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Wednesday, May 22nd 2019

The ACP Legal Association

  • OHADAC and ACP Legal

    The partisans of this project, called OHADAC (Organisation for the Harmonisation of Business Law in the Caribbean), decided to meet within the framework of the association ACP Legal, to help interested Caribbean States to implement the project.

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  • OHADAC in brief

    This brochure has been published by the ACP Legal Association.

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OHADAC PRINCIPLES ON INTERNATIONAL COMMERCIAL CONTRACTS

ABBREVIATIONS

ADR: Alternative Dispute Resolutions

CESL: Common European Sales Law included in the Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law of 11 October 2011.

CG: Convention on Agency in International Sale of Goods, held in Geneva on 17 February 1983

CISG: United Nation Convention on Contracts for the International Sale of Goods, held in Vienna on 11 April 1980

DCFR: Draft Common Frame of Reference

OHADA: Organization for the Harmonization of Business Law in Africa

OHADAC: Organization for the Harmonization of Business Law in the Caribbean

PECL: Principles of European Contract Law (Principles of the Lando Commission)

UCC: Uniform Commercial Code (USA)

UP: UNIDROIT Principles on International Commercial Contracts

UNIDROIT: International Institute for the Unification of Private Law

INTRODUCTION

1. Background of the OHADAC Principles on International Commercial Contracts

OHADAC (Organization for the Harmonization of Commercial Law in the Caribbean) was created as an institution the main objective of which is the convergence, harmonisation or unification of Commercial Law in the Caribbean countries. It is considered that harmonisation is the best way to facilitate and foster international trade in this regional area and also, in the long term, to join efforts so as to reinforce the region's role within the global market, all the while strengthening economic and political links among Caribbean countries. The Caribbean is a strategic region characterised by a distinctive political diversity, located in a geographic area of great interest for international trade, due to its proximity to major developed economies such as the United States or emerging markets such as Mexico, Colombia and Brazil. However, despite this proximity, even in cases where certain micro-states share the same island (Saint Martin/Sint Maarten), Caribbean States have not succeeded in establishing close communication from a legal or economic point of view. This has proved detrimental to their commercial relationships and closed the door to strategic alliances that could reinforce their common international standing.

The OHADAC Project was created on the occasion of a conference held in Pointe-à-Pitre (Guadeloupe) on 15 May 2007, organised by the Caribbean Community (CARICOM), the Caribbean Chambers of Commerce and Industry and the Pointe-à-Pitre Chamber of Commerce and Industry. Guadeloupe, led an initiative of the French Overseas Departments, with the backing of regional cooperation funds and INTERREG European funds, and consequently played a central role in the implementation of this project. It also defined the participation of other countries through the creation of regional and national chapters of “ACP Legal” associations. These are non-governmental organisations, which are today represented in several Caribbean countries.

In June 2008, a second OHADAC Conference was held in Port-au-Prince to define the priorities for harmonisation. In June 2010, OHADAC was the focus of the Latin-American and Caribbean Congress on International Commercial Arbitration held in Havana, which concluded with the “Declaration of Havana”1 that formalised the attempt to promote and advance the harmonisation of commercial law in the Caribbean. In October 2010, there was a training course in the field of commercial and investment arbitration in Panama, which was already aimed at drafting OHADAC Rules on Arbitration.

Within the context of the priorities established by OHADAC, four proposals were eventually considered concerning contract law, company law, private international law and arbitration, each geared towards different strategies. The OHADAC principles of international commercial contracts are aimed at meeting the harmonisation needs raised in the first draft legislative instrument. The work on a project began in October 2013 and was completed in December 2014.

2. The territorial framework of the Principles as a determining factor: the “OHADAC” territory

Although it was inspired by the OHADA experience, from the very beginning, the OHADAC Project was mindful of the divergences between the two organisations, which did not allow the mere importation of the strategy followed by primarily French-speaking African countries. In contrast with the basically common tradition of the States that constitute OHADA, right from its early days, the OHADAC Project was confronted with the diversity and heterogeneity of the Caribbean countries.

