Code Unique

by Jan Peter Schmidt

1. Notion

The term Code unique has been coined for a civil code that aims to overcome the dichotomy of commercial law and general private law, which traditionally exists in most civil law jurisdictions and which is reflected in a coexistence of civil code and commercial code. Accordingly, a Code unique seeks either to establish uniform rules for civil and commercial matters or at least to incorporate the provisions that were specifically designed for the latter. Classic examples of a Code unique are the Swiss Civil Code (ZGB) (1907) and the Italian Codice civile (1942); more recent ones are the Polish Civil Code (1964), the Burgerlijk Wetboek (1992) and the Russian Civil Code (1996). The majority of civil law jurisdictions, for instance France (Code de commerce), Germany, Austria, Spain, Portugal and Turkey (Turkish Civil Code and the Turkish Code of Obligations), still deal with commercial law in a separate code, though.

In order to avoid misunderstandings, it needs to be emphasized that the creation of a Code unique only implies the absence of a commercial code, not the abolition of commercial law as such. Specific rules for matters of business life (regarding, for instance, contract law, the commercial register or company law) may stand both inside and outside a Code unique. Furthermore, the discussion on the virtues and shortcomings of a Code unique is not to be confused with the question if and to what extent commercial law should be treated as a separate branch of law in legal academia and legal education. In most civil law countries, regardless of whether they have a Code unique or a commercial code, commercial law until today has maintained a kind of doctrinal autonomy, which is, however, not undisputed.

Hence, the creation of a Code unique is primarily a matter of statutory technique; substantive consequences do not necessarily flow from it. Still, the importance of the issue should not be underestimated: as the unitary model corresponds more closely to the goal of conceptual coherency and legislative economy, the adoption of a two-code-system requires special justification. Correspondingly, the adequate legislative treatment of commercial law has been a constant topic of debate in most civil law jurisdictions throughout the 20th century.

For common law jurisdictions on the other hand, the matter discussed here is completely irrelevant, not only because their private law has not been codified (codification), but also because a basic distinction between commercial law and general private law would appear arbitrary to a common lawyer. The historical reason is that the medieval law merchant, in many ways the English counterpart of the commercial law of the continent (lex mercatoria), was already incorporated into the common law in the 18th century (mainly due to the efforts of Lord Mansfield).

2. The historical reasons for the creation of commercial codes

The creation of commercial codes can be explained primarily by historical factors. Not existing as a formal category in Roman law, commercial law developed in the Middle Ages as a non-state and cross-border law of the merchants (|lex mercatoria). Only with the beginning of the modern age did commercial law come increasingly under the influence of the national legal systems. The first comprehensive records of commercial law were the French Ordonnances de Commerce (1673) and the Ordonnances de la Marine (1681) (Ordonnances). When at the end of the 18th century the European states began to codify their private law (codification), they had to decide whether commercial law should also be included. It was incorporated into the Allgemeines Landrecht für die Preußischen Staaten (1794), but its character as a special law for the merchant class remained unaltered. A different approach was taken in France: as commercial law had developed as an independent branch of law, it was regarded as natural not to include it in the Code civil (1804), but to deal with it in a separate body of law. The Code de commerce(1807) that was enacted for this purpose soon became highly influential as a legislative model not only in Europe (it strongly inspired, for instance, the commercial codes of Greece (1828), Spain (1829), Portugal (1833), the Netherlands (1838), Turkey (1850) and Italy (1865)), but also in other continents, especially in Latin America (Latin America, influence of European private law).

In Germany, the separate codification of commercial law in the form of the Allgemeine Deutsche Wechselordnung (1848) and especially the Allgemeines Deutsches Handelsgesetzbuch (ADHGB (1861)) was motivated first of all by the wish to unify the economically most relevant areas of the law on a national level. When in the course of drafting the Bürgerliches Gesetzbuch (BGB) some authors argued in favour of an integration of commercial law, this idea was rejected at an early stage and the preservation of a commercial code was justified with the separate historical development of commercial law.

3. The reasons for the creation of a Code unique in Switzerland and Italy

The adoption of a unitary model in Switzerland (Swiss Civil Code (ZGB)) was also influenced by historical circumstances: After its formation in 1848, the Swiss Federal State, for the time being, still lacked the legislative competence for the adoption of a national civil code. As business circles were pressing for the unification of at least the area of economic law, the creation of a Swiss commercial code was envisaged (similar to the situation in Germany (Allgemeines Deutsches Handelsgesetzbuch (ADHGB)). It soon turned out, however, that without a simultaneous unification of the fairly diverse Cantonal regimes of obligations in general the commercial code would be rather incomplete. In this way the idea was born to create a law of obligations that would also include commercial law. The Swiss Code of Obligations (OR) (1881) which was enacted for this purpose abandoned the traditional distinction between legal relationships of a civil and commercial nature and contained only a small number of special provisions on commercial transactions (regarding, for instance, simpler ways to withdraw from a contract or claim damages in case of breach). These characteristics were maintained when the Code of Obligations was formally merged with the Swiss Civil Code (ZGB) in 1911.

