Promoting trade through private law: Explaining international legal harmonization

Abstract

A large body of research examines states' efforts to increase international trade through public law, that is, by forming preferential trade agreements (PTAs) that lower governmental barriers to trade. Scholars, however, have overlooked another mechanism through which states seek to facilitate trade: international harmonization of private law. Underlying legal harmonization is the assumption that cross-national variation of commercial law impedes trade; by contrast, similarity of laws across countries encourages trade by reducing uncertainty and transaction costs.

Alienated Twins – The Overlooked Private Law Dimension of Global Trade and Investment Governance

“…Like international regulatory cooperation and harmonizationa better known phenomena in international trade and investment scholarshipthese efforts are seen to reduce legal trade costs by having identical norms apply across jurisdictions thereby limiting the need for country-specific expertise and contract adjustment (de Frahan and Vancauteren, 2006;Hoekman, 2015;OECD, 2015;Pelkmans, 2023). Efrat (2016Efrat ( , 2023 indeed argues that private law harmonization serves as a substitute for preferential trade agreements (PTAs). He finds that developing countries with limited administrative resources, few and shallow PTAs are significantly more likely join the UN Convention on the International Sale of Good (CISG) in order to reduce legal uncertainty and trade costs for businesses involved in trade.…”

“…Such an index would follow in the footsteps of efforts to measure for instance regulatory openness/closure of economies for digital and services trade (OECD, 2021;Ferracane, 2022). At first sight, six components are likely to affect the openness/closure of national private law regimes: (1) the overall (3) general features of domestic private lawsuch as contract and corporate lawand their suitability for complex international business operations (Kötz, 2010;Cuniberti, 2014;Pistor, 2019); (4) state participation in international substantive private law harmonization efforts in areas including in contract, transport, or shipping law (Efrat, 2016;Bogdan and Sender Pertegas, 2019); (5) unilateral and treaty-based judicial cooperation regarding the recognition and enforcement of foreign commercial awards and judgements as well as through comity and deferral practices (Hale, 2015;Nielsen, 2020); ( 6) private international lawor in other words national conflict of law rulesincluding the degree of permitted party autonomy, choice of law, and forum selection (Gottschalk et al, 2007). This list is not definitive or exhaustive.…”

Empowering Civil Society in the Industrial Revolution 4.0

“…In general, each country has a nationally Institutional Arbitration as center of national arbitration in the respective country, such as: Nederland's Arbitrate Institute, The Japan Commercial Arbitration Association, The American Arbitration Association, The British Institute of Arbitrators etcetera. In addition to the regional Institutional Arbitration established by third world countries (developing countries), such as Asia Afrika Legal Consultative Committee (AALCC), the International Chamber of Commerce (ICC), Investment Dispute (ICSID), United Nations Commission on International Trade Law (UNCITRAL) (Asouzu 1999;Efrat 2016;Yunari 2017).…”

Domestic legal traditions and international cooperation: Insights from domestic and international qualification systems

“…Upon embarking on international cooperation on laws and regulations, civil law states are likely to join the international harmonization exercise (Efrat, 2016b). International harmonization of laws is not only possible but also preferred by civil law states because written laws occupy the central position in their legal system (Glenn, 2000).…”