THE CONTEXT FOR TRANSACTIONAL LEGAL HARMONIZATION

IN THE AMERICAS
A Background to the SLA/CIDA Project

Nadia Bourly *
I. Introduction ......................................................................................................7
II. Globalization & Legal Harmonization ........................................................10
A) ECONOMIC AND LEGAL INTEGRATION ............................................................10
B) HARMONIZATION...............................................................................................11
C) MARKET DRIVEN HARMONIZATION ................................................................13
1) Emergence of a Modern Lex Mercatoria.................................................................................13
2) Standardization in International Business Law........................................................................14
D) INSTITUTIONAL HARMONIZING PROGRAMS......................................................15
1) UNCITRAL
16
2) UNIDROIT
17
3) Hague Conference on Private International Law......................................................................19
4) European Union 20
5) Ohada 21
III. The Americas: Characteristics and Prospects ...........................................22
A) SIGNIFICANCE AND IMPACT OF THE FTAA NEGOTIATIONS .............................22
B) COEXISTENCE OF TWO MAJOR LEGAL SYSTEMS.............................................23
C)ORGANIZATION OF AMERICAN STATES (OAS)..................................................25
1) Evolution of the Inter-American Codification Process............................................................25
2) Exploring New Possibilities.....................................................................................................27
IV. Conclusion....................................................................................................27

I.

Introduction

The late 20th century has been characterized by an increased interdependence

between the nations of the world. Unprecedented trade liberalization at the multilateral,
regional and bilateral level accompanied by the exponential development of new information
technologies have changed the way sovereign states, businesses and citizens interact among
themselves and with one another. In the Americas, important developments have
supplemented those global transformations: our Hemisphere is now well embarked on the
road to democratic consolidation and a significant number of social indicators have
improved. Remarkable trade liberalization and a switch from protectionist to open market
economies have provided the basis for the growth of transnational business activity while
democratic values and institutions have been progressively strengthened. However, the
*

Ms. Nadia Bourly is a Canadian lawyer who worked as a legal consultant and coordinator of
the SLA/CIDA Project at the Secretariat for Legal Affairs of the Organization of American States
(OAS).
-7-

Americas are still facing great challenges such as social inequalities, economic instability,
poor standards of living and lack of enforcement of human rights.
It is now well recognized that processes of globalization alone will not resolve such
problems, and that there is a need for improved international cooperation mechanisms and
development policies to effectively address those issues. Indeed, the last decade of free
market reforms implemented throughout Latin America and the Caribbean brought a certain
level of growth, but were not as successful in diminishing the gap between the rich and the
poor. The slow results on the social front and the recent collapse of the Argentinean
economy have caused many to wonder about the possibility that certain countries would
move toward a more protectionist economy, shifting away from the open liberal policies
enforced during the last ten years. We take the position that while economic growth provides
no instant solution to inequality, further social development does require economic growth.
Strengthened regionalism and further economic integration have been increasingly seen as
fundamental steps towards both economic growth and social development in our
Hemisphere, and the positive link between trade policy and poverty alleviation has been
established1.
Need for Legal Reform
Efforts aiming to establish a free trade zone encompassing the Western Hemisphere,
the so-called Free Trade Area of the Americas (FTAA), are currently underway. In addition
to this hemispheric economic integration process, the creation or strengthening of other subregional trading arrangements (such as the North American Free Trade Agreement
(NAFTA), the Common Market of the Southern Cone (MERCOSUR), the Central American
Common Market (CACM), the Caribbean Common Market (CARICOM) and the Andean
Nations Community (ANC) to name a few2), will support trade expansion. The market
access provisions and rules of origin provisions contained in those agreements provide
incentives for transnational commercial activities. In addition to the traditional advantages of
market access and reduction of customs duties, those agreements now typically cover a
much broader scope of topics, such as services and intellectual property rights. While this
expanded coverage of areas that were previously within the exclusive competence of the
sovereign nation-state raises complex new issues, it also provides a level playing field,
assists countries in designing new legal and regulatory framework (and may also help certain
countries to lock-in reforms otherwise politically risky), as well as increasing investors
confidence.
As economic integration progresses at the macro-level, the establishment of a legal
and regulatory environment where private transnational exchanges can take place becomes
paramount for developing countries to attract further investment as well as promote local
private sector development. Legal and judicial reforms, aimed both at the domestic judicial
institutions and at the law itself, are core issues to be addressed in order to support further
1

See Hoekman B., Michalopoulos C., Schiff M. & Tarr D., Trade Policy Reform and Poverty
Alleviation, World Bank, Development Research Group, Policy Research Working Paper 2733,
December 2001.
2
For a full description of the trade agreements in force within the Hemisphere, see generally the
OAS Trade Unit Foreign Trade Information System at the following address: <
http://www.sice.oas.org>.
-8-

economic development in the Americas. For instance, it might be necessary to harmonize

law for internal or regional consistency, and to update existing provisions and adopt new
legislation in order to modernize a certain legal regime or respond to new international
business trends such as e-commerce and the multiplication of cross border exchanges. Such
reforms should ultimately support economic growth by facilitating transnational business
transactions, and may encompass everything from writing, or revising commercial codes,
bankruptcy statutes and company laws, and updating the mandate of regulatory agencies.
This process also permits the abolishment of uncertain provisions, promotes transparency,
and improves competitiveness for domestic and international trade in addition to attracting
more investment since transaction costs are reduced.
As international trade within the region of the Americas is facing unprecedented
growth, following extensive economic reforms, as well as a profound shift in trade policy
and extensive market liberalization, there is a need for legal reform adapted to the interAmerican context, particularly with the current regional economic integration efforts
underway in the Hemisphere (FTAA, NAFTA, MERCOSUR, CACM, CARICOM, etc.).
While economic integration cannot take place without a previous political process, both at
the national and international level, it cannot subsist without a solid legal framework.
Worldwide Legal Harmonization
At the same time, international legal instruments developed in multilateral
institutions and applicable to certain cross-border transactions have become increasingly
important to the development of a substantive transnational law. We broadly use the term
"transnational law" as referring to "all kinds of principles and rules of non-national character
used in international business practice as an alternative to domestic law" 3.
Indeed, a supranational framework encompassing business customs and instruments
such as the UNIDROIT Principles of International Commercial Contracts, and dealing with
international trade and private international commercial law is slowly emerging. This
international legal framework developed through different intergovernmental and business
organizations or legal research centers, (such as UNIDROIT, UNCITRAL, The Hague and
the International Chamber of Commerce) does reinforce the trend for seeking harmonized
solutions to multi-jurisdictional issues.
This "emerging pattern of harmonized international commercial law" will be
strengthened in the future: transnational legislative and regulatory harmonization will be
further pursued as the possibility of benefiting from a single and predictable set of rules
becomes more attractive4. The rationale is that following a single set of rules, instead of
having to consider various state laws, is more efficient, reduces transaction costs and thus
facilitates the expansion of economic activities. For instance, one can note the remarkable
trend towards denationalization of private law in Europe as it results from the impact of
European Union (EU) legislation on national law. This supports the progressive
development within the EU of a body of harmonized transnational commercial law.
3

