The New, New Lex Mercatoria, or,
Back To The Future*
by L. YVES FORTIER CC, QC**
I. INTRODUCTION
Commercial arbitration exists for one purpose only: to serve the commercial man. If it fails in
this, it is unworthy of serious study.
I TAKE these wise and wonderfully insightful words of our friend and colleague,
Lord Michael Mustill,1 as the essential creed of the commercial arbitrator. The `. . .
iťs the economy, stupiď of the professional world which we  practitioners,
students, administrators, providers of international commercial arbitration 
inhabit. That such a practical, common-sense view of the world is expressed not by
a businessman but by a former Law Lord is noteworthy. That it is expressed in a
text devoted to an assessment of the lex mercatoria is perhaps even more so.
Lord Mustill understood, as I do, the risks inherent in a discussion of the lex
mercatoria. To paraphrase:
Few people are likely to welcome a discussion on the lex mercatoria. The common lawyer will
not look kindly on an addition to the extensive literature on what he may be tempted to regard
as a non-subject, having no contact with reality save through the medium of a handful of awards
which could well have been rationalised more convincingly in terms of established legal
principles. Conversely, a scholar nurtured in other disciplines may well anticipate yet another
reactionary response to any doctrine lying outside the tradition of Anglo-Saxon jurisprudence.2
Yet as I hope to explain, the lex mercatoria is indeed a live subject: more so
today than at almost any time over the last generation. This is so, precisely because
it transcends the constraints of any given juridical tradition.
* Presentation to AAAICCICSID 17th Joint Colloquium on International Arbitration, Washington, DC,
10 November 2000.
** President, London Court of International Arbitration; Chairman, Ogilvy Renault, Montreal, Canada. Mr
Fortier would like to thank his colleague, Stephen L. Drymer, for his invaluable assistance in the
preparation of this text.
1
M. Mustill, `The New Lex Mercatoria: The First Twenty-five Years' (1986) 4 Arbitration International, 2,
86.
2
ibid.
ARBITRATION INTERNATIONAL, Vol. 17, No. 2
# LCIA, 2001
121
II. A QUESTION OF PRACTICALITY
By proposing to address the question of lex mercatoria in the context of a
discussion devoted to `governing law' in international arbitrations, I do not intend
to dwell on the nature or origin of the lex. Nor will I expand at length on the
admittedly fundamental question of whether or not such a beast as an `anational
system of general principles, customs and rules spontaneously referred to,
elaborated and followed in the framework of international trade and commerce'
exists or constitutes a true `law'.
Inspired by Lord Mustilľs injunction, my project is more simple in design,
more practical in orientation. The question whether `the general principles of law'
 or, in this case, the lex mercatoria  conceived as a system, can serve as the
proper law of a contract, depends less on any preconceived notion of what
constitutes a legal system than on whether they can fulfil satisfactorily, in practice,
the function of a proper law, and whether they are, in fact, used for that purpose.3
The typical critique of the lex mercatoria, from the perspective of the lawyer or
business person for whom practicality is all-important, is expressed by Klaus Peter
Berger, as follows:
The problem is both in its `provability', and in finding a comprehensive set of principles within
the lex mercatoria. For problems with determining the existence of any purported principle of
lex mercatoria, just look at its sources: practices followed since time immemorial, or at least
since the Roman ius gentium; ancient cases in dusty tomes; writings of erudite scholars who
passed away about the time the steam engine was revolutionizing industry . . . As a collection of
commercial practices, the content of lex mercatoria has not been discoverable in any single
place . . . Nor has lex mercatoria been `definitive' in the sense of supplying a comprehensive set
of decision-making rules which can be applied to resolve a dispute.4
These concerns are not merely of theoretical interest; they bespeak substantial
scepticism regarding the practical viability not only of the lex, but of any self-styled
system of transnational law. Indeed, the discussion between international practitioners,
who tend to view the lex as meaningless (or at least, of little utility) in the
absence of concrete and workable legal rules, and those scholars and advocates
who focus on developing, first, the theoretical and doctrinal underpinnings
necessary to a positivist system of legal norms, has been less a dialectic than a
dialogue of the deaf, resulting not in synthesis but in stalemate.