A significant aspect of the territorial context of the OHADAC Principles on international commercial contracts is the large number of international organisations around the Caribbean. Some countries belong to the Caribbean Community (CARICOM), the CARIFORUM, the Association of Caribbean States (ACS), the Organisation of Eastern Caribbean States (OECS), the Rio Group or the Community of Latin America and Caribbean States. The aim of these organisations, at least in part, is economic integration. Several countries belong to regional organisations that exceed the bounds of the Caribbean, but tend to similar goals in terms of legal harmonisation or economic integration: ALADI, ALBA, OAS (CIDIP), Commonwealth, etc. This plurality of international organisations is similar to the situation that characterised OHADA in Africa, where it did not prevent the successful harmonisation of commercial law through a new specific organisation such as OHADA is. Although OHADAC does not intend, at least in the beginning, to play a role as wide as that of OHADA in Africa, it is aiming to contribute to the same target in the Caribbean. The OHADAC Principles on international commercial contracts are therefore a key element to achieve this goal.

The OHADAC area concerns about thirty independent States and more than forty different territories. There are twelve continental countries, eleven of which are independent States: Colombia, Costa Rica, Guatemala, Honduras, Mexico, Nicaragua, Panama, Venezuela, Suriname, Guyana, and Belize. French Guiana is a French overseas community under French sovereignty. Island countries are more in number and more heterogeneous. On the one hand, there are the independent States: Cuba, Dominican Republic, Haiti, Antigua and Barbuda, Dominica, Grenada, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Saint Lucia, Bahamas, Barbados, Jamaica and Trinidad and Tobago. Then, there is also a set of countries under French sovereignty (the overseas departments of Guadeloupe and Martinique and the overseas communities of Saint Martin and Saint Barthélemy), under British sovereignty (Anguilla, Cayman Islands, Montserrat, Turks and Caicos Islands, British Virgin Islands and Bermuda (which is not part of the Caribbean in the strict sense), under Dutch sovereignty (Bonaire, Sint Eustatius and Saba, which belonged to the former Netherlands Antilles, after the new political status acquired on 10 October 2010). Finally, the special status of Puerto Rico (Commonwealth of Puerto Rico, unincorporated territory of the U.S.A.) must be stressed, as well as the Virgin Islands of the U.S.A. and Curaçao, Aruba and Sint Maarten (autonomous constituent countries of the Netherlands).

In political terms, OHADAC groups together one sixth of the States of the international community and around 260 million inhabitants. The linguistic and cultural heritage of these countries is as diverse as their levels of proximity with their former mother countries. While the Spanish-speaking countries have a wide tradition as independent nations that date back to the 19th century in all cases, many territories of French, English or Dutch tradition still belong to the mother nations or obtained independence during the second half of the 20th century.

The diversity is not only political, but also cultural. OHADAC territories show a large array of languages: Spanish, French, English, Dutch, apart from indigenous tongues, which are particularly common across the continent, and mixed languages (Creole and Papiamento). Spanish clearly prevails on the continent and even in countries such as Belize, where English is the unique official language, but Spanish is commonly used. However, Dutch (Suriname) and French (French Guiana) are also spoken on the continent. This linguistic diversity, which is not necessarily cultural, gives a glimpse into significant differences in the legal sphere, which are not always self-evident.

Most of the continental and island countries of the Caribbean have legal systems based on civil law while their contract law follows French and Spanish traditions. French law extends its influence beyond its overseas departments and communities (Guadeloupe, Martinique, Saint Martin and Saint Barthélemy). Haitian contract law, which is basically included in its Civil Code, is based on the French civil law model. Dominican Republic, although it is a Spanish-speaking country and was for centuries a Spanish colony, shares these French roots, particularly in the legal field: its Civil code is word for word the same that the French. Likewise, Saint Lucia maintains, only in part, a French legal culture, directly imported from the Civil Code of Quebec. Spanish-speaking continental territories (Colombia, Venezuela, Costa Rica, Guatemala, Honduras, Nicaragua, Panama and Mexico) have also incorporated the heritage of the Napoleonic Civil Code. It must be stressed that most of these countries, despite their Spanish tradition, achieved independence during the first quarter of the 19th century, that is, long before the enactment of the Spanish Civil Code in 1889. Spanish legal and cultural tradition has obviously been important in these countries. At the same time, the fact that the Spanish Civil Code itself is clearly based on the Napoleonic Code blurs and muddles legal influences that are very frequent. For their part, Cuba and Puerto Rico obtained their independence from Spain in 1898 and in both countries the Spanish Civil Code was in force for decades, even after independence. In the case of Puerto Rico, the influence from USA has also been relevant from a legal point of view, as well as in other common-law countries or in countries like Panama.