Bonnel, Michael J., "The UNIDROIT Principles and Transnational Law", Uniform Law Review,
vol 5, 2000-2, 199.
4
Rosett, Arthur, "UNIDROIT Principles and Harmonization of International Commercial Law:
Focus on Chapter 7", Uniform Law Review, vol. 2, 1997, 441.
-9-

While recognizing that the economic integration scheme followed within the
Western Hemisphere is very different from that of the EU, both in terms of level and scope
of integration and of geo-political purposes, the socio-economic development of the
Americas is related to the dynamism of the private sector and the development of
appropriate tools to benefit from the commercial prospects offered by international trade.
Therefore, even though the Americas are not currently seeking a deeper level of economic
integration than that of a hemispheric free trade zone (FTAA) and increased cooperation
(Summit of the Americas, Organization of American States), a certain level of legal
harmonization is still desirable in order to benefit from the advantages of free trade
agreements (macro-level convergence), in addition to facilitating transnational activities,
attracting further investment and contributing to the development of the local private sector.
Objectives of this Background Paper
Taking into consideration both the need for domestic legal reform in commercial
matters and the importance of promoting harmonized commercial solutions for the
Americas, we briefly review the concept of legal harmonization as well as current worldwide
and market-driven efforts to establish harmonized legal frameworks. We then provide an
overview of some characteristics of the region of the Americas: the impact of the FTAA
negotiations, the co-existence of civil and common law regimes, and the evolution of the
inter-American codification process under the auspices of the Organization of American
States (OAS). We conclude by affirming the interest of further exploring the opportunities
offered by increased harmonization/standardization of certain transactions in areas such as
corporate law, finance and energy, and advocating for the development of new interAmerican soft law instruments that would encourage legal convergence.
II.

Globalization & Legal Harmonization

A)

Economic and Legal Integration

The globalization phenomenon that is currently reshaping our world and way of life
is a multifaceted concept. While it encompasses a wide range of human activities such as
employment, technology, finance, business, politics, environment, culture and entertainment,
it primarily refers to an economic process related to a world-wide integration of markets.
Economic integration is basically the process of eliminating discrimination, through the
mechanism of free trade, among the economies of a group a countries.
The effort was first initiated after World War II with the creation of the Bretton
Woods institutions and the General Agreement on Tariffs and Trade (GATT), which has
fostered unprecedented trade liberalization at the global scale through eight rounds of
multilateral trade negotiations. The end of the Cold War and the collapse of the communist
system then contributed to the consolidation of the global economic regime. Indeed, the
conclusion of the Uruguay Round represented an enormous step along in the path of
worldwide trade liberalization and a consecration of multilateralism that materialized in the
creation of the World Trade Organization (WTO) in 1995, the first post-Cold War global

- 10 -

institution5. Liberal economic policies, international trade and new technologies of

communication have progressively converged towards the establishment of a multi-level
integrated world system.
Multilateral economic integration is regulated through the GATT-WTO framework
that constitutes the basic set of rules regulating the global trading order, its core principles
being non-discrimination, reciprocity and transparency. However, numerous states are also
members of regional trading agreements, i.e. geographically discriminatory arrangements
among a subset of countries, which in fact discriminate trade of non-members. A special
provision was made with GATT Article XXIV to allow for the existence of these agreements
inconsistent with the non-discrimination principle. Those regional trading agreements are
varied in structure, level of integration and significance, as are the motives for creating such
groupings. However, they have been multiplying and nearly all of the WTOs members have
now concluded such arrangements with other countries. Most notably, the countries of the
Americas have been particularly active in establishing a multitude of bilateral and regional
trade agreements amongst them6.
A form of macro-level regulatory convergence among a subset of countries will
happen through the implementation of commitments undertaken through negotiations aiming
at the closure of a multilateral trade round or at the establishment of a regional free trade or
other preferential agreements. But as processes of economic integration go deeper among a
subset of countries, a certain degree of concrete bottom-level legal harmonization also
becomes highly desirable or even necessary in order to benefit from the commercial
advantages spurred by such integration. Any integrated system requires a certain coordination and legal uniformity at the domestic level in order to function effectively, and this
facilitates exchanges between private parties located in different jurisdictions and other
transnational business activities. In other words, a certain level of legal integration should
follow economic integration.
B)

Harmonization

Harmonization processes are varied and can take many forms, at the domestic,
international, or multilateral level. For instance, such a process can be embodied in (a) the
revision of a national code (e.g. Mexico modernizing and harmonizing the Cdigo
Comercial and related statutes, or the National Commissioners on Uniform State Laws and
the American Law Institute working on revisions of the Uniform Commercial Code (UCC)),
(b) the creation of an international code such as the Convention on the International Sales of
Goods (CISG by UNICTRAL), (c) an international restatement such as the UNIDROIT
Principles of International Commercial Contracts, (d) the adoption of regional choice of
law conventions such as the Rome Convention (1980 European Convention on the Law
Applicable to Contractual Obligations) or the Mexico City Convention (1994 InterAmerican Convention on the Law Applicable to International Contracts), (e) the adoption of
5

See generally Trebilcock, Michael J. and Howse, Robert, The Regulation of International Trade,
2nd ed., 1999, Routledge, 612 p. See also the World Trade Organization's website at:
<www.wto.org>.
6
See Devlin, R. and Estevadeordal, A, "What's New in the New Regionalism in the Americas",
Inter-American Development Bank (INTAL/ITD/STA), Working Paper 6 (2001).
- 11 -

uniform private rules such as the Uniform Customs and Practices on Documentary Credits
(UCP),and (f) the universal adoption of arbitral regimes in commercial disputes 7.
The more radical form of legal integration is uniformization, which is the legal
technique seeking to erase the differences between the national provisions by replacing them
with a unique and identical text for all the states involved in the legal integration process.
Two possibilities then follow: the text is submitted to national parliaments who may adopt it
as is, modify it or even reject it, or the adopted text contains the principle of supranationality, by which the uniform norm is directly integrated into the domestic legal order 8.
Harmonization is a less radical technique than pure uniformization. It basically
consists of modifying domestic provisions from various countries that are not similar in
order to make them all coherent, or update them with a reform. Therefore, while respecting
the particularities of various national legal regimes, harmonization permits to reduce their
differences in specific areas, or to promote increased legal cooperation between the
countries9. Generally, such a result is obtained through the directives or recommendations
adopted by an international organization who then directs them to its member states for
implementation. Member states remain free to choose the form of adoption of the new
instruments, as long as the result is the incorporation of the new harmonized norm (of
course, provided that there is sufficient incentive to do so), thus leaving much more
flexibility.
Since the advent of modern international trade, efforts towards the international
unification of law have essentially taken the form of binding instruments, such as
supranational legislation or binding international conventions. However, despite some
successes, the majority of bilateral or multilateral treaties of unification or harmonization
have generally not been very effective, as demonstrated by their subsequent limited use. It
seems that the development of a truly successful harmonized solution does not fit with the
rigidity of the traditional treaty-making process, where unification cannot go beyond the
terms of the treaty and amendments are difficult to adopt. But calls have been increasingly
made for recourse to non-legislative or non-binding means of unification or harmonization
of law, for example, through model laws or model clauses and contracts formulated on the
basis of current trade practices, or even through international restatement of general
principles of some particular legal domain, such as the UNIDROIT Principles of
International Commercial Contracts for contract law, which have been very successful.
As levels of integration deepen, increased legal convergence would become useful
for the Americas, specifically through processes of informal harmonization. Informal
harmonization may consists merely in a new awareness among the participants to a new
initiative, but generally refers to the development of new soft law, i.e. non-binding

