Purpose

Concept

The TransLex-Principles are a unique online codification- and research platform for transnational law, the New Lex Mercatoria.

They are the successor of the "Transnational Law Digest & Bibliography" (Tldb) which CENTRAL has operated at www.tldb.net from October 2001 until March 2009.

The ancient Lex Mercatoria, the Law Merchant of the Middle Ages, was first described by an anonymous author in the late thirteenth century as part of "Colford's Collection" in the "Little Red Book of Bristol" and later refined by Gerard Malynes in his famous treatise "Consuetudo Vel Lex Mercatoria" published in 1622.

The concept was rediscovered in the 1960s by Berthold Goldman and others. Today, transnational commercial law provides a vital means to meet the challenges of globalization. The decreasing significance of the sovereign state as lawmaker and the increasing significance of private rulemaking ("private governance") which go along with the globalization of commerce and trade foster the development of "a-national", i.e. transnational legal structures¹. These transnational legal structures are being used in international contract and arbitration practice.

A worldwide enquiry about the use of transnational law in international practice conducted by CENTRAL between 1998 and 2000 has revealed that the lack of knowledge about the contents of the New Lex Mercatoria provides the major stumbling block in the way towards an increased acceptance of this concept².

The TransLex-Principles improve this situation significantly. For almost 130 principles and rules of transnational law, like "venire contra factum proprium", "duty to mitigate" or "compensation for expropriation", the TransLex-Principles provide the user with their black letter text and comprehensive references taken from international arbitral awards³, domestic statutes, international conventions, standard contract forms, trade practices and usages, other sample clauses and academic sources. All of these sources are, as far as possible, presented in full text versions.

The TransLex-Principles may be used for many purposes, for example as a means:

1. to determine the applicable rules in a dispute if the parties have chosen "transnational commercial law", "general principles of law", "the lex mercatoria" or the like;
2. to determine the applicable law, if, absent a choice of law by the parties, the arbitrators decide to apply this concept to the dispute before them;
3. to allow for an autonomous interpretation of and for the filling of internal gaps in international conventions and other uniform law instruments⁴,
4. to allow for the "internationally useful" construction of domestic law in international disputes;
5. to ascertain the disputed meaning of key legal terms of transnational commerce, e.g. "force majeure", "hardship", "best efforts", "time is of the essence", "FOB", "CIF" etc.;
6. to supplement or correct a future European Civil Code in international commercial disputes⁵;
7. to provide legal know how about modern commercial law to developing and transition countries;
8. to provide information about transnational law to other sciences (politics, economics, sociology) which are exploring the clash between the territorial limitations of the law and the transnationalisation of international commerce and trade in an era of globalisation.

II. The Concept: "Creeping Codification"

The TransLex-Principles are based on the concept of the "Creeping Codification"⁶ of Transnational Law: a non-exhaustive, open list of principles and rules of the lex mercatoria that is constantly updated but never completed. This list-concept has met with approval in international legal practice:

"....it is evident that the idea of 'the list'...is as close as we've come, in recent generations, to tackling the lex and wrestling it into usable shape"⁷.

Any attempt towards formal "codification" of the lex mercatoria may appear paradoxical, given the high degree of informality and flexibility of international business out of which these principles and rules emerge:

"...the new transnational lex mercatoria is likely to be of a dynamic nature, often expressed in practices that may change overnight if business logic or market forces so require. The search is therefore on for a forward-moving set of internationalized, uniform principles and rules that may be largely articulated by participants themselves and draws widely from their practical needs, established ways of dealing, best practices, trade organization rules, and from the innate rationality of their international dealings"⁸.

However, in the context of transnational law, "codification" does not mean formalized law making by a sovereign legislature. Rather, it relates to the formulation of these principles and rules in black letter texts and the reproduction of the comparative law materials evidencing a particular principle or rule. This approach to the codification of transnational law serve three specific purposes:

• the formulation of the rules and principles in black letter text allows the user to apply the New Lex Mercatoria in legal practice;
• the reproduction of the comparative law references for each principle or rule helps to save the time and money that must be invested in comparative research required to determine the contents of transnational law^9;
• displaying the relevant materials in full-text versions immediately below the black letter text of each principle and rule allows the user to make his own judgement about the "comparative persuasiveness" of these sources.

