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Privatizing the Economic Constitution: Can the World Market Reproduce its own Institutional Prerequisites?

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European Yearbook of International Economic Law 2013

Part of the book series: European Yearbook of International Economic Law ((volume 4))

Abstract

It especially builds on work published in the following articles: Calliess/Mertens, Transnational Corporations, Global Competition Policy, and the Shortcomings of Private International Law, Indiana Journal of Global Legal Studies 18 (2011) 2, p. 843; Calliess/Renner, The Public and the Private Dimensions of Transnational Commercial Law, German Law Journal 10 (2009) 10, p. 1341; Renner, Towards a Hierarchy of Norms in Transnational Law?, Journal of International Arbitration 26 (2009) 4, p. 533.

This article is based on the authors’ joint research conducted within the framework of the Collaborative Research Center 597 “Transformations of the State” in Bremen, http://www.staat.uni-bremen.de/?SPRACHE=en. It especially builds on work published in the following articles: Calliess/Mertens, Transnational Corporations, Global Competition Policy, and the Shortcomings of Private International Law, Indiana Journal of Global Legal Studies 18 (2011) 2, p. 843; Calliess/Renner, The Public and the Private Dimensions of Transnational Commercial Law, German Law Journal 10 (2009) 10, p. 1341; Renner, Towards a Hierarchy of Norms in Transnational Law?, Journal of International Arbitration 26 (2009) 4, p. 533.

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Notes

  1. 1.

    Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1778, Book II pp. 539–540.

  2. 2.

    North, Institutions, Institutional Change and Economic Performance, 1990, p. 54.

  3. 3.

    Böhm, Wettbewerb und Monopolkampf. Eine Untersuchung zur Frage des wirtschaftlichen Kampfrechts und zur Frage der rechtlichen Struktur der geltenden Wirtschaftsordnung, 1933; Behrens, Weltwirtschaftsverfassung, Jahrbuch für Neue Politische Ökonomie Band 19, 2000, p. 5.

  4. 4.

    Teubner, 'Global Bukowina': Legal Pluralism in the World Society, in: Teubner (ed.), Global Law without a State, 1997, p. 3; Berger, The creeping codification of the lex mercatoria, 1999; Stone Sweet, The New Lex Mercatoria and Transnational Governance, Journal of European Public Policy 13 (2006) 5, p. 627; Calliess, Transnational Civil Regimes: Economic Globalisation and the Evolution of Commercial Law, in: Gessner (ed.), Contractual Certainty in International Trade – Empirical Studies and Theoretical Debates on Institutional Support for Global Economic Exchanges, 2009, p. 215; Calliess et al., Transformations of Commercial Law: New Forms of Legal Certainty for Globalized Exchange Processes?, in: Hurrelmann et al. (eds.), Transforming the Golden Age Nation State, 2007, p. 83.

  5. 5.

    Teubner, Global Private Regimes: Neo-spontaneous Law and Dual Constitution of Autonomous Sectors in World Society, in: Teubner/Ladeur (eds.), Globalization and Public Governance, 2004, p. 71; Teubner, Constitutional Fragments. Societal Constitutionalism and Globalization, 2012.

  6. 6.

    O'Hara/Ribstein, The law market, 2009.

  7. 7.

    Dezalay/Garth, Merchants of Law as Moral Entrepreneurs: Constructing International Justice from the Competition for Transnational Business Disputes, Law & Society Review 29 (1995) 1, p. 27.

  8. 8.

    North, Institutions, Institutional Change and Economic Performance, 1990, p. 3. For more specific information on the role of institutions in cross-border trade cf. Dietz, Institutionen und Globalisierung – Eine empirische Untersuchung am Beispiel grenzüberschreitender Softwareentwicklungsverträge, 2010.

  9. 9.

    Cf. Dixit, Lawlessness and Economics: Alternative Modes of Governance, 2004, p. 10.

  10. 10.

    For an in-depth analysis of the function of a state-organized private law system cf. Mertens, Privatrechtsschutz und vertikale Integration im internationalen Handel, 2011, pp. 31 et seq.

  11. 11.

    Calliess, The Making of Transnational Contract Law, Indiana Journal of Global Legal Studies 14 (2007) 2, p. 469 (473) with further references.