Civil law influence is also palpable within the territories (both continental and island) under Dutch sovereignty or tradition, and even exists alongside common law in countries such as Guyana. The former Dutch Civil Code corresponded to the Napoleonic Code and was in force in the Netherlands and its territories until the reform in 1992. The new Dutch Civil Code, inspired by German law, took a new turn (transferred to the Civil Code of the Netherlands Antilles and Aruba) and borrows significantly from the German BGB. Such a change has an impact in the contract law applied in the island countries subject to Dutch law (Bonaire, Sint Eustatius, Saba, Aruba, Curaçao, Sint Maarten) as well as in Suriname, an independent republic since 1975 but which has incorporated the new Dutch Civil Code into its legal system.

The influence of common law is evident, first of all, in the islands under British sovereignty (Anguilla, Cayman Islands, Montserrat, Turks and Caicos Islands, British Virgin Islands and Bermuda). The same influence exists in independent countries with a colonial past related to the United Kingdom. Under the aegis of common law are independent countries that belong to both the Commonwealth and the OECS (Antigua and Barbuda, Dominica, Grenada, Saint Kitts and Nevis, Saint Vincent and the Grenadines and Saint Lucia) or only to the Commonwealth (Bahamas, Barbados, Jamaica, Trinidad and Tobago, Guyana and Belize). Caribbean Commonwealth countries have kept the British court procedural structure. In most of these countries there is a court of first instance (High Court) and a Court of Appeal. The OECS countries (Anguilla, Dominica, Saint Kitts and Nevis, Saint Vincent and the Grenadines and Saint Lucia) have these two instances within a common jurisdiction: the Eastern Caribbean Supreme Court (ECSC), whose headquarters is located in Saint Lucia. The highest court of appeal (or court of last resort) is mainly the Judicial Committee of the Privy Council in England, which has been replaced in some States (Barbados, Belize and Guyana) by the Caribbean Court of Justice, based in Trinidad and Tobago. There is an ongoing debate in Caribbean legal spheres about the continued jurisdiction of the Privy Council.

Common law applies in the Caribbean islands by virtue of different titles and historical reasons. The method of reception of English common law varied depending on whether the countries were claimed by settlement or by conquest or cession. In the first case (Antigua, Bahamas, Barbados, British Virgin Islands, Montserrat, Saint Kitts and Nevis), the reception of common law was through settlement and no further legal rules were necessary. Conversely, colonies incorporated by conquest or cession generally kept the law in force at the moment of conquest or cession (Belize, Dominica, Guyana, Grenada, Jamaica, Saint Vincent and the Grenadines, Saint Lucia and Trinidad and Tobago), so that incorporation of common law usually required the enactment of specific statutes of reception. However, this distinction of titles is purely indicative, since in actual fact, the history of reception of common law in Caribbean countries is hard to untangle. Thus, for instance, in the British Virgin Islands, the Common Law (Declaration of Application) Act was enacted in 1705, and although equity law was not formally extended until the West Indies Associated States Supreme Court in 1969, it is accepted that such a manifestation of English law was actually applied by Courts long before that date. In practice, application of common law is based on legal rules [e.g. Section 31 Supreme Court of Judicature Act, Ch 117 (Barbados); Section 48 Judicature (Supreme Court) Act (Jamaica); Section 12 (Supreme Court of Judicature Act, Ch 4:201 (Trinidad and Tobago); Section 15 Supreme Court Act, Ch 53 (Bahamas); Civil Law of Guyana Act (Guyana) Ch 6:01] or implemented by proclamation (e.g. Proclamations of 1763 for Dominica, Saint Vincent and the Grenadines or Jamaica) or in constitutional texts. In the case of Jamaica, reception took place, as mentioned above, in different ways, particularly through the establishment of its colonial status in Section 22 of the Statute 1 Geo II Ch 1 of 1728.

In countries under British sovereignty, the special relationship between English law and the colonies implies that the relevance of English statute law is very similar to that of independent countries. In principle, Statutes and Acts of Westminster Parliament generally apply in the colonies when they expressly or clearly establish it (Colonial Laws and Validity Act, 1865), but such an application shows blurred boundaries due to the legal powers of the colonies themselves, a presumption favouring restricted effects of written law to United Kingdom and a principle of non-interference in the law of the Commonwealth countries. This was the pronouncement of the Privy Council in Al Sabah v Grupo Torras et al [2005, 2 WLR, 904 (CI)], a case that involved relationships between English statues and the legal autonomy of the Cayman Islands.

