Define: Lex Mercatoria

Lex Mercatoria, also known as the Law Merchant, is a body of customary international commercial law that governs international trade and commerce. It is a set of principles and rules that have evolved over centuries to regulate business transactions between merchants from different countries.

While Lex Mercatoria is not a formal legal system enacted by any specific government or international organisation, it is recognized and applied by international arbitrators and courts in resolving disputes. Therefore, it can be considered legally binding in the context of international commercial transactions.

The main sources of Lex Mercatoria include international conventions, model laws, trade usages, customs, and general principles of law recognized by the international community. It is a flexible and dynamic legal framework that adapts to the needs of international trade.

Unlike national laws that are specific to a particular jurisdiction, Lex Mercatoria transcends national boundaries and applies to international commercial transactions. It provides a uniform set of rules that parties from different legal systems can rely on to resolve disputes.

Parties to a contract can choose to exclude or modify the application of Lex Mercatoria by explicitly stating their intentions in the contract. However, if the contract is silent on the choice of law, Lex Mercatoria may be implied as the governing law, especially in international trade.

Lex Mercatoria is primarily enforced through international arbitration. Parties can agree to resolve their disputes through arbitration, and the arbitrators, who are experts in international trade law, apply Lex Mercatoria to reach a fair and equitable decision.

Lex Mercatoria is primarily applicable to commercial contracts, particularly those involving international trade. It may not be suitable for contracts that are purely domestic in nature or those governed by specific national laws.

While Lex Mercatoria is primarily applied in international arbitration, domestic courts may also consider its principles and rules in certain cases, especially when dealing with international commercial disputes. However, the extent of its application may vary depending on the jurisdiction.

While Lex Mercatoria is widely recognized and applied in international trade, its recognition and acceptance may vary among countries. Some jurisdictions may have reservations or limitations regarding its application, while others may fully embrace its principles.

In cases where national laws conflict with Lex Mercatoria, national laws generally take precedence. However, if the parties have explicitly chosen Lex Mercatoria as the governing law in their contract, it may prevail over conflicting national laws, especially in international arbitration.