Harmonization of International Law through Conventions: Causes of Failure and Prospects of Success - Coursework Example

Running Header: Harmonization of International Law Through Conventions: Causes of Failure and Prospects of Success Student’s Name: Instructor’s Name: Course Name & Code: Date of Submission: Contents Contents 2 1.0 Introduction 3 2.0 Harmonization of International Commercial Laws 4 3.0 Importance of Law Harmonization of Transnational Commercial Law 5 4.0 Challenges Faced by International Conventions 6 4.1 Legal Shorthand 6 4.2 Lack of Uniformity 8 4.3 Exclusion of Important Stakeholders 10 5.0 Prospects for Success of International Conventions 13 5.1 Patience and Respect to Involved Parties 13 5.2 Representation of all Key Stake Holders 14 5.3 Merging of Laws 16 6.0 Conclusion 16 Bibliography 17 Harmonization of International Law through Conventions: Causes of Failure and Prospects of Success 1.0 Introduction International trade has been growing very fast since the end of World War II; this has also led to the importance of having international laws to govern international trade. It is worth noting here that international transaction happens when more than one country is involved. International commercial law is defined as the body consisting of laws governing international transactions. As business conducted between different nation as well as companies from different nations continue to rise; there is need for the harmonization of commercial laws. This calls for harmonization of the laws governing trade to improve on efficiency or the much anticipated fruits. Law harmonization efforts have been proving fruitless for a long period, though the aspect of globalization has pushed unchanging legal structures that are bounded territorially; this is necessary towards the efficient adaptation to the reality of globalization. In addition the modifications realized in the structure and the main activities of institutions mainly the financial institutions leads to the increase in risks thus necessitating the need for new regulatory responses, it is evident that the efforts to have harmonization within international commercial laws has resulted in split and unplanned process as it is done via multiple totally different interests as well as need to have policies in the aspect of international challenges maintained. 2.0 Harmonization of International Commercial Laws The uniting and harmonization of the international commercial laws is a phenomenon that has been gaining momentum in today’s world. It is being facilitated by different means a good example is the adoption of the Convention on Contracts for the international sale of good (CISG); this is considered on of the most vital instrument of the harmonization of the contract law. It has been in existence for over 27 years with the number of contracting states reaching 70. These states share a mutual law governing their sales and it is referred to as lingua franca. This was meant to have a controlled international trade. The Vienna Convention (CISG) withdraws legal barriers to all trade that happens across the boarders; this happens through the decreasing of legal costs, thus enabling the contracting states to enjoy the benefits of harmonization of international laws1. A big question can be drawn from this regarding what other countries or the rest of the world is doing towards reaping the benefits of commercial law harmonization. There is an impelling need for the development of international rules to help govern international business; this motivation leaves no nation immune from the necessity to generate solutions to the international trade and enhance interaction with others.2 This need must extend across the range as United States to African nations. The European convention on International Commercial Arbitration is a good example of a multilateral treaty, which aimed at harmonization of transnational laws; it regulates arbitral proceedings and covers issues like the appointment of arbitrators, applicable law, jurisdiction objections plus competing competences of state courts. 3.0 Importance of Law Harmonization of Transnational Commercial Law By creating a formal point of reference for law harmonization; the positive end results is promoted. A consistent law for transactions carried out internationally is essential for development. However, the outcomes of the harmonization are not as anticipated mainly because of the lack of support for a uniform application of differentiated conventional instruments by the existing laws as well as the legal customs. In addition the liberty of parties plays a very important role in the process of harmonization; the other important part of harmonization is the standard terms as they play a vital role in as the informal instruments in the process of developing a uniform, international commercial law3. In the context of harmonization it is very crucial to determine whether a certain preferred way of for the development of uniform international commercial law as well as how the different uniting and harmonization means of commercial law move along with each other.4 Other principles like the International Institute for the Unification of Private Law (UNIDROIT) Principle of International Commercial contracts and the Principal of European Contract law are also important instruments used in the harmonization of international commercial laws. Harmonization of commercial laws through international conventions will help promote unity through use of a common law to govern trade regardless of the economic capacity of the state; it generally unifies all states which ratify it. Again solving of disputes becomes easier and cheaper through the use of one uniform law rather than the use of too many regional or state laws and regulations5. Though harmonization of law is a challenge due to the different interests of concerned parties, it is important to realize that this is the way forward because no state or international organization can succeed without the dependence of partners in trade, be it local, regional or even international6. 