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Introduction:
Since Second World War, the cross-border transactions increased exponentially.
However, the transnational contracts inevitably raise the problem of, which national laws
from various countries should govern the transaction. Transnational commercial law which
born as law that is neither particular to nor the product of any legal system is therefore
favourable as it removes the barriers inherent in national commercial transactions. In
general view, international commercial law indicates a fusion of rules that completely
"anational" in character.1 It derives its meaning through its execution by the business world
and international usage. On the other hand, it is a member of private international law,
which concern the relations across various legal jurisdiction between persons, and
sometimes also corporations, companies and other legal entities.2
Harmonisation of commercial law at international level, can be considered as one of
the best process in transnational commercial law to remove this barrier.3 Harmonisation, a
process which making the legal rules of two or more legal systems more similar4, instead of
replace the domestic system.5 It assume and preserves the diversity of the various legal
systems to be harmonised.6 In the initial stage of harmonisation, conventions or treaties
which were the primary instrument indicate the hard law method of harmonisation
instrument. Nevertheless, along with diversification in commercial transactions and
businesses, various soft law instruments have been developed for the benefits of business
such as codified usages and customs, model laws and restatement. 7

1 Sandeep Gopalan, 'Transitional Commercial Law: The Way Forward' (2003) 18 SSRN Electronic
Journal <http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?article=1197&context=auilr>
accessed 12 December 2016.
2 'Transnational Commercial Legal Framework | Law Teacher' (Lawteacher.net, 2016)

<http://www.lawteacher.net/free-law-essays/commercial-law/transnational-commercial-legal-
framework-commercial-law-essay.php> accessed 12 December 2016.
3 Alford Duncan, 'A GUIDE ON THE HARMONIZATION OF INTERNATIONAL COMMERCIAL LAW -

Globalex' (Nyulawglobal.org, 2016)

<http://www.nyulawglobal.org/globalex/Unification_Harmonization.html> accessed 6 December 2016.
4 M. Bogdan Comparative Law, Kluwer, 1994, p. 30
5 Polina Nesterenko, 'SOME ISSUES CONCERNING UNIFICATION AND HARMONIZATION OF

EUROPEAN FOUNDATION LAW' (2012) 0 European Integration Studies.

6 M. Boodman, The Myth of Harmonisation of Laws, Am J Comp L, 1991, 39, p. 699
7 '3 - Is Harmonisation A Necessary Evil? - The Future Of Harmonisation And New Sources Of

International Trade Law' (Jus.uio.no, 2016)

<http://www.jus.uio.no/pace/is_harmonisation_a_necessary_evil.loukas_mistelis/3.html> accessed 10
December 2016.
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Benefits of Conventions
How does the conventions contribute to the transnational commercial law? What is
its benefit? These questions always raise by the scholars and practitioners. One of the
important benefit of the conventions is to produce neutral law. Usually, parties who
negotiating to enter into the transnational contracts will fall in need to submit their
agreement to neutral rules to ensure that it does not favour either parties. A traditional
compromise approach, which is usually used in international trade is submit the contract to
the law of a third country like English law, Swedish law, or Swiss law. This of course more
balanced than to choose the law of the country from one of the two parties, since it will give
neither of them benefit of having recourse to its own law. As a matter of fact, both parties
will be in equal condition. However, both will have to deal with a law which they are not
know well. As the parties rarely have a good knowledge of the chosen law of the third
country, it may appear later that part of the provisions under the contract is not comply
with the applicable third-country law or some of the gaps might be inevitably left and filled
by provisions which will lead to an unpredicted result. Therefore, business people and their
legal advisors are increasingly interested in transnational rules which able to help them to
create an alternative neutral legal framework for their transnational contracts.8
Among the conventions, ‘CISG9 probably indicate the high-water mark for thorough
global unification. It operating in the commercial sales area and become effective in 1988.
Today, 85 states, including major trading nations like USA, have adopted CISG, except UK.
CISG also been adopted by few South American States. It is bolstered that sooner or later it
will 'become the law which appropriate for the majority of the international sale of goods
contract'. From a practical and objective view, CISG seems not only to be neutral and
impartial, its substantive content is view as taking balanced approach to buyer and sellers
right and obligation. CISG represents a compromise legal instrument that balances the
interest of legal traditions-in particular the common and civil law systems, as well as
interests of the industrial and developing countries. For these reasons, CISG is seen as
neutral, balanced international law or set of rules, making it popular source of law in
international arbitration10
Furthermore, conventions also able to reduce transaction cost. Normally, the
prerequisite imposed by the legal systems from various countries will be very expensive to
business, which can range from a mere legal advice cost to the costs imposed by the law’s
inadequacy for cross-border transaction. The uncertainty and unpredictability brought by
different treatment by domestic laws will certainly influence the cost of credit. As
uncertainty increases, risk increases, and the risk is passed onto debtor in term of higher

