HARMONIZATION APPROACH

For a better choice of words, I refer to the explanation given by the late Professor John Ademola, who described the harmonization approach as follows:

"Harmonization relates to a process whereby national laws are not totally ignored but instead community law becomes integrated within the framework of national laws. By community agreement, some degree of uniformity is achieved with respect to transactions that the community laws are to govern.

Thus, national laws operate as long as those laws are not inconsistent with the community laws’ requirements. Further, where national law differs in substance from the community law, the former adopts adjustments and amendments imposed for the purpose of achieving the objectives of community laws. Identity of the laws is not required.

Harmonization can be obtained by having a new set of laws replace the countries’ existing laws, but it can also result from non-identical national laws that achieve substantially the same outcomes. The issue, of course, is that each member nation, and ultimately the collection of member nations, must compare and coordinate laws that are different on their face, and then agree on their actual impact.

In addition to a potential harmonization among the member countries, if the community has supranational institutions, these may promulgate laws as well, resulting in a need for vertical harmonization. In this arrangement, the member nations’ local laws may coexist with the supranational pronouncements, thereby creating another area of potential conflict."

Roy Goode, for instance, identifies judicial parallelism as one of the means of harmonization, wherein states use their courts to exercise the comparison and coordination of national laws, which are different in nature. According to the learned author, judicial parallelism is an increasing source of transnational commercial law and provides vivid examples of the way in which the approaches of courts in different countries to new ideas and commercial instruments tend to converge, subordinating established doctrine to market needs.

He cites the case of Trendtex Trading Corp v Central Bank of Nigeria [1977] Q.B. 529, where the English court modified its principle on the absoluteness of state immunity, aligning it with the laws of most other countries that exempted commercial acts of state from immunity to legal suit.

In international law practice, various techniques exist for harmonizing national laws.

Clive Schmitthoff identifies two methods:

1. International legislation (treaties), such as the New York Convention on the Enforcement and Recognition of Foreign Arbitral Awards.

2. International Commercial customs, including the UNCITRAL Model Law or the Universal Model for Business Contract by Emeritus Professor Barthélémy Mercadal.

Spanogle outlines four harmonization techniques:

1. Uniform substantive law

2. Uniform choice of law rules

3. Lex mercatoria (a collection of rules governing merchant trade in Europe)

4. Standard form contracts

Lukas Mistellis classifies harmonization methods into two main categories based on the distinction between mandatory or optional rules and their proximity to the parties: hard law, soft law, and softer law (or extra-legal standards).

For hard laws, Lukas explains:

"It consists of international conventions, national statutory law, and regional or international customary law. Only a small proportion of hard law rules are mandatory, usually being specific to national legal systems.

Their 'hardness' stems from the fact that when parties make an effective choice of substantive law, they must accept the law as it stands. They cannot modify it but may amend it with contractual stipulations. A notable example is the 1958 New York Convention on the Enforcement and Recognition of Foreign Arbitral Awards."

For soft law, Lukas states:

"It consists of provisions in model laws (not incorporated into national law), principles found in legal guides, and scholarly restatements of international commercial law. Contractual stipulations agreed upon by the parties, which do not conflict with mandatory rules or public policy principles, also fall under soft law. These rules are not legally binding or enforceable unless the parties to a commercial transaction decide otherwise.

Thus, soft law is capable of developing legal effects, even when not expressly included in contracts. Soft law often provides guidance for party conduct, contract interpretation, or negotiations, and is often the recommended method for harmonization."