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Reproduced with permission of 4 Vindobona Journal of International Commercial Law & Arbitration (2000) 132-146.

PRACTICAL AND THEORETICAL IMPLICATIONS OF THE
LEX MERCATORIA FOR JAPAN: CENTRAL'S EMPIRICAL
STUDY ON THE USE OF TRANSNATIONAL LAW

Luke Nottage [a1]

Introduction
Central's empirical study on the use of transnational law
Conclusions and future directions

INTRODUCTION

CENTRAL's work should be praised as a major contribution to uncovering more about a key aspect of this process in commercial relations among private actors, and indeed sometimes states, over recent decades. It adds a much more solid quantitative basis on which to determine the usage of Transnational Law or the new lex mercatoria, and complements more qualitative studies touching more briefly on this problem. CENTRAL's study suggests that the new lex mercatoria remains alive and well, and relevant also to countries like Japan. In particular, it demonstrates that this topic deserves ongoing scrutiny. Hopefully, experts in Japan will be prompted to keep building on pioneering research on the lex mercatoria going back several decades.

Last year, while still a member of Kyushu University's Law Faculty, I wrote stressing the importance of participation from Japan in the Vis Arbitral Moot competition.[1] One reason was the possibility of nurturing more practical skills in legal education in this country. After co-teaching a course with my colleague, Hiroo Sono, and encouraging a team to represent Kyushu University in the Seventh Moot this April, I am all the more convinced of the pedagogical value of participating in the moot.[2] Experiments like this are particularly important now [page 132] that reform of Japan's legal education system has emerged as a very pressing subject of debate.[3]

A second reason I advanced was also quite practical, namely that Japanese companies have been significant users of arbitral venues around the globe. This is illustrated by numerous arbitral awards or court judgments related to arbitral proceedings which involve Japanese parties, even when limiting the search to those reported in readily accessible English language sources.[4] Significant usage is also apparent from responses to regular surveys of Japanese corporate legal departments.[5] To be sure, much of this involvement of Japanese companies in transnational arbitration has been in venues outside Japan. But there may be now the beginnings of some change due to improvements over the 1990s in the infrastructure supporting arbitration within Japan, and considerable restructuring of regulatory and economic environments (including record inward Foreign Direct Investment in 1999).[6] On the other hand, involvement in events in the Moot competition can also help keep drawing Japan in from the 'periphery' of [page 133] the arbitration world. As the fine study by Dezalay and Garth showed, the growth of arbitration globally since the 1960s has involved not just raw demand by companies and states for a new dispute resolution process. It has also been nurtured by those on the 'supply side': first mainly professors, then lawyers in large law firms, and a proliferating number of arbitration institutions. They have often drawn on the growing acceptance and prestige of commercial arbitration at the international level to successfully develop arbitration in their home jurisdictions.[7] Japan has also recorded some major successes in this respect. That is evidenced not only by the JCAA's close links with arbitration bodies world-wide, but also the election of Professor Toshio Sawada as Vice-President of the International Court of Arbitration of the International Chamber of Commerce, and Professor Yasuhei Taniguchi to the International Council of Commercial Arbitration (ICCA) and now the Appellate Body of the World Trade Organisation. However, the 'next generation' of experienced arbitration specialists will need to be nurtured in Japan, and participating in the Vis Moot can provide excellent practice for them too.

A third argument I made for more involvement from Japan similarly had two aspects. On the 'demand side', there are already instances in which Japanese companies are involved in arbitral or court proceedings applying the Vienna Sales Convention (CISG), even though Japan has not yet acceded.[8] Japanese [page 134] subsidiaries or affiliates overseas can also become involved in such disputes.[9] In addition, they or their head offices will need to consider CISG rules in resolving disputes which never escalate into formal proceedings, and especially in negotiating or drafting contracts, as the number of CISG member states and worldwide understanding of its rules continue to grow. On the 'supply side', it is important that a new generation of legal academics, but also legal practitioners and government officials, become engaged in refining the ongoing process of interpreting CISG and making it work in new circumstances.

Finally, however, I mentioned that events like the Vis Moot invite more theoretical consideration of how commercial law, both substantive and procedural, evolves in an era of globalisation.[10] In particular, participants should learn of the gradual formalisation of arbitration procedures beginning mainly with the arrival of US law firms on the scene in the 1970s. This led arbitration practitioners to conclude in the early 1990s that arbitration was no longer any less costly than litigation and only slightly faster, according to another fine empirical study by Christian Buehring-Uhle. Such problems arguably have led to attempts to reverse this trend, by updating rules of arbitral institutions and investigating the possibilities (and tensions) of combining mediation with the arbitral process.[11] Participants also need to become aware of indications of a gradual formalisation of substantive sales law, for instance in regard to allowing even arbitrators to adapt contracts in the event of extreme economic dislocation, or as general principles or lacunae in CISG are filled by more detailed rules contained for instance in the UNIDROIT Principles of International Commercial Contracts.[12] Without this broader perspective, students participating in the Moot cannot argue opposing sides of many issues raised, and those serving as 'arbitrators' cannot properly judge them or engage in productive deliberations with their colleagues.[13] [page 135]