  12. 12.

    Zitelmann, Die Möglichkeit eines Weltrechts, Allgemeine österreichische Gerichts-Zeitung 39 (1888), p. 193.

  13. 13.

    For the CISG see Ferrari, Quo Vadis CISG? Celebrating the 25th Anniversary of the United Nations Convention on Contracts for the International Sale of Goods, 2005.

  14. 14.

    For The Hague Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters of 2005, which has still not taken effect, cf. Baumgartner, The Proposed Hague Convention on Jurisdiction and Foreign Judgments: Trans-Atlantic Lawmaking for Transnational Litigation, 2003.

  15. 15.

    Especially through the Council Regulation (EC) No. 44/2001 of 22 December 2000 (Brussels I—Regulation), OJ [2001] L 12/1, the Convention of 16 September 1988 on jurisdiction and the enforcement of judgments in civil and commercial matters (Lugano Convention), the Regulation (EC) No. 805/2004 of the European Parliament and of the Council of 21 April 2004, OJ [2004] L 143/15, the Rome Convention on the law applicable to contractual obligations, adopted on 19 June 1980, the Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 2008, OJ [2008] L 177/6, and the Council Regulation (EC) No. 1206/2001 of 28 May 2001, OJ [2001] L 174/1.

  16. 16.

    Schmidt-Trenz/Schmidtchen, Private International Trade in the Shadow of the Territoriality of Law: Why does It Work?, Southern Economic Journal 58 (1991) 2, p. 329 (331).

  17. 17.

    In this vein already Schmidtchen/Schmidt-Trenz, Private Law, The World Production Possibility Frontier and the Need for an International "Private Law Community": German Theory of Order and Constitutional Economics at Work, 1989, p. 34: ‘[…] trades between ’faceless buyers and sellers’ […] hardly work in international trade. They require a developed legal system and protective safeguard that we encounter only in an ideal domestic economy.’; Cf. also Rühl, Effizienzprobleme bei grenzüberschreitenden Rechtsstreitigkeiten, German Working Papers in Law and Economics (2006) 17, p. 6: ‘Constitutional uncertainty caused by the plurality of law can prevent rationally acting parties from concluding cross-border transactions and, hence, lead to the failure of these transactions; whereas national transactions would not fail.’.

  18. 18.

    Among the most popular are: Greif, Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders, The Journal of Economic History 49 (1989) 4, p. 857; Greif, The Organization of Long-Distance Trade: Reputation and Coalitions in the Geniza Documents and Genoa During the Eleventh and Twelfth Centuries, The Journal of Economic History 51 (1991) 2, p. 459; Greif, The fundamental problem of exchange: A research agenda in Historical Institutional Analysis, European Review of Economic History 4 (2000) 3, p. 251; Greif, Institutions and the path to modern economy: Lessons from medieval trade, 2006; North, Institutions, transaction costs, and the rise of merchant empires, in: Tracy (ed.), The Political Economy of Merchant Empires, 1991, pp. 22–40; Milgrom et al., The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges, and the Champagne Fairs, Economics and Politics 2 (1990) 1, p. 1; Clay, Trade Without Law: Private-Order Institutions in Mexican California, Journal of Law, Economics & Organization 13 (1997) 1, p. 202.

  19. 19.

    See Calliess et al., Transformations of Commercial Law: New Forms of Legal Certainty for Globalized Exchange Processes?, in: Hurrelmann et al. (eds.), Transforming the Golden Age Nation State, 2007, pp. 83–108; Dietz/Nieswandt, The Emergence of Transnational Cooperation in the Software Industry, in: Gessner (ed.), Contractual Certainty in International Trade – Empirical Studies and Theoretical Debates on Institutional Support for Global Economic Exchanges, 2009, pp. 87–106; Dietz, Institutionen und Globalisierung – Eine empirische Untersuchung am Beispiel grenzüberschreitender Softwareentwicklungsverträge, 2010, pp. 65 et seq.; Sosa, Cross-Border Dispute Resolution from the Perspective of Mid-sized Law Firms—The Example of International Commercial Arbitration, in: Gessner (ed.), Contractual Certainty in International Trade – Empirical Studies and Theoretical Debates on Institutional Support for Global Economic Exchanges, 2009, pp. 107–156; Konradi, The Role of Lex Mercatoria in Supporting Globalised Transactions: An Empirical Insight into the Governance Structure of the Timber Industry, in: Gessner (ed.), Contractual Certainty in International Trade – Empirical Studies and Theoretical Debates on Institutional Support for Global Economic Exchanges, 2009, pp. 49–86.