8 'DEVELOPING NEUTRAL LEGAL STANDARDS FOR INTERNATIONAL CONTRACTS' (2016)

<http://store.iccwbo.org/content/uploaded/pdf/Developing%20neutral%20legal%20standards%20for%
20Intl%20contracts.pdf> accessed 10 December 2016.
9
United Nations Convention on Contracts for the International Sale of Goods
10 Larry A DiMatteo, International Sales Law (1st edn, Cambridge University Press 2014).

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cost of credit. Even once the applicable law is determined, parties still need to educate
themselves regarding their obligation and rights under that law.
In these situations, the presence of a single instrument, Cape Town Convention11,
governs all respects of the transaction act crucially to reduce risk, and thereby reduce the
transaction cost, thus leading to a better use of resources. Cape Town Convention,
promulgated by UNIDROIT, resolved ‘the issue of retaining and taking rights in rem in assets
like aircraft objects’ and including rules governing the priority and effect of insolvency. It
offers substantive rules which would displace any consistent national law. It is expected to
reduce cost of raising finance by providing an internationally recognised system of
"international interests" to be created and registered and standard remedies in a default
scenario giving creditors certainty as to the likelihood of being able to recover the aircraft.
These remedies including the ability to take possession, deregister and export the aircraft,
grant a lease or sell an aircraft object, receive or collect any profit or income in connection
with the management of that aircraft object and obtain interim relief pending final
determination of any claim. Shortly, Cape Town Convention potentially widen the option of
credit available to borrowers and reduce interest rates and able to reduce part of the
potential risk of aircraft finance and leasing transactions12
ECC13 also capable to reduce transaction cost. It’s objective is to facilitate the use of
electronic communications used in transnational commerce by assuring businesses that the
contracts they’re signing and other communications that are exchanged via email and other
electronic methods are just as applicable and enforceable as the traditional paper
contracts.14 The Convention works to remove obstacles created by older international laws
like Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and CISG.
Ratification and implementation this convention, therefore, would create universal legal
uniformity and a sense of predictability thereby reduce the transaction cost. This convention
even advocated by President Obama that, it could be a reduction in costs for US businesses
that use electronic communications and engage in electronic commerce.15
A central advantage of conventions pointed out by Kronke is, the legal certainty
which against the adaptability and flexibility permitted by other soft law instruments. He
expressed that, “the less acceptable the state of the art in private international law
regarding any area of substantive law, the greater the need for a uniform law

11
Convention on International Interests in Mobile Equipment
12 justin benson, 'The Benefits Of Ratifying The Cape Town Convention' [2016] UK Ratification of the
Cape Town Convention <http://www.whitecase.com/publications/article/uk-ratification-cape-town-
convention> accessed 11 December 2016.
13
UN Convention on the Use of Electronic Communications in International Contracts
14 Alysia Davies, 'Current Publications: Science And Technology: The Development Of Laws On

Electronic Documents And E-Commerce Transactions (PRB 00-12E)' (Lop.parl.gc.ca, 2008)

<http://www.lop.parl.gc.ca/content/lop/ResearchPublications/prb0012-e.htm> accessed 12 December
2016.
15 Elitza Nicolaou, 'White House Response To The UN Convention On Electronic Communications |

Revision Legal' (Revision Legal, 2016) <https://revisionlegal.com/revision-legal/white-house-

response-un-convention-electronic-communications/> accessed 12 December 2016.
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Convention.”16 Thus, convention should be improve instead of being abandoned. It depends