In any case, distinctive characteristics are more pronounced in the countries that not under British sovereignty. Obviously, the evolution of Caribbean systems based on their own requirements and particularities is nowadays at the heart of legal debate. Not only is the appropriateness of maintaining the appeal system through the English Privy Council is often questioned, but also, Caribbean courts emphasise the need for adjusting common law to their own evolution since independence (decision of the Trinidad-Tobago Court of Appeal in Boodram v AG and Another, 1994, 47, WIR 459).

It is true that the specific characteristics of Caribbean systems compared to English law are manifested mainly in matters closer to their cultural and ideological roots such as family law (same sex marriages) or public law, than in contract law. However, OHADAC Principles on international commercial contracts could contribute to forging the identity of Caribbean law and also enhance harmony with the common law tradition.

The influence of common law is also present in the increasing significance of US law in some Caribbean systems such as Puerto Rico, the American Virgin Islands or even Panama. Some “Americanisation” of the Caribbean common law has also been pointed out. However, these influences are not often pure. For instance, Puerto Rico shares a marked civil law culture as is the case with small countries such as Saint Lucia or Guyana, which are often considered as mixed or hybrid systems. In Guyana, the civil law culture inherited from Dutch law survives together with the common-law tradition. Their relationships are evident in the Civil Law of Guyana Act (Guyana) Ch 6:01, which tries to streamline and adapt the surviving institutions of Roman-Dutch law to common law. The hybrid system of Saint Lucia combines common law elements with French influences, the legal system of Quebec and indigenous institutions within its Civil Code of 1879, adapted to common law in 1956 [Civil Code (Amendment Ordinance)], particularly in the field of contract law (Article 917 A). The uniqueness of this hybridisation can be represented by the turning of English consideration into civil law requirement of “causa” [Velox and Another v Helen Air Corporation & Others, 1977, 55 WIR 179 (CA)]. The Saint Lucia Civil Code is currently being reformed.

The asymmetry of influences and legal traditions reappears in international sources of contract law, which must also be considered in the framework of a strategy of regional legal harmonisation. The 1980 Vienna Convention on the international sales of goods (CISG) has been ratified by Cuba, Dominican Republic, Honduras and Colombia, as well as by common-law countries such as Saint Vincent and the Grenadines and Guyana. Certainly, United Kingdom is at this moment out of the Convention, but it has been ratified by the USA, France and the Netherlands. The CISG, widely inspired by trade usages, has probably been the main influence of the UNIDROIT Principles on International Commercial Contracts and it provides a significant starting point in contract law.

Legal diversity in the Caribbean region therefore constitutes a challenge, well-known in the sphere of contract law unification in Europe and worldwide. The acid test will be the achievement of a legal text equally acceptable to common and civil law cultures.

3. Goals of OHADAC Principles

OHADAC Principles on International Commercial Contracts obey a soft law model. Soft harmonisation implies drafting rules and regulations that are not directly imposed on the States involved, but offered as a kind of recommendation or model law that both States and individuals can freely incorporate into their legal systems or relationships. Such a soft character has the advantage of allowing a more finished, sophisticated and less politically conditioned drafting of rules and proposals for harmonisation. Soft law rules can become hard law through their unilateral adoption by OHADAC States, but also if OHADAC progress toward to a more institutional organisation. The European Union is using this strategy for the harmonisation of contract law and private law. A soft strategy can be immediately implemented. If results are positive, this will lead to the moving on to more ambitious approach in the near future.

Unlike attempts for international harmonisation of contract law through a soft law approach, some recent theories put forward in the field of legal harmonisation, even in the most economically integrated regions such as the European Union, have pointed out the convenience of diversity in national laws in order to promote competitiveness of legal systems. Given that the field of international trade is characterised by autonomy of will, parties should be informed enough to choose the court or the law most suited to their needs2. This is a significant approach in the process of harmonisation of European Private Law. It deals with what some have defined as “the efficiency of diversity”.

This approach is very debatable, especially when it deals with private law, less susceptible than public law to the need for competitiveness. Competition between public legal systems could perhaps be efficient for individuals (tax incentives, attractiveness of company law, etc.), but by definition, competition between legal systems turns out to be impossible in contract law when two oppose each other. This is because there will always be different legal systems that benefit each party, so that an agreed law would inevitably lead to a misrepresentation by the better-informed party and would present a risk to legal certainty in general. Moreover, this competition reflects a deep contradiction from the viewpoint of economics and the law itself. Given that one of the main arguments in favour of unification is rooted in such an approach, particularly insofar as diversity between legal systems results in external costs of information and distortion of competition conditions, which harmonisation will internalise or eliminate.

