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Why transplants rarely work –

Commercial Law – where from and where to? Conference, Law School – CCLS, Queen Mary College, University of London London, 7 and 8 February 2008 Herbert Kronke, Secretary-General UNIDROIT www.unidroit.org. Why transplants rarely work –

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Why transplants rarely work –

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  1. Commercial Law – where from and where to?Conference, Law School – CCLS, Queen Mary College, University of London London, 7 and 8 February 2008Herbert Kronke, Secretary-General UNIDROITwww.unidroit.org Why transplants rarely work – why convergence is insufficient in commercial law – methodical changes of paradigm in the harmonisation of commercial law

  2. Legal Transplants I Successful: - transplantation through imperialism (Rome; France to sub-Saharan Africa; England to colonies) - invited transplantation and transplantation based on shared values/ ideology (France to other European and Latin American countries, Quebec, Louisiana; Swiss Civil Code to Turkey; German BGB to Greece, Japan, China) Doubtful/failure: - invited or solicited by scholars, donor countries, business interests, etc (René David-Ethiopia; USA and others - Central- Asia; USA-Rwanda; special case Vietnam)

  3. Legal Transplants II • Motive power for adoption of foreign law - Imposition by conqueror or settler - Urgent need for off-the-shelf set of laws governing investment and commercial transactions guides decision to borrow elsewhere • Sustainability of imported/imposed laws - Depending on circumstances at receiving end (Turkey (+); Ethiopia (-)) • The Quest for autonomy, and the difficulty to let go • Example: draft OHADA Uniform Act on Contracts

  4. Legal Transplants III • Special issue: transplantation of specific legal institutions - German law of groups of companies to Portugal, Brazil, Croatia - trust to pure civil-law countries • Hypothetical transplants with high likelihood of failure: reasons - Article 9 UCC (umbrella "security interest" based on publicity) to Germany - German system of secured transactions (retention of title and fiduciary transfer of ownership without disclosure) to any other system

  5. Convergence I Three groups of comparatists • Legal systems differ fundamentally and are unique • Praesumtio similitudinis as point of departure; global economic activities, migration, etc. are pushing legal systems towards convergence in many areas; task of comparative law and transnational commercial law is helping convergence come about • Neither uniqueness nor inexorable move towards convergence: comparative law’s responsibility to provide tools that enable us to fathom the degree of and the reasons for similarity, diversity, convergence (and maybe, to make recommendations in favour or against maintaining diversity, embarking on harmonisation efforts)

  6. Convergence II • Extreme convergenists - unlikely that elements of diversity will resist pressure from economic realities - planned and intergovermentally structured harmonisation [= treaties] as well as lex mercatoria [= harmonisation not based on sovereignty] sometimes contribute to, sometimes only reflect existing convergence – consequently, restatements needed • Realistic assessment - neither uniqueness nor inexorable convergence; spontaneous and autonomous convergence too slow to respond to the needs of commerce and finance, in particular where legal infrastructure underdevelopped - Two conditions for high degree of convergence: (1) supra- national starting point for legal reasoning; (2) administered by skillful supra-national judicial system - except in federations or Regional Economic Integration Organisations neither condition satisfied

  7. Need for innovative methods in planned and targeted harmonisation of commercial law • The "commercial approach" to harmonisation of commercial law - comparative studies & economic impact assessment studies (example: 2001 Cape Town Convention and Protocols) - objectives and participants in process - conduct of negotiations (example: default & insolvency) • The "functional approach" - example: Article 7 draft Convention on Substantive Rules regarding Intermediated Securities - results • Why transplant impossible – why convergence no solution – why planned intervention required and promising

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