A New (Quasi-)Codified Lex Mercatoria Based on Soft Law Regulatory Competition and the Use of Comparative Law Methodology in International Commercial Arbitration

Although mostly corroborative of solutions based on national law, the use of a-national rules produced in the realm of transnational commercial law is not infrequent in international commercial arbitration. Unlike the traditional lex mercatoria, however, which was referred to primarily in the form of supranational, uncodified customary law, the current trend seems to favor recourse to (quasi-)codified soft law instruments produced by various actors and in various formats. Starting from this observation, this paper critically reviews (and rejects) some of the alternative explanations proposed in legal scholarship as to why arbitrators may resort to lex mercatoria (such as those focusing on the alleged reduction of transaction costs, or the advantages for arbitrators or formulating agencies) and embraces a theory of lex mercatoria based on a functional comparative methodology. Unlike other functional theories, however, the one proposed here posits that arbitrators’ reliance on non-national sources of law is, in most cases, strictly connected to the parties’ quest for impartiality and independence, which is best served when, in the absence of a choice of law made by the parties, arbitrators refrain from resorting to the national law applicable by virtue of the relevant objective conflict-of laws rules. It is thus observed that, when embracing this approach, arbitrators increasingly rely on soft law instruments, such as (“codified” or “quasi-codified”) collections of rules or principles, whose legitimacy and enforceability may be called into question, unless duly supported by solid legal arguments. Moreover, it is observed that the recent booming in the enactment of soft law instruments is leading towards a sort of soft law regulatory competition, which calls for a methodology to select among the many (hard and soft law) instruments made available to international arbitral tribunals. The paper’s claim, in this respect, is that arbitrators should resort to a two-step comparative methodology in order to determine which (hard or soft) legal instruments to apply. First, arbitrators should search for a solution based on the parties’ own will, thus investigating which rules the parties would have selected as applicable to their relationship, had the parties chosen an applicable law or legal instrument. In the alternative, should the former approach fail to lead to a satisfactory solution, arbitrators should select and apply the (hard or soft) legal rules which appear to be more suitable for legal transplants and more adaptable to the specific legal environment and circumstances of the case. This approach can be duly pursued by resorting to the well-developed comparative legal scholarship dealing with the trans-frontier mobility of law and the challenges of legal transplants, provided that the adaptability of the instrument should at all times be measured having regard to its compatibility with the public policy and mandatory laws of the legal systems involved.