on the past useful experience. It would be misconception in envisaging a future of
unification and harmonisation of commercial law solely control by the market manipulator
and loosely framed by those soft law instruments. A powerful debate for this is, it would not
be appropriate for the soft law instruments to solve those issues of property like, a delicate
issue such as the acquisition of title from a non-owner.17
Concisely, conventions are the most rigorous harmonising instruments, they bind in
their entirety once in force and any amendments must be ratified in order to be effective.
This provides certainty and promotes uniformity in international trade. International
instruments like CISG, Cape Town Convention and a host of others which have attained
global acceptance, ratification and recognition, have created a level of legal certainty for the
furtherance of transnational commerce and trade. One can refer to attainment of legal
certainty in international dispute resolution of cross-border transactions especially in
transnational commercial arbitration.18 This can be seen in, New York Convention 195819,
which is based on a pro-enforcement bias. 20 It safeguards and facilitate the enforcement of
arbitration agreements and arbitral awards. By these, it serves transnational commerce.
New York Convention also offer an extra measure of security of commerce for the parties
entering international trade. These has greatly contributed to achieve the harmonisation of
international arbitration law which, in turn, aim to achieve certainty and predictability.21
CISG also able to achieve legal certainty. CISG aims to facilitate legal certainty in
transnational sale of goods, establish a uniform legal text for various nations in the world
and separating itself, as has been said, from national law.22 Indirectly, application of CISG
reduce the incentive to forum-shop on the ground that, at least for the questions governed
by it, the CISG constitutes a uniform legal basis. This produce a highly positive effect on legal
certainty and predictability as to the outcome of a dispute. For the countries of Latin

16 H. Kronke, 'International Uniform Commercial Law Conventions: Advantages, Disadvantages,

Criteria For Choice' (2000) 5 Uniform Law Review - Revue de droit uniforme.
17 Ibid
18 Jude Thaddeus Uchenna Nnodum, 'Source Of Legal Certainty' (2016) 18 Transnational

Commercial Law on the Wings of Globalization: Analysing the Role of Transnational Commercial Law
in Our Contemporary World
<http://www.academia.edu/22261251/Transnational_Commercial_Law_on_the_Wings_of_Globalizati
on_Analysing_the_Role_of_Transnational_Commercial_Law_in_Our_Contemporary_World>
accessed 12 December 2016.
19
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958,
20 Joseph T. McLaughlin, 'Enforcement Of Arbitral Awards Under The New York Convention - Practice

In U.S. Courts' [1986] 'The New York Convention'

<http://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?article=1034&context=bjil> accessed 12
December 2016.
21 Neil Kaplan, 'INTRODUCTION' (2011) 179 ICCA’S GUIDE TO THE INTERPRETATION OF THE

1958 NEW YORK CONVENTION <http://www.arbitration-

icca.org/media/1/13890217974630/judges_guide_english_composite_final_jan2014.pdf> accessed 13
December 2016.
22 Ana Elizabeth Villalta Vizcarra, 'Current Situation' (2015) 54 Thirty-five Years of Uniform Sales Law:

Trends and Perspectives

<http://www.uncitral.org/pdf/english/texts/sales/cisg/35_Years_of_Uniform_Sales_Law-E.pdf>
accessed 12 December 2016.
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America, CISG is important by enable them to adapt to uniform substantive provisions for
the operations of international trade, ensuring the operators have advance knowledge of
the legal regime that will govern the international sale of goods operation. This will boost
the international trade by affording greater legal certainty to cross-border transactions, as a
suitable legal instrument will be available to facilitate such transactions by governing the
contract into, independently of any national law, which will not be resorted to in any case,
given that the Convention is sufficient in itself under its own rules.23
In addition, conventions able to be applied in arbitration agreement. In an
international trade, arbitration become significantly strong and widely accepted as an
alternative dispute resolution other than litigation.24 Commercial arbitration has a strength
of confidentiality and privacy. Regardless of whether the rules of arbitration will provide for
confidentiality in the process of arbitration, it is usually open for the parties to reach an
agreement that the process is confidential and private. This is demonstrated in Ali Shipping
Corporation v Shipyard Trogir25 which held that there is a strong contractual presumption in
favour of confidentiality. Although this may be overridden by a court when it is necessary to
protect a parties against a third party or in other exceptional circumstance where justice
require.
A vital convention in regarding of arbitration is New York Convention26 which seeks
to supply a common legislative criteria to recognise arbitration agreements and court
recognition, enforcement of non-domestic and foreign arbitral awards. The "non-domestic"
come into sight in order to include the awards which, though made in the state of
enforcement, are consider as "foreign" under its law as there are several foreign elements in
the proceedings. The Convention's objective is to prevent the non-domestic and foreign
arbitral awards being discriminated and require the Parties to make sure that such awards
has been recognised and are generally able to enforce in their jurisdiction like domestic
awards. Besides, requiring the courts of parties to provide a full effect to arbitration
agreement by making the court compulsory to deny the parties access to court in
contravention of their agreement to refer the issue to an arbitral tribunal is an auxiliary goal
of the convention.27