See Rosset, Arthur, "UNIDROIT Principles and Harmonization of International Commercial

Law: Focus on Chapter 7", Uniform Law Review, vol. 2, 1997, 441.
8
See Issa-Sayeh, Joseph, "Quelques aspects techniques de l'intgration juridique: l'exemple des
actes uniformes de l'OHADA", Uniform Law Review, vol. 4, 1999, 5.
9
Ibid.
- 12 -

instruments such as model laws, codes of conduct, guiding principles, etc., which presents
the advantage of flexibility.
C)

Market Driven Harmonization

1)

Emergence of a Modern Lex Mercatoria

Between the ninth and sixteenth century, a transnational uniform body of customary
mercantile law was formed in medieval Europe. This lex mercatoria constituted a legal
system with codified principles that would be applied in commercial disputes by merchants
courts throughout Europe. More recently, the possibility of having binding transnational
norms not embodied into contracts, statutes or conventions, but that would be applicable to
an international contract, became reality again with the resurgence of a "modern" lex
mercatoria. Indeed, some instruments have recently brought significant developments in the
area of international transactions, and a form of modern lex mercatoria based upon common
principles, rules and standards of international commercial law reconciling civil and
common law traditions has progressively emerged 10.
As mentioned before, this resurgence of non-domestic transnational law is explained
by a multifaceted phenomenon which "lies in the changing structures of commercial markets
and business practice as increased trade and rapid communication have created large
regional and global markets. Change in commercial law is inevitable because it is driven by
powerful economic forces visible throughout the world. New legal regimes are a response to
the changes in transactions and relationships that mark the new economic and social
situation"11.
For instance, the 1994 UNIDROIT Principles of International Commercial
Contracts (UPICC) established the fundamental concepts and modern transnational rules
applicable to international commercial contracts. The UPICC basically represents a synthesis
of the law of international trade, and were drafted by experts from civil law, common law,
and even socialist legal systems. It is a mixed instrument seeking to establish a modern
compromise and to offer solutions for international parties located not only in different
jurisdictions, but also within different legal systems. Another international instrument that
can be viewed as providing a basis to the claims of a modern lex mercatoria is the
UNICTRAL 1980 Convention on the International Sale of Goods, often referred to as the
Vienna Convention or CISG, which brought a certain level of uniformization of the
substantive law relating to the international sale of goods.
Other international instruments have had tremendous impact and are now widely
used throughout the global market. Some of the most famous examples were published by
the International Chamber of Commerce (ICC) and include the 1993 Uniform Customs and
Practice for Documentary Credits (UCP 500), which established modern banking practices
now implicitly incorporated into the various documentary credit contracts, and the 2000
INCOTERMS, a transnational set of conditions on price and delivery applied uniformly in
10

See Tetley, Q.C., William, "Mixed Jurisdictions: Common Law vs Civil Law (codified and
uncodified)", Part II, Uniform Law Review, vol. 4, 1999, 877.
11
Rosset, Arthur, "UNIDROIT Principles and Harmonization of International Commercial Law:
Focus on Chapter 7", Uniform Law Review, vol. 2, 1997, 441.
- 13 -

international sale of goods contracts. The ICC proclaims that it possesses unrivalled
authority in making voluntary rules that govern the conduct of business across borders, and
also provides for the ICC International Court of Arbitration, the world's leading arbitral
institution. The area of international commercial arbitration is also remarkable, with an
increasing number of arbitral awards rendered each year, and a great number of jurisdictions
that have adopted national legislation based on the 1985 UNCITRAL Model Law on
International Commercial Arbitration, which followed the 1958 United Nations Convention
on the Recognition and Enforcement of Foreign Arbitral Awards. The ultimate result is that
a body of world law on the procedure and regulation of commercial arbitration is
progressively being developed.
This emergence of transnational law, at the outset perceived as non-binding soft law,
is therefore now reinforced as its norms are recognized as mandatory when the parties have
accepted it or are participating in an activity governed by it. Substantive norms become
applicable through the form of the above-mentioned international instruments or through
custom, practice, usage and principles, and basically aim to establish a fair and equitable
best practice standard. Therefore, while the whole concept of a modern lex mercatoria
remains disputable, some supranational norms which often reconcile differences between
distinct legal traditions are undoubtedly gaining in importance. Basically, as economic
activities become increasingly global, there is a strong incentive for the law to do the same.
The appeal of transnational legal solutions lies in the potential reduction in complexity, more
widely dispersed expertise, and resulting increased transaction efficiency.
Supranational and transnational legal norms and rules related to international trade
and commerce will gain in importance in the future, provided that they promote flexibility,
best practice standard as well as bringing together common law and civil law principles.
The authority of those instruments also tends to get more widely acknowledged when they
deal with specialized fields of law and when they incorporate both practical and academic
perspective.
2)

Standardization in International Business Law

In a strict definition, business law generally refers to commercial law. However, if

taken in a broader context, business law includes many other areas relating to the regulations
applicable to all economic activities (production, distribution, consumption), such as its legal
framework (antitrust and competition, credit), its actors (businessman, companies, agents)
and the corresponding goods and services. Therefore, under the general term business law
could be included legal areas such as commercial law, law of sales, company laws, labor
law, competition law, securities, bankruptcy law, debt collection, enforcement law,
accounting, arbitration, etc., in short, all the legislation relating to the economic
environment.
International business transactions are complex operations that involve identifying
and coordinating many issues such as the corporate, antitrust/competition, tax, and
regulatory requirements in different countries and multinational jurisdictions. A broad range
of legal sub-topics can arise in the course of closing such a transaction. For instance, the
determination of the structure of the proposed investment (asset vs. share investment, setting
up branches or foreign subsidiary, franchising or joint venturing, mergers and acquisitions,
- 14 -

international project financing and cross-border lending), the selection of international

representation (international agency and distributorship law), taking into account foreign
domestic considerations such as securities regulations, protection of intellectual property
rights, regulations applicable to consumer contracts, international technology transfers, etc.
Other concerns relate to choosing the applicable law and jurisdiction, and international
commercial arbitration.
Basically, issues arising can be grouped into three different sections: transactional
issues, litigation issues, and regulatory issues. Transactional issues to take into account will
include, for instance, those related to agency and distributorship law, sale of goods and
services and letters of credit, international contract problems, regulation of international
trade including customs law, cross-border mergers and acquisitions, project financing and
structure of the foreign investment. Litigation matters will arise in connection to choice of
law and forum issues, force majeure events or expropriatory conduct, foreign domestic rules
of procedure and evidence, enforcement of judgements, sovereign immunity and
international commercial arbitration. Regulatory issues facing international business are also
very important since they relate to the wide scope of regulations in connection with trade
transactions and financing (bank, securities, etc.), tax regimes, bankruptcy and competition
or antitrust law in an international economy.
International instruments seeking to harmonize some of the aspects of cross-border
transaction issues may then cover a wide range of topics, establishing new substantive and/or
procedural norms for international transactional, litigation or regulatory issues.
D)