It is important to note that the Swiss option for a Code unique from the beginning had also been backed up by arguments of a substantial nature: the creation of a special set of rules for the merchant class was regarded as undemocratic and contrary to the spirit and the aims of the nation. Furthermore, it was pointed out that the average Swiss citizen possessed a high standard of education and was commercially experienced, which was why he could be subject to a higher standard of care in his personal legal relationships. Finally, the draftsman of the Code of Obligations, Walther Munzinger, argued that the distinction between civil and commercial matters was often very difficult and that therefore a uniform solution was simpler and provided more legal certainty.

Italy, on the contrary, first adopted a dualist solution, with the parallel enactment of a civil code and a commercial code in 1865. Over the following decades, Italian legal academia experienced an intensive debate over the adequate legislative treatment of commercial law. The unification of civil and commercial obligations was defended in particular by Cesare Vivante in his famous lecture series on commercial law at the University of Bologna in 1888. When after World War I a reform first of the commercial code and then also of the civil code was put on the agenda (Codice civile), the discussion became practically relevant. While Vivante had in the meantime changed his ideas and now argued in favour of the autonomy of commercial law, a movement led by Mario Rotondi wanted to take the opportunity to unify private law and create a Code unique. They regarded the existence of a commercial code as a historical accident and argued that there was no clear way to distinguish commercial law from general private law. To everybody’s general surprise, the Fascist Regime ultimately took up this idea and supported it also by an argument of a political nature: as the principle of corporatism was now the basis of the entire national economy, treating commercial law as a separate unit was no longer justified (it is curious to note that a few years earlier the same argument had been invoked in favour of the autonomy of commercial law). It has also been supposed that the decision to unify commercial law and private law was in the end motivated by economic reasons: seeking self-sufficiency, the Fascist Regime aimed at a dynamization of all sectors of the economy.

The wish to create an all-embracing code of private law found its expression particularly in Book Five of the new Codice civile. Its title, Del lavoro, is somewhat misleading though, as it not only contains rules on labour law, but also on the notion of an entrepreneur (imprenditore), company law, intellectual property law and competition law. The law of obligations is based to a large extent on the Draft for a Franco-Italian Code of Obligations (1927). Similar to the Swiss Code of Obligations (OR), it establishes a uniform regime for all kinds of obligations with just a few exceptional rules for transactions in which an imprenditore is taking part (regarding, for instance, the formation (contract (formation)) and interpretation of contracts).

4. The trend towards the Code unique and its reasons

a) Recent civil codes and the international harmonization projects

Recent civil codes show a clear trend towards the model of a Code unique. Besides the already mentioned Burgerlijk Wetboek (1992) and the Russian Civil Code (1996), the civil codes of Paraguay (1985) and Brazil (2002) can be named (Latin America, influence of European private law). The idea of a unitary code also has many adherents in legal writing: in particular, German and Austrian scholars have consistently been demanding the transfer of at least the rules on commercial contracts from the commercial code into the civil code (Bürgerliches Gesetzbuch (BGB); Allgemeines Bürgerliches Gesetzbuch (ABGB)). Still, the major Austrian reform on commercial law from 2005 brought only minor changes in this respect, as the legislature shrank from the enormous effort which a fundamental reform would have implied.

Also in the context of the international unification of contract law a strong trend towards a uniform treatment of civil and commercial obligations can be observed. Following the recommendation of Ernst Rabel, the Hague Uniform Sales Law (sale of goods, international (uniform law)), had already abandoned the distinction between private sales and commercial sales. The restriction of its successor, the CISG, to sales for commercial purposes (Art 2a) was not meant as a reversal in this regard, but aimed at avoiding conflicts with the national rules on consumer protection (consumers and consumer protection law). Similarly motivated is the self-restriction of the UNIDROIT Principles of International Commercial Contracts (PICC). The Principles of European Contract Law (PECL) on the other hand, which show many similarities to the PICC, were deliberately designed as a general regime and contain just a few special provisions for professionals. This approach has been continued in the Draft Common Frame of Reference (DCFR) (which has, however, been supplemented by the rules on consumer contracts).

All these developments show that the traditional distinction between civil and commercial obligations has hardly maintained any relevance. Instead, attention has shifted to the distinction between general contract law and consumer contract law (consumers and consumer protection law); formerly, relationships between professionals and non-professionals were discussed under the notion of ‘unilateral commercial transactions’.

b) Reasons for the abandonment of the distinction between civil and commercial obligations

