Definition of the "Lex Mercatoria".

THE LEX MERCATORIA

Definition of the Lex Mercatoria

Many practitioners and commentators have criticized the lex mercatoria on a number of grounds, but especially on the ground that it is a concept too vague and uncertain to apply. 20 Although there is increasing agreement about what the lex mercatoria is, the definition is not uniformly agreed upon. Here are some characteristic definitions:

§  A loosely organized system of transnational legal principles, rules and standards derived from the usages, customs, and practice of international commerce.

§  General principles of law, transnational rules, a method of decision-making.

§  Customary commercial law.

§  “Transnational substantive rules of law and trade usages and the method of their application to international economic transactions.”

§  A set of substantive rules developed to regulate international trade in the business community, which are derived “not only from international commercial dealings, standard clauses, international conventions and arbitral awards but also from various sets of legal rules issued by the International Chamber of Commerce (ICC) or other international organizations.”

   From these various definitions, some common themes emerge. The lex mercatoria is not based on any one legal system, but incorporates inter-national commercial rules, general principles of law, standards, and trade usages. An example of today’s lex mercatoria is the UNIDROIT Principles of International Commercial Contracts.  These principles are not law as such, because they are not adopted as law by any jurisdiction. Rather, they are a restatement of the law of international commercial contracts. In the preamble, the principles are said to apply when the parties choose them, or “when the parties have agreed that their contract be governed by general principles of law, the lex mercatoria or the like.” The lex mercatoria is also thought to include other kinds of rules, such as the ICC’s Uniform Customs and Practice for Documentary Credits (UCP 600), which are the rules that govern virtually all letters of credit, and the ICC’s INCOTERMS, which are international commercial terms, such as FOB and CIF. Some commentators also include in the lex mercatoria international arbitration awards, as well as principles derived from international conventions or international public law. Moreover, there have been attempts to make the lex mercatoria more concrete by collecting lists of principles that can be regularly updated to conform to the best and most current international practices. Grasping a reasonable understanding of the meaning of lex mercatoria is important for considering the purposes for which it can be used.

 Book Reference:

THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION by  Margaret L. Moses, Loyola University Chicago School of Law, CAMBRIDGE UNIVERSITY PRESS, First published in 2008,Page no.(60-62)