Institutional Harmonizing Programs

Many issues arise with respect to the preparation and implementation of

harmonizing legal instruments: the substantive scope of harmonization, the technical
procedure, its formulation, the scope of application of the international instrument in the
domestic legislative order and its monitoring12.
The substantive scope of the area to be harmonized is determined not only by the
choice of the international organization. The choice will also be affected by the mandate of
the organization promoting the harmonization, by the fact that other international
organizations are working on similar issues (importance of avoiding duplication) and by the
technical constraints that are part of the domestic legal order (public policy exception,
domestic procedural issues). On the technical front, the procedures used to elaborate and
create a new instrument vary widely and depend on the institutional structure of the
organization. Generally, and to simplify the process, the permanent secretary or a committee
of experts or working group mandated by the decision-making body will present a draft or
submit recommendations, member states then present their comments and proposed
modifications after internal consultations, and the decision-making body adopts the final
draft. Issues to take into consideration in the formulation of the instruments are the official
working languages of the organization and the style and wording that will be used.

12

See generally Issa-Sayeh, Joseph, "Quelques aspects techniques de l'intgration juridique:

l'exemple des actes uniformes de l'OHADA", Uniform Law Review, vol. 4, 1999, 5.
- 15 -

Determining the scope of application of the new instrument is often problematic and
again varies according to the type of organization and its mandate. For instance, are member
states automatically bound by the instrument once it is adopted by the organization or must
they first sign and ratify it? When are the provisions of the international instrument
considered in force and enforceable in domestic law? Another issue is the application of the
instrument. Is there a supranational tribunal charged with overseeing the uniformity of
application or the conformity of the national provisions implementing the instrument? Is
there a consultative body charged with giving recommendations regarding the application of
the instrument? Are the member states bound by those recommendations?
This merely serves to outline some of the main issues that must be answered to
determine the substance, scope and concrete applicability of a new legal instrument designed
to harmonize different provisions. We briefly review some of those processes of legal
harmonization leading to the unification of legal practice through regulation or otherwise,
including international conventions on private law, model laws and regional instruments.
1)

UNCITRAL

The United Nations Commission on International Trade Law (UNCITRAL) 13 was

established by the General Assembly in 1966 with the mandate to further the progressive
harmonization and unification of the law of international trade. The Commission is
composed of thirty-six member States elected by the General Assembly for terms of six
years. The current UNCITRAL members from the Americas are Argentina, Brazil,
Colombia, Honduras, Mexico, Paraguay, United States of America, and Uruguay. The
Secretariat of UNCITRAL is the International Trade Law Branch of the United Nations
Office of Legal Affairs located in Vienna. The Commission has established three working
groups to perform the substantive preparatory work on topics within the Commission's
program of work and carries out its work at annual sessions
UNCITRAL has been particularly active in the following areas: international sale of
goods, international transport of goods, international commercial arbitration and
conciliation, international payment, cross-border insolvency, construction and more recently
e-commerce and procurement. Among the most recognized UNCITRAL instruments in
these areas are the following:

13

The United Nations Convention on Contracts for the International Sale of Goods
(Vienna, 1980). This Convention establishes a comprehensive code of legal rules
governing the formation of contracts for the international sale of goods, the
obligations of the buyer and seller, remedies for breach of contract and other aspects
of the contract. The Convention entered into force on 1 January 1988.
The United Nations Convention on the Carriage of Goods by Sea, 1978 (the "Hamburg
Rules"). This Convention establishes a uniform legal regime governing the rights
and obligations of shippers, carriers and consignees under a contract of carriage of
goods by sea, and was prepared at the request of developing countries and entered
into force on 1 November 1992.

See generally UNCITRAL's website at: <www.uncitral.org>.

- 16 -

The UNCITRAL Arbitration Rules. Adopted in 1976, the UNCITRAL Arbitration Rules
provide a comprehensive set of procedural rules upon which parties may agree for
the conduct of arbitral proceedings arising out of their commercial relationship.
The UNCITRAL Model Law on International Commercial Arbitration (1985) is designed
to assist States in reforming and modernizing their laws on arbitral procedure so as
to take into account the particular features and needs of international commercial
arbitration. It has been enacted into law by a large number of jurisdictions from both
developed and developing countries.
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York,
1958).
United Nations Convention on International Bills of Exchange and International
Promissory Notes (New York, 1988).
UNCITRAL Model Law on International Credit Transfers (1992).
United Nations Convention on Independent Guarantees and Stand-by Letters of Credit
(New York, 1995), will enter into force upon the deposit of 5 instruments of
ratification, acceptance, approval or accession.
The UNCITRAL Model Law on Electronic Commerce (1996), is intended to facilitate the
use of modern means of communications and storage of information, such as
electronic data interchange (EDI), electronic mail and telecopy, with or without the
use of such support as the Internet. It is based on the establishment of a functional
equivalent for paper-based concepts such as "writing", "signature" and "original".
The UNCITRAL Model Law on Cross-Border Insolvency (1997) is to promote modern
and fair legislation for cases where the insolvent debtor has assets in more than one
State. The text deals with conditions under which the person administering a foreign
insolvency proceeding has access to the courts of the State that has enacted the
Model Law, determines conditions for recognition of a foreign insolvency
proceeding and for granting relief to the representative of such foreign proceeding,
permits courts and insolvency administrators from different countries to cooperate
more effectively, and contains provisions on coordination of insolvency proceedings
that take place concurrently in different States.

During the thirty-fourth session of the Commission held at Vienna from June 25 th to
July 13th 2001, the Commission worked on a Draft Convention on Assignment of
Receivables in International Trade and also adopted its 2001 Model Law on Electronic
Signatures. Preparing for the agenda of the thirty-fifth UNICITRAL session to be held in
New York form June 17-28 2002, the working groups are currently preparing the following
topics: privately-financed infrastructure projects, arbitration, transport law, electronic
commerce, arbitration, insolvency and security interests.
2)

UNIDROIT

The International Institute for the Unification of Private Law (UNIDROIT) 14,
established in 1940 on the basis of a multilateral agreement, is an independent
intergovernmental organization located in Rome. Its purpose is to examine ways of
harmonizing and coordinating the private law of States and of groups of States, and to
prepare gradually for the adoption by States of uniform rules of private law. Membership is
14

See generally UNIDROIT's website at: <www.unidroit.org>.