The so-called law merchant, if it exists, by definition exists both because of and
for (`to serve', in Lord Mustilľs words) the commercial party; it is therefore worthy
of study by commercial arbitrators who must confront the question: is it such that it
can be applied in international commercial arbitrations?
In 1988, Lord Mustill answered a series of similar questions with a `no'.5 In
truth, however, the questions he posed could be said to have begged such a
response. Then as now, and likely for a long time to come, it is difficult to envisage
3
See Jenks, The Proper Law of International Organisations (1962).
4
Klaus Peter Berger, The Creeping Codification of the Lex Mercatoria (1999), at 5.
5
Mustill, supra, n. 1, at 102.
122 Arbitration International Volume 17 Number 2
an affirmative response to a question such as: `has the lex mercatoria stolen the
international commercial scene, pushing national laws into the wings?'6 Yet, Lord
Mustilľs `no' was, in fairness, tempered by `. . . at least not yet.' Which brings us
back to the present.
In their book, Dealing in Virtue: International Commercial Arbitration and the
Construction of a Transnational Legal Order,7 Dezalay and Garth argue that
international commercial arbitration began to assume its present role, as the preeminent
means of resolving transnational disputes, around 1970, for very
particular historical reasons. The Cold War and NorthSouth tensions in the
post-World War II era gave rise to a need for legal norms, independent of
national legal systems, that could be used to resolve major transnational
commercial disputes and that could, as well, serve as a framework for new
transnational agreements. This, in turn, led to a renewed interest in the lex
mercatoria and to the development of what Lord Mustill and others have called
`the new lex mercatoria'.
Interestingly, it appears that these developments were also behind the growth at
that time of the ICC as an international arbitral institution. In considering why it
should have been the ICC that attained such a pre-eminent position, `. . . rather
than arbitral institutions in London, of older vintage and much world-wide
prestige,'8 such as the LCIA, the authors posit that the answer lies in the fact that,
at the time, it was primarily Continental European, and in particular French, law
professors who possessed both the prestige and the academic freedom to develop
credibly the concept of an anational, autonomous lex mercatoria. Moreover,
French courts of the day maintained a `rather disdainful lack of interesť in the
activities of the ICC, as a private institution, and in the limited arbitration work
undertaken by it at that time. Ironically, this benign neglect on the part of the
courts may have done much to establish the ICC's credentials. By way of contrast,
England then had a well-established and highly respected Commercial Court with
a tradition of overseeing private arbitrations.9
However, as I have indicated, the so-called `new' lex mercatoria proved shortlived.
The argument runs as follows. Just as the new lex was developing a nascent
legitimacy as an independent legal order, based largely on the work of academics,
6
Id.
7
Y. Dezalay and B. Garth (Chicago, University of Chicago Press, 1996).
8
L. Nottage, `The Vicissitudes of Transnational Commercial Arbitration and the Lex Mercatoria: A View
From the Periphery' (2000) 16 Arbitration International 1, 53 at 59.
9
Fortunately, the advent of the new English Arbitration Act 1996 has resulted in somewhat less interference
in private arbitrations by the no less respected English Commercial Court, though the Act has also been
characterized as `unduly statist in approach' by requiring (in section 46(1)) an arbitral tribunal to establish
an applicable `law' (generally considered to mean a national law), rather than the more flexible `rules of law'
(more easily encompassing custom, usage, general principles of law and the lex mercatoria). See `Young
Arbitration Practitioners and the 1996 Act: Let Age Learn from Youth' Editorial in (1997) 13 Arbitration
International 4, at iii. While section 46(2) of the Act permits a tribunal to resolve disputes according to
`such other considerations as are agreed by [the parties] or determined by the tribunal,' the greatest comfort
for those who advocate the practicality of informal `rules of law' such as the lex mercatoria lies in the fact
that s. 46 is not a mandatory provision of the Act, opening the door to application of, for example, Article
14.2 of the LCIA Rules or Article 17(1) of the ICC Rules, which refer explicitly to applicable `rules of law'.
