely occupied by a community of sovereign States who are seen as the only recognized actors producing international law and being governed by it.

The ideological postulate that law is either State law or international law applicable to States is still largely prevailing, even today, on a global scale.

Historically and philosophically, however, this postulate cannot claim to have been or to deserve to be the only conceivable idea of law; even less, the only idea of law that is capable of being implemented through concrete and practical applications.

To begin with, certain important legal experiences in history remind us that law inevitably has two souls or, if one prefers philosophical language to the use of metaphors, law is in a constant search for its internal balance by hosting the pressure of two needs within itself: the need to ensure stability and predictability through rigidity and formality, on the one hand; and the need to evolve in response to social demands through rules of institutions permitting flexibility, on the other hand. In support of this assertion, I need only to mention the distinction between jus civile and jus gentium in Roman law and the initially separate, yet interactive paths of common law and equity in English legal history.

In English history, equity fairly soon became more of a parallel legal system rather than a set of moral rules demanding social compliance in day-to-day life. Nevertheless, there is, I think, no doubt that at the outset equity was politically justified by the king on the grounds that the law, with its rigidity and formality, could not unconditionally prevail over justice based on morality.

This is the most telling example of the structural terms of the tension that was the subject matter of today's round table, namely the tension between positive law, i.e. the human, political and historical set of rules expressing the identity of a community personified by the State at each point in time, and natural law, i.e. the religious or moral and, in any event, universal and non-contingent set of principles that claim a superior legitimacy over positive law whenever a non-reconcilable conflict arises between the two.

This is not, however, exactly the tension on which my remarks will focus.

II. The tension between State law and non-State rules of law

I will rather try to give consideration and to offer brief comments on a somewhat different kind of tension, once again involving, on the one hand, positive law but, on the other hand, evoking a rival form of non-positive law. Specifically, I refer to the tension between positive law as State law, on the one hand, and existing law of non-State origin, on the other hand; in more frequently used terms, the tension between State law and non-State rules of law.

As a starting point for the analysis, it is helpful to evoke the Roman law distinction between lex and jus. While the former word (lex) was used to designate a set of rules set forth in a specific statute, the latter one (jus) was used to designate a broader concept covering in a holistic sense a major branch of the entire legal system and sometimes even the entire legal system itself.

Conceptually, the distinction may still be useful and is in fact referred to in the analysis of what is usually called the system of legal sources or the different forms of methods for law production in a given legal system. Thus, even today, it may still be convenient to distinguish between la loi and le droit; between das Gesetz and das Recht; and in the common law countries, between statutory law and general law (the latter expression meaning, in these countries, judge-made law envisaged as the core of the entire legal system). Having said that, general law should mean judicial law envisaged as the core of the entire legal system in these countries.

All of these distinctions are usually evoked for the purposes of developing a reasoning that is confined within the conceptual boundaries of the already recalled postulate that law, as a synonym of a legal system, means law of a specific State. This is so, in particular, when the distinction is used to illustrate the special role of parliamentary or governmental sources of legal rules, as opposed to an overall consideration of a national legal system in its complexity, comprehensive of the other sources (such as, for instance, judge-made law and collective labor agreements) which under the constitutional system of a given State are treated as concurring factors in determining the law in that particular State.

However, as stated at the outset, the proposition that law necessarily means State law may be challenged and, it is respectfully submitted, deserves to be challenged.

Law is not only a product of the State or a product necessarily bearing a State trademark: it may be a social phenomenon, a fact created by human beings not acting in accordance with the law-making processes institutionalized by each individual State.

Law, as Paolo Grossi liked to exemplify, may also derive from the spontaneously observed behavioral rule, consisting in queuing at a bus station notwithstanding the absence of any formal regulation prescribing it.

For the purposes hereof, law, it is submitted, may be also created by non-State communities or institutions that derive sufficient authority from their particular competence in a given field and/or from their ability to extract from certain common practices norms deserving to be observed as rules of law.

III. The UPICC as the new lex mercatoria

One of the institutions capable of creating non-State rules of law in this sense is UNIDROIT thanks to its instruments of soft law, the most outstanding example of which is the set of rules called the UNIDROIT Principles of International Commercial Contracts (UPICC).

For a number of reasons, there are some remarkable similarities and links between the present reality of the UPICC and the ancient model of formation and spreading of the medieval lex mercatoria. In particular, attention was drawn today in the context of the round table to the crucial role that was played in the formation and spreading of lex mercatoria by the hierarchical relationship that, at that time, was thought to exist between two different levels of rules of law.