- 17 -

restricted to States acceding to the UNIDROIT Statute and member states from the Americas
include Argentina, Bolivia, Brazil, Canada, Chile, Colombia, Cuba, Mexico, Nicaragua,
Paraguay, United States of America, Uruguay and Venezuela.
UNIDROIT essentially has a three-tiered structure, made up of a Secretariat
(executive organ), a Governing Council (supervises the policy aspects and draws the Work
Program) and a General Assembly (ultimate decision-making organ with representative from
each member Government). The official languages of UNIDROIT are English, French,
German, Italian and Spanish; its working languages are English and French.
Many conventions have been drawn up by UNIDROIT and adopted at diplomatic
Conferences convened by member States, such as the Convention relating to a Uniform Law
on the International Sale of Goods (The Hague, 1964), the Convention on Agency in the
International Sale of Goods (Geneva, 1983) and the UNIDROIT Convention on Stolen or
Illegally Exported Cultural Objects (Rome, 1995). More recently, UNIDROIT has also taken
the path towards informal harmonization, by preparing soft law instruments such as t he
UNIDROIT Guide to International Master Franchising (1998), which offers a
comprehensive examination of the whole life of master franchise arrangements, from the
negotiation and drafting of the master franchise agreement and other associated agreements,
to the end of the relationship and its effects.
However, the most successful UNIDROIT instruments is undoubtedly the UPICC,
or Principles of International Commercial Contracts, published in 1994, which were the
result of years of intensive comparative research and deliberations by a special Working
Group composed of representatives of all the major legal systems of the world. The objective
of the UNIDROIT Principles was to establish a balanced set of rules designed for use
throughout the world irrespective of the legal traditions and the economic and political
conditions of the countries in which they are to be applied. They are not a binding
instrument because they lack governmental authority but reflect concepts to be found in the
major legal systems while avoiding the use of terminology peculiar to any given legal
system, and are specifically designed for the needs of international trade with characteristics
such as fairness and flexibility.
The UPICC find concrete application only if parties agree to incorporate them into
their contract, and only in so far as they do not affect the rules of the applicable law from
which the parties may not derogate, however, their influence has progressively expanded as
they provide parties belonging to different legal systems or who speak different languages
with a guide for drafting their contract, and the states courts and arbitrators with additional
assistance when called upon to decide according to undefined usages and customs of
international trade or to the enigmatic lex mercatoria15. The UPICC are proving to be
extremely successful and UNIDROIT is currently preparing a new edition that will include
new sections devoted to topics not yet addressed in the first edition.
Other recent developments within UNIDROIT include the adoption of the
Convention on International Interests in Mobile Equipment and the Protocol thereto on
15

See generally Bonnel, Michael J., "The UNIDROIT Principles and Transnational Law", Uniform
Law Review, vol 5, 2000-2, 199 and Rosett, Arthur, "UNIDROIT Principles and Harmonization of
International Commercial Law: Focus on Chapter 7", Uniform Law Review, vol. 2, 1997, 441.
- 18 -

Matters specific to Aircraft Equipment, both adopted during a diplomatic Conference held in
Cape Town from 29 October to 16 November 2001. The Working Group for the preparation
of Principles and Rules of Transnational Civil Procedure, set up jointly by UNIDROIT and
the American Law Institute, will hold its next meeting in May 2002 in Rome, and work is
being pursued on the topic of International Interests in Mobile Equipment.
3)

Hague Conference on Private International Law

The Hague Conference16 is an intergovernmental organization, whose purpose is to

work for the progressive unification of the rules of private international law. The principal
method used to achieve this objective consists in the negotiation and drafting of multilateral
treaties (conventions) in the different fields of private international law (e.g. international
judicial and administrative co-operation; conflict of laws for contracts, torts, maintenance
obligations, status and protection of children, relations between spouses, wills and estates or
trusts; jurisdiction and enforcement of foreign judgments). From 1951 to 1999 the
Conference adopted 34 international Conventions.
The institutional structure is composed of a secretariat - the Permanent Bureau,
which prepares the Plenary Sessions and the Special Commissions and carries out the basic
research required for any subject that the Conference takes up, a Council of Diplomatic
Representatives of Member States that approves the budget of the Permanent Bureau, and
the Plenary Sessions where each Member State has one vote (discuss and adopt the draft
Conventions and decide on the subjects to be included in the agenda). There are currently 49
member States to the Hague Conference, and the members of the Americas are Argentina,
Brazil, Canada, Chile, Mexico, Peru, United States of America, Uruguay, Venezuela.
Among those Conventions that have been the most widely ratified, the following
topics should be mentioned: civil procedure, service of process, taking of evidence abroad,
conflicts of laws relating to testamentary dispositions, maintenance obligations, recognition
of divorces, protection of minors, international child abduction and inter-country adoption.
Some of the Hague Conventions deal with the determination of the applicable law, some
with the conflict of jurisdictions, some with the recognition and enforcement of foreign
judgments and some with administrative and judicial co-operation between authorities.
The Convention on Jurisdiction and Foreign Judgments in Civil and Commercial
Matters is supposed to be adopted during 2002, and the current work agenda of the Hague
Conference includes the future Convention on jurisdiction and foreign judgements in civil
and commercial matters and the topic of collateral securities. Among the subjects identified
in the agenda for the future work program of the Conference are the following: conflict of
jurisdictions, applicable law and international judicial and administrative co-operation in
respect of civil liability for environmental damage; problems of private international law
raised by electronic data interchange; and maintenance (support) obligations.

16

See generally the Hague Conference's website at: <www.hcch.net/e/index.html>.

- 19 -

4)

European Union

The main bodies of the European Union (EU) 17 are the Council of Europe, which is
the main decision-making body where each national government is represented, and has
legislative and budgetary authority, the Commission, which is the executive body concerned
with the interests of the EU as a whole, and which drafts and implements legislation, and the
Parliament with elected representatives from member states that does the political
supervision of all institutions and overviews the Commission. The EU Court of Justice has
jurisdiction under community law over members, individuals, institutions and businesses,
and the Court of Auditors oversees the management of the EU budget. European legislation
is composed of directives, regulations and decisions 18.
In the area of law relating to undertakings, the legislation in force covers the
following topics: company law (for instance, Directive 78/855/EEC concerning mergers of
public limited liability companies, Directive 89/666/EEC concerning disclosure
requirements in respect of international branches, Directive 90/434/EEC on the common
system of taxation applicable to mergers, divisions, transfers of assets and exchanges of
shares concerning companies of different member states), intellectual property law (e.g.
Directive 91/250/EEC on the legal protection of computer programs, Directive 93/83/EEC
on the coordination of certain rules concerning copyrights and rights related to copyright
applicable to satellite broadcasting and cable retransmission) and business procedures (e.g.
Directive 2000/35/EC on combating late payment in commercial transactions).
In particular, it is noted that the company law directives in harmonizing and unifying
aspects of member states law have been very successful, on issues such as disclosure,
shareholder protection, standards for statutory auditors and accounting. The harmonization
of company law has long been a goal of the European union, mandated by Article 220 of the
Treaty of Rome. Recently, the Commission also succeeded in creating a supranational form
of company, a Societas Europea (SE), with the objective of promoting the formation of
larger companies with greater economies of scale, allowing them to compete more
efficiently on global markets 19. Again, the rationale is that following a single set of rules,
instead of having to establish each foreign subsidiaries under individual member state law, is
more efficient and thus facilitate expansion of economic activities. .
But going beyond these efforts, the EU must also address the challenge of achieving
greater harmonization of its various legal systems, especially in the area of contract law, the
legal basis for cross border transactions being one of the main catalysts of trade. With the
1980 Rome Convention on the Law Applicable to Contractual Obligations, a uniform
conflict of laws approach was provided; however, harmonized private international law does
not ensure that the same case will receive the same judgement anywhere in the EU. The
necessity of developing a body of uniform contract law became more apparent. Instruments
17

See generally the European Union's website at: <www.europa.eu.int>.

