by Klaus J Hopt
1. Concept and sources of commercial law
In some instances, commercial law is contained in a separate codification, eg in France’s Code de commerce of 1807 or Germany’s Commercial Code of 1897 (similarly in Belgium, Luxembourg, Spain, Portugal and Greece; and also as a model law since 1954 in the United States’ Uniform Commercial Code). In other countries, it is embedded in the general civil law as part of the Civil Code, such as in Switzerland (Swiss Code of Obligations (OR) of 1881 and Swiss Civil Code (ZGB) of 1907), in Italy where the original separate codification was later abandoned (Codice civile of 1942), or, more recently, in the Netherlands (Burgerlijk Wetboek (BW)). In some countries, such as the Scandinavian nations, there are only separate statutes dealing with certain parts of commercial law. In others, such as the United Kingdom and Ireland, most of it is covered not by written law but by judge-made law alone. It follows that there are also many differences in the legal doctrine in the various countries on whether there is a separate concept of commercial law and, if so, what its reach and content are. It is therefore disputed, for example, whether commercial law also includes accounting law, transport law (carriage, contract of), company law, banking and stock exchange law (banking law; banking law (international); exchanges), insurance law (insurance contracts; insurance contract law (international)) and portions of labour law.
Conceptually, commercial law may be considered a separate part of the general legal order dealing either with certain persons who are engaged in business transactions or dealing directly with certain business transactions and activities. Depending on this, commercial law may begin and be delineated by either regulating certain transactions (commercial transactions, the ‘objective system’) or, like the German and Austrian Commercial Codes, rather by regulating certain persons (the merchant as in Germany or the enterprise as was more recently done in Austria). The latter is the ‘subjective system’, though mixtures between the two systems are common. Commercial law is then the law of merchants, and commercial law regulates the transactions performed by these merchants either among themselves or with private persons. Commercial law is private law, though occasionally it also contains public law norms, eg concerning the commercial register, certain rules on the name of the merchant and accounting.
In continental Europe, the sources of commercial law are primarily statutes, even though judge-made law also plays a role. The latter is still the primary source of commercial law in common law countries. Commercial usages and trade customs are more important in commercial law than in general private law. This is because of the specific needs and practices of commerce. Commercial usages are particularly relevant in international trade. Standard contract terms play an important role in a large part of commercial practice in many countries. They raise particularly difficult problems in transborder transactions. Furthermore, the recommendations of the International Chamber of Commerce (ICC) and other international and national institutions must be remembered.
2. Particularities of commercial law as compared to general civil law
Merchants are entrepreneurs who must stand up to competition or be driven out of the market. Therefore, they must be free to make business decisions and contracts as they think best, up to certain limits set by the law in protection of other parties and of the market as a whole. It is not surprising, therefore, that norms made by private persons or institutions (in particular contract norms, including standard contract terms) play an important role in commercial law. Mandatory legal norms (mandatory law (fundamental regulatory principles)) are rare, with the exception of those for the protection of commercial agents, for example. The merchants must evaluate and bear the risks and chances they face in commerce.
Simplicity and rapidity are decisive for commercial transactions. Therefore, commercial law renounces unnecessary formalities and urges merchants to respond to offers and make dispositions quickly. Commercial norms, internationally uniform contract clauses like the incoterms and trade usages standardize the contractual and other business declarations of the merchant. Commercial law favours standardization; an example of this is that the power of representation is irrevocable in certain commercial contexts, such as for the representatives of commercial companies.
Regarding merchants’ decisions, simplicity and rapidity presuppose that merchants can reliably inform themselves about their contractual partners and in commercial transactions can rely on those partners’ behaviour (ie in legal terms, without internal or mental reservations of the latter being relevant). Commercial transparency and the concept of reasonable reliance on business appearances play an important role in commercial law.
Commercial law has arisen to a considerable degree out of commercial practice. This can be observed in the legal sources and in the great importance of arbitration (arbitration (international)). Commercial law is geared towards international trade, though in legal terms it is part of national law. Trade interests do not stop at borders. Commercial law is not only open to influences from outside, but in particular also to a pragmatic international harmonization of law. The German Common Commercial Law (Allgemeines Deutsches Handelsgesetzbuch (ADHGB) of 1861) preceded the unity of the state by one decade and the uniform civil law in Germany (Bürgerliches Gesetzbuch (BGB)) by nearly half a century.