However, practical reality rather than theory provides the definitive criticism. Even with a lot of imagination, it is impossible to conceive that parties to international contracts are fully familiar with the various national contract laws, gambling on the most competitive system and perhaps even considering the many possibilities of dépeçage, where the different parts of the contract are governed by different laws. Even if this scenario is conceivable, one has to analyse the real cost, for the average merchant, of storing and updating of this information. Common practice shows that in international trade each party usually insists in applying its own law, ignoring absolutely the scope and contents of the rules and legal systems of the other party's country. That is why there are often very serious delays in negotiations and contracts can be frustrated. To avoid this deadlock during negotiations, a compromise has to be found when two parties ask that different competing national legal systems be applied. To reach an acceptable agreement, the legal system finally chosen must be known by and appropriate for all parties, which is why usual solution is the election of the legal system of a third-party State. The OHADAC Principles seek to provide a neutral legal system that facilitates negotiations and guarantees legal certainty for the parties.

The unification of contract law is therefore necessary to reinforce the legal certainty of the market and to establish common rules for all players. Predictability and accurate calculation of both economic and legal costs and risks are essential to boost and facilitate international trade. The arduous and costly attempts implemented both at the international (UNIDROIT) and regional (OHADA, PECL, DCFR) levels are proof of this. It is well-known that choosing to apply English law or of the law of the stronger negotiating party usually helps to break the deadlock over the law to be applied. Nevertheless, the submission of a contract to a national legal system, whatever it may be, does not mean that the best solution has been found. The harmonisation of contract law can reduce the negotiation and drafting costs of international contracts, by providing simpler legal rules, reliable translations and foreseeable regimes for all parties.

Moreover, legal harmonisation does not only appear necessary, it is also relevant. The improvement of contract law quality often comes up against the rigidity of national legal systems on two levels. There is first a formal rigidity due to difficulties inherent to the law-making process, especially when there is the reform of legal instruments such as civil codes, which have a natural tendency to ossification. Secondly, national laws are constricted by their own understanding of domestic legal relationships that constitutes their material sphere of application, and they suffer from an inherent lack of consideration of the needs of international trade. The specific characteristics of international business require solutions adapted to this special, different and heterogeneous sphere that will hardly be satisfied by the options of a national law-maker absorbed by local concerns. An effective global law cannot be based on local law. The harmonisation of contract law in an international geographic area is therefore an opportunity to be seized. It offers a chance to create a high-tech contract law based on the potentiality of comparative method in its most subversive interpretation. For this approach to be successful, the lawmakers must take some postulates into account, know the limitations and overcome them with imaginative alternatives.

The flexible and optional character of a harmonised contract law does not guarantee its success or its effectiveness in achieving the intended goals. One of the keys to success in an area characterised by remarkable legal diversity lies in the formulation of principles that are easily acceptable for the various legal cultures concerned. To obtain a law that is accepted by all, it is essential to avoid the limitations and mistakes made in the UNIDROIT Principles, PECL and especially in the DCFR. The scope of those texts is rather limited, in contrast with the significant impact on academia and their influence as Model Laws on the reform of domestic laws.

From the impressive work carried on preparing the UNIDROIT Principles, there is no doubt that the same process to find a European Contract Law has produced a remarkable legal and doctrinal effort, able to provide regulations much improved and more attractive than the old and often confusing domestic laws. There is a legitimate interest that the results of this enormous comparative work be useful in regenerating national private laws. The choice of adaptation present in the reform of the German BGB in 2002 has been followed by other domestic legal systems and today, European contract law both positive and in statu nascendi is a mandatory reference in all reform or codification projects of national laws.