See the excellent European Union legal database available at the following:
<www.europa.eu.int/eur-lex/en/index.html>.
19
See Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European
company (SE) Official Journal L 294 , 10/11/2001 P. 0001 - 0021.
18

- 20 -

in particular fields such as products liability, late commercial payments, and cross-border
credits transfers have been adopted.
The Commission on European Contract Law created in 1976 finally presented the
Principles of European Contract Law (PECL) in 1999, covering some fundamental
principles of contract law and rules concerning performance, remedies in case of nonperformance, formation, interpretation, validity of contracts and authority of agents. Most
European Community legislation in the area of contract law had been so far dealing with
consumer protection. However the PECL have remained completely in the shadow of the
UPICC and the value of the PECL has been questioned, especially considering the fact that
PECL and the UPICC could resemble two similar sets of rules for the same purpose. Still,
the PECL address some specifics related to the Europeanisation of trade, deal with more
issues than the UPICC (e.g. authority of agents), set forth general rules for contract law,
unlike the UPICC that restrict their application to commercial contracts (excluding
consumers), and offer the prospect of inclusion in a future codification. The Commission on
European Contract Law has now determined four different approaches to the future
development of contract law: (a) leaving solutions to the market, (b) developing nonbinding common contract law principles in Restatement-like form, (c) improving and
refining existing European-level law, and (d) adopting a new code-like instrument at the
European level20.
5)

Ohada

The Organization for Harmonization of African Business Laws (OHADA) 21 was

established by a Treaty between African countries in the Franc zone, signed on October 7,
1993 and entered into force on July 1995. The objective is the implementation of a modern
harmonized legal framework in the area of business laws in order to promote investment and
develop economic growth. The Treaty calls for the elaboration of uniform acts to be directly
applicable in member states notwithstanding any provision of domestic law. OHADA
consists of a Council of Ministers assisted by a Permanent Secretary, and a Common Court
of Justice and Arbitration (CCJA).
To date, the Uniform Acts that were adopted deal with General Business Law,
Company Laws and Pooling of Economic Interest, Organization of Securities, Bankruptcy
law, Debt collection and Enforcement law, Accounting law and Arbitration. This legislation
is affecting business operations, such as gas and oil activities that are of particular interest
for foreign investors. This new legal framework also provides a mechanism for the
settlement of disputes, one of the goals of the Treaty being to establish judicial security in
the countries involved. The CCJA has jurisdiction over judicial (it rules on decisions
rendered by the courts of appeal of the member states) and arbitration matters (supervisory
role to the appointed arbitrators and granting enforceable status to the award), thus ensuring
the harmonized interpretation of the Treaty, Uniform Acts and corresponding regulation and
arbitration agreements22.
20

See "Communication from the Commission to the Council and the European Parliament on
European Contract Law", Brussels, 11.07.01, COM 2001 398 Final, available at : <europa.eu.int/eurlex/en/com/cnc/2001/com2001_0398en01.pdf>.
21
See generally OHADA's website at: <www.ohada.com>.
- 21 -

III.

The Americas: Characteristics and Prospects

A)

Significance and Impact of the FTAA Negotiations

The whole region of Latin American and the Caribbean has gone through incredible
transformations during the last decade. While conflicts still persist in certain countries,
democratically elected leaders and governments profoundly changed trade policies and
renewed emphasis has been placed on growth and sound macroeconomic policies. Great
inequality persists and poverty is still far from being eradicated, but current trends place
international trade, supported by multilateral and regional trade agreements as well as the
improvement of domestic private sector entities, at the center of development policy along
with institutional reforms.
The currently negotiated FTAA23, a free trade zone that would encompass all the
Western Hemisphere, is consistent with the framework of promoting prosperity through
economic integration and free trade. But FTAA negotiations have also been useful in
providing a table for discussing various policies, related to trade but also to other issues such
as democracy, cooperation and sustainable development, and in promoting good governance
and transparent rule-making. In that sense those negotiations represent a fundamental
undertaking, and a great opportunity to initiate a reflection on the need for legal
modernization and facilitation of business transactions 24.
Since the prospects offered by the creation of the FTAA will, over a certain period
of time, favor increased commercial ties throughout the Hemisphere, a harmonized common
set of rules applicable to cross border transactions would allow to benefit even more from
the advantages brought by the FTAA. Business facilitation measures have already been
adopted25. Those deal with customs-related business facilitation measures and procedures,
and transparency-related measures such as the creation of a Tariff Database, the foreign
investment Report, visa requirements for business travelers and commercial arbitration.
The FTAA also presents major challenges for the domestic legal systems of the
participating countries, both at the substantive legal and judicial levels. First of all, the scope
of the topics covered is even broader than at the WTO level, whose agenda after 1995
included not only tariff barriers and trade in goods as with the GATT, but also, for instance,
services (GATS), intellectual property (TRIPS) and non-tariff barriers (NTBs). The WTO
also adopted a new and improved mechanism for the settlement of disputes and other newly
regulated sectors include agriculture and textile, and telecommunications and financial
22

Issa-Sayeh, Joseph, "Quelques aspects techniques de l'intgration juridique: l'exemple des actes
uniformes de l'OHADA", Uniform Law Review, vol. 4, 1999, 5.
23
For detailed information on the Free Trade Area of the Americas, please consult the FTAA
official website at: <www.ftaa-alca.org/>.
24
Salazar-Xirinachs, Jos M., and Parga, Csar, "El Area de Libre Comercio de las Amricas
(ALCA): Desafos para los sistemas jurdicos y judiciales", paper presented at the conference "El
Sistema Interamericano Frente al Nuevo Siglo", Colombia, March 2001, available at :
<www.oas.org/juridico/spanish/salazar.htm>.
25
See for instance custom-related measures adopted at the Toronto Ministerial meeting held
November 4, 1999 and available at: <www.sice.oas.org/FTAA/Toronto/minis/minisA2e.asp>.
- 22 -

services. As the GATT/WTO framework grew in scope and complexity, simply reducing
and removing barriers to trade became insufficient to implement the result of binding
multilateral commercial negotiations. Now, the agreements dealing with new subject
matters such as services and intellectual property rights often require that the member states
implement changes to their domestic legislation or even adopt new policies, practices or
procedures in certain sectors. From purely negative integration, i.e. removing obstacles to
commerce, we are progressively moving toward global positive integration, i.e. member
states having to proactively implement new commercial rules following the prescriptions of
a multilateral agreement.
This will also be true in the case of the FTAA, an agreement that is foreseen to cover
even more sectors than the WTO, such as investment, competition and procurement, and
also go deeper in its coverage, which means further liberalizing market access, agriculture
and subsidies, antidumping and countervailing duties and internet-related measures 26. FTAA
members who already have had to update their legislation with multilateral prescriptions
(WTO) and sub-regional ones (from NAFTA, MERCOSUR, CACM, ANC, CARICOM),
will also have to implement a further set of regulations to comply with the hemispheric free
trade agreement. In addition, the FTAA negotiations currently have to take into account the
coexistence of two distinct legal systems, which somewhat complicates the goal of
establishing general principles of universal application and easy to incorporate in the
domestic framework. It has to be remembered that an eventual FTAA would encompass not
only 34 member States, but also more than 130 private law jurisdictions.
The FTAA will definitively influence legal and judicial developments in the
Hemisphere27. And this highlights in turn the importance of also adapting to the changes and
modernizing the law from below, i.e. developing new rules applicable to private parties at
the transaction-level. And similarly to the FTAA rules developed from above, those will
also have to take into account the issue of hemispheric bijuralism.
B)

