Article by Keith Highet
Has the lex mercatoria replaced national laws in the interpretation of transnational or international mixed contracts? In this Article, I will discuss this elusive and often frightening subject. In so doing, I will draw from Professor Georges Delaume's contribution to this Colloquium.
It is important to distinguish between the roles that systems of law serve. Such distinctions can be submerged and forgotten in a discussion such as this; they are brought forth when one considers the approach advocated by Professor Delaume. A system of law can serve one of several different roles in relation to a multinational contract: As the source of the general obligation; as the body of law that determines the specific rights and obligations expressed in generalities in the contract; as the body of law available for secondary or interpretative guidance of provisions of the agreement; and as the body of law for effective enforcement of the contract. Obviously there is little difference between most of these functions, and in most cases they reside in the same legal system. They may however be made severable—a form of functional dépecage—and above all the several roles should be perceived as being different functions.
This analysis is important to the extent that it helps one respond to the assertion that there can be a state-free contract that is somehow independent of any known legal system. If one is to hold that the lex mercatoria—such as it is—can serve as the exclusive legal system governing a given multinational agreement, then one must also hold that it is not necessary to have any known legal system serving as the source of the general obligation.
A state-free contract presents the paradox of the contrat sans loi—un marteau sans maître—which is, for this observer at least, a logical impossibility and an intellectual solecism. The only way in which a contract can exist independently of a legal system is to consider it as a voluntary compact operating by virtue of the collective will of the parties. Such an arrangement is not a contract, but a sort of parallelism of conduct and expectation. To the extent that one can rely on an agreement's allocation of rights and obligations, one must logically look beyond the will of the parties to the legal framework within which that will may be expressed and possess content.
It is not necessary in the context of this Colloquium for us to resolve this paradox (assuming that it can be resolved); the resolution is a jurisprudential question of considerable dimensions and of great interest, although it does lurch slightly toward the theoretical. In brief, it is hard to conceive rationally of a contract in vacuo, as it were; a form of test-tube baby with no mother and no father. The force of the obligation in a contract comes from the force of the legal system that creates the obligation.
Consider two castaways who make an agreement while on a rubber raft in the middle of the Sargasso Sea, relating to the disposition of the raft in exchange for a pocket watch. If they were to attempt to deny expressly any governing law system, and insist at all times that their mutual undertaking—one to buy the raft and the other to sell it—was enforceable in accordance with its terms by virtue of their collective will, they would have something that would look like a contract. It might even work like a contract as between themselves. But their so-called contract can only go so far and no further. The castaways might have a successful exchange of raft and watch; however, I would urge that what they have confected is not a contract as we know it.
The castaways' agreement could become a contract only if they were to wash ashore, for example in North Carolina or Bermuda, and the person with the watch were to refuse to hand it over for the now useless raft. The moment that the person with the raft sought the help of a court in North Carolina or Bermuda to compel specific performance, then for that purpose, both he and the person with the watch would become subject to the laws of the forum state. Their agreement, defiantly protesting any governing law outside the collective will of the parties, would be brought under the legal system at hand for enforcement. I of course assume that other things are equal, such as proper evidence of the agreement and no question of forum non conveniens.
Thus, I suppose one could say that the castaways' agreement was an executory contract, an almost-contract, or a document that looked like a contract, and could be enforced as one as soon as the raft washed ashore. But the agreement could not be enforceable as a contract or in any other way unless it were to fit itself under and within the legal system of their landfall. It is thus obvious that the contract was not independent but only incomplete. The stateless contract then is not a contract, but only something that looks like a contract, until enforcement is sought. At that point, regardless of whether the drafters like it, the source of obligation is attributed back to the instrument itself. The forum that accepts personal and subject matter jurisdiction determines and applies the governing law of the contract based on conflicts of law and constitutional principles. There is, after all, something close to a governing law. The contract never was one without governing law; the equivalent of that governing law was acquired as soon as one party sought enforcement.
If the contract is stateless, it is not a contract and cannot be enforced. The moment one seeks to enforce the contract, or to confirm an arbitral award based upon the contract, then, like the weightlessness of astronauts returning to earth, the contract's statelessness vanishes. If the contract can be enforced, it is no longer stateless, even if everyone once thought it to be so. Moreover, who in his right mind would or could ever give a legal opinion that a contract was enforceable in accordance with its terms without considering where that enforcement would take place? What if the parties agreed that enforcement could only be had at the International Chamber of Commerce in Paris? When the time comes for the arbitration, the party seeking not to perform decides not to show up. What then? Whither enforceability? Whither statelessness? The answer is: Thither statelessness, as soon as the aggrieved party goes to a court to seek an injunction to force the other party to arbitration.
This discussion is essentially epistemological; it is about the meaning of words. In this ambiguous landscape of developing trends and uncrystallized tendencies—in Professor Bowett's felicitous phrase, ‘the twilight zone of international law’—the doctrinal debate reminds one of the revolution in logical philosophy in the 1930s and the study of the meaning of meaning. What for example is a contract without law? What is a law without a legal system supporting it? Just because the lex mercatoria is theoretically available as a source for interpretation or amplification of contractual clauses does not make it law. It is, in my own view, not a system of lex mercatoria but rather, at most, a set of principia mercatoria. Indeed, principia mercatoria would be a better phrase by far than lex mercatoria. The former more correctly reflects the nature, application, and content of these principles than any suggestion that they form part of an inchoate or undiscovered legal system outside national jurisdictions. I would therefore prefer to take a somewhat more timid approach to the subject than Professor Delaume did, and classify the lex mercatoria more as an enigma than a myth. The subject cries out for a sort of deconstructive or analytic approach.
About the Author
Keith Highet. Partner at Curtis, Mallet-Prevost, Colt & Mosle, New York; A.B. 1954, LL.B. 1960, Harvard University.
Citation
63 Tul. L. Rev. 613 (1989)