3. International harmonization of commercial law
The drive towards harmonization in the interest of trade is old, as shown by the ADHGB, for example. Harmonization of law and approximation of law were already practised by the High Commercial Court of the Reich (Reichsoberhandelsgericht (with Reichsgericht)). Early stages of harmonization of law by harmonization of trade practices include the Incoterms or the Uniform Customs and Practice for Documentary Credits (letter of credit) of the International Chamber of Commerce (ICC). Since the time of the 19th century, it has been important international conventions, especially in the traffic sector, which have driven the onset and continuing evolution of global commercial law; examples include the International Conventions on the Uniform Rules Concerning the Contract for International Carriage of Goods by Rail (CIM) of 1890/1961, the Uniform Rules Concerning the Contract for International Carriage of Passengers and Luggage by Rail (CIV) (railway transportation), the Contract for International Carriage of Goods by Road (CMR) (carriage of goods by road) and the Unification of Certain Rules Relating to International Carriage by Air (Warsaw Convention, air transportation (contractual liability)). The several Geneva Conventions on the Unification of the Law Relating to Bills of Exchange and to Cheques in 1930/31 must also be mentioned. Further measures of international harmonization of commercial law concern UN sales law (sale of goods, international (uniform law)), financial leasing and factoring (UNIDROIT Conventions), the contracts of guarantees (UN Convention; guarantee, independent), the business of storing and handling goods (UN Convention) and other areas of international transportation law. Last but not least there are the controversial lex mercatoria, model laws, general principles and standard contract terms.
4. European harmonization of commercial law
Today the harmonization of law in the European Union is proceeding rapidly. Many directives aiming to coordinate commercial law in a wider sense have already been enacted and it is fair to speak of a core of genuinely European commercial law. This has even led to a demand for a European commercial law statute. If the directives are not transposed into national law, there is a threat that the Member State could become liable for damages towards its citizens. The uniform interpretation of national commercial law in light of European commercial law may create difficulties. For example, the European directive on commercial agents provides for a duty of acting in the interest of the entrepreneur, yet this same duty has been concretized in national law in many different ways. The important issue in practice and as far as procedure is concerned is that the European Court of Justice (ECJ) is competent to decide doubts arising out of the interpretation of European directives under Art 267 TFEU/234 EC. If the duty of the national judge to refer such a matter to the ECJ is violated, this amounts to the withholding of the ‘competent judge’, ie a violation of a basic right under the German constitution.
As for commercial law in a narrower sense, only specific parts of commercial law have been harmonized in the European Union. These include the transparency by means of and the reliance on the commercial register (1st Company Law Harmonization Directive 68/151 of 9 March 1968, Transparency Directive) and more generally the law of the commercial register including an electronic commercial register (Dir 2003/58 of 15 July 2003 modifying the previously mentioned directive); the annual accounts and the consolidated accounts of public companies (4th and 7th Company Law Harmonization Directives, Annual Accounts Directive 78/660 of 25 July 1978 and Consolidated Accounts Directive 83/349 of 13 June 1983); the definite inclusion of the German GmbH & Co (a mixture between a commercial partnership and a limited liability company) into these accounting directives (Dir 90/605 of 8 November 1990, so-called GmbH & Co Directive); auditors (8th Company Law Harmonization Directive of 10 April 1984, Auditors Directive 84/253, replaced by Dir 2006/43 of 17 May 2006 on audits (auditors); the recommendation of the European Commission of 16 May 2002 on the independence of auditors; the recommendation of the European Commission of 5 June 2008 concerning the limitation of the civil liability of auditors and auditing companies; the law of commercial agents (Dir 86/653 of 18 December 1986, Commercial Agents Directive); and the disclosure requirements in respect of certain company branches (11th Company Law Harmonization Directive 89/666 of 21 December 1989, Branch Directive).
Looking through this stock of European harmonization measures in the area of commercial law in the narrower sense, it is easy to notice that the main focus of the European legislature lies on three areas: transparency in commercial and company matters, commercial agency and the law of the branches. The reasons for this are easily understood. Transparency is one of the most important regulatory instruments in commercial and business law because it forces enterprises to face competition and control by the markets. For the European legislators, transparency is also important for another reason: it is a measure that infringes on commerce less than substantive regulation. Therefore, Member States are more willing to accept transparency norms than substantive regulation and intervention. The law of commercial agents is a central area of the sale and distribution of goods, which in an internal market must be possible with- out restrictions across borders (commercial agents). The law of commercial agents also contains protective norms. The European legislature demonstrates care for the protection of the weaker party here as well as in other areas, eg protection of the shareholders, the consumers and the workers. Finally, as to the law of the branches, its importance in an internal market is self-evident.
