Law merchant

Lex mercatoria (from the Latin for "merchant law"), often referred to as "the Law Merchant" in English, is the body of commercial law used by merchants throughout Europe during the medieval period. It evolved similar to English common law as a system of custom and best practice, which was enforced through a system of merchant courts along the main trade routes. It functioned as the international law of commerce. It emphasised contractual freedom and alienability of property, while shunning legal technicalities and deciding cases ex aequo et bono. A distinct feature was the reliance by merchants on a legal system developed and administered by them. States or local authorities seldom interfered, and did not interfere a lot in internal domestic trade. Under lex mercatoria trade flourished and states took in large amounts of taxation.

In the last years new theories had changed the understanding of this medieval treatise considering it as proposal for legal reform or a document used for instructional purposes. These theories consider that the treatise cannot be described as a body of laws applicable in its time, but the desire of a legal scholar to improve and facilitate the litigation between merchants. The text is composed by 21 sections and an annex. The sections described procedural matters such as the presence of witnesses and the relation between this body of law and common law. It has been considered as a false statement to define this as a system exclusively based in custom, when there are structures and elements from the existent legal system, such as Ordinances and even concepts proper of the Romano-canonical procedure.

The lex mercatoria was originally a body of rules and principles laid down by merchants to regulate their dealings. It consisted of rules and customs common to merchants and traders in Europe, with some local variation. It originated from the need for quick and effective jurisdiction, administered by specialised courts. The guiding spirit of the merchant law was that it ought to derive from commercial practice, respond to the needs of the merchants, and be comprehensible and acceptable to the merchants who submitted to it. International commercial law today owes some of its fundamental principles to the lex mercatoria. This includes choice of arbitration institutions, procedures, applicable law and arbitrators, and the goal to reflect customs, usage and good practice among the parties.

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