The New, New Lex Mercatoria, or, Back to the Future 123
an entirely new challenge arose: the arrival on the European, in particular the
Parisian, legal scene of some of the major US law firms, followed by their British
cousins, bringing `promises of efficacy and cost-effectiveness, keys to the world of
business.'10 It has been argued that one of the effects of this latter-day storming of
French beaches by lawyers who `. . . had no compunction about pursuing a new
business opportunity . . . [who] treated arbitration like litigation, applying increasingly
sophisticated document and case management techniques, and
developing procedural tactics to assist their clients further . . .'11 was to `[force]
the formalisation of pro-cedure in transnational commercial arbitration' and, along
with it, `the formalisation of the substantive norms of the lex mercatoria.'12 For
these lawyers, the lex constituted neither a true body of law nor, indeed, a practical
one. Worse, whatever it was, the lex was seen to be the product of an earlier
generation of `grand old men' with little to teach the modern practitioner.13 The
result was a return to the sterile debate of the past.
III. GETTING TO THE ROOT OF THE PROBLEM 
THE NEW TREND
More than any other factor, the difficulty in determining the content of
transnational law has typically stood in the way of a serious discussion concerning
the practical usefulness of the lex mercatoria. Practicability  or its lack  is the
watchword.
Recent initiatives and new approaches evidence not only a resurgence of
interest in the issue, but may in fact go a long way toward providing international
practitioners with the workable tools they claim are lacking. At their core, these
initiatives share certain defining traits: informality and pragmatism, rather than an
insistence on overly formal and dogmatic methodology or result. They have also
resulted in what has been called `the new, new, lex mercatoria'.14
In 19941995, two separate yet similar projects revealed to scholars and
practitioners that transnational commercial law is more than a mere abstract
academic subject, `. . . that it is capable of being codified in norm-like principles
and rules together with commentary-like explanations, thus providing international
legal practitioners with a means to apply the lex mercatoria in every day legal
practice.'15
In May 1994, the International Institute for the Unification of Private Law
(UNIDROIT) published its Principles of International Commercial Contracts (the
UNIDROIT Principles). The UNIDROIT Principles set forth what are referred
10
Ibid., at 5960.
11
Id.
12
Id.
13
Id.
14
Id.
15
Berger, supra, n. 4, at 3.
124 Arbitration International Volume 17 Number 2
to as `general rules' for international commercial contracts. Almost one year after
publication of the UNIDROIT Principles, the Commission on European
Contract Law (eponymously referred to as the Lando Commission, in honour
of its Chair, Professor Ole Lando) published its Principles of European Contract
Law.
In addition to sharing the common objective of presenting a kind of modern ius
commune, that is, a contemporary expression of the lex mercatoria, the
UNIDROIT and Lando Principles also share, as mentioned, a common approach
to the subject. Eschewing earlier unsuccessful attempts at formal `codification' (for
example, by means of statutory codes, multilateral conventions or model laws)
these initiatives instead opt for a more informal product, along the lines of
American-style `restatements' of contract (or tort) law. Focusing on the question of
how to give form and expression to the lex mercatoria, instead of being trapped in
endless doctrinal discussions concerning its existence and nature, these initiatives
have arguably freed the discussion from the sterility and stagnation into which it
had fallen.16 The result  a concrete, usable list of principles and rules  addresses
head-on the traditional concern of practitioners that the lex is too abstract and
impractical to be of any use in the real world.17
Surely, the most important attribute of these collections is that they exist. They
can be filed with a judge or an arbitrator, can be referred to by page and article,
and may be located and reviewed easily by all those who wish to understand and
apply them.18 As such, they possess the sort of `definitive' and `provable' qualities
required of a system of law if it is to provide an understandable, workable
framework to govern the dealings of parties to international commercial
transactions. At the same time, however, these initiatives are criticized for lacking
the sort of underlying flexibility which reflects `. . . the peculiar character of the lex
mercatoria which, being an open legal system, requires a similar, open codification
technique.'19
Such an `open' technique has been proposed and elaborated by Berger, and is
suggested in the title to his book, to which I have already referred. This is what he
calls the `creeping codification' of transnational commercial law. Berger's idea 
and, if it proves to be successful, his great innovation  is that it is possible to
distinguish so-called `creeping' codification from more formalized techniques for
defining the lex mercatoria. As with the UNIDROIT and Lando Principles,
creeping codification is manifested in the drafting of a list containing principles,
standards and rules of transnational commercial law. However, unlike other
16
Ibid., at 227 to 228. See also G. Baron, `Do the UNIDROIT Principles of International Commercial
Contracts Form a New Lex Mercatoria?' (1999) 15 Arbitration International 2, at 115.
