Leading commercial law
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Leading commercial law
Former lord chief justice says we can’t just muddle through
English commercial law needs effective leadership if it is to maintain its position in the world’s market place, a former lord chief justice of England and Wales said in a lecture this month.
Delivering the third of his three Hamlyn lectures at Guildhall in the City of London, Lord Thomas of Cwmgiedd set out what he thought would be needed for England to maintain its position as the primary provider of transnational commercial law1:
It must engage in the development of principles, model laws and other instruments. It must show more visibly that English law in its development is a system that takes account of the importance of the development of transnational model laws, standard terms and principles and, just as in the nineteenth century and more recently in its examination of good faith, takes account of other national laws.
“Muddling on is not a viable option,” insisted Thomas, who was chief justice from 2013 to 2017. “The provision of effective leadership to realise some or all of the options is an urgent task.”
These options might include:
helping the courts to develop case law;
promoting codification and restatements;
a strategy for engagement in the development of transnational law; and
leadership for the courts in developing transnational law.
Developing case law
“The English common law method of developing commercial law through case law has been seen as one of England’s unique characteristics,” Thomas said. But other legal systems were adopting — and adapting — common-law techniques.
In his view, our courts needed to be aware of what these courts were doing. “If English law is to continue as a system used transnationally, then it must demonstrate it is transnational in the way it makes law.”
But, he argued, any such developments needed to be viewed from the perspective of the markets. Otherwise there was a risk of undermining commercial certainty.
Codification and restatements
Codification involves converting judge-made law into legislation. The former chief justice saw no realistic prospect of parliament finding the time needed for that.
The alternative, said Thomas, would be a restatement of the law:
A restatement has significant advantages. It is not a code, but states the law in principles with reference to the cases from which it is derived. It is in no way binding on courts. Its statements of the principles can be revised, kept up-to-date and modified as cases develop the law.
However, it is difficult to see how restatements could be formulated and command in England the wide acceptance that restatements have commanded in the US without some institutional structure, market input and support.
Engaging in development
“In the short term,” said Thomas, “it is difficult to foresee parties to traditional commercial transactions moving away from their preference for a national law, such as English law, used transnationally. It has a body of learning which can be applied to most situations and is predicable.”
However, he continued, “for commerce based on digital assets and products, the question is much more open”. It would be possible to develop new model laws. These would not have binding effect but harmonisation could be achieved if each state based its own laws on a uniform international standard.
Leadership for the courts
“Whichever of these options has the greatest attraction,” said Thomas, “it is the role of the courts that is of central importance in ensuring that English law is kept at the forefront and remains a dominant national system of law used transnationally.”
Meanwhile, foreign commercial courts were developing in an increasingly competitive market place:
If England is to retain its position as providing de facto transnational law, it has to be transnational not only in outlook but in active participation and cognisant of the merits of other systems.
The future
“A legal system must never be complacent,” Thomas concluded. It must adapt to meet changing needs for the benefit of the people.
Pressed afterwards to say what changes he thought were needed and how change should be led, the former lord chief justice modestly declined to be drawn.
An expanded version of this year’s Hamlyn lectures will be published by Cambridge University Press in 2025. I am a member of the committee that organises the lectures — which were first delivered in 1949.
Transnational law has been defined by Professor Sir Roy Goode as “that set of private law principles and rules, from whatever source, which governs international commercial transactions and is common to legal systems generally or to a significant number of legal systems”.