CENTRAL'S EMPIRICAL STUDY ON THE USE OF TRANSNATIONAL LAW

Similar practical and theoretical issues emerge from a third intriguing empirical study, completed this year by Professor Klaus Peter Berger and his team at the Center for Transnational Law (CENTRAL) at the University of Muenster. Importantly, it examines current practices and perceptions in both trans-border arbitration and contracting per se, in relation to what they refer to generically as 'Transnational Law' or which others have simply called the 'new lex mercatoria.' The notion of the rebirth of a new normative order for regulating both procedural and substantive issues arising in the conduct of international trade, totally or even partially independent from domestic rules of law, has been discussed increasingly especially since the 1960s. Yet Berger and his assistants identify only three studies in which empirical research has tried to systematically determine its usage:[14]

To this list should be added the qualitative study by Dezalay and Garth, which refers to the new lex mercatoria re-emerging in the 1960s in the historical context of the North-South and East-West divides; and the research by Buehring-Uhle, which indirectly provides some empirical insights into the evolution of norms -- or at least practices -- in transnational arbitration procedures. The CENTRAL study, however, fills a major gap in obtaining reliable quantitative [page 136] data on usage and perceptions of the new lex mercatoria around the world, including Japan.

The CENTRAL survey was addressed to 2733 respondents, selected from four main categories (with elimination for double-counting):

Of the 639 valid replies, representing a respectable 23.4 percent response rate, 155 came from in-house lawyers, 412 from lawyers in law firms, and 52 from 'others' (presumably full-time arbitrators, professors, etc); only 20 did not specify their area of practice.[16] This proportion of corporate lawyers represents a considerable improvement on the study by Dezalay and Garth, in particular, which focused overwhelmingly on those involved as arbitrators or arbitral institution associates, thus tending to focus on the 'supply-side' in describing the development of transnational commercial arbitration and the lex mercatoria.[17] The geographical distribution is also impressive, with responses from 51 out of 78 countries; 79 nationalities involved in situations where Transnational Law was reportedly invoked in contract negotiations or the contracts themselves; and 75 in which Transnational Law arose in the context of arbitration.[18]

In particular, of the 2733 addressees, 120 (4.39 percent) were in Japan.[19] Of the 639 valid responses, 18 (2.8 percent) of respondents were Japanese; and 12 (1.9 percent) of their organisations had their seat in Japan.[20] Further, in response to [page 137] Question 1 asking about cases 'occurring in your practice in which the parties have referred to Transnational Law during the negotiation of an international contract', 206 out of the 639 respondents (32.2 percent) said there had been cases (47 out of the 206 reporting one case, 64 reporting 2-5 cases). Of these 206 positive responses, Japan was mentioned in 16 cases as the nationality or seat of those involved in such contract negotiation.[21] Interestingly, however, Japan was not cited by any of the 206 respondents who were also asked to specify the 'nationalities of the negotiators of the contract.'[22] This suggests that Japanese inhouse [page 138] lawyers (or of course, much more commonly, corporate legal department staff not qualified as lawyers) or their outside lawyers are not active 'negotiators' of these contracts in which Transnational Law ends up being referred to. Since the categories of reasons most frequently cited by the remaining 406 as to 'why according to your practical experience no reference has been made so far' is that there has been 'no chance to gain any experience so far' (162 cases) and 'no information on this topic available' (124),[23] this suggests that there is particular room for efforts in Japan to educate lawyers as to the possibilities and benefits of referring to Transnational Law in negotiating contracts. However, a broader problem is no doubt that legal specialists in Japanese companies are still not as often involved in the 'negotiation' phase, despite steady improvements over the last few decades.[24]

These specialists are often brought in when it comes to actually drafting or checking the contract documentation, even when negotiations have been conducted by business department staff or others in their companies. All should note therefore some similar indications of significant usage of Transnational Law in trans-border contracts. In response to a survey query posed about 'cases occurring in your practice in which the parties referred to Transnational Law in the text of the contract or in the choice-of-law clause', 202 out of the 639 respondents reported this (31.6 percent, similarly with 46 out of 202 reporting one case and 66 reporting 2-5 cases). Of these 202 positive responses, 14 (6.9 percent) specified Japan as one of the parties to such contracts.[25] In addition, a vast majority of such contracts (85 percent: 170 of the 202 cases) clearly [page 139] involved also an arbitration clause in the contract.[26] This reinforces the practical importance for Japanese companies, and hence their advisors and academics, to understand lex mercatoria specifically in the context of arbitral proceedings, as well as further evidence for the general point that arbitration is an important issue for Japanese companies.