23 Alberto De Campos Cordeiro Neto, 'Electronic Library On International Commercial Law And The
CISG' (Cisgw3.law.pace.edu, 2011) <http://cisgw3.law.pace.edu/cisg/biblio/neto-radael-lopes.html>
accessed 12 December 2016.
24Steven Finizio, 'International Arbitration 2015' (Clydeco.com, 2016)

<http://www.clydeco.com/uploads/Files/International_Arbitration_15_Chapter_4_ClydeCo.pdf?utm_so
urce=Mondaq&utm_medium=syndication&utm_campaign=View-Original> accessed 14 December
2016.
25 Ali Shipping Corporation v Shipyard Trogir [1997] EWCA Civ 3054
26
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards1958
27 Giuditta Cordero Moss, 'CRITERIA FOR DETERMINING THE VALIDITY OF AN ARBITRATION

AGREEMENT' (2003) 18 RISK OF CONFLICT BETWEEN THE NEW YORK CONVENTION AND
NEWER ARBITRATION-FRIENDLY NATIONAL LEGISLATION?
<http://folk.uio.no/giudittm/Form%20of%20arbitration%20clause.pdf> accessed 15 December 2016.
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Challenges with the use of conventions:

Every coin has two side, not everyone is convinced that the conventions is desirable.
It was held that several well-known limitations partly offset the advantages of conventions.
A typical example is, the realization that the court of state will interpret the conventions
according to their own national law which lead to a disparity of interpretation is the
inherent hollowness of any uniformity.28
To reduce the issue of interpretations divergence by courts from various nations,
drafters of CISG included Article 7(1)29 which provide that when interpreting CISG "regard is
to be had to its international character and to the need to promote uniformity in its
application." As other legal writers indicated, this means that one should read the
conventions in an autonomous manner, instead of through the lenses of national law,
therefore, when interpreting the convention one should not adopt the meaning generally
attached to certain expressions within the scope of particular legal system.30 This can be
exemplified in United States District Court ‘s decision in Zapata Hermanos Sucesores v.
Hearthside Baking Co31 which concerned with a sale of goods contract under CISG. In this
case, the court refuse the argument of buyers that, the ‘American rule’ in American court
have required the litigants in federal court actions to undertake their own legal expenditure.
The court emphasised the significance of CISG’s international character and the need to
facilitate uniformity and thus rejected the American Rule to be applied. The court did not
succumb to the homeward trend to interpret the implication of Article 74.32
Beside CISG, Cape Town Convention also provide a similar solution under article
5(1)33 which require the international character and promote uniformity in interpretation
the convention. The only different is Article 7(1) of CISG also require the observance of good
faith in cross-border transaction. In contrast, Cape Town Convention omits this directive,
finding its application unpredictable.
Next, article 2 of New York Convention which requires the parties to enter into the
arbitration agreement in written form have raised a dispute in whether the clause of
arbitration which entered into ‘electronically’ satisfied the prerequisite of the written form.
It was held that, by referring to “exchange of letter or telegrams”34, the convention
has embraced the latest definition of telecommunication that were known at once. The

28 Ibid.
29 United Nations Convention on Contracts for the International Sale of Goods, Article 7(1)
30 Franco Ferrari, Interpreting the CISG in Light of its International Character'' [2001] CISG Case Law:

A New Challenge for Interpreters? <http://www.cisg.law.pace.edu/cisg/biblio/ferrari3.html> accessed

13 December 2016.
31 Zapata Hermanos Sucesores v. Hearthside Baking Co, [2001], U.S. District Court
32 Nives Povrzenic, '4 - Harmonisation And The United Nations Convention On Contracts For The

International Sale Of Goods' (Jus.uio.no, 2016)

<http://www.jus.uio.no/pace/harmonisation_and_the_cisg.troy_keily/4.html#119> accessed 13
December 2016.
33 Convention on International Interest In Mobile Equipment, Article 5(1)
34New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards1958, Article

