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TEXT 4. LEX MERCATORIA AND INTERNATIONAL COMMERCIAL LAW IN HISTORICAL PERSPECTIVE
Lex mercatoria, law merchant, can be regarded as one of the early forms of what we today call international commercial law or international trade law. In fact, in the history of international commercial law, lex mercatoria was often inseparable from maritime law. Merchants were often those who sailed across seas. Both the law merchant and maritime law dealt with the commercial transactions involving merchants, even though the law merchant might have been regarded rather as a special law for 'mercantile transactions than a special law for merchants'. It appears from the English literature that 'law merchant' might have been a special term of English law, although lex mercatoria did not originate from English. Before the seventeenth or eighteenth centuries, law merchant represented a body of special legal rules separate from the common law. There was even a power struggle between the English Court of Admiralty and the common law courts as to who had appropriate jurisdiction over the enforcement of lex mercatoria before the middle of the seventeenth century. The matter was finally settled in the eighteenth century by the work of Lord Mansfield and lex mercatoria has since become a part of the ordinary law of England'. Today, lex mercatoria, or law merchant, is more or less used as a synonym of the more modern term 'commercial law'.
The development of international trade law can be divided into three stages. 'The first was the period of the medieval law merchant, the old lex mercatoria. The second was the incorporation of the medieval lex mercatoria into the national systems of law in the seventeenth to nineteenth centuries. And the third period is the contemporary phase which began in earnest after the Second World War37. For the purpose of our study, we will briefly review the first stage of lex mercatoria only.
Before the Middle Ages, law merchant, lex mercatoria, was largely based on customs. In Edward II's day in England merchants were summoned to give evidence on the customs of the trade before the King's Bench when there were doubtful points in lex mer-countries. 'This meant that if a merchant was unable to obtain justice against a foreigner in the foreigner's court, then his own government would authorise him to recoup himself out of the property of any merchant of the foreign jurisdiction in question whom he could find.' The spirit of this primary rule of justice is still seen in the present rules of conflict of laws applicable to commercial disputes.
The lex mercatoria slowly grew into part of the English law. The Statute of Merchants (or Statute of Acton Burnell), passed in 1283, was intended to bring speedy settlement of commercial disputes between merchants trading in England for the purpose of attracting more foreign merchants to that country. The statute allowed a creditor (probably a seller) to sue a debtor (often a buyer) before the Mayor of London, York or Bristol, who had power to sell the property (most likely movables) of the debtor to satisfy the legitimate claim of the creditor. If necessary, the mayor could ask the Chancellor to issue a writ directing a sheriff of another town, who had jurisdiction over the movables of the debtor to sell them to satisfy the creditor's claim. In 1303 the Carta Mercatoria was made. The Act recognised law merchant as part of the English law. It exempted foreign traders from local taxes and gave them a freedom to trade throughout England. It also allowed a jury for a commercial dispute involving a foreign merchant to consist of half Englishmen and half the countrymen of the foreign merchant. In 1311, the government stated in ordinances that the Statute of Merchants 'should only apply to merchants, and to debts arising from the sale of goods', and extended the application of the statute to twelve cities or towns. In 1353, the Statute of the Staple was passed. This statute created the Courts of Staple for dealing with disputes between merchants. It allowed the disputes to be 'ruled by the law merchants' and not by the English common law.
Attracting more foreign merchants to England and commercial expediency appeared to be the major concerns of these English statutes. Commercial customs and usages might have been used to support the notion of speedy justice. For English merchants engaged in commercial disputes, the right of reprisal by the King was the major means through which the government attempted to ensure justice for its merchants trading overseas.
Two people played important roles in incorporating mercantile customs into the English common law. Lord Mansfield, who became the Chief Justice of the King's Bench in 1756, believed that 'any satisfactory system of commercial law must be in harmony with the recognised mercantile customs of other civilised nations'. Similarly, Sir John Holt, the Chief Justice of the King's Bench in the early eighteenth century was said to have also believed that 'any sound commercial law should be based on mercantile customs'. Indeed, there are reported cases going back as early as the reign of Edward I, where the customs of merchants were considered for determining liabilities between merchants in commercial disputes. For example, in the thirteenth century, the customs of merchants were applied by the courts to determine the existence of a debt between the merchants. Later, in Milton's case, decided in 1668, the parties disagreed as to whether an English custom, that a merchant who had accepted a bill of exchange was 'chargeable with the sum therein contained', should apply. Hale CB was of the opinion that 'it was worthwhile to enquire what the course has been amongst merchants, or direct an issue for trial of the custom amongst merchants in this case'. Similarly, the customs of merchants were accepted as applicable rules in Woodford v Wyatt, Browne v London and Sarsfield v Witherley. After the seventeenth century, the law merchant became part of English common law.