This is true not just at the stage of planning the contract, including its dispute resolution mechanism(s), as evidenced by responses to a third part of the CENTRAL survey. Question 13 asked whether respondents were 'aware of international arbitration proceedings occurring in your practice in which Transnational Law was being referred to.' An even higher proportion of the 639 respondents, 266 (42 percent), responded in the affirmative (89 reporting one case, 71 reporting 2-5 cases). Of these respondents, nine identified Japan as the nationality or seat of the parties to the arbitration,[27] showing again that Japanese companies do not necessarily fighting out arbitration proceedings. Again, however, Japanese attorneys were underrepresented: named only in five cases.[28] Japanese arbitrators were only represented in three of the 266 cases, suggested that much work still needs to be done to keep drawing Japan in from the periphery of the arbitration world.[29]

From a practical perspective, all should note the relatively high proportion of cases in which the parties or the arbitrators were reported to have referred to Transnational Law even though the parties had originally chosen domestic law in their choice-of-law clause. Of the 266 respondents, 62 said this had happened once and 100 said it had happened 100 times (collectively, 60.9 percent), whereas only 100 said it had not occurred.[30] On the other hand, there were relatively few cases in which referring to Transnational Law in arbitral proceedings was used to 'replace domestic law' (99 out of 266 responses; multiple answers possible). Main purposes were supplementing and interpreting [page 140] domestic law (145 and 90 reported instances, respectively), or doing the same for international uniform law (38 and 23), and 'improving understanding' (83 instances).[31] Similar patterns emerge regarding references to Transnational Law in the parties' contract documentation,[32] and in negotiating contracts.[33]

More theoretical issues are also raised by these patterns, especially the significant number of cases in which references to Transnational Law are made to add to uniform law instruments. In arbitral proceedings, this could cover the situation in which arbitrators (say in proceedings in Japan) may refer to the UNCITRAL Model Law and authoritative commentary even when that law is not yet incorporated into domestic law, for instance when trying to interpret the New York Convention which is incorporated. Alternatively, in deciding a substantive issue of contract law, a court or arbitrator might refer to the UNIDROIT Principles to interpret CISG.[34] It would have been helpful to learn from CENTRAL how often such combinations occur, and then why and how that is undertaken by contracting parties, their lawyers, and adjudicators. This would then provide more evidence on the issue of whether we are now witnessing a gradual formalisation (the emergence of a 'new new lex mercatoria') of an originally rather loosely defined and applied 'new lex mercatoria.'[35] Other evidence would have been some decline over time of reference to Transnational Law by means of very broad principles such as 'general principles of law', the expression 'lex mercatoria' itself, or 'transnational principles of law', in favour of rapidly increasing acceptance of the more precise rules often encapsulated in the UNIDROIT Principles since their promulgation in 1994. As it is, we learn only that references so far are reported most often to the first-mentioned of those, 'general principles of law', followed by the other three terms used in declining [page 141] order of frequency: a pattern common to references to each whether in contract negotiations, the contract itself, or arbitral proceedings.[36]

Similarly, although Question 3 asked respondents to 'state exactly the principles of Transnational Law' referred to during contract negotiations, those given covered by the 206 respondents covered a very broad spectrum. In particular, only 9 referred to 'hardship or force majeure', 16 to 'pacta sunt servanda', and 34 to 'good faith fairness or equity', compared to 120 'other' principles cited.[37] This provides a shaky basis to further test the idea that arbitrators have become more cautious about allowing adjustment of contracts under extreme changes of circumstances, although it should add to the limited number of reported awards as a basis for such an assessment.[38] Berger and his team acknowledge the problem of limited responses, but argue that the mere invocation of such standards show that Transnational Law is proving useful.[39] This is bolstered by their conclusion regarding CENTRAL survey queries regarding reasons suggested by those who have not yet had any reference to Transnational Law: 'answers referring to the vagueness and uncertainty of transnational commercial law are by far outweighed by those replies that refer to the lack of practical experience and the fact that no information has been available on the subject of Transnational Law.'[40] Certainly, at all three stages -- negotiations, inclusion in contract documentation, and arbitral proceedings -- these are major reasons given.[41] Yet other reasons given collectively add up to a significant concern for more specific, precisely defined rules. For instance, these are implied 140 times in relation to why reference was not made to Transnational Law in the contract itself, by respondents mentioning 'no complete legal system' (10), 'vagueness' (48), 'certainty, predictability' (58), 'enforcement concerns' (8), and 'no case law' (16). There were also 110 'other' reasons given (not broken down). This compares with 'no experience' being mentioned 169 times; and 'no information', 128 times. In any case, of prime interest is whether such concerns are have indeed grown in importance in the last decade or two. [page 142]

Finally, the CENTRAL survey reveals considerable general scepticism nowadays towards using 'Transnational Law.' When asked to rank benefits of doing so, on a scale from 1 to 5, the means from 413 valid responses (from all countries) were 2.55 in regard to contract negotiations; 2.39 when included in the contract; and 2.89 in arbitral proceedings. When asked to rank risks, the mean evaluations were 3.0, 3.47, and 3.1 respectively.[42]