2
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convention’s purpose is for the recognition of arbitration agreement which entered into by
using the means of communication that usually adopt by the parties in the process of their
transactions. As of today, communicate by electronic post become habitually due to the
technological evolution, it seems only natural to extend the interpretation of article 2 once
again, to embrace the latest definition of communication that is widely adopted to conclude
the contracts. A distinct interpretation would be against the spirit of the convention, which
aim to recognise arbitration agreements if they were concluded in the form that was
generally adopted for the conclusion of contracts.35
To confirm that Article (2) of New York Convention is uniformly interpreted,
UNCITRAL Working Group on Arbitration has elaborated several proposals reflecting current
practices. The declaration is depending on its recitals, by consider, firstly, the necessity of
having an interpretation of the term “agreement in writing” which is uniform to strengthen
certainty in cross-border transactions. Next, the prerequisite that the interpretation of
convention must consider the need to facilitate uniformity in its application and its
international origin, and thirdly, the necessity to regard subsequent legal instruments.
Therefore, it can be said that the interpretation of UNCITRAL have play a major role in
construing the convention. Yet, it remains to be seen whether the declaration instrument is
sufficient or even adequate to found an interpretation of article (2) that might differ
considerably from the interpretation currently made in several states. The provision
interpretation is used to cover the arbitration agreements entered electronically. However,
it does not seem to be beyond the limits of an ordinary extensive interpretation, and has, as
mentioned, already been done earlier in respect of past technological developments. The
UNCITRAL declaration is, therefore, simply adding its authoritative voice to confirm the
rightness of this construction.36
Moreover, it was impossible for a code to be written in the area of commercial law
to include provisions for all situations within its ambit of application, nor describe all that is
necessary for its understanding. This should be considered especially when dealing with civil
law, trade law in general and other area of law. In a transnational contract of sales, the
questions may, although falling in the range of conventions, its provisions unable to settled
the problem expressly.37
Article 7(2)38 of CISG stated that such issue should be settled "in conformity with the
general principles on which the Convention is based or, in the absence of such principles, in
conformity with the law applicable by virtue of the rules of private international law.” There
are 2 requirements in order to apply Article 7(2) that is, a question need to concern
"matters governed by ... Convention" and cannot be "expressly settled in it". The area of
CISG is determine by Article 4, which relates only to "the formation of the contract of sale

The term “agreement in writing” shall include an arbitral clause in a contract or an arbitration
agreement, signed by the parties or contained in an exchange of letters or telegrams.
35 Ibid.
36 Ibid.
37 Ibid.
38 United Nations Convention on Contracts for the International Sale of Goods, Article 7(2)

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and the rights and obligations of the seller and the buyer arising from such contract." This
article also explicitly exclude the effect which the contract may have on the property in the
goods sold and the validity of the contract from the scope of conventions. The express
exclusions can also be seen in Articles 2, 3(2) and 5 of CISG.39
Thus, if the Convention involves a provision dealing with the matter at hand, the rule
of gap-filling is not required to apply. While, if the Convention have no such provision
although the case at hand lies within its ambit, then second requirement for gap-filling is
satisfied and one may begin to find out a suitable solution. Examining Article 7(2), here
concludes that the CISG allows 3 solutions which need to be applied subsidiary that is,
application of general principles on which the Convention is based, application of law
determined by the rules of private international law and the application of its specific
provisions by analogy.40
The last but not the least, depending on the nations, a series of formal steps might
be required in the ratification process, involve different authorities and consume a long
period of time to conclude. This cause a long transition period between the adoption of
international conventions and their entry into force, as well as a sluggish of national
implementation. Besides, conventions are hard to amend. One of the reason is, it requiring
accommodation to economic change or evolution of practice or technology. Besides, there
is still a risk that modifying protocols may not be ratified by all the original signatory
countries even the amendments are agreed upon, resulting in a complex patchwork of
Contracting Parties.41
In order to manage this challenge, it is vital for the formulating agencies to realise
the instruments’ limits they produce and the potential drawbacks of their working methods.
It has been persuading that the future harmonisation of contract law, for example, will
consist of “some kind of interaction between the binding law of international conventions or
directives on the one hand and the new phenomenon of Principles of Contract Law on the
other hand.” Shortly, it should be more flexible for the formulating agencies to choose the
instrument and in a conceptual approach in which “hard” and “soft” law may best
supplement each other.42

39 Ibid
40 Ibid
41 Arthur ROSETT, “Unification, Harmonization, Restatement, Codification and Reform in International

Commercial Law”, The American Journal of Comparative Law (1992), vol. 40, 683 et seq. (688)
42 J. A. E. Faria, 'Future Directions Of Legal Harmonisation And Law Reform : Stormy Seas Or

Prosperous Voyage ?' (2009) 14 Uniform Law Review - Revue de droit uniforme
<http://www.unidroit.org/english/publications/review/articles/2009-1&2-faria-e.pdf> accessed 13
December 2016.
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Alternatives to the use of conventions