Coexistence of Two Major Legal Systems

While both common law and civil law systems share social objectives such as
individualism, liberalism and personal rights, they are very distinctive in their origins,
substance, approach, style, and interpretation. Civil law is highly systematized and structured
and relies on declarations of broad, general principles, while common law is much more
detailed in its prescriptions, since the principles are generally outlined in reported judgments
in relation to specific facts; these differences are also reflected in the functions and style of
doctrine, jurisprudence and statutes28.

26

For an overview of the distinctions between the FTAA and the WTO processes, see SalazarXirinachs, J.M., "The Trade Agenda in the Context of the Inter-American System", OAS Trade Unit,
March 2000, article available at: <www.sice.oas.org/geograph/intdocs_e.asp>.
27
See generally Salazar-Xirinachs, Jos M., and Parga, Csar, "El Area de Libre Comercio de las
Americas (ALCA): Desafios para los sistemas juridicos y judiciales", paper presented at the
conference "El Sistema Interamericano Frente al Nuevo Siglo", Colombia, March 2001, available at :
<www.oas.org/juridico/spanish/salazar.htm>.
28
Tetley, Q.C., William, "Mixed Jurisdictions: Common Law vs Civil Law (codified and
uncodified)", Part I, Uniform Law Review, vol. 4, 1999, 591.
- 23 -

While any attempt to pursue a certain degree of harmonization between various

countries presents challenges, the difficulty of the task increases when those two different
legal systems are considered, such as in the region of the Americas. Civil law regimes, based
on the romano-germanic legal tradition, place the law as the model of social organization,
with a codification of the principles and norms that are to govern relations between private
parties, based upon notions such as justice and equity. On the other hand, the common law
derives from the jurisdiction of the English royal courts, which heavily emphasized the
procedural aspect of the law rather than the substantive one, and rejected the codification
process. Judgments are based mainly upon judicial precedents instead of codified rules:
contrary to the civil law tradition, there are much less applicable general principles 29.
There are thus major conceptual gaps between the two major legal traditions and
such fundamental differences are reflected in the way relations between private parties are
foreseen. Typically, civil law rules will appear too brief and general to the common law
lawyer; the civil law lawyer will use a language more similar to the concise style of the
French inspired civil codes in contrast to the more detailed drafting style prevalent for
common law rules. In addition, translating common law concepts in a Spanish or French
contract when those rules have evolved in English does present a challenge.
At the substantive level, the formation of the contract and related countervalue
requirement, implied warranties, force majeure clause and remedy issues, are all examples
where civil law and common law diverge 30. Other basic differences in contract are found in
the award of damages and economic loss, pre-judgment interests, conflicts of law or private
international law, forum non conveniens, arbitration, interpretation and construction of
contracts. Other fields where the differences are substantial include equity, floating charges,
assignment, trust and agency and land law and possession. Key international contracts may
also be foreseen differently, such as international representation, where the legal relationship
between foreign companies and local agents, distributors or licensees is much more
regulated in civil law countries.
However, it is interesting to note that civil and common law traditions have grown
closer, not only with the development of harmonizing legislation in the European Union or
through the creation of multilateral instruments reconciling both legal systems such as the
UPICC, but also at the domestic level, for instance through the incorporation of civilian
principles in the US Uniform Commercial Code (UCC). Other examples include the
adoption of a California civil code and the fact that the number of statutes has greatly
increased, and that statutes have even taken precedence over common law for most of
commercial law. Therefore, in practice the divergences between civil and common law are
far from presenting insurmountable problems and many can be resolved contractually.
However, it is still necessary for the legal practitioners involved in a transaction between two
parties located in jurisdictions governed by different legal systems to acknowledge and
reconcile those differences. A truly efficient and useful inter-American instrument thus has
to take into account hemispheric bijuralism.

29

Ibid.
Tetley, Q.C., William, "Mixed Jurisdictions: Common Law vs Civil Law (codified and
uncodified)", Part II, Uniform Law Review, vol. 4, 1999, 877.
30

- 24 -

C)

Organization of American States (OAS)

1)

Evolution of the Inter-American Codification Process

The OAS Inter-American Juridical Committee (IAJC) is charged with promoting the
progressive development and the codification of international public and private law and to
study juridical problems related to the integration of the countries of the Hemisphere and the
possibility of attaining uniformity in their legislation. The IAJC has worked on a number a
different issues and has elaborated many studies and draft conventions for the Inter
American Specialized Conference on International Private International Law (CIDIP). (It is
to be noted that the term private international law in civil law basically refers to conflict
of laws in common law, which includes choice of law, choice of jurisdiction and
recognition of foreign judgments).
In the field of public international law, areas covered include diplomatic asylum,
pacific resolution of disputes, hemispheric security, protection of the rights of women,
extradition, and more particularly human rights, with the creation of an Inter-American
System of Human Rights constituted by a Commission and a Court. More recently,
emphasis was placed on the issue of corruption with the Inter-American Convention Against
Corruption adopted in 1996. Current and future legal issues of concern to the OAS are the
consolidation of democracy, economic integration and free trade, strengthening of the
administration of justice, cybercrime, and combat against money laundering and drug
trafficking.
In the field of private international law, the countries of the Hemisphere have always
placed great emphasis on the codification of conflict of laws rules. This codification
basically went through two different phases: idealistic with global attempts at codification
and then more pragmatic with a sectored and progressive approach to the codification
process31. Following the Montevideo Treaties (1889), the Bustamante Code, adopted in
1928 during the Sixth Pan-American Conference, was the first code totally dedicated to this
subject matter, and a good example of the first period, where global codification, i.e. creating
a code containing all the areas related with conflict of laws, was perceived as the goal to
attain. After several years of unsuccessful attempts, the General Assembly called for the first
CIDIP, which renewed the OAS codification process: from now on, only certain areas would
be examined. Since 1975, six CIPIDs took place during which twenty-four conventions were
adopted and 4 additional protocols32.
In addition to the General Rules of Private international Law, the various
instruments basically relate to conflict of law rules in three categories: (1) international
commercial law, covering topics such as bills of exchange, checks, promissory notes and
invoices, international commercial arbitration, commercial companies, international carriage
31

