University of Nottingham Commercial Law Centre

What is A-National Law? And Why Does It Matter?

Orsolya Toth

When we think about ‘law’ or a ‘legal system’, we usually associate these notions with nation states. When we are discussing rules and legal concepts, we consider them under ‘English’, ‘French’, ‘US’ or ‘Chinese’ law. By contrast, if we do not associate law with a nation state then, almost always, we navigate in the realm of ‘international law’: a law which binds states amongst each other based on international treaties or custom. Traditionally, therefore, legal concepts have either belonged to the sphere of ‘national law’ or ‘international law’. The theoretical foundations of national and international law have, more or less, been clarified by academics. These laws are also routinely applied by practitioners with relative ease  Broadly speaking, they are binding, because a certain state (in the case of national laws) or the community of states (in the case of international law) recognise them as law. 

However, in recent years, a third category of law has gained prominence in academic writings and in commercial practice: the concept of non-state law or a-national law. It has been argued by commentators that there is a body of law emerging beyond the boundaries of nation states which may govern commercial transactions without geographical boundaries. If this is so, that may well jeopardise the settled dichotomy of national and international law. But what is this mysterious ‘third’ legal order? What are its theoretical foundations and how can it be applied in practice?

The answers to these questions are hotly debated. The most enthusiastic supporters of the concept argue that there is a universal, autonomous a-national legal system developed spontaneously by merchants. For these writers, this evolving law is called the new law merchant or, in Latin, the new lex mercatoria. Nevertheless, critics of the concept point out that detaching law from the state is little more than wishful thinking.  They submit that it is axiomatic that ‘law’, as we know it, is either ‘national’ or ‘international’. There is no space for ‘a-national law’ either in theory or practice. The question which arises, therefore, is the following: should we stay within the confines of the traditional dichotomy of law or should we break free from these limitations and investigate, explain and apply ‘a-national law’? 

Plainly, staying within the traditional dichotomy of law is the convenient option. It requires no intellectual effort. We already have most of the answers to the questions of how ‘national’ and ‘international’ law create rights we must respect and obligations we must observe. However, the key difficulty with this alternative is that it is out of touch with commercial reality. The reality of commercial transactions is that businessmen often follow unwritten rules of their trade which are derived neither from a national legal system nor from international law. These trade rules or usages operate as law in commercial practice, yet the crucial issue of how and why they become law has remained unexplained by the majority of writings. If this continues to be the case, legal theory will miss out on a significant new development and legal practice will inevitably suffer as a result. Simply put, law will lag one step behind commercial realities.

Consequently, the more challenging option of exploring how a-national law becomes ‘law’ is the preferred route. It is essential that we, as lawyers, try to grasp how trade usages or unwritten trade rules emerge and operate in commercial practice. 

It should be noted that there have been numerous attempts by academics to explain what a-national law, or the lex mercatoria, is. Most of these do not focus on trade usages. Rather, some commentators argue that the lex mercatoria comprises international conventions which deal with commercial transactions. However, an international convention becomes law because it is ratified by a nation state and therefore it becomes part of its ‘national law’. There is nothing a-national about that. Others equate the lex mercatoria with legal harmonization which is a process that seeks to eliminate the differences between various domestic laws. Yet, legal harmonization is based on a so-called ‘common core’ approach which aims to establish the common rules of domestic laws and develop compromise solutions for international trade. Again, however, if these rules are the ‘common core’ of national laws, they are derived from domestic laws and cannot be truly a-national. 

Ultimately, the argument that regards a-national law as consisting solely of unwritten trade usages is the concept that is able to afford the lex mercatoria a truly a-national status. The question, of course, is how? 

The essence of this approach is that we must adopt a paradigm-shift to our understanding of ‘law’. If certain usages within a business community are recognised as law by that particular community, then, lawyers must also recognise them as law. They must make an intellectual effort to investigate and explain it. Otherwise, once again, lawyers will lag behind those they seek to serve: businessmen and commercial parties. Legal theory and practice must afford a law-making power to business communities and recognise that if certain practices are followed by those members as law, then legal consequences must follow if those practices are violated by community members. Business communities in international trade are not organised according to the borders of nation states. Global business cares about the relevant trade, not where the trader is located. Thus, the rules emerging from these communities will be truly a-national.

To sum up, a-national law consists of unwritten trade usages created by business communities that transcend the boundaries of nation states. A-national law matters hugely both as a matter of theory and practice. As a matter of theory, we need to break through the traditional dichotomy of ‘national’ and ‘international’ law and acknowledge this third category of law. As a matter of practice, we need to serve commercial parties by offering them clear legal concepts and certainty, rather than refuse to acknowledge the very reality that they live on a daily basis.  

October 2019

University of Nottingham Commercial Law Centre

University of Nottingham
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Nottingham, NG7 2RD