In addition, considerable differences were revealed among respondents from the United Kingdom. Compared to those from the rest of the world, their mean assessments of benefits in drafting and arbitration were significantly lower; and means assessment of risks in contract negotiation and drafting was significantly higher.[43] This result, arguably due to the preference for 'bright line rules' and other examples of more formal reasoning in English law, mirrors the traditional reluctance of British arbitration practitioners to countenance the admixture of mediation with arbitration, noted in Buehring-Uhle's study.[44] Such differences among respondents based on their national background also suggest the possibility that one and the same expression used to invoke 'Transnational Law' may be preferred more by parties or practitioners of one nationality or interpreted differently to those of another nationality, or find favour and then fall into disuse, in line for instance with divergent or variable legal traditions. It may be highly significant, for instance, that the notion of new autonomous and general principles to govern transnational relations was advocated by a French professor, Berthold Goldman, as far back as the Suez Canal incident in 1956, and then developed by him and others especially in France over the 1960s.[45] As well as the inclusion of 'general principles of law' as a new guiding concept in Article [page 143] 38 of the Statute of the International Court of Justice established after World War II by the United Nations, arguably related notions experienced a revival in French domestic legal theory (both public and private) as a response to the perceived poor record of French judges taking a highly formal and hence uncritical approach to fascist legislation during the Vichy era. This stands in marked contrast to the scepticism towards using general principles which prevailed in Germany after World War II, since it was felt that this had encouraged German jurists to reach unjust outcomes in the Nazi era.[46] This may represent an important instance of 'globalised localism', the term used by Boaventura de Sousa Santos to describe situations in which local phenomena (especially in 'core countries') are globalised; the flip side to 'localised globalism', arguably represented by the expansion of transnational arbitration transforming domestic dispute resolution practices and approaches.[47]

CONCLUSIONS AND FUTURE DIRECTIONS

In these ways, CENTRAL's study leads into an ongoing and intense debate about the nature of globalisation and its interaction with law. That evolving process raises some of the most important theoretical and practical issues of our times. CENTRAL's work should be praised as a major contribution to uncovering more about a key aspect of this process in commercial relations among private actors, and indeed sometimes states, over recent decades. It adds a much more solid quantitative basis on which to determine the usage of Transnational Law or the new lex mercatoria, and complements more qualitative studies touching more briefly on this problem. CENTRAL's study suggests that the new lex mercatoria remains alive and well, and relevant also to countries like Japan. In particular, it demonstrates that this topic deserves ongoing scrutiny. Hopefully, experts in Japan will be prompted to keep building on pioneering research on the lex mercatoria going back several decades.[48] [page 144]

On the other hand, one disappointment from CENTRAL's study is the conclusion that responses in regard to specific types of transactions were too few to establish significant correlations between them and even general usage of Transnational Law.[49] There also remains scope to test for resilient differences among practitioners from outside the United Kingdom. Finally, the survey results do not tell us much about the precise contours of the new lex mercatoria, and especially its historical development and likely future evolution from an empirical viewpoint. From the outset, CENTRAL's empirical study limited itself to ascertaining 'whether concrete rules or principles of transnational commercial law such as 'pacta sunt servanda' ... are being used in international commercial practice.'[50] It would have been helpful to focus on how or in what sense they were being used, so as to determine whether for instance the lex mercatoria now includes quite clear norms. CENTRAL plans to launch in early 2001 a comprehensive Online Database on Commercial Law, to provide practitioners with an accessible and up to date means of determining the lex mercatoria.[51] But this cannot draw much on the results of its survey so far, and thus must turn to secondary sources such as published arbitral awards -- like reported judgments, often an unrepresentative tip of an iceberg -- or restatements by various private bodies such as UNIDROIT. Further, even if CENTRAL's survey had included more questions to tease out the rules and principles encapsulating the lex mercatoria, an important theoretical issue would have been to determine whether these have changed over time.

Thus, promising avenues for future empirical and theoretical research include a focus on applications or perceptions of specific rules or practices (e.g. contract renegotiation), transactions involving particular countries (e.g. Japan) or regions, and/or specific types of contracts (e.g. sales).[52] Such further studies might fit in nicely with a major multinational five-year research project directed by Professor Kaoru Matsuura of Meijo University, with which I am pleased to be associated. After careful comparisons of arbitration laws and rules in Asia and Oceania, it is [page 145] moving into a phase of empirical and theoretical research into how to activate arbitration in the region.[53]

Lastly, at the level of general legal theory, empirical research should proceed in conjunction with normative analysis, with the two enfusing each other. This is especially true when examining the new lex mercatoria, since it developed out of the exigencies of new forms of economic organisation. On the one hand, those exigencies have grown with the dismantling of the East-West divide, at least. On the other hand, Teubner sees new normative structures such as CISG as representing a corresponding tendency for the political system to respond to this fusion of economic rationality with legal relations. For purely functionalist reasons, he argues that such processes need to be carefully monitored.[54] Similar conclusions follow from richer normative theories developed recently.[55] These see trends such as globalisation as undermining the regulatory and hence legitimising potential of nation-states and their legal systems; but generally welcome the rise of new governance structures, provided they are monitored to ensure legitimate as well as functionally effective institutionalisation.[56] Such scrutiny, for practical purposes as well as further refinement of legal and social theory, benefits enormously from the empirical studies like those mentioned in this article, including now CENTRAL's stimulating research. [page 146]


FOOTNOTES

a1. Jean Monnet Fellow, European University Institute Law Department; Barrister of the High Court of New Zealand; Arbitrator, formerly Associate Professor of Transnational Law, Kyushu University, Japan. I thank Professor Klaus Peter Berger and his assistant, Holger Dubberstein, for providing certain additional data not included in the conference materials cited and for comments on an earlier draft of this paper.