The trend towards the uniform treatment of civil and commercial obligations is the expression of a development that had already been pointed out in the 19th century and for which the expression ‘commercialization of general private law’ (Kommerzialisierung des Zivilrechts) was coined. This means that many rules and institutions that were developed by commercial practice in order to overcome inadequacies of the existing law have over the centuries ‘seeped in’ to the general law of obligations. Examples are the principle of freedom of form (formal requirements) or the far-reaching protection of legitimate expectations in legal transactions. Therefore, the modern law of obligations is already well adapted to the demands of commercial practice. Besides, these can easily be taken into account by reference to commercial usages, interpretation of contracts according to good faith or the determination of the standard of care according to the profession in question. As regards bills of exchange and traditional types of commercial contracts (eg commission agency, forwarding), there is no need for the creation of separate regimes either as non-professionals will not usually enter into these kinds of transactions anyway. The need for provisions that only apply to professionals is therefore very limited. An example from German law is the notification requirement concerning defects in commercial sales according to § 377 HGB (notification requirement (commercial sales)). However, special provisions of that kind not only raise the question whether they are justified, but also require a formal criterion for the limitation of its scope (commercial law).

In favour of a specific regime for commercial obligations, it has often been argued that commercial law is much more dynamic than general private law and strives to a much greater extent towards international unification (uniform law). Today, however, this reasoning no longer seems very persuasive, as experience has shown that commercial practice usually creates its own sets of rules anyway and that, therefore, the mandatory rules of general contract law are much more relevant for commercial transactions than the dispositive rules of commercial law. Nor is the trend towards international unification of commercial law an argument for maintaining its legislative autonomy on the national level, but rather against it: uniform law conventions can hardly ever be integrated into the national bodies of law and therefore lead to a fragmentation of legal sources. In this situation, the complexity should not be further increased by separate regimes for civil and commercial obligations on the national level.

c) The commercial codes’ tendency towards disintegration and the abolition of commercial courts

Another important reason for the trend towards the Code unique is the commercial codes’ tendency towards disintegration. From their very inception they proved to be neither complete nor strictly systematic (which is why it is doubtful whether they fulfilled the criteria of a real codification), and since the 19th century their content has consistently shrunk, as many of the original subject matters have been transferred to special statutes (concerning, for instance, company law, insolvency law or transportation law). The core matters that have remained, such as the definitions of merchant or business, or the rules concerning the commercial register, hardly justify the existence of an autonomous code. Having said that, it is not easy to find an alternative place for these rules either: in a civil code they easily appear as an alien element for lack of systematic harmony with the other areas of the law. Thus, the creation of a Code unique is not without its shortcomings either.

Finally, the far-reaching loss of autonomy that commercial law has experienced since the 19th century is also reflected in procedural law: many legal systems have abolished the special jurisdictions for commercial matters that traditionally existed and have replaced them by civil court chambers with special commercial expertise. Experience has shown that the existence of separate commercial courts—besides entailing additional costs of administration—easily creates difficulties regarding the clear determination of their competence as a consequence of the difficult distinction between commercial law and general private law.

5. Conclusions and perspectives

The distinction between general private law and commercial law, which for many centuries was firmly engrained in the civil law tradition, is due mainly to historical reasons and lacks a substantive basis. The separate codification of commercial law, which at present can still be found in many civil law jurisdictions, is therefore hard to justify from a systematic point of view. It is not to be expected that this assessment will change in the European process of codification (European Civil Code). A European Commercial Code, whose creation has been proposed by Ulrich Magnus, would not constitute a real codification, but rather a fragmentary compilation in the spirit of the national commercial codes. The model of a Code unique has therefore to be regarded as the more adequate solution for private law codification.

Literature

Manuel Broseta Pont, La empresa, la unificación del derecho de obligaciones y el derecho mercantil (1965); Mario Rotondi (ed), Inchieste di Diritto Comparato, vol 3: The Unity of the Law of Obligations (1974); Wolfram Müller-Freienfels, ‘The Problem of Including Commercial Law and Family Law in a Civil Code’ in Samuel J Stoljar (ed), Problems of Codification (1977) 90; Karsten Schmidt, Das HGB und die Gegenwartsaufgaben des Handelsrechts. Die Handelsrechtskodifikation im Lichte der Praxis (1983); Dennis Tallon, ‘Civil Law and Commercial Law’ in IECL VIII (1983) ch 2, paras 3 ff; Francesco Galgano, ‘Diritto civile e diritto commerciale’ in Francesco Galgano (ed), Atlante de diritto privato comparato (3rd edn, 1999) 35; Andreas Heinemann, ‘Handelsrecht im System des Privatrechts—zur Reform des deutschen Handelsgesetzbuchs’ in Festschrift Wolfgang Fikentscher (1998) 349; Ulrich Magnus, ‘Die Gestalt eines europäischen Handelsgesetzbuches’ in Festschrift Ulrich Drobnig (1998) 57; Martin Schauer, ‘Integration des Handels- und Unternehmens- *rechts in das ABGB?’ in Constanze Fischer-Czermak, Gerhard Hopf and Martin Schauer (eds), Das ABGB auf dem Weg in das 3. Jahrtausend (2003) 137; Jan Peter Schmidt, Zivilrechtskodifikation in Brasilien. Strukturfragen und Regelungsprobleme in historisch-vergleichender Perspektive (2009) 163 ff.