  20. 20.

    Hoffmann, Schiedsgerichte als Gewinner der Globalisierung?—Eine empirische Analyse zur Bedeutung staatlicher und privater Gerichtsbarkeit für den internationalen Handel, Zeitschrift für Schiedsverfahren 8 (2010) 2, p. 96 (100); Hoffmann/Maurer, Entstaatlichung der Justiz—Empirische Belege zum Bedeutungsverlust staatlicher Gerichte für internationale Wirtschaftsstreitigkeiten, Zeitschrift für Rechtssoziologie 31 (2010) 2, p. 279.

  21. 21.

    For more details on the model cf. Williamson, Transaction-cost economics: The Governance of Contractual Relations, Journal of Law and Economics 22 (1979) 2, p. 233, and Williamson, Transaction Cost Economics, in: Ménard/Shirley (eds.), Handbook of New Institutional Economics, 2005, pp. 41–65.

  22. 22.

    This categorization goes back to the model of Yarbrough/Yarbrough, The Contractual Role of Boundaries: Law and Economics Meets International Organization, European Journal of International Relations 9 (2003) 4, p. 543 (551).

  23. 23.

    For the main ideas of this school cf. Bork, The Antitrust Paradox: A Policy at War with Itself, 1978; Posner, The Chicago School of Antitrust Analysis, University of Pennsylvania Law Review 127 (1979) 4, p. 925.

  24. 24.

    As one example out of many, this becomes obvious in the Commission Regulation (EC) No. 2790/1999 of 22 December 1999, OJ [1999] L 336/21, especially in recital 6.

  25. 25.

    In this vein also Dixit, Lawlessness and Economics: Alternative Modes of Governance, 2004, p. 3: ‘Thus conventional economic theory does not underestimate the importance of law; rather, the problem is that it takes the existence of a well-functioning institution of state law for granted.’

  26. 26.

    See Calliess et al., Transformations of Commercial Law: New Forms of Legal Certainty for Globalized Exchange Processes?, in: Hurrelmann et al. (eds.), Transforming the Golden Age Nation State, 2007, pp. 83–108.

  27. 27.

    Williamson, The Economics of Governance, American Economic Review 95 (2005) 2, p. 1 (12).

  28. 28.

    Grossman/Helpman, Outsourcing in a Global Economy, Review of Economic Studies 72 (2005) 1, p. 135; Nunn, Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade, The Quarterly Journal of Economics 122 (2007) 2, p. 569.

  29. 29.

    Dietz, Institutionen und Globalisierung – Eine empirische Untersuchung am Beispiel grenzüberschreitender Softwareentwicklungsverträge, 2010, Chapter 2, point 4.2.

  30. 30.

    Cf. Behrens, Weltwirtschaftsverfassung, Jahrbuch für neue politische Ökonomie Band 19, 2000, p. 5; For background information on the model of an economic constitution cf. Kerber/Vanberg, Constitutional Aspects of Party Autonomy and Its Limits—The Perspective of Constitutional Economics, in: Grundmann et al. (eds.), Party Autonomy and the Role of Information in the Internal Market, 2001, pp. 49–79; Behrens, Die Bedeutung des Kollisionsrechts für die "Globalisierung" der Wirtschaft, in: Basedow et al. (eds.), Aufbruch nach Europa: 75 Jahre Max-Planck-Institut für Privatrecht, 2001, pp. 381–398 (384 et seq.).

  31. 31.

    A plethora of suggestions for improving the state protection of private law can be found in Calliess/Hoffmann, Effektive Justizdienstleistungen für den globalen Handel, Zeitschrift für Rechtspolitik 42 (2009) 1, p. 1.

  32. 32.