However, very few international contracts are governed by UNIDROIT Principles, at least in comparison with the frequent submission to English Law or other domestic laws. It must be expected for the DCFR to be as little used as PECL as governing law. In practice, their rules have barely achieved the profile of “narrative rules”, used by judges and arbitrators to support their decisions with an erudite or ad abundantiam quotation, but rarely as direct grounds for a decision that opposes national laws or a particularly novel solution that fills in a gap. On the other hand, the approach that presents these rules as an expression of the lex mercatoria does not meet the most basic criterion. Arbitration practice shows in many cases a reasonable recourse to some rules of the UNIDROIT Principles, which in fact reflect and abridge rules and principles commonly accepted in international trade. Most of the arbitration awards that apply UNIDROIT Principles seek to construct and integrate the CISG, generally in a very reasonable manner. However, the ability of these rules as an exclusive basis of a determinant legal argument is doubtful, especially when they contradict other relevant domestic laws; and, above all, an application en bloc of these rules as governing law of the contract becomes hazardous when it is well-known that some of these rules are interventionist, novel and ignorant of the liberal tradition of international commercial arbitration. Therefore, the assertion, for instance, in ICC Award No. 7110/1995 (Bull. CCI, 1992/2, pp. 39-54), justifying the application of UNIDROIT Principles as bearer of neutral general principles that reflect an international consensus, cannot be generally accepted without an accurate process of analysis of considered legal questions, comparing the proposed solution in UNIDROIT Principles with its origin in relation with the most representative legal systems and the current legal practice. Likewise, in a prudent sense, the ICC Award No.11526/2003 states that UNIDROIT Principles do not necessarily imply a reflection of generalised trade usages3 and the ICC Award 11926/2003 defends that UNIDROIT Principles must be contrasted with the domestic law that would presumably be applied in the absence of choice of law or that has a close connection with the contract, in order not to introduce rules that could not be foreseen by the parties4.

In some authors' opinion, the reason for the low competitiveness of international texts drafted as a more efficient alternative to a simple choice of domestic law by parties is the scant number of traders who participated in the drafting of Principles and other harmonisation texts. However, such a circumstance does not sufficiently explain the lack of acceptance and resonance of legal systems that are manifestly more technically developed than any domestic law. UNIDROIT Principles, no matter how optional in the whole and how compatible with contract clauses and trade usages they are, are soft with regard to their effects, especially due to the optional nature of their rules, but are definitively not soft regarding their form. Although it not complete, the subjects covered in these Principles are intended to be completed and rounded up through a legal body that could be compared with a domestic legal system. Under this process, the UNIDROIT Principles must take sides and opt for a concrete model of regulation. Sometimes, such a decision has opted in crucial matters for the civil law model, which advocates for substantive justice rather than legal certainty, to the detriment of the alternative provided by English law. In other words, UNIDROIT Principles have preferred definition to respecting the rule of the highest consensus and have courageously opted for some solutions that in certain cases may not be the safest or most accepted in international trade.

The PECL have maybe been more compliant with and influenced by such a consensus, but in many aspects they provide the same solutions as those included in UNDROIT Principles, with an additional inconvenience: they aim to create a general system of contract law valid both for commercial contracts (B2B) and consumer contracts (B2C). The European backdrop to this text tones down the criticism, but the consistency of such an option is hardly acceptable, at least if the main goal of harmonisation is to contribute to improvement of international trade.

The OHADAC Principles have a single objective: harmonise the law of Caribbean countries within the exclusive framework of international commercial contracts (B2B). They are therefore closer to UNIDROIT Principles and are not hampered by the limitations suffered by the PECL, whereby the same rules had to be extended to consumer contracts. Furthermore, the drift of DCFR, openly inspired by the idea of a European Civil Code, emphasised the break in the dialogue between civil and common laws demonstrated, for instance, in Book III, which is devoted to the category of “Obligations”, which is a sort declaration of war against English Law and the PECL themselves.

OHADAC must take these experiences into account to avoid the same mistakes and to produce a text relevant for traders who operate in a heterogeneous scenario. The Kantian principle that must orient the drafting of OHADAC Principles on International Commercial Contracts consists in preparing a text that could be considered equally useful and reliable by all traders within the Caribbean market regardless of their legal culture. In short, it deals with the need to respect a high consensus, which must be conducted by a set of boundaries that must not be crossed:

  1. avoiding rules that could be culturally unacceptable or not comfortable for a party or a judge of a legal family;
  2. creating new rules only insofar as they can solve concerns common to all legal systems, thus facilitating international commercial trade and commercial certainty;
  3. observing the rule of lowest common denominator when differences are insurmountable.

The context of the region covered by OHADAC requires, thus, not only giving up the legal techniques imposed from above and favouring soft sources. It must also be assumed right from the beginning that there are certain to be irreducible questions, for which imaginative solution will have to be found. In this sense, OHADAC Principles must try to be more than a set of legal rules that will govern a contract when chosen by the parties. They must extend their functions, over and above the settlement of disputes, to the negotiation of the contract proper, providing Caribbean traders with an effective guide to make international contracts more transparent and safer.