Since conventions sometimes risk remaining little more than a dead letter and tend
to be rather fragmentary in character, there is a trend to adopt of soft law sources and non-
binding arrangements. There are two set of principles which aims to harmonize the
International Contract law. Firstly, “Principles of International Commercial Contracts”(PICC)
by UNIDROIT for the cross-border transactions worldwide and another is Principles of
European Contract Law (PECL), for European Union’s member states which shares the same
objectives with PICC. 43
As a legislative codification of restatement of a law for the contract of transnational
commerce, PICC does not have the force of law. They provide a series of regulations
produced by scholars, including every significant fields of general contract law and appear to
be ‘a resource for the courts and arbitral tribunals who find them helpful there have been a
number of arbitral awards invoking them.’ Professor J. Bonell, who administrate the work of
international scholars on the PICC, held, ‘It was both the benefit and drawbacks of CISG
which actuate UNIDROIT to set up a project as driven as the Principles.’ 44 Although both
PICC and CISG in general solve the similar matters, PICC’s non-binding nature make them
able to solve questions which not covered by CISG. Significantly, PICC is not contrast with
CISG and other instruments of harmonization. It always applied as a gap-filler, to
supplement and interpret the instrument of uniform law especially CISG. These two
instruments ‘may actually perform the crucial functions side by side.’45
Regarding to the formation of contract, the rule laid down by PICC are at variance
with the one contained in CISG, they improve them. For instance, PICC specifically adopt a
rule which held that the contract may be concluded in the absence of the offer and
acceptance process. Its definition of "offer" is simpler, language in CISG definition that was
erroneous, or at best confusing, has been eliminated.46 In addition, the apparently
invariable prerequisite that an implicit or express price term is necessary to an offer has
been eliminated. One of the enhancement in PICC over CISG is Article 1.7, which imposes a
non-derogable duty to act in line with good faith and fair dealing in cross-border transaction
on the contracting parties. CISG provides that in interpreting this Convention, the
observance of good faith in transnational commerce has to be regarded. This cautiously
prevent to say that an obligation of good faith and fair dealing exists in every contract.
Instead, it required convention to be interpreted in the light of a standard of good faith
which contrast with PICC which demand the parties under the contract to act in good
faith.47

43
Ibid.
44 Bonell, International Restatement, supra n. 28, at 305
45 Ibid.
46 Joseph M. Perillo, 'The UNIDROIT Principles Of International Commercial Contracts' (1994) 63

Unidroit Principles of International Commercial Contracts: The Black Letter Text and a Review
<http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=3132&context=flr> accessed 15 December
2016.
47 Ibid.

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Another alternative to the use of conventions is Uniform Customs and Practice for
Documentary Credits (UCP) by members of International Chamber of Commerce (ICC). It is a
set of rules which brought uniformity to the letters of credit. Since UCP inception, it become
the most succeeded private group of rules for trade ever developed.48 Professor Schmitthoff
pointed out that UCP have been widely adopted almost 30 years ago, "as banks in more
than 170 countries operate letters of credit under this document, it has become a world
law". UCP 600, the latest revision of the UCP which is governing the function of letters of
Credit.49 Issues of particular interest to the commodity trade including the basic duties of
banks when inspecting documents tendered for payment under letters of credit governed
by UCP 600, and the prerequisite pertaining to various types of documents that may be
tendered under credit letters. However, UCP 600 only applies when the credit text expressly
pointed out that it is subject to these rules. 50
The contract of sales need to include an express condition which impose a duty to
open a letter of credit governed by UCP600 on the buyer, because only with such condition
in place, seller able to object if the buyer open a letter of credit which is not governed by
UCP. Yet, buyers can still set in the credit that certain aspects which are not covered by UCP
rules, provided this was laid down in the sale’s contract. The key benefit to incorporate UCP
600 for a seller is that, where it is incorporated, he will able to know beforehand the norm
against which the banks will check the shipping documents in making decision of whether to
pay under the credit. While for purchaser, he will know beforehand that the price which will
be paid against the tender of documents is following the standard.51
At last, conventions can achieve in uniform law, but transnational harmonisation
able to take place without the conventions when nations adopt similar legal principles as
part of their national law. International model laws, for instance, may serve as models for
use in drafting national legislation.52 Model law able to be accepted in whole or in amended
form or at least be cherry-picked by a State at the time of legislating. This contrasts with the
"take it or leave it" appeal of a convention that is difficult to modified. However, advocated
by Herrmann, the drawbacks of model law, