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International Commercial Law Soft Law

Explore the significance, pros, and cons of "Soft Law" in international transactions, its sources, including model laws and private codifications, and its application through examples like INCOTERMS and UNIDROIT Principles.

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International Commercial Law Soft Law

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  1. International Commercial LawSoft Law University of Oslo Giuditta Cordero Moss, Ph.D., Dr.Juris Prof.ass., International Commercial Law, Oslo University

  2. ”Soft Law” • A set of rules regulating international transactions • Does not emanate from national sources of law or international treaties

  3. ”Soft Law”- Grounds in Favour • National law is primarily aimed at regulating domestic relationships • National laws differ from one another • National laws are confusing and an hindrance for international trade • International commercial usages and practices are more adequate to regulate transactions across national borders

  4. ”Soft Law” – Grounds against • Not a system but a fragmentary collection of rules • Rules are too vague • Rules are difficult to determine • Rules are not issued by competent authorities

  5. Sources of ”Soft Law” • ”Principles rooted in the good sense and common practice of the generality of civilised nations” • Usages and practices • Model Laws • E.g. UNCITRAL Model Arbitration Law • Private Codifications • E.g. INCOTERMS, UCP 500 • Restatements • E.g. UNIDROIT Principles, European Principles

  6. International Conventions - Sources of Soft Law? • If they are applicable, they are not soft law but applicable law • If they are not applicable: Can soft law achieve application of convention in lieu of ratification?

  7. Private Codifications • International Chamber of Commerce, ISDA, branch associations • INCOTERMS, UCP 500, Model Agreements, Codes, Definitions • May be considered as expression of trade practices • Are applicable if incorporated by the parties • May not prevail over conflicting madatory rules of the applicable law • Have a clearly determined scope of application

  8. INCOTERMS • Terms of sale: • Passage of risk • Division of costs • Obligations in connection with delivery (customs formalities, transportation, etc.) • Integration of applicable law (e.g. Art. 66 CISG- Incoterms are not in contradiction, are specification of when risk passes) • Do not replace applicable law (e.g. Validity, Limitation, Interests, Remedies, etc.)

  9. UNIDROIT Principles of International Commercial Contracts • Drafted in 1994 by the International Institute for the Unification of Private Law • Establish a balanced set of rules designed for use throughout the world • No binding effect • Persuasive authority

  10. UNIDROIT- Irrevocable Offer • Art. 2.4: An offer cannot be revoked if it indicates that it is irrevocable (by fixing a time for acceptance or otherwise).

  11. UNIDROIT – Definition of Force Majeure • Art. 7.1.7: non-performance excused if due to an impediment beyond the party’s control and that could not be expected to be foreseen or avoided

  12. UNIDROIT- Partial Impediment • Not regulated

  13. UNIDROIT- Amendments to a contract • Art. 1.3: Contract may be modified in accordance with its terms or by agreement

  14. Application of UNIDROIT Principles • As an integral part of the contract, if they have been incorporated by the parties • Not applicable if contrast with mandatory governing law (art. 1.4) • As an expression of trade uses, if they have not been incorporated • To corroborate governing law • Rarely as an independent source of law

  15. ”Soft Law” – Scope of Application • Soft law is mostly compatible with national laws • Soft law is a desirable integration of national law • If conflict, the applicable national law prevails

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