1. Luke Nottage, 'Educating Transnational Commercial Lawyers for the 21st Century: Towards the Vis Arbitral Moot in 2000' 66/1 Hosei Kenkyu [Kyushu University] F1-30 (Part One: May 1999).

2. Luke Nottage & Hiroo Sono, 'Uin Hanbai Joyaku (CISG) to Hogaku Kyoiku [The Vienna Sales Convention (CISG) and Legal Education]', 1186 Juristo 24 (September 2000); with the following longer version, 'Uin Hanbai Joyaku (CISG) to Hogaku Kyoiku: Dainanakai Willem C Vis Mogi Kokusai Shoji Chusa Taikai Sankaki [The Vienna Sales Convention (CISG) and Legal Education: Chronicle of Participation in the Seventh Annual Willem C Vis Commercial Arbitration Moot Competition]' 67 Hosei Kenkyu (forthcoming, November 2000). See also the team website at <http://www.law.kyushu-u.ac.jp/~luke/visteam.html>.

3. The consensus which emerged was that the 'leading' Japanese universities should all add 'law schools', namely another specialist post-graduate course of 2-3 years on top of the existing 3-4 year undergraduate programme in law. I have criticised this quite extensively as 'reformist conservatism': see 'Sozoryoku o Hatarakaseyo - Nihon ni okeru Hogakukyoiku/Shiho Kaikaku o Kangaete [Let's Use Our Imagination: Thoughts on Reform of Legal Education and the Administration of Justice in Japan]' 1170 Juristo 148-150 (January 2000); 'Reformist Conservatism in Civil Justice and Legal Education Reform in Japan' 9 Zeitschrift fuer Japanisches Recht 23-47 (2000). One reason is that this 'law school' proposal ignores the problems of extra cost; I think money would be better sense in improving legal education at undergraduate level, bringing it up to levels in the English law tradition: see 'Nyujirando no Hogaku Kyoiku ni okeru Hoshiteki na Kaikakushugi [Conservative Reformism in New Zealand's Legal Education]' 6 Shihokaikaku Zasshi 61-68 (March 2000); 'Eibeiho no Ei-bei no Bunri [The Anglo and the American in Anglo-American Law]':, 1618 Toki no Horei 2-3 (May 2000). Secondly, the proposal ironically may promote a narrow, 'black-letter law' focus on 'practice' in a narrow sense, namely becoming a practising lawyer, judge or public prosecutor through passing a compulsory national bar examination, recently liberalised only with regard to the number permitted to pass, not the subjects which must be sat (not including international business law, for instance).

4. See e.g. Mitsubishi Motors Corp (Japan) v Soler Chrysler-Plymouth, Inc (USA) 473 US 614 (1995); Nissan UK Ltd v Nissan Motor Manufacturing (UK) Ltd (unreported judgment of Nourse LJ in the Court of Appeal (Civil Division), 26 October 1994; transcript available through LEXIS: ENGGEN, then CASES library); Juken Nissho Ltd v Attorney-General (unreported judgment of Smellie J in the High Court at Auckland, CL 17/98, 25 August 1998).

5. Out of almost 1000 Japanese companies responding to a survey in 1995 of legal departments, for instance, a total of 21.8 percent ranked arbitration in their top three means for most frequently resolving disputes. See Nottage, supra note 1, at pp F6-8. Note that the latest five-yearly survey was just been implemented, and results are expected soon.

6. Luke Nottage, 'The Vicissitudes of Transnational Commercial Arbitration and the Lex mercatoria: A View from the Periphery' 16 Arbitration International 53 (2000), at p56 and p76.

7. Ibid; Luke Nottage (Noboru Kashiwagi, trans), 'Kokusai Shoji Chusai to Lex mercatoria no Hensen [The Vicissitudes of Transnational Commercial Arbitration and the Lex mercatoria]' 113 Ho no Shihai 100-111 (1998); Yves Dezalay & Bryant Garth, Dealing in Virtue: International Commercial Arbitration and the Construction of a Transnational Legal Order (Chicago/London, University of Chicago Press, 1996). This is a good example of what Boaventura de Sousa Santos calls 'localised globalism', in which 'local conditions, structures and practices change in response to transnational influences': see William Twining, Globalisation and Legal Theory (London et al, Butterworths, 2000) at p 5. One of the best examples is in the United States, where arbitration in domestic matters benefited from growing participation in transnational arbitration, in turn reinforcing the turn to Alternative Dispute Resolution (ADR) in that country. Unfortunately, this influence from abroad is still often overlooked: see e.g. Note, 'Developments in the Law: The Paths of Civil Litigation' 113 Harvard Law Review 175 (2000) at pp 1851-4.

8. See e.g. the award in ad hoc arbitral proceedings held here in Florence on 19 April 1994, involving a Japanese defendant buyer (reported in Diritto del Commercio Internationale (1994) 867-73: see <http://www.cisgw3.law.pace.edu/cases/940419i3.html>); San Ming v Zhanzhou Metallic Minerals (Fujian Higher People's Court, December 1994, originally reported in Zhongguo Shenpan Anli Yaolan (1995) 1261-6: see <http://www.cisgw3.law.pace.edu/cases/941200cl.html>). Such cases can follow from CISG Article 1(1)(b), which requires CISG to be applied where the rules of private international law applied by a court or arbitral tribunal lead to the application of the law of a CISG member state. Both Italy and the People's Republic of China acceded to CISG in 1988.

9. See e.g. Fauba v Fujitsu Mikroelectronik (Cour de cassation, 4 January 1995: see <http://cisgw3.law.pace.edu/cases/950104fl.html>).

10. Luke Nottage, 'Educating Transnational Commercial Lawyers for the 21st Century: Towards the Vis Arbitral Moot in 2000' 66/1 Hosei Kenkyu [Kyushu University] F1-32 (Part Two, December 1999) at pF30-2.

11. Nottage, supra note 7; Christian Buehring-Uhle, Arbitration and Mediation in International Business (The Hague, Kluwer, 1996).

12. Nottage, supra note 6, at p61.

13. A very good example of the need to make arguments of general principle, and indeed largely competing 'visions' of contract law and behaviour, arose in the Seventh Vis Moot this April. This was the issue of whether there should be even partial exemption from liability when a government export ban left the defendant exporter with a total quantity of goods adequate to fulfil the plaintiff's particular contract, but not all contracts already concluded. See the moot problem, and prize-winning written memoranda for both sides, on the Moot website at <http://www.cisg.law.pace.edu/cisg/moot/moot7.html>.

14. Klaus Peter Berger, Holger Dubberstein, Sascha Lehmann & Viktoria Petzold, 'The CENTRAL Enquiry on the Use of Transnational Law in International Contract Law and Arbitration: Background, Procedure, and Selected Results', paper presented at the CENTRAL conference on 'The Practice of Transnational Law', Muenster, 4-5 May 2000 (Part B of the proceedings), Section I at pp 2- 3. For an abridged version, see Klaus Peter Berger, 'The CENTRAL Enquiry on the Use of Transnational Law in International Contract Law and Arbitration: Selected Results From the First Worldwide Survey on the Practice of Transnational Commercial Law', 15/9 Mealey's International Arbitration Report 1 (September 2000).

15. Berger et al, ibid, Part III. 1 at pp 7-9.

16. Part D of the conference proceedings, graph summarising responses to Q.25 of the survey questionnaire.

17. Nottage, supra note 6, at p 58.

18. Berger et al, supra note 14, Section VI. 1, at pp 16-17.

19. Part D, graphs on 'regional distribution of addressees.'

20. Part D, graphs on Question 24 ('Part I' and 'Part II' respectively). There remains notable over-representation of Switzerland (113 Swiss respondents, and 93 cases of a Swiss-based organisation) and under-representation of the United States (54 and 52 respectively), compared to their respective share of world trade or investment. Professor Berger and his team justify the former primarily on the basis that Switzerland is a popular neutral country for arbitration, with many specialist practitioners; and admit that the poor response from the United States may have been due to the names of corporate counsel being often unknown as well as CENTRAL being relatively unknown in that country (supra note 14, Sections III. 1.h at p 10, and VI. 1 at p 16).

21. Part D, graph on Questions 1 and 5 ('Part II') respectively. Other frequently cited nationalities or seats were France (38), Germany (69), Italy (26), the Netherlands (13), Switzerland (31), Russia (17), UK (56), and the US (85). The disproportionate numbers for the first five of these may be related to the active encouragement of lex mercatoria by professors, and now arbitral institutions, in those jurisdictions. Further, other Asian countries are mentioned in 40 of the 206 responses.

Unfortunately, the graph to Question 5 says rather cryptically that these specified nationalities/seats are 'absolute numbers, 206 questionnaires taken into account, multiple namings of a country by a participant not taken into account.' Presumably this means that if a respondent said that there had been two cases in which a Japanese company was involved in contract negotiations invoking Transnational Law or lex mercatoria, this would be only counted as one of the 16 cases listed. Hence, the number of cases in which Japanese companies (or those from other countries) refer to lex mercatoria may be significantly understated. It would be helpful therefore for CENTRAL to publicise data summarising numbers of cases named including multiple namings.