The TransLex-Principles therefore merely establish a presumption that the principles and rules reproduced in the list form part of the lex mercatoria. It is for this reason that the name of the lex should rather be "principia mercatoria"¹⁰.

With this approach, the TransLex-Principles stand in the tradition of the Digests of common law published in the first half of the 20th century. What was stated by Edward Jenks in the Preface of his "A Digest of English Civil Law" of 1921 applies with equal justification to the TransLex-Principles:

"A Digest differs from a Code, mainly in that it professes merely to state the rules which are covered by existing authority. It claims - at least, when it is the work of purely private authors - no other respect than that which is derived from a belief that it represents an honest, intelligent, and industrious attempt to reduce the chaos of existing materials to simplicity and order.

[...]

The chief intellectual effort demanded of the authors of the work has been to extract, by appropriate treatment, from this formless heap of statutes and judicial decisions, the rules which such authorities enunciate and expound, and to arrange those rules in the most convenient and accessible form." ¹¹

In the modern world, the idea of the persuasive force of a compiliation of legal principles, definitions and rules, derived from comparative research, has been adopted by a number of influential working groups operating at a global or regional level. The "UNIDROIT Principles of International Commercial Contracts (UPICC)" and the "Lando Principles on European Contract Law (PECL)" are the most prominent results of these efforts. More recently, this approach was adopted by the Study Group on a European Civil Code and the Research Group on Existing EC Private Law ("Acquis Group").¹²

The Common Frame of Reference (CFR) drafted by the Group has been characterized as a "non-legislative codification of European private law" and as a "codification-like system of legal norms with immediate application".¹³ This terminology is the ultimate proof of the fact that today, the notion of "codification" has acquired a new meaning which goes well beyond the traditional view of legislation by the nation-state and extends to modern instruments of private governance. Their value - or persuasive authority - as a means to "codify" the law depends solely on the acceptance of those who use them:

"...the abstract authority of a text giving expression to a legal norm consists in the legal profession accepting it as an ultimate source of the law, without requiring further legal reasons to do so...

More specifically, the relative authority of a legal text consists in its formal weight in legal argument, where different legal authorities are present and may be in conflict with each other. In such a case, decisions must be made, usually independently of the content of the individual norms in question, as to which of those texts should be taken as the ultimate foundation of legal argument. These decisions depend on, and are an expression of, the texts' authority. Indeed, it would be wrong to assume that the legal authority would be a kind of mysterious quality of a text. Rather, authority is assigned to legal texts by those working with them, i.e. by professional lawyers applying and interpreting such texts in the course of legal argument."¹⁴

All those involved in the TransLex-Project at the Center for Transnational Law at the University of Cologne sincerely hope that the TransLex-Principles will serve their purpose as a tool to spread the knowledge about the concept of transnational law around the globe and to bridge the gap between theory and practice.

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Footnotes

1) Berger, Rechtliche Rahmenbedingungen der Globalisierung - vom Wettbewerb der Rechtsordnungen zu "Private Governance", in: Bierbaum (ed.), So investiert die Welt, 2007, at 33 et seq; Jansen, Nils/Michaels, Ralf, Private Law and the State, Comparative Perceptions and Historical Observations, RabelsZ 71 (2007), at 345 et seq.; Michaels, Ralf/Jansen, Nils, Private Law beyond the State? Europeanization, Globalization, Privatization, 54 Am. J. Comp. L. (2006), at 843, 868 et seq; Köndgen, Privatisierung des Rechts - Private Governance zwischen Deregulierung und Rekonstitutionalisierung, AcP 206 (2006), at 477 et seq.; Caruso, Private Law and State-Making in the Age of Globalization, 38 N.Y.U.J.Int'l.L.& Pol., 1 et seq (2006); see generally Creveld, The Rise and Decline of the State, 1999, at 336 et seq.

2) See the statement of an international practitioner, reprinted at Berger (ed.), The Practice of Transnational Law, 2001, at 111: "Negotiating with another party by invoking these principles [of transnational commercial law] requires that the other party is as well assisted by somebody who is aware of these principles and knows how to handle them. This is not always the case".

3) Schmitthoff, International Trade Usages, 1987, No. 71: "Substantive law is often born in the womb of procedure. In keeping with their international character, the law which these international arbitral bodies create is transnational. It is the new lex mercatoria".

4) See Kronke, Unif.L.Rev. 2000, at 13, 18: "Some of the road ahead [of mitigating the effects of the specific and fragmentary character of international conventions] may be covered by 'creeping' unification ...".

5) See Lando, in Scandinavian Studies in Law 2000, at 343, 401.

6) See Berger, The Creeping Codification of the Lex Mercatoria, 1999, at 206 et seq.

7) Fortier, Arbitration International 2001, at 121, 127 (= ICSID Rev.-FILJ 2001, at 10, 18); see also Molineaux, J.Int'l.Arb. No. 1, 2000, at 147, 150: "...the list looks forward and provides an incentive for the future evolution of transnational commercial law as an open legal system ... There can be no doubt that this is a list which will become a sine qua non reference..."; Pryles, Mealey's Int'l.Arb.Rep., February 2003, at 21, 25 et seq; see for the case law of the Iran-US Claims Tribunal Brunetti, Arbitration International 2002, at 355 et seq surveying the Tribunal's jurisprudence relating to selected rules of the TLDB.

8) Dalhuisen, Legal Orders and their Manifestation: The Operation of the International Commercial and Financial Order and Its Lex Mercatoria, Berkeley J.Int'l.L. 2006, 129, 133; see also Berger, in: Hartkamp/Hesselink/Hondius et al. (eds.), Towards a European Civil Code, 3rd ed. 2004, at 43, 53 et seq; Herber, Internationales Handelsrecht (IHR) 2003, at 1, 5; Wasserstein Fassberg, Chicago Journal of International Law 2004, at 67, 82: "This push towards formalised codification...requires lex mercatoria theorists to relax the qualifications for membership and compromise its autonomy in a way which ultimately belies the standard justification offered for its existence - the more formal and explicit the rules, the less organic, the less spontaneous, the less authentic they are".

9) See the Statement of the Sole Arbitrator in ICC Award No. 5953, Clunet 1990, at 1056, 1059: "As far as the general principles of international business are concerned, their list cannot be found in a single textbook" (translation from French).

10) See Highet, 63 Tulane L. Rev. 613, 616 (1989); see also Lowenfeld, in Lowenfeld, Collected Essays Over Three Decades, 2005, at 173, fn. 71, stating that "[t]here is some appeal to this point, though,...it is cleary too late to change the name of a concept so widely described if not always understood".

11) See Jenks (ed.), A Digest of English Civil Law, London 1921, at iii et seq.; see also Broom, A Selection of Legel Maxims, 10th ed. 1939, at v: "If, then, it be true that a knowledge of first principles is at least as essential in Law as in other sciences, certainly in none is a knowledge of those principles, unaccompanied by a sufficient investigation of their bearing and practical application, more likely to lead into grievous error." For a recent digest containing 1.000 principles on transnational law see Domingo/Ortega/Rogríguez-Antolin/Zambrana, Principios de Derecho Global, 2nd ed. 2006, at 31 et seq.

12) In the introduction to the "Draft Common Frame of Reference" (DCFR), which was published in early 2008, the drafters state: "The drafters of the DCFR nurture the hope that it will be seen...as a text from which inspiration can be gained for suitable solutions for private law questions...If the content of the DFCR convinces, it may contribute to a harmonious and informal Europeanisation of private law", see von Bar/Clive/Schulte-Nölke et al (eds.), Principles, Definitions and Model Rules of Eurpean Private Law, Draft Common Frame of Reference (DCFR), Interim Outline Edition, 2008, at 7 et seq; see also Schulze, in: Schulze (ed.), The Common Frame of Reference and Existing EC Contract Law, 2008, at 3 et seq.

13) Jansen/Zimmermann, Was ist und wozu der DCFR?, NJW 2009, 3401, 3406 (emphasis added).

14) Jansen, The Making of Legal Authority, 2010, at 43 et seq., concluding that "non-legislative reference texts may gain similar or even greater authority than legislative codifications" and complaining that so far "legal scholars [in analyzing factors determining "legal authority" of such texts] have mostly focused on factors of pure legal rationality", id. at 138 and 141.