4.0 Challenges Faced by International Conventions 4.1 Legal Shorthand Unification of international law requires a differentiated interpretation, to make it understood in reference to the usual legal instruments.7 There are many conventions such as the Vienna Sales convention; its main characteristics are simplicity, it is practical and clear. Vienna convention was seen to be free from legal shorthand, it had no complicated theory and it was easy for many businesses to understand8. The use of term that can be interpreted differently are avoided in the Vienna Convention so as to ensure that any legal technicality is faced and solved in the right manner without us of technical terms which are likely to bring contradictions due to different interpretation. In case, where uses of short hand words were used, the convention provided a very accurate definition. It is therefore important to note that the language in the convention was generally meant for the business to make an understanding practically, this is the reason as to why the convention was written in a business language. Vienna Convention admits that some important matters are not covered and are left to be decided by the law which is applicable under conventional rules of private international law.9 When coming up with a common law it necessary to have characterized relevant information, then selecting the main area of conflict laying down the connection factor to the issue characterized and finally getting identity of the law which ties by the connecting factor for the issue identified. With this process, the law agreed upon is perfect10. 4.2 Lack of Uniformity In order to achieve the desired purpose of unification of laws, there must be a high certainty of uniformity when applying all the rules. In many cases there is no uniformity. The truth of the matter is that, the solutions adapted mainly by the conventions are not always appropriate; harmonization of commercial laws is a form of technical assistance to developed and developing countries; many countries and international organizations are very active in developing models for example in reorganization and harmonization commercial laws. With the world becoming a global village and economic trade that relies more on international trade, technical assistance for regional solutions entail harmonization.11 With important unifying laws in force across the world, there are challenges being faced by jurists as well as scholars plus the business. Therefore, this calls for the need to have a uniform interpretation of the common laws. The creation of model laws are known to promote the harmonization of international commercial law a good example is the United Nations Commission on International Trade Law (UNCITRAL) which has model laws on the international commercial arbitration, electronic signatures, online commerce, the goods, construction and services procurement and the credit transfer internationally.12 A number of international organizations which play a great role in the harmonization of the international commercials laws include: the Hague conference which focused on international private law, United Nations Commission on International Trade Law; it is important as it covers the areas of international carriage of goods and international arbitration. Among the conventions important to international sale of goods include: the UN Convention about the limitation duration in the international sale of goods, the UN Convention on the International Bill of Exchange and International Promissory notes among others13. The main two approaches used, the first one is the assumption that the differences in national laws are not desirable ; this causes troubles for business and for the functioning of the common market in order to make harmonization a merit on its own without necessarily involving justification.14 The other approach is the commissions regarding commercial transactions. Unification should be focused on what is required so that the serious impediments experienced in cross boarder business. The two main approaches basically focus on the improvement of the existing legal regimes.15 The harmonization process should involve the engagement of studies of survey of the existing laws as well as the practices. Legal systems in the whole world vary in the philosophy, ideas, culture as well as the institutional infrastructure.16 The sensitiveness of the individual states plus their business communities to the interference with their local laws is not always high as when confined to the international transactions; where foreigner’s interests have to be given respect and where law is specified basically for transactions that are done locally or are not well placed for international environment. Lacking the position in the case of harmonization regionally, where harmonization of business laws may be seen desirable, in governing both domestic and cross-border transactions so as to help a common market as well as providing in foreign relations. Lack of this vital position acts as hindrance to many countries interested in participating in international trade through a unified commercial law.17 Harmonization plays an important role in the substitution of the uniform rules from different legal systems; increasing the legal certainty thus reducing costs of transaction. 