Read On!: International Commercial Contracts: Applicable Sources and Enforceability

Professor Giuditta Cordero-Moss has published the book “that she would have liked to have read when she started her career as an in-house lawyer in an Italian multinational Company about thirty years ago”; it is titled International Commercial Contracts and is available here.

Any practising lawyer and student working with international commercial contracts faces standardised contracts and international arbitration as mechanisms for dispute settlement. Transnational rules may be applicable, but national law is still important. Based on extensive practical experience, this book analyses international contract practice and its interaction with the various applicable sources: which role is played by the contractual regulation, which by national law, which by transnational sources, what is the interaction among these factors, and how does this all apply to contracts that refer disputes to international arbitration?

Giuditta was kind enough to respond to my request for an interview for IntlLawGrrls:

Q: You studied law in Rome and then pursued Phds in both Russia and Norway, what impelled you towards academic research and what did you write about?

A: I have always been interested in pursuing a deep and systematic understanding of the law. For the first decade and a half of my career I was a corporate lawyer, and I was very busy with drafting contracts , negotiating them and advising on their operation. Whenever interesting legal issues arose, they had to be addressed as efficiently as possible. There was no possibility to engage in extensive research, as the next contract and negotiation was waiting; the interesting legal issues were often avoided by commercial solutions. This gave me a long mental list of possible research topics. Many of these topics related to Russian law, as I was following my company’s (the Norwegian multinational Norsk Hydro’s) legal affairs in Russia. It was the beginning of the 90s, the Soviet Union had collapsed, the Russian legal system was undergoing important reforms, and it was very difficult to obtain reliable legal advise. To ensure that Norsk Hydro’s activity in Russia was relying on a certain competence of Russian law, the head of the Legal Department of Norsk Hydro agreed to sponsoring my studies of Russian law. That’s the background for my Russian PhD. The topic was the intersection between freedom of contract, the applicable law and arbitration. Back in Norway, I decided to continue working on the mental list of possible research topics that I had been compiling during all my years in practice.

 

Q: You have practiced as an international commercial lawyer in Italy, Norway and Russia. This must provide you with broad insight as the importance of context and culture on the interpretation and application of international commercial law- What is the most memorable (amusing, confusing, etc.) example from practice?

A: There is one red thread that has characterized my practice – be it the years as financial lawyer in Italy (at Fiat) or the years as international commercial lawyer in Norway and Russia: when contracts are being drafted and negotiated, all attention goes to the wording of the terms, and very little to the applicable law. You can be in a room filled with lawyers for all involved parties, both in-house and external, and they will negotiate for days, nights and weekends the amount of the penalty to be paid in case of delays in the production, or whether the termination clause should contain the word “reasonable”. At the very last minute before the signing, then, the applicable law may be decided, and nobody will pay attention to the circumstance that choice of English law will make all the negotiations of the penalty useless (because contractual penalties are illegal under English law), or that choice of German law will imply that the termination clause is based on reasonableness even if it does not say so.

 

Q: Your new book, International Commercial Contracts, seeks to explain how international contract law interacts with national law and how this affects international arbitration decision making and enforcement by national courts. Whereas one school of scholars view international commercial law as autonomous system, you seem to emphasize the importance of recognizing the field as transnational- where national rules and international norms interface. Can you explain the background for your vision?

A: The background is very practical, and appears from my answers to your first two questions: my research is based on the desire to clarify some of the questions that arose when I was drafting, negotiating and applying international contracts. It is certainly very empowering to draft the terms of a contract without taking into consideration the applicable law, as if the contract was part of an autonomous system. However, when differences arise between the parties, contracts need to be interpreted and enforced. It is in this phase, that the applicable law becomes important. Even when the contract contains an arbitration clause, the relevance of the applicable law may not be completely excluded. My interest in the interaction with national law is based on the desire to write contract terms that are enforceable in practice. To be able to do so, it is necessary to understand to what extent the contract terms are capable of being enforced simply on their own basis, and to what extent they depend on the applicable law.

 

Q: At present some international courts, such as the ICC, are experiencing legitimacy challenges. What are the key legitimacy challenges confronting international arbitration tribunals?

A: International commercial arbitration is very well established as a mechanism to solve disputes, not the least thanks to the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards. Nowadays, arbitration is being increasingly criticized for having become too well established, that is too regulated, too formalized, too time consuming, too expensive. There is a growing interest in alternative dispute resolution mechanisms, that are less rigid: conciliation, mediation, structured negotiations. These mechanisms cannot really compete with arbitration as long as their result in not enforceable, but they can be appropriate in situations where enforceability is not crucial.

 

Q: Your book presents many practical insights from practice on proper contract drafting. It seems that it will be a good textbook for students and reference for practitioners. Do you think we need to change legal education to focus more on the provision of practical skills – like contract drafting, oral argumentation (moot arbitrations), etc.?

A: Law is an applied science, and it can be very useful if the educational system may convey both aspects, the practical and the theoretical. In my opinion, for the theoretical part it is very important that students are taught the method to apply the law: if they understand the main principles, how to apply the principles to factual situations, which sources are relevant, how to interpret sources, etc., then they are given the possibility to orientate themselves in the legal landscape. I think it’s less important that we teach the specific content of every single provision – whether the term to present a certain request is 20 or 30 days, for example. This is something that they may look up when they need it. The practical side of teaching is also very important: it permits the students to apply in practice the method they have learnt in theory, which ensures a better pedagogical result. The systems of legal eduction vary considerably, in some countries there is very little emphasis on practical skills, in others there is more. It is certainly desirable to reach a balance between theory and practice, although it can take a lot of effort and time to introduce new elements in educational traditions.

Q: You are one the few women within international commercial arbitration. How can we recruit more women into this Field?

A: There are many more women of the younger generation within arbitration than there used to be a couple of decades ago.

 

Thank you for joining us on Intl Law Grrls!

 

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