Following this line, the choice of OHADAC Principles must be considered in any case as a useful means of establishing a system of rules that will complete contract clauses, maintaining, in case of contradiction, the prevalence of contract clauses. Secondly, such a choice must not became a mistaken manifestation of the integrity of contract law, since there will inevitably be shortcomings, as well plurality of interpretations, which will be a more difficult issue. In this sense, OHADAC Principles must not prevent the parties from establishing a benchmark legal system that will offset both legal and interpretative gaps, as proposed in the commentaries to the Preamble.

On another note, the draft of OHADAC Principles must take into account texts such as CISG, UNIDROIT Principles, PECL and DCFR, adapted to the principles of consensus mentioned above. The uniformity of the OHADAC Principles with existing international texts will be considered as a value, unless in concrete cases it turns out that these texts sometimes do not meet the three conditions set out above in relation with the acceptability by traders of the different cultures involved. The OHADAC Principles will stop at the last boundary of that acceptable consensus for all participants in Caribbean market, irrespective of their legal culture.

To overcome the obstacles arising from this voluntary restraint, the OHADAC Principles will sometimes become legal and business guide of sorts, proposing common rules and usages and providing standard clauses that will make up for gaps or legal limitations through contractual regimes especially designed by the parties according to the nature and the object of the contracts and their own expectations. This integrated supply of rules, conduct recommendations and standard clauses are the distinctive traits of the OHADAC Principles and the reasons for their uniqueness and essential contribution to comparative legal harmonisation.

4. Scope of material application of the OHADAC Principles

On one hand, the OHADAC Principles on International Commercial Contracts are limited to a general legal regime of international contract law. There are no rules on specific contracts, which means that parties should assess whether or not they need to complete the regulation of particularly specialised contracts with specific clauses, standard contracts or even through a subsidiary submission to a national law that they consider especially suitable or technically developed to regulate their obligations.

On the other hand, the OHADAC Principles are limited to contractual obligations in the strict sense. Questions related to procedure, property, torts, as well as quasi contracts are not considered. Pre-contractual obligations are also not included in the scope of application of the OHADAC Principles. In many legal systems, the so-called culpa in contrahendo deserves a tort or non-contractual characterisation, as evidenced by Article 1.2 i) of Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (“Rome I”) itself. The relevance of excluding this last matter is due, besides a question of characterisation, to its divergent treatment in the legal systems represented in the OHADAC territory. On the ground of good faith principle, the sanction of abusive conduct during negotiations is a commonplace in civil law systems as well as in USA law (Sections 1-203 UCC and 205 of the Restatement (Second) on Contracts). However, the approach of English law is based on a more rigid principle (“all or nothing approach”) that usually does not recognise good faith obligations during negotiations (Walford v Miles, 1992, WLR, 174:16).

OHADAC Principles apply exclusively to commercial contracts, excluding consumer contracts and any contract with no professional or commercial object. Therefore, contracts related to family law and succession law and gifts are not considered. Finally, OHADAC Principles are not useful in obligations related with bills of exchange and other negotiable instruments.

5. Participants in the drafting of OHADAC Principles

Preparation of the Draft of OHADAC Principles was entrusted by ACP Legal to a research team composed entirely by experts in comparative contract law.

The following experts participated in the debate and writing of the original Draft, under the direction of Dr. Sixto Sánchez Lorenzo, Professor of the Faculty of Law of the University of Granada (Spain):

Dr. Ángel Espiniella Menéndez, Professor of the Faculty of Law of the University of Oviedo (Spain).
Dr. Fernando Esteban de la Rosa, Professor of the Faculty of Law of the University of Granada (Spain).
Dr. Rosa García Pérez, Professor of the Faculty of Law of the University of Granada (Spain).
Dr. Pilar Jiménez Blanco, Professor of the Faculty of Law of the University of Oviedo (Spain).
Dr. Ángeles Lara Aguado, Professor of the Faculty of Law of the University of Granada (Spain).
LL. M. Rosa Miquel Sala, Assistant in the Faculty of Law of the University Bayreuth (Germany).
Dr. Patricia Orejudo Prieto de los Mozos, Professor of the Faculty of Law of the Complutense University of Madrid (Spain).
Dr. Francisco Pertíñez Vílchez, Professor of the Faculty of Law of the University of Granada (Spain).
Dr. María Luisa Palazón Garrido, Professor of the Faculty of Law of the University of Granada (Spain).
Dr. Ricardo Rueda Valdivia, Professor of the Faculty of Law of the University of Granada (Spain).
Dr. Carmen Ruis Sutil, Professor of the Faculty of Law of the University of Granada (Spain).
Dr. Carmen Vaquero López, Professor of the Faculty of Law of the University of Valladolid (Spain).