4.3 Exclusion of Important Stakeholders Transactional commercial law comes as a product of very many international conventions, contractually uniform rules, models laws, legislative Parallelism and international statements. All these lead to the harmonization of commercial law internationally. Harmonization of international commercial law has been necessitated by new scale of composite commercial transactions that today take place on daily basis on the globalised world. The contractual conflicts are mainly being settled by arbitration; this creates a totally different kind of law. Due to the developing new markets in India, Japan and China, the New York as well as London has been challenged as the trade and financial markets.18 This is because of the changing trends in business and trade globally. This in essence stirs the need for a harmonized trade law to control trade effectively without any country feeling shortchanged. The domination of English law also necessitates the need to have a unified commercial law that will not leave other countries out or otherwise affect trade negatively. International contracts which are mainly commercially oriented and prepared by exclusions of various stakeholders in trade development.19 This contributes to lack of trust and transparency in development of conventions; many countries think that they are cheated into agreements which are one sided or favors just one side. A harmonized law is also very encouraging to the business environment as it acts as a bridge to impediments encountered when countries or international companies get involved in cross-border transactions. Transnational commercial laws help in clarification and improvement of the rules which in many national systems do not exist, not developed, not clear and in most cases not suitable for international trade; this therefore, removes challenges about to occur in the cross-border transactions; which cannot be resolved through use of the national law. Every commercial law convention since the Vienna Convention has been actuated by the problem-oriented approach.20 This consequently has led to a growing need of harmonization agencies that are ready to move to certain areas such as property rights, with the main focus in preserving the efficacy and how transactions are done to reduce risks such as the property rights which were left out in the Vienna Conventions. Such mistakes are the one which makes conventions a challenge as law should include everything provided it is trade oriented. Though there are problems associated with the conventions, they play a major role in the control and regulation of international trade which is gaining popularity on daily basis.21 Some of the provisions enacted within such conventions like Vienna Convention (CISG) and the Rome Convention on the sales of goods, include the provision that if the goods do not have a conformity with a certain contract, it is the buyers liberty to request delivery of substitute products and this is only if the lack of the conformity constitutes an important infract of the contract and a call for substitute goods is made either in connectivity with notice under a reasonable time there after. Under article 46 (3) of the Vienna Convention, the buyer can reject the goods and also require repair if there is any breach of requirement whether profound or not. These provisions among others are essential to be incorporated within the overall framework of the harmonized law to create uniformity across the globe and enhance trade which is fair and free.22 Conventions should be based on long term goals as the process of coming up with new conventions is tedious and costs a lot of money through seminars, conferences and research. On the other hand there should be a regular review of the conventions to ascertain that the goals and objectives set or desired from the conventions are meant and most importantly to check on the probability of the success of having a uniform or a harmonized law to govern trade. United Nations Commission on International Trade Law (UNCITRAL) is a model law on international commercial arbitration and it establishes current or modern international standards, which limits interference of judicial mechanism as it provides a final award. It adoption is a step forward to getting solutions emanating from trade issues. 5.0 Prospects for Success of International Conventions 5.1 Patience and Respect to Involved Parties Preparing international conventions require a lot of time, thus calling for patience, respect between the parties involved as well as hard work. This process makes many countries or parties involved to get tired even before a deal is brokered. The end results of a much waited conventions leads to uncertainties especially when parties fail to agree on a common agenda or goal. For example the leaving out of the property rights in the Vienna Convention makes it a challenge to various interested parties. It is very hard for all parties preparing a convention to reach a consensus. This is a discouragement to many international companies and people involved in the brokering a deal especially in the age of search for a harmonizing commercial law23. The sophistication of commercial law, directly relates to the volume and the variety of transacted businesses. The greater the volume of transactions, the more varying the instruments and the broader the disputes that have to be encountered by the community involved in the business as well as the parties preparing a convention plus the courts. This shows the a great factor of the extent of freedom that is being given to the business people to enable them come up with their own law and to formulate their own instruments, structures as well as the rules that governs them. Some aspect of this approach is much less satisfactory especially to the civil law jurisdiction and in particular in the field dealing with the property rights and law in the case where there are some rules that encompass very serious impediments to current methods of dealing with trade. Property rights is a crucial aspect of international transactions; it forms the base of owning property internationally, therefore, effecting rules governing property rights uniformly in cross-border transactions helps in strengthening commercial laws hence improving trade internationally.24 5.2 Representation of all Key Stake Holders There are tensions related to new players internationally; this is mainly due to the feeling that the transnational law is mainly dominated by the countries that are developed to be indirectly imposed on the developing countries and in the new market economies; thus making them to feel inadequately represented; this view affects the common respect and disturbs the level of attentiveness when there is a differing point of view.25 Therefore the international conventions’ working groups and committees must include those from the developing countries. This is basically to help mutual agreement and outcomes of conventions to avoid later confrontation of lack of representation. The other problem that arises when preparing a convention is the way to maintain a good balance between the immense pressure which comes from the commercial interests and the much needed respect for the rights of other parties involved26. This will help and motivate all parties to come up with a convention that is all inclusive thus, driving conventions towards the desired goals of unification and harmonization for better business. Many international conventions fail due to lack of the international figure; lack of representation of all parties as some feel that they are the super powers and they need to control even the business sector to maintain their superiority. Majority of the rules never get implemented especially when it affects the so-called developed countries thus sidelining the efforts of the developing countries to get committed in ensuring that the main objective of the conventions are met.27 Harmonization of the laws governing commerce is one major step towards global development of trade and in ensuring free and fair trade for example, the Vienna Conventions provides various remedies for breach of contracts by the seller. This motivates buyers and sellers to transact more as they consider themselves well protected by law. A good example is where a buyer may require performance from the seller regarding the obligations unless the buyer may resort to a remedy which may be inconsistent with the requirements of this provision this is well articulated in article 46 of the Vienna Convention.28 5.3 Merging of Laws The effort to merge civil law and common law is a major step towards dispute resolution which has been a challenge to international trade.29 This approach will lessen the burden of settling cross-border cases, therefore, reducing conflicts in arbitration and other cases where dispute arises basically due to the rules governing the procedure. Easing case settlements encourages investments’ as well as strengthening the conventions put in place to control international trade as there is no fear of delay of cross-border cases which may slow international transactions. Laws merged together form a strong foundation for consolidated ideas that help in improvement of court cases as there is a uniform reference point when determining cases. Through codification of laws such that the laws are collected and restated by subject to form legal codes, a state or even international organizations will also have an easy referencing of the laws governing them as they are easy to identify through the legal codes.30 6.0 Conclusion International markets needs proper set of establishments in order to work effectively. Within states, the legal order together with their legal rules, the courts as well as the enforcement agencies have the obligation of playing the important roles of creating institutions governing trade. Apart from the protection of the property rights they also facilitate market transactions as they enable enforcement of contracts. This has agitated the need for transnational commercial law which encompasses instruments such as international sales, agency and distribution, international credit transfer as well as bank payment undertakings, treaty law, contracts, commercial arbitration and electronic commerce among others. Conventions such as the Contracts for the International Sale of Goods or the Vienna Convention formed the base of search for uniformity in commercial law and the efforts should be emphasized to regulate international transactions. Further research need to be done to help in drawing of much better conclusions in today’s changing world rather than relying too much on the research and conventions developed long time ago. Transnational law must be harmonized for the success of cross border transactions. Bibliography Barry, A.,Yutaka, T. & Fiona, M. Commercial law in a global context, Kluwer Law International, U.S.A, 1998. 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