Challenges and Prospects of Legal Harmonization in Contemporary Global Commercial Transactions

nIntroduction

Emergence of legal harmonization goes back to the 19th century which was much easier since the commercial relationship between countries were narrow and limited keeping the transactions mostly within the comfort zone but today, the scenario is completely different and transactions have become more complicated since different countries have very unique legal system with varied rules, which makes the rules for transaction starkly different. This essay will address the various issues that pose in the way of commercial transactions and whether harmonization of law, having a uniform and adequate standard can be sustained to make such dealings simpler. There is no doubt about the fact that harmonization of such a field depends largely on pattern of business dealings, jurisdictions, cultural, economic and social influences which may come about adequately after sufficient experience over the years. Not only that, the effect of harmonization also tends to show on the cost reductions in various transactions making commercial business easier for the world. The essay will throw light on the critical understanding of the possibility of such a concept and hope to formulate a agenda and a strong agenda which can be uniformly applicable.

Especially today as the world is moving rapidly and developing at a broader scale, with globalisation especially the world has shrunk which is why the traders need a successful harmonization agenda that may make their transactions simpler and unified even though the ambit seems to increase with every passing day but an objective approach may help bring out few patent criteria that every commercial transaction irrespective of their country and its unique laws may demand. . The smooth regulation of such in transnational commercial law may reflect on the country’s commercial and economic development as well. Harmonization can also be explained in different ways, one of which is a legal framework is looked upto and is used a source of inspiration in order to create a new framework or different legal framework may be brought together to be used as one. The unification of a law has certain characteristics like the framework should be in one cohesive instrument that if applied in such a way the consequences of such application shall evade any viable contracts. In the first part, the essay will purely concentrate on what may influence harmonization and how in turn can harmonization influence commercial transaction. Secondly, the essay will look into the harmonization and restatement of contract law and Lastly, the essay will study and cover aspects of international commercial arbitration.

Is the harmonisation agenda capable of creating ‘transnational commercial law’?

Be that as it may, prior to entering the subject itself, it is essential to explain a few perspectives concerning the terms unification and harmonization. Unification happens when there is just one instrument to be applied; and the consequence of such application overall is comparable enough that it prompts the shirking of pragmatic contrasts that may bring about a particular decision of such an implementation.This section of the essay will demonstrate the need for harmonization of laws, bearing in mind that the harmonization considering as a part of the law has been prevalent throughout the ages and it is still existent. This proves its importance but also highlights the lack of governmental backing and institutional force in

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1. Agasha Mugasha, 'The Reform and Harmonization of Commercial Laws in the East African Community' (2017) 19 Eur JL Reform 306
2. Ana Teresa de Abreu Coutinho Boscolo, “ Problems on harmonization and unification of international commercial law “ < http://www.uncitral.org/pdf/english/congress/Papers_for_Programme/4-DE_ABREU_COUTINHO_BOSCOLO-Problems_on_harmonization_of_international_commercial_law.pdf > accessed on 16th November, 2020
3. Ibid
implementing such a system. Having an unified system will make it easier for private trading companies to indulge and complete their transactions in a smooth manner. Namely here appears the purpose of harmonization process is improving the legal systems by saving time and effort when the government dealing with new legislation, it would be a remarkable idea to use other legislations and adjust it appropriately according to the state so that the benefits of existing legislations can be incorporated in a new one . As an example, unorganized rules might force the companies lead to multi procedures to the same services which would be impractical and waste of their time. Especially with commercial transactions that require speed and achievement. Keeping the flexibility of harmonization in mind, decision makers should not avoid the need for harmonization with the globalization increasing at this time and rate, in particular, with the transnational commercial law. In another meaning, the harmonization process should be continuing to decrease the vagueness in such a complex economic and business environment. Despite of the development in transnational commercial law it is still being controlled by local law which is in conflict with international trade needs. Business, regardless of whether homegrown or transnational, has its own arrangement of rules and standards which verifiably administer exchanges, and the law automatically follows this. The selection of orchestrating has a possible risks of slamming into the guidelines and standards of the business community already existing ,which could have the effect of either smothering cross-border business exchanges, or the blending measure being overlooked by business, or both. In relation to, the idea of interchange outside international forums for example with the global companies, this kind of forum might provide a significative discuss and explain what they practically need. Also, cooperation with scholars to see the full picture of a problem might bring about a reform. So, the coordination success is based on planning and well organizing. Even discussions regarding the suitable instruments that needs to be chosen. Besides, the unavoidable obstacles of harmonization, we can reduce it if we focus our efforts on harmonizing and prioritizing by collaboration between academics and practitioners, which means there could be a possibility of a flexible attitude, deep understanding and a broad mind to incorporate such complex changes.Moreover, the soft law is appropriate with the aims of harmonization. There are some advantages, reduce the cost of international dealings, avoiding the conflict of legal systems, enhancing the confidence between states and the most important feature is a decrease of law risks relating to transnational commercial.

The role of harmonization agenda at restatement of contract.