    For an extensive analysis of the role of international arbitration for small and medium-sized enterprises cf. Parise-Kuhnle, Transaktionssicherheit im Außenhandel durch prozessualen Rechtsschutz – eine Untersuchung aus der Perspektive kleiner und mittelständischer Unternehmen, CRC 597 „Transformations of the State“ Working Paper Series, forthcoming.

  33. 33.

    For the cost structure of arbitration cf. Schütze, Schiedsgericht und Schiedsverfahren, 2007, p. 12; Henn, Schiedsverfahrensrecht – Handbuch für die Praxis, 2000, pp. 194 et seq.; Hoffmann, Nationale Ziviljustiz und internationaler Handelsverkehr – ein Vorschlag zur Einrichtung von Kammern für internationale Handelssachen, 2010, pp. 52 et seq.

  34. 34.

    Lachmann, Handbuch für die Schiedsgerichtspraxis, 2008, marginal numbers 4682 et seq.

  35. 35.

    For further details on the relation between the economic power of the parties and their access to arbitration cf. Knapp, Taking Contracts Private: The Quiet Revolution in Contract Law, Fordham Law Review 71 (2002–2003) 3, p. 761 (781); Budnitz, The High Cost of Mandatory Consumer Arbitration, Law and Contemporary Problems 67 (2004) 1–2, p. 133 (161); Drahozal, Arbitration Costs and Contingent Fee Contracts, SSRN Working Paper, 2005.

  36. 36.

    Reichsgericht, IV 272/35, Juristische Wochenschrift 1936, p. 2058 (2059) (our translation).

  37. 37.

    Teubner, Global Private Regimes: Neo-spontaneous Law and Dual Constitution of Autonomous Sectors in World Society, in: Teubner/Ladeur (eds.), Globalization and Public Governance, 2004, p. 71; Fischer-Lescano/Teubner, Regime-Collisions: The Vain Search for Legal Unity in the Fragmentation of Global Law, Michigan Journal of International Law 25 (2004) 4, p. 999.

  38. 38.

    See Teubner, Contracting Worlds: The Many Autonomies of Private Law, Social and Legal Studies 9 (2000) 3, p. 399.

  39. 39.

    See generally Schlosser, Das Recht der internationalen privaten Schiedsgerichtsbarkeit, 1989.

  40. 40.

    New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 10 June 1958, 330 U.N.T.S. 38, Art. III.

  41. 41.

    New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 10 June 1958, 330 U.N.T.S. 38, Art. V para. 2 (b).

  42. 42.

    For the status of mandatory rules in conflict of laws see especially Guedj, The Theory of the Lois de Police, A Functional Trend in Continental Private International Law—A Comparative Analysis with Modern American Theories, American Journal of Comparative Law 39 (1991) 4, p. 661, as well as Hartley, Mandatory Rules in International Contracts: The Common Law Approach, Recueil des Cours 266 (1997) p. 337.

  43. 43.

    Renner, in: Calliess (ed.), The Rome Regulations. Commentary on the European Rules of the Conflict of Laws, Art. 9 paras. 13–20.

  44. 44.

    O'Hara, Opting Out of Regulation: A Public Choice Analysis of Contractual Choice of Law, Vanderbilt Law Review 53 (2000) 5, p. 1551.

  45. 45.

    Derains, Public Policy and the Law Applicable to the Dispute in International Arbitration, in: Sanders (ed.), Comparative Arbitration Practice and Public Policy in Arbitration, 1987, p. 227 (232).

  46. 46.

    Voser, Mandatory Rules of Law as a Limitation on the Law Applicable in International Commercial Arbitration, American Review of International Arbitration 7 (1996) 3/4, p. 319 (330).

  47. 47.

    See Lalive, Ordre public transnational (ou réellement international) et arbitrage internationale, Revue de l'arbitrage (1986) 4, p. 327. English language version published as Lalive, Transnational (or Truly International) Public Policy in International Arbitration, in: Sanders (ed.), Comparative Arbitration Practice and Public Policy in Arbitration, ICCA Congress Series No. 3, 1987, pp. 257–318 (286). Similarly, the recommendations of the International Law Association Committee on International Commercial Arbitration, Report on Public Policy as a Bar to Enforcement of International Arbitral Awards, 2002, Recommendation 2(b) rely on “the existence or otherwise of a consensus within the international community as regards the principle under consideration.”