17
In an arbitration in which the author served as Chairman of the Tribunal, the UNIDROIT Principles, as
well as a substantive domestic law, were applied in the process of determining a partial award. The Tribunal
found that the same conclusion derived from the application of either legal system.
18
Barton S. Selden, `Lex Mercatoria in European and US Trade Practices: Time to Take a Closer Look' 2
Ann. Surv. Inťl & Comp. L. 1995 at 111 et seq.
19
Ibid., at 233.
The New, New Lex Mercatoria, or, Back to the Future 125
means to that end, it is intended to avoid the `static elemenť characteristic of other
approaches and to provide the openness and flexibility required in order to take
account of the rapid development of international trade and commerce. True,
restatements generally, and the Lando and UNIDROIT Principles specifically,
account for this problem insofar as they contain provisions allowing for the
development of new solutions in accordance with their underlying general
principles. Yet, in Berger's view, these `opening clauses' are of only limited
usefulness:
They may help in individual cases but they also reveal the essential weakness of the restatement
technique [what he refers to as the `codification dilemma'] in that they contain an implied
acknowledgement of the fact that transnational commercial (contract) law cannot be put in
statutory form.20
The need for openness and flexibility in a transnational legal system is of a
quality altogether different than in domestic legal systems. I agree with Berger
when he writes:
The lex mercatoria as `law in the making' requires a degree of codificatory flexibility and
subtleness that goes far beyond that which a restatement may provide.21
This requirement, ironically, can only be satisfied by means of  for lack of a
better expression  a sort of enforced informality in methodology, so as somehow
to ensure that, after an initial drafting phase, a list of transnational commercial
principles is capable of being rapidly and continuously revised and updated.
Berger cites the establishment of the Centre for Transnational Law at the
University of Munster (known by the acronym CENTRAL) as creating the
required institutional framework for the task of developing and updating the list.
For myself, however, I cannot help but wonder whether Berger's proposal does
not end up impaled on the horns of the very `codification dilemma' that he himself
invokes. One may legitimately ask whether any institutional framework is able to
maintain the degree of openness and flexibility required to keep pace with the
world of international commerce  particularly the world of e-commerce. Berger
writes of the Centre for Transnational Law as a forum for discussion between all
those who participate in the creation of transnational law: international arbitrators,
practitioners and businessmen. He refers to it as a `law-finding community',
composed of renowned experts, both academic and practitioners, in the field of
transnational commercial law, and the focal point for the exchange of ideas,
concepts and information on the emerging and ever-evolving lex mercatoria. He
may be correct. However, in my view, the importance of his ideas, and in
particular, his own list of principles, rules and standards of the lex mercatoria, lies
less in their correctness than, as with other recent initiatives, in the fact that they
exist.
20
Ibid., at 228.
21
Id.
126 Arbitration International Volume 17 Number 2
Berger's list of 70 norms of `black-letter' transnational commercial law  drawn
from international arbitral and contract practice, backed up by comprehensive
comparative references  is a tremendous achievement. It attempts to unify all of
the various sources of transnational law into a defined yet open-ended set of
principles and rules: general principles of law, previous codification efforts by
various institutions, the case law of international arbitral tribunals, the law-making
or declaratory authority of model contract forms and general conditions of trade,
and concise comparative legal analysis. It perfectly represents the trend associated
with development of what has been identified as the new, new lex mercatoria. For
its scholarship, detail and thoroughness, the list puts the lie to the claim that it is
not possible to point to, and thus not possible to consider basing commercial
relationships on, a discrete body of transnational commercial norms. Berger's
`creepy code' is undeniably a major contribution to the field of transnational law.