In connection with, the differences between national laws in International contracts and which one will govern it. Impact of the harmonization efforts appears when it is avoiding

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4. Roy Goode,Herbert Kronke,and Ewan McKendrick ,’Transnational Commercial Law: Texts, Cases and Materials’ (2ed edn Oxford University Press, Incorporated 2015)10
5. ibid
6. Ibid 573
7. Fogt(n2)
8. Daniele De Carolis, 'Some Features of the Harmonisation of International Trade Law in the Third Millennium' (2010) 15 Millennium, Uniform Law Review 37
9. José angelo estrella faria, 'Future Directions of Legal Harmonisation and Law Reform: Stormy Seas or Prosperous Voyage?' (2009) 14 Millennium, Uniform Law Review 5
10. Goode, Kronke,and McKendrick (n5)18
11. R Ashby Pate, 'The Future of Harmonization: Soft Law Instruments and the Principled Advance of International Lawmaking' (2010) 13 Touro Int'l L Rev 142
12. Mugasha (n1)
dispute that might happen in future. In another word, harmonization leads to reduce such obstacles. In other respect, the contracts negotiations, and the impact of harmonization in saving them time and avoiding the disputes of a legal nature in the future. An example of such, one of the harmonization features appears when the contracting parties depend on the previous contracts in the same situations or framework, thus creating suitable contracts. Also, the role of the scholars who concern to harmonize finds better solutions consequently for the development of law, whether the form of that as a convention or body of rules to be, such as restatement of contract. Concerning, the restatement used as a resource for contracting parties who look to an appropriate rule fit with their situation, such as the Principles of European Contract Law and the UNIDROIT Principles of International Commercial Contracts. Even though there are similarities in aiming to harmonize the law yet different , it tries to clarify the scope which is obvious that the EU governs the contracts at the regional level and the UNIDROIT governs global commercial contracts. Taking into account, the nature of principles it is existing and nonbinding for international traders which they could apply it in their contracts and the aim is not just to copy the legal systems or usages which is familiar but also replace it, especially if it harms commercial and economic development. despite not prospect of using the Principles if was there any conflict of laws but the parties could insert as contract condition thus making it a binding rule. For instance, the principles of UNIDROIT demonstrate that if the contracting parties agreed on these principles in their contract would subject to it. In addition, soft law can be used as restatements of contract law or filling gaps to complete the binding law.

The role harmonization at International commercial arbitration

Considering the oldest harmonization projects and most successful in arbitration despite of the hindrance that it is facing with. For example, when the court reduces the authority for arbitrators and limited their freedom in issuing the decisions but after the Geneva Convention, it made those arbitration decisions to be enforceable. In addition, the purpose is to update domestic arbitration laws to align with international practiceand give arbitral tribunals wide scope of authority which they could practice without any judicial intervention. After that, the UNCITRAL Model Law was adopted in 1985, and the aims to harmonize the procedures of arbitration whether the national and international. The model law is aimed to reduce the restrict of legal regulation and rise the independence of the parties. Besides that, it is a suitable way for the countries when they need to modify the text to fit in the national matters that would be different from law to others. Also, it is flexible and easy to negotiate while the binding text includes commitment cannot be changed. UNCITRAL has broad experience in creating it at that domain. However, in respect of the global traders able to decide which law administer a contract. That will decrease the risk relating to international commercial contracts. That demonstrates a flexible regime which means they could modify and conform to be altering with change in time. Another meaning of that is the capability of contracting parties to who will govern their disagreement. For instance, traders prefer

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13. Goode, Kronke,and McKendrick (n5) 466
14. Goode,Ibid 80
15. Ibid 468
16. Fogt (n2) 10
17. Goode, Kronke,and McKendrick (n5)265
18. Ibid 466
19. T T arvind, 'The Transplant Effect' in Harmonization' (2010) 59 The International and Comparative Law Quarterly 65
20. De Carolis (n8)
21. Faria (n9)12
22. Pate (n12)
arbitration as it is the best way to resolve the disputes. International commercial arbitration is consists both of a mixture of soft and binding law.

Conclusion

This study focused on the need of harmonisation pertaining to international and transnational commercial contracts and the benefits it may have on such a large scale transcation however it also has some obstacles whether at restatement of contract law or international commercial arbitration. There could be many problems with relation to drafting only one legislation and then applying it keeping all the different jurisdictions in mind. Also, the Principles of UNIDROIT and how to use the soft law and the UNCITRAL relative to model law needs to be addressed. The connection between orchestrating/binding together instruments and obligatory standards and public arrangement issues is viewed as an issue on the grounds that the last two breaking point party self-governance and act forestalls the total utilization of instruments to concede assurance to public legitimate requests. UNCITRAL, UNIDROIT, and the Hague Conference should proceed to facilitate and coordinate on all issues identifying with the harmonization of worldwide agreement law, remembering for the usage of existing writings. The continuous work on the Hague Principles and on the methods for deciphering and enhancing uniform law comprise critical strides forward in the modernization and harmonization of global agreement law.

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23. Michael J. Dennis, “ Modernizing and harmonizing international contract law: the CISG and the UNIDROIT Principles continue to provide the best way forward “

Bibliography

Arvind T, 'The Transplant Effect' in Harmonization' (2010) 59 The International and Comparative Law Quarterly 65

De Carolis D, 'Some Features of the Harmonisation of International Trade Law in the Third Millennium' (2010) 15 Millennium, Uniform Law Review 37

Faria J, 'Future Directions of Legal Harmonisation and Law Reform: Stormy Seas or Prosperous Voyage?' (2009) 14 Millennium, Uniform Law Review 5

Fogt M,’Unification and Harmonization of International Commercial Law. Interaction or Deharmonization?’(Kluwer Law International 2012)

Goode R, Kronke H, and McKendrick E, ‘Transnational Commercial Law: Texts, Cases and Materials’ (2ed edn Oxford University Press, Incorporated 2015)

Mugasha A, 'The Reform and Harmonization of Commercial Laws in the East African Community' (2017) 19 Eur JL Reform 306

Pate R, 'The Future of Harmonization: Soft Law Instruments and the Principled Advance of International Lawmaking' (2010) 13 Touro Int'l L Rev 142