Another potential problem is what could have been understood by respondents in these questions, and indeed throughout the survey, by the phrase 'aware of any cases occurring in your practice' referring to Transnational Law. Berger et al (supra note 14, Section IV.2.a at p 17) indicate this means occurring in 'both their own practice or [...] cases which they had heard of.' That could mean counting as a first case the situation in which one respondent may have happened across a report (say in a journal or ICCA Yearbook) of one arbitral award mentioning Transnational Law; and then counting as a 'second' case a similar situation faced by another respondent, even if the latter had in fact only came across the same (first) case. In other words, this would involve double (or multiple) countings of what might be a very limited number of actual cases in which Transnational Law was referred to, but ones which happened to be widely reported or read about. Further, there would be no necessary correlation between those cases and actual usage, as opposed to a general 'awareness', by practitioners in their work. However, I believe that at least the wording in the English version of the questionnaire connotes reasonably clearly that respondents are being asked about cases in which they themselves have had direct practical experience in their work, either for instance through direct involvement or having heard from others about a case in the same law firm or company. That connotation also follows from the German, 'aus Ihrer Praxis', used in the original version of the survey (ibid, section III.4 at p 11). Holger Dubberstein, one of Professor Berger's assistants in the CENTRAL survey, has also kindly explained to me (personal communication, 19 October 2000) that considering 'that nearly all addresses who reported cases gave a lot of details on these cases when answering the other questions in part A, B and C of the questionnaire, we estimate the number of people who reported cases that did not occur in their own practice to be very low.'

22. Part D, graph for Question 5 ('Part II'). Similarly, other Asian countries were specified in only 27 cases, suggesting that their company personnel or lawyers were not the main ones actively advancing the negotiations. Perhaps this picture will change somewhat if CENTRAL can also provide data summarising numbers of cases named including multiple namings, since the same problem arises as indicated in the previous footnote.

23. Part D, graph for Question 6 (multiple answers possible).

24. Toshimitsu Kitagawa & Luke Nottage, 'Globalisation of Japanese Corporations and the Development of Corporate Legal Departments: Problems and Prospects' (Paper presented at the conference on 'The Emergence of an Indigenous Legal Profession in the Pacific Basin', Harvard Law School, 11-14 December 1998; updated in 1999 for forthcoming a book edited by William Alford). A similar problem may be evident in other Asian countries, given relatively few cases where they were specified as the nationality of the negotiators (27 compared to 40 cases in which Asian countries constituted the nationality or seat of the eventual contracting parties: supra notes 21 and 22).

25. Part D, graph for Question 10 (subject to the same caveat as to possible understatement of cases of usage, as made supra note 22). Again, other frequently cited were France (even higher proportion, with 42 respondents specifying this), Germany (56), Switzerland (26), UK (43), the US (68) and Russia (14). Other Asian countries were mentioned in 31 responses, proportionately lower than the 40 cases in which lex mercatoria was used as a guide to negotiations. A similar pattern occurs with Russia, suggesting that the latter function is particularly useful in countries experiencing considerable changes in their legal infrastructure.

26. Part D, graph for Question 11. Another 15 responses said 'yes and no', while 6 did not respond; only 11 said there was 'no' arbitration clause.

27. Part D, graph for Question 17 ('Part I'). Other frequently cited nationalities or seats included France, Germany, Switzerland, Italy, the United Kingdom and the United States.

28. Part D, graph for Question 17 ('Part II'). Other frequently cited nationalities for lawyers included again France, Switzerland. Those from other Asian countries were disproportionately low: only mentioned in 13 responses.

29. Part D, graph for Question 17 ('Part III'). Other frequently cited nationalities for arbitrators included especially France, and Switzerland. Those from other Asian countries were again disproportionately low: only mentioned in 11 responses.

30. Part D, graph for Question 14 (the remaining four respondents did not fill out this question).

31. Part D, graph for Question 15.

32. This was done 'instead of domestic law' only in a minority of cases (99 out of 202 cases); mostly the reference was made 'in connection with domestic law' (110) or 'international law' (47); 24 respondents mentioned 'other' ways: Part D, graph for Question 8 (multiple answers possible).

33. Here too, Transnational Law was not used often to 'replace domestic law' (105 out of 206 cases); 96 cases of 'supplementing domestic law' were reported and 58 of 'interpreting domestic law', while there were 29 cases of 'supplementing international uniform law' and 16 in 'interpreting it' (another 93 cases involved 'improving understanding', and 17 respondents mentioned Transnational Law as a 'checklist' in negotiations): Part D, graph for Question 2 (multiple answers possible).

34. Indeed, both Questions 8 and 15 of the survey add 'e.g. CISG' as an example of international uniform law for 'supplementing' through reference to Transnational Law in the contract or arbitral proceedings. Generally on the emergence of this multi-levelled interpretative scheme, see e.g. Berger et al, supra note 14, section V.2.c at 22 (and references cited therein).