5. European harmonization in areas that are close to commercial law
If one assumes a wider concept of commercial law (see 1. above), or if one takes into consideration the European harmonization of law in areas that are close to commercial law—like company law, banking and stock exchange law, insurance law and, in part, labour law—the number of European measures of harmonization of law is so high that it does not make sense to start enumerating them here. Instead, the reader must be referred to other entries in this work. To give an idea of the breadth of this harmonization, a 2007 text collection (Hopt and Wymeersch (2007)) contains 32 entries concerning European company and financial law, 42 concerning banking law, 24 concerning consumer law in financial transactions, 34 concerning stock exchange and capital markets law, 40 concerning insurance law and 13 concerning enterprise law.
6. Towards a European commercial law statute?
Here and there voices have arisen that call for a European commercial law statute (Ulrich Magnus (1998)). The reason given is that apart from the formation of the contract (contract (formation)) and general contract law, quite a number of specific commercial contracts have already been totally or partially harmonized internationally (sales of goods, financial leasing (leasing), factoring, guarantee contracts (guarantee, independent), transport contracts, (carriage, contract of), commercial agency contracts (commercial agents), storing and handling of goods contracts, documentary credits (letter of credit) and transfer of money (bank transfers (cross-border)). But other important commercial contracts have been neglected, including contracts of distribution of goods (sales (forms of distribution)), franchising, licence agreements and know-how and technology transfer contracts. The parts that have already been harmonized could be used as building blocks, which would only need to be compiled into a truly European commercial law statute.
This quest is certainly on target insofar as the selection and the reach of these harmonization measures can be understood as political choices driven by interest groups. For the merchants, there is a free commercial choice whether to distribute their products directly, through commercial agents, through independent distributors, or in other ways. Therefore, it makes little sense in an internal market that only commercial agency has been harmonized, and even this only in parts—eg as far as the remuneration of the commercial agents and the termination of their contracts including severance pay is concerned—while the law of the independent commercial distributors has been left out (apart, of course, from the public law measures in antitrust and competition law).
Yet, on the other hand, it must be seen as described above that a separate codification of commercial law is by no means accepted throughout the Member States of the European Union and that, on the contrary, there is a movement towards integration of commercial law into general civil law (Code unique). Furthermore, there are considerable differences among Member State laws and in the legal discussion in these states as far as the concept and the reach of commercial law is concerned. Last but not least, it is well known that the movement towards European private law—not necessarily a European statute on private law—by means of principles, model laws and tools has gained unexpected momentum during the last decade. It is therefore more likely that commercial law harmonization on the European level will also make advances.
Peter Raisch, Geschichtliche Voraussetzungen, dogmatische Grundlagen und Sinnwandlung des Handelsrechts (1965); Wolfgang Zöllner, ‘Wovon handelt das Handelsrecht?’  ZGR 82; Franz Bydlinski, Handels- oder Unternehmensrecht als Sonderprivatrecht (1990); Uwe Blaurock, ‘Übernationales Recht des Internationalen Handels’ (1993) 1 ZEuP 247; Herbert Kronke, ‘Rechtsvergleichung und Rechtsvereinheitlichung des Reichsoberhandelsgerichts’ (1997) 5 ZEuP 735; Ulrich Magnus, ‘Die Gestalt eines Europäischen Handelsgesetzbuches’ in Festschrift Ulrich Drobnig (1998) 57; Karsten Schmidt, Handelsrecht (5th edn, 1999); Klaus J Hopt (ed), Vertrags- und Formularbuch zum Handels-, Gesellschafts- und Bankrecht (3rd edn, 2007); Klaus J Hopt and Eddy Wymeersch (eds), European Company and Financial Law (4th edn, 2007); Adolf Baumbach, Klaus J Hopt and Hanno Merkt, Handelsgesetzbuch mit GmbH & Co, Handelsklauseln, Bank- und Börsenrecht, Transportrecht (ohne Seerecht) (34th edn, 2009).