When the substantive appropriate rule to be applied in a controversy between two merchants from two different cities could not be found in the convergence resulting from the presence of the same or a similar substantive rule in the respective personal statutes (in modern terms, in the respective national laws), an impasse was created. The resolution of the impasse was sought by searching for the appropriate rule at a higher level of law.

In other words, what could not be satisfactorily resolved by looking at the local, contingent and intrinsically variable rules assembled in the statutes of the individual cities ought to be resolved by upgrading the search at the level of the jus commune based on reason; more specifically, at the level of the jus commune as ratio scripta, envisaged as a system of universal rules deserving to be observed by virtue of their self-standing authority.

Initially, the superior universal law having the nature of ratio scripta was Roman law in continental Europe. However, recalling this experience is not a rhetoric escamotage for singing once more the praises of Roman law.

The point that deserves to be made here is that for centuries legal thinking in continental Europe has deemed it absolutely reasonable and normal, if not a logical imperative, to look to a non-State system of law, basing its legitimacy on reason and acceptance of a set of shared legal values, for the purposes of filling the gaps and fostering the evolution of the positive law, resulting from the combination of local, territorial and contingent rules.

At first sight, there is a non-negligible similarity of functions between the ancient lex mercatoria and the UNIDROIT Principles, in terms of satisfying or intending to satisfy the same or similar needs.

In fact, today, as in the past, there is a demand, coming from the main actors in international trade, for uniform cross-border rules facilitating international transactions by avoiding the risks and uncertainties stemming from the differences in national (State) laws and from the complexities associated with the use of the method of determining the applicable law through rules of conflict.

From this standpoint, however, there is a very significant difference in nature between the old lex mercatoria and the UPICC as the new lex mercatoria.

The former, although consisting of non-State rules of law, was objective law that did not require a common agreement of the parties as to its application as a condition for becoming applicable. The latter one, on the contrary, is typically applicable by virtue of an agreement of the parties directed thereto: in substance, viewed as rules whose legitimacy depends on the will of the parties, the UPICC cannot claim to be a superior form of ratio scripta capable of performing a function of gap filling and of promotion of a dynamic evolution of the local, territorial and contingent law.

The UPICC, however, do not have as the only addressees those who may become parties to an international commercial contract and who may wish to consider the advisability of adopting them as specific regulation, in whole or in part, of such contract. The UPICC are also addressed to judges and arbitrators as potential users, as clearly spelled out in their Preamble and, it is submitted, as it would anyhow be implied even if the Preamble were silent on this point.

The fact is that the UPICC are an excellent combination of restated common core rules prevailing in the major legal systems together with a non-negligible number of innovative, original solutions in cases where the comparative law analysis had presented non-resolved divergences on very sensitive issues. As such, and owing to their intrinsic good quality and compatibility with the law of contract of the generality of major legal systems, the UPICC have to be considered as a most useful, if not precious, tool that judges and arbitrators may be tempted to use to interpret and to supplement not only international instruments (in particular the 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG), with which the Principles have a large commonality of inspiration), but also the applicable national law, as identified by virtue of the appropriate rules of conflict.

Does this result in a superiority of the Principles over positive law (i.e., over applicable national law) as ratio scripta permitting both to fill the gaps of such law and to determine its evolution towards the absorption of its higher level rules, incorporating the wisdom of the comparative law analysis carried out by its drafters?

Officially, one cannot bluntly state that this can happen. Realistically, however, the penetration of the Principles may be more or less open but could be very significant. As a vehicle, whereby the culture deriving from comparative law may become part of the reasoning developed in adjudicating the case, the UPICC may well operate as a very real law, although not as positive law but as a friend, rather than a rival of positive law.

IV. Positive law: prospects for the future

Ultimately, I am personally convinced that positive law cannot and should not entertain the illusion of being able to preserve its purity in an ivory tower where the 'gates' are supposed to remain inflexibly shut against any possibility of contagious contacts with values other that those expressed by rules of State law in the strict sense.

Realistically, sincelawis essentially a living and social phenomenon, not a bundle of self-justifying precepts, the possibility of interaction with other facets of the social reality of law, such as natural law and non-State rules of law, must be admitted.

In the case of interaction of the UPICC with the positive law of individual States, there is, I think, no fear that the interaction may be prejudicial to the functions that law must fulfill in the contemporary globalized world.