35. See Nottage, supra note 6, at p 60.

36. Part D, graphs respectively for Question 1, 7, and 13.

37. Part D, graph for Question 3 (multiple responses possible).

38. Cf Nottage, supra note 6, at 61.

39. Berger et al, supra note 14, section VI.2.d, at 24.

40. Ibid, at 25.

41. Part D, graph for Question 18 (multiple responses possible); cf text supra note 23; and Part D, graph for Question 12 (169 out of 414 respondents mentioned 'no chance to gain any experience so far' as explaining why they had not included reference to Transnational Law in the contract itself; 128 mentioned 'no information available'; multiple responses possible).

42. These means for the entire sample of respondents were not given in Part D, but were kindly provided to me by Professor Berger and Holger Dubberstein.

43. Part D, graphs headed 'Differences in Mean', respectively: mean of 1.84 for British respondents compared to 2.44 for other respondents (p W 0.002), and 2.21 versus 2.95 (p W 0.001); 3.65 versus 2.93 (p W 0.001), 3.95 versus 3.41 (p W 0.008). By contrast, Holger Dubberstein confirms that there were no statistically significant differences distinguishing US respondents (at p W 0.005 or the 95% confidence level). This pattern suggests the continued openness of US law to more substantive legal reasoning, as opposed to more formal reasoning in English law, apparent also in their contract law. See Patrick Atiyah & Robert Summers, Form and Substance in Anglo-American Law (Clarendon Press, Oxford, 1987); Nottage L, 'Form and Substance in US, English, New Zealand and Japanese Law: A Framework for Better Comparisons of Developments in the Law of Unfair Contracts', 26 Victoria University of Wellington Law Review 247 (1996).

44. Nottage, supra note 6, at pp 70-1.

45. Klaus Peter Berger, 'The New Law Merchant and the Global Market Place: A 21st Century View of Transnational Commercial Law', paper presented at the CENTRAL conference on 'The Practice of Transnational Law', Muenster, 4-5 May 2000 (Part B of the proceedings), section 3 at p 6.

46. Vivian Curran, 'Formalism and Anti-formalism in French and German Judicial Methodology', paper presented at the conference on 'Perceptions of Europe and Perspectives on a European Order in Legal Scholarship During the Era of Fascism and National Socialism', Workshop at the European University Institute in Florence, 29-30 September 2000.

47. See Twining, supra note 7.

48. See e.g. Tokusuke Kitagawa, Kokusai Shoji Chusai no Kenkyu (Tokyo, Tokyo University Press, 1978) chapter III.

49. Berger et al, supra note 14, section VI.1 at p 16.

50. Berger et al, supra note 14, at p 6 (emphasis added).

51. Ibid, section VI, at p 28.

52. For a preliminary study precisely along these lines, see Luke Nottage 'Planning and Renegotiating Long-Term Contracts in New Zealand and Japan: An Interim Report on an Empirical Research Project' [1997] New Zealand Law Review 482-530.

53. See generally "Symposium on International Commercial Arbitration Law in Asia and Oceania: Prospects and Comparison' at Meijo University', 6 JCA Newsletter 5 (March 2000).

54. Gunther Teubner, "Global Bukowina: Legal Pluralism in a World Society' in Gunther Teubner (ed) Global Law without a State (Aldershot, Dartmouth, 1997) 1 at p 27. More recently, Teubner has suggested that there is an inherent tendency for economic logic to dominate all contract governance, and even proposed 'constitutional' rights to protect it against the former's totalising tendencies. See Gunther Teubner, 'Contracting Worlds: The Many Autonomies of Private Law', 9/3 Social and Legal Studies 399 (2000) at p 411 and 413.

55. See e.g. Oliver Gerstenberg, 'Justification (and Justifiability) of Private Law in a Polycontextural World', 9/3 Social and Legal Studies 419 (2000).

56. See generally e.g. Joshua Cohen & Charles Sabel, 'Directly-Deliberative Polyarchy' in Christian Joerges & Oliver Gerstenberg (eds), Private Governance, Democratic Constitutionalism, and Supranationationalism: Proceedings of the COST A7 Seminar, Florence, 22-24 May 1997 (EUR 18340, European Commission, 1998) 1. Such perspectives underpin the scrutiny by Kristina Preinerstorfer, 'The Work of the Lando-Commission from an Alternative Viewpoint' in Sonja Feiden & Christoph Schmid (eds), Evolutionary Perspectives and Projects on Harmonisation of Private law in the EU (LAW No 99/7, European University Institute Working Paper) 31, especially at pp 41-44. Similar arguments can be made with respect to the UNIDROIT Principles, for instance, in the context of the evolution of the new lex mercatoria in a contractual setting. In relation to product safety, see also Christian Joerges with Stefaan van den Bogaert, 'Law, Science and the Management of Risks to Health at National, European and International Level: Stories on Baby Dummies, Mad Cows and Hormones in Beef', 7/1 Columbia Journal of European Law (forthcoming, 2000).


Pace Law School Institute of International Commercial Law - Last updated August 10, 2006
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