Maekelt, T., "El Desarollo del Derecho Internacional Privado en las Amricas: las Conferencias
Especializadas Interamericanas en Derecho Internacional Privado (CIDIPs)", paper presented at the
conference "El Sistema Interamericano Frente al Nuevo Siglo", Colombia, March 2001, available at:
<www.oas.org/juridico/spanish/tatiana_maekelt.htm>.
32
To access all inter-American treaties, see the Inter-American System of Legal Information
operated
by
the
Department
of
Legal
Cooperation
and
Information
at:
<www.oas.org/juridico/english>.
- 25 -

of goods by road and law applicable to international contracts, (2) international procedural
civil law, dealing with issues like rogatory letters, taking of evidence abroad, legal regime
of powers of attorney to be used abroad, extraterritorial validity of foreign judgments and
arbitral awards, execution of preventive measures, proof and information on foreign law,
jurisdiction in the international sphere for the extraterritorial validity of foreign judgments,
and (3) international civil law, where the focus was placed on the domicile of natural persons
and personality and capacity of juridical persons, but most of all the protection of children,
with themes such as adoption of minors, return of children, support obligations, and
international traffic in minors.
With the re-emergence of the interest for private relations, due to the increased
political stability in the OAS member states and the renewed importance of private sector
development and international trade for economic development, CIDIP is increasingly
focusing on the commercial field. This was reflected most notably in the agenda for CIDIPVI, held at the OAS headquarters in Washington D.C. from February 4 to 8th, 2002, where
the following three instruments were considered: (1) a model inter-American law on secured
transactions (dealing with international loan contracts of a private nature, in particular the
uniformity and harmonization of international laws governing transactions secured with
movable property, commercial and financial guarantees), (2) a protocol on bills of lading
standardized commercial documentation for international transportation, and (3) conflicts of
laws on extra-contractual liability, with emphasis on competency of jurisdiction and
applicable law with respect to civil international liability for transboundary pollution 33.
While CIDIP had previously taken the path of codification, a radical way of
pursuing harmonization, which did not succeed as expected when one considers the very low
level of ratifications for the majority of the inter-American conventions produced by the
CIDIP process. Significantly, Canada, Brazil and the United States have been very reluctant
to adhere to CIDIP conventions. Many factors explain this, such as the emphasis on LatinAmerican legal tradition, the lack of preparatory working papers, work agendas too broad for
the short period of time of the conference, lack of expertise in certain delegations, political
factors, states preferring to focus on multilateral instruments, and the formalism of a
ratification process34. However, CIDIP is now on the way of using more flexible methods of
harmonization, such as drafting model laws, which is more in tune with recent international
trends that point towards the elaboration of soft law instruments.
Another recent addition to the CIDIP process is the new attention given to closing
the gap between the differences resulting from the co-existence of civil law and common law
in the Americas. While both major legal systems are represented in the Americas, for a long
time it could be said that the common law perspective was not well integrated into the interAmerican instruments. However, since Canada became an OAS member in 1990, new
attention was paid to the issues raised by federalism and common law, in its American (US)
version as well as the more British one represented by Canada (to the exception of the
33

The Final Act of the Sixth Inter-American Specialized Conference on Private international Law
(CIDIP VI) is available at: < http://www.oas.org/juridico/english/cidip_vi.html>.
34
See Maekelt, T., "El Desarollo del derecho internacional privado en las Americas: las
Conferencias Especializadas Interamericanas en Derecho Internacional Privado (CIDIPs)", paper
presented at the conference "El Sistema Interamericano Frente al Nuevo Siglo", Colombia, March
2001, available at: <www.oas.org/juridico/spanish/tatiana_maekelt.htm>.
- 26 -

province of Quebec) and the Caribbean. It remains to be seen whether this new approach
combined with the new emphasis on private relations and commercial undertakings, will
return CIDIP to the forefront of international legal developments.
2)

Exploring New Possibilities

The great economic and social transformations caused by the multifaceted

globalization process are also impelling changes at the legal level. International trade and
related legal reforms have been identified as paramount to further economic and social
development in the Americas. In addition, regional economic integration would benefit from
the successful development of new inter-American soft law instruments in commercial
matters since some of the obstacles to integration would be eliminated through commercial
harmonization. Successful harmonization would also be conducive of further trade and
investment in the region, additional business exchanges and strengthened trade facilitation
mechanisms, and contribute to poverty reduction.
While many types of harmonization processes are currently advancing in parallel,
the OAS and its member states should explore new possibilities and alternatives,. taking into
account past success and failures in the history of inter-American codification: The
challenge is to develop harmonization tools that produce better law in relevant legal areas 35.
We have to acknowledge the need to pursue an in-depth reflection on those issues.
As further evidence of their relevance, one can note that the Congress to be held in
September 2002 in celebration of the 75th anniversary of the founding of UNIDROIT will
focus on "Worldwide Harmonization of Private Law and Regional Economic Integration".
An organization such as the OAS should be increasingly involved in the harmonized
modernization of the law governing commercial transactions.
IV.

Conclusion

With this project entitled "Legal Harmonization in the Americas: Business

Transactions, Bijuralism and the OAS" and developed in collaboration with the Canadian
International Development Agency (CIDA), the objective of the Secretariat for Legal Affairs
is to assess the opportunities offered by legal harmonization and standardization for certain
business transactions, and whether they would lead to the development of new instruments
facilitating cross-border transactions and investment within the Hemisphere. As mentioned
before, it seemed that this initiative was particularly relevant taking into account not only the
current FTAA negotiations and CIDIPs restructuring process, but also the current trend of
other multilateral bodies working towards the creation of transnational legal norms in
commercial areas.
We discussed the fact that bottom-level legal integration within the Americas is, and
should be, pursued through processes of informal harmonization. However, the need for
more affirmative measures can be found when examining the current inter-American
35

Rosset, Arthur, "UNIDROIT Principles and Harmonization of International Commercial Law:

Focus on Chapter 7", Uniform Law Review, vol. 2, 1997, 441.
- 27 -

context, with the growing importance of cross-border transactions and the FTAA
negotiations, and the need to reconcile in some instances diverging common and civil law
principles. The development of those new measures should follow the informal path, i.e.
flexible soft law instruments, address the specific issues affecting inter-American business
transactions, not duplicate topics already developed in other multilateral forums, and also
take into account the opinion of the private commercial actors involved in the day to day
practice of inter-American trade. Moreover, flexibility becomes highly desirable because
changes in world economic structures are hardly complete and as international trade
disciplines and practices continue to evolve, the legal structure for inter-American
transactions must have the flexibility to grow and remain relevant.
As mentioned previously, this publication may be considered as an "exploratory
phase" of the commercial topics that could be further examined in the future. We invite you
to consult the experts articles gathered for this publication and dealing with cross-border
transactions in the Americas, bijuralism, and the opportunities for further legal
harmonization in certain commercial areas. Our diverse group of experts also issued some
recommendations and ideas for legal co-operation mechanisms which should positively
contribute to the elaboration of future legal projects and action plans. Given the current
inter-American context, we believe that flexible commercial harmonization mechanisms
should be further examined and developed.

- 28 -