Besides the aforementioned persons, the following experts of the Henri Capitant Association have participated in the revision and final draft of the OHADAC Principles:

Dr. Dénis Mazeaud, Professor of the Faculty of Law of the University of Paris II (Panthéon-Assas).
Dr. Phillipe Dupichot, Professor of the Faculty of Law of the University of Paris I (Panthéon-Sorbonne).
Dr. Cyril Grimaldi, Professor of the Faculty of Law of the University of Paris XIII.

1 The text reads as follows: “Those attending the Latin American and Caribbean Congress of International Commercial Arbitration, Convinced that regional integration processes are a way to advance towards a universal process of globalisation, well balanced and respectful of the interests of all States belonging to the international community. Aware that legal harmonisation of commercial law is an effective tool to provide regional trade and greater legal certainty and minimize costs, facilitate trade, national economies development and their progressive integration. Convinced that Latin American and Caribbean countries, due to their geographical environment, need to generate mutual trust and relationships for their common interests through legal harmonisation processes that contribute, through their collaboration, to strengthen the international position of the region in international fora, especially those concerning unification and harmonisation of private international and business laws. Recognizing the importance of regional legal harmonisation experiences such as that represented by the Organization for the Harmonization of Business Law in Africa (OHADA) and other regional integration processes, Considering suitable to promote arbitration in legal trade & investment disputes, as a fundamental pillar of the harmonisation of commercial law in the Caribbean area, DECLARE: 1. To support the promotion of the “Organization for the Harmonization of Business Law in the Caribbean” (OHADAC) project. 2. To convene all Latin American & Caribbean countries, as Guadeloupe, Martinique, Dominica, Guyana, Saint Lucia, Saint Vincent & the Grenadines and others...to join this initiative by bringing together all the necessary elements to greater collaboration in order to harmonize their respective legal business systems. 3. To seek institutional cooperation on this project in those countries whose legal systems have a decisive influence on the formation of the respective national legal systems in Latin America and the Caribbean, as it is the case with Roman-Germanic, French, Spanish, Dutch systems and British Common Law. 4. To express the hope that other countries around Latin America join the OHADAC initiative. 5. To request OHADAC to promote and develop an international commercial arbitration institution. To provide it with modern and efficient regulation that takes into account the most recent contributions of comparative law, to fill gaps and move towards an arbitration that meets autonomy of the parties, respecting the States sovereignty, providing an efficient framework to the arbitrators, and ensuring the order issuance by optimizing the quality of justice, legal certainty and effectiveness of the pronouncements. 6. To promote the Caribbean comparative law studies, with a broad perspective, for a better understanding of our respective legal systems in order to provide legal harmonization business law contents. 7. To submit OHADAC to introduce in its agenda a subject catalogue of substantive laws, which harmonisation is considered desirable to achieve the objectives pertaining to the legal integration, particularly in the areas of commercial contracting, transportation, business registers, corporations, securities and payment methods, industrial property rights, insolvency law and border enforcement procedures of credit. 8. To collaborate with the identified objectives with exemplary and absolute respect for the States sovereignty, the diversity of cultures, values and political concepts in search of sincere cooperation to make possible the harmonization of legislation with the ultimate goal and main common interest to promote progress and economic growth for countries in the region, in addition to improving the living conditions of our Latin American and Caribbean Community peoples”.

2 According to the European Commission itself, “[I]n many cases the market creates problems of public concern, but it also develops its own solutions. The effectiveness of the market in responding to different social values and to public opinion should not be underestimated. As a result of competitive behaviour, many of the problems created by the market may be solved automatically by the pressure exercised by the interest groups involved (consumers, NGOs, enterprises. Public authorities can enhance this coincidence of self-interest and public interest” (Communication to the Council and the European Parliament on European Contract Law, OJ 2001/C 255/01, 49). This understanding is translated into option I (no Community action), supported in the answers to this Communication presented by the British government, the London Investment Banking Association, the European Publishers Council, The International Chamber of Commerce and a wide array of traders, especially in the spheres of sea transport and telecommunication.

3 http://www.unilex.info/case.cfm?pid=2&do=case&id=1416&step=Abstract

4 http://www.unilex.info/case.cfm?pid=2&do=case&id=1416&step=Abstract

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OHADAC principles on international commercial contracts.pdf