On the other hand, I imagine that Berger himself might demur, and that for him
the most significant contribution is not the list per se, but the technique that gave
rise to it and is meant to ensure its open-endedness and continuing evolution: the
technique of creeping codification.
So many treatises on the subject of the lex mercatoria conclude with some form
of the clicheÂ: `. . . only time will telľ. As in, for example: whether or not the lex
becomes part of the grab-bag of tools and mechanisms regularly employed by
parties and arbitrators in day-to-day international commercial practice . . . only time
will tell. For my part, only time will tell whether `creeping codification' becomes a
trend  or whether it means anything in practice. However, it is evident that the
idea of `the lisť, in its several manifestations (e.g. Lando; UNIDROIT; Berger) is
as close as we've come, in recent generations, to tackling the lex and wrestling it
into usable shape.
IV. CONCLUSION
It has been said that `. . . custom, not law, has been the fulcrum of commerce since
the origins of exchange.'22 No doubt this is true, as far as it goes. Business,
especially international business, requires practical and commercially sensible
solutions to the myriad practical and economically significant disputes that it
spawns. Such solutions are likely more easily found within the realm of
commercial practice rather than legislative pronouncement. The application of
custom-based solutions, which are by their very nature `transnationaľ, serves to
avoid much of the unpredictability of domestic substantive legal rules and
complicated conflict of laws doctrine. Yet, as we all know, the lex mercatoria is not
without its problems, especially in regard to the basic question of whether and how
it can be used as a governing law in day-to-day practice.
22
L. Trakman, The Law Merchant: The Evolution of Commercial Law (1983) at 7.
The New, New Lex Mercatoria, or, Back to the Future 127
The recent work of Klaus Peter Berger and others constitutes a new and very
constructive trend in dealing with these problems. This trend consists, simply, in
drawing up the lex, rather than engaging in drawn-out discussion of whether or not
it is possible or worthwhile to do so. Focusing on how to codify the lex has made it
possible to do so.
In 1622, Gerard Malynes published his treatise:
Consuedo, vel, Lex Mercatoria: or, The Law Merchant: Divided into three parts, according to
the Essential Parts of Trafficke Necessary for All Statesmen, Judges, Magistrates, Temporal and
Civil Lawyers, Mint-Men, Merchants, Mariners and Others Negotiating in all Places of the
World.
Malyne's rather . . . comprehensive . . . text contains one of the first legal
commentaries on international commercial arbitration in England, and remains, in
many respects, as relevant today as then. The treatise also contains the following
description of the lex mercatoria:
Every man knoweth, that for Manners and Prescriptions, there is great diversitie amongst all
Nations: but for the Customes observed in the course of trafficke and commerce, there is that
sympathy, concordance and agreement, which may be said to be of like condition to all people,
diffused and spread by right reason, and instinct of nature consisting perpetually. . .
And this Law of Merchants hitherto observed in all countries, ought in regard of commerce,
to be esteemed and held in reputation as the Law of the Twelve Tables was amongst the
Romans. For herein you shall find every thing built upon the foundations of Reason and
Justice.
Think what one will about the currency, relevance and viability today of a
loosely organized system of transnational legal principles, rules and standards
derived from the usages, customs and practice of international commerce, some of
which date back several centuries, the fact remains that the concept simply refuses
to die. Indeed, it may well be that this old dog still has some tricks to teach us.
A friend remarked last week, as I was preparing for this Colloquium: if iťs the
`ancienť law merchant, how can it be a new trend? My response was that
sometimes one must look back to look forward. In the Tempest, Shakespeare
observed: `Whaťs past is prologue.'23 In the case of the lex mercatoria, it could be
that whaťs past is also whaťs to come.
23
The Tempest, II, i, 261.
128 Arbitration International Volume 17 Number 2