Harmonizing International Commercial Law Through Codification

Abstract

The growing trend toward trade liberalization and the The growing trend toward trade liberalization and the switch from protectionist to open market economies in the late twentieth century has resulted in the breaking down of discrete markets domestically and internationally, and in the worldwide integration of these markets generally. Correspondingly, there have been attempts at integrating the laws governing international business transactions to make it easier for persons to engage in cross-border transactions. Despite these efforts, national domestic laws often continue to compete with similar laws of other nations and with a plethora of international agreements and understandings to which different countries may be parties. The resulting inconsistency inevitably increases the legal risk associated with these transactions, causing uncertain outcomes and an increase in the costs associated with these transactions. This article suggests that the disparate range of laws currently applicable to cross-border commercial transactions should be further harmonized. As much of the inconsistency in the applicable law is the product of interest group rent seeking than the result of attempts to deliver efficient and equitable legal systems in competition with each other, the article suggests that such harmonization be achieved by way of codification of the applicable laws. Such codification can be achieved by nations modifying their domestic commercial laws to accommodate international conventions that are already in existence or to be developed for this purpose, at both the regional and international levels.