  48. 48.

    See US Supreme Court, 473 U.S. 614, Mitsubishi Motors vs. Soler Chrysler-Plymouth.

  49. 49.

    See ECJ, C-126/97, Eco Swiss China Time Ltd vs. Benetton International NV, [1999] ECR I, 3055.

  50. 50.

    This analysis was performed by Moritz Renner in preparation of his doctoral thesis. The full results of the study are published in Renner, Zwingendes transnationales Recht – Zur Struktur der Wirtschaftsverfassung jenseits des Staates, 2011, pp. 92 et seq.

  51. 51.

    See, e.g., ICC Cases No. 6503, (1990), 122 J. DROIT INT’L (CLUNET) 1022-1031 (1995); 7146 (1992), Y.B. COM. ARB. XXVI 119-129 (2001); 7181 (1992), Y.B. COM. ARB. XXI 99-112 (1996); 7539 (1995), J. DROIT INT’L (CLUNET) 1030-1037 (1996); 7893 (1994), Y.B. COM. ARB. XXVII 139-152 (2002); 8423 (1994), J. DROIT INT’L (CLUNET) 1079-1082 (2002); 8626 (1996), J. DROIT INT’L (CLUNET) 1073-1079 (1999); 10988 (2003), J. DROIT INT’L (CLUNET) 1408-1417 (2006).

  52. 52.

    See ICC Case No. 8626 (1996), J. DROIT INT’L (CLUNET) 1073-1079 (1999).

  53. 53.

    See ICC Case No. 7893 (1994), Y.B. COM. ARB. XXVII 139-152 (2002).

  54. 54.

    See ICC Cases No. 7146 (1992), Y.B. COM. ARB. XXVI 119-129 (2001); 7181 (1992), Y.B. COM. ARB. XXI 99-112 (1996); 7539 (1995), J. DROIT INT’L (CLUNET) 1030-1037 (1996); 8423 (1994), J. DROIT INT’L (CLUNET) 1079-1082 (2002); 10988 (2003), J. DROIT INT’L (CLUNET) 1408-1417 (2006).

  55. 55.

    See Ehrenzweig, Local and Moral Data in the Conflict of Laws, Buffalo Law Review 16 (1966), p. 55; Kay, Conflict of Laws: Foreign Law as Datum, California Law Review 53 (1965) 1, p. 47.

  56. 56.

    See ICC Case No. 6503 (1990), J. DROIT INT’L (CLUNET) 1022-1031 (1995).

  57. 57.

    Cf. Kahn, Les principes généraux du droit devant les arbitres du commerce international, Journal du droit international 116 (1989), p. 305 (317); Idot, Les conflits de lois en droit de la concurrence, Journal du droit international 122 (1995) 2, p. 321 (328 et seq.); for perspectives cf. Basedow, Weltkartellrecht: Ausgangslage und Ziele, Methoden und Grenzen der internationalen Vereinheitlichung des Rechts der Wettbewerbsbeschränkungen, 1998, pp. 94 et seq.

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  1. Fachbereich Rechtswissenschaft, Universität Bremen, Universitätsallee GW1, 28353, Bremen, Germany

    Gralf-Peter Calliess, Jens Mertens & Moritz Renner

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  1. Gralf-Peter Calliess
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  2. Jens Mertens
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  1. European Law, European and, University of Passau Chair for Constitutional and Administrat, Passau, Germany

    Christoph Herrmann

  2. Chair for Public Law, University of Erlangen-Nürnberg, Erlangen, Germany

    Markus Krajewski

  3. Chair for Public Law, European and, Leuphana University Lüneburg, Lüneburg, Germany

    Jörg Philipp Terhechte

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Calliess, GP., Mertens, J., Renner, M. (2013). Privatizing the Economic Constitution: Can the World Market Reproduce its own Institutional Prerequisites?. In: Herrmann, C., Krajewski, M., Terhechte, J. (eds) European Yearbook of International Economic Law 2013. European Yearbook of International Economic Law, vol 4. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-33917-2_8

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