Chapter

Islands of Transnational Governance

Alec Stone Sweet

in On Law, Politics, and Judicialization

Published in print August 2002 | ISBN: 9780199256488
Published online November 2003 | e-ISBN: 9780191600234 | DOI: http://dx.doi.org/10.1093/0199256489.003.0010
Islands of Transnational Governance

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The two papers in Ch. 5 examine how lawyers and law professors, operating in private arenas, successfully revived a pre-modern legal system, the Lex Mercatoria – the international body of trade law derived from merchant practice. Stone Sweet’s paper traces the development of a transnational legal system, comprised of a national contract law and a network of arbitration houses that compete to supply third-party dispute resolution to the international commercial world. The paper is divided into two parts. The first discusses, in a theoretical manner, obstacles to the emergence of a stable network of traders engaged in relatively long-range, impersonal exchange, focusing on three generic problems of human community: cooperation and commitment, transaction costs, and institutional choice and governance. The second part examines three quite different regimes that have governed transnational commercial activity: from the mediaeval law merchant, to the Westphalian state system and its institutional failings (including discussion of conflict of laws practices), and – the principal focus of the chapter – the new Lex Mercatoria and its institutionalization.

Keywords: arbitration; commitment; conflict of laws; cooperation; dispute resolution; governance; institutional choice; institutionalization; international commerce; international trade law; Lex Mercatoria; mediaeval law; merchant practice; national contract law; trade law; transaction costs; transnational commerce; transnational governance; transnational legal system; Westphalian state system

Chapter.  8621 words. 

Subjects: Comparative Politics

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