Non-State Rules in International Commercial Law: Contracts, Legal Authority and Application

Photo by Pat Whelen

Dr Johanna Hoekstra, Lecturer in Law at the University of Essex, published a monograph titled Non-State Rules in International Commercial Law: Contracts, Legal Authority and Application (Routledge 2021).

The book examines the different ways non-state rules are applied in international commercial contracts with the aim to understand the legal authority of non-state rules. To do so, the book analyses:

  • The rule of non-state rules in international commercia law;
  • The role of non-state rules in international commercial contracts;
  • The application and interpretation of non-state rules.

Non-state rules can be defined as those rules which come from a source other than the state. This includes uncodified rules (trade usages and general principles of law) and codified rules (restatements of law, model laws, model contract clauses and guidelines). They are, in principle, not binding and they either need to be contracted into or can be contracted out of. The concept of non-state rules is wider than the lex mercatoria which consists of trade usages and practices by merchants and general principles of law, but would not include rules codified by international organisations and trade associations.

The contracting parties in an international contract might be faced with uncertainty and unpredictability as to the applicable law and its content. For at least one of the parties’ choice of law often means the application of a foreign law with sometimes unforeseen consequences. To escape the unpredictability of a foreign law, to create a level playing field between the contracting partners if they cannot agree on the applicable law, or because they prefer a neutral law, the parties might choose non-state rules as the governing law of the contract. Whilst such a choice is usually permitted in arbitration, it is only rarely permitted in litigation. Private international law in most jurisdictions allows the parties to include non-state rules as contractual terms or by reference, but limits choice of governing law to state laws.

Examining the role of non-state rules, beyond being the governing law of the contract, shows that they are frequently used by courts and arbitral tribunals to interpret either the contract or the applicable law. Interestingly, this is frequently done even when the parties have not included a reference to non-state rules in the contract. This can be done to either fill gaps in the contract, to show the compatibility of the applicable law with transnational commercial practice, or to interpret the contract in light of the principles of transnational commercial law. Courts and arbitral tribunals are thus taking a leading role in shaping how non-state rules are used.

This book examines these different ways in which non-state rules are applied in order to understand how this affects their legal authority. By studying the application of non-state rules, it can be understood what role they play in domestic law, what support they have from the international business community, and the position they have in courts and arbitral tribunals.

Published on 16 Mar. 2021 by Routledge

This book demonstrates how non-state rules have legal authority as the applicable law to the contract, as sources of (domestic) law, as legal doctrine/scholarship, and as terms of the contract. They can be considered as law, rules of law, contractual rules, and/or normative practices depending on the situation.

Dr. Hoekstra’s book thus gives a practical overview of different types of non-state rules and their role in international commercial law, and contributes to the theoretical discussion by analysing several key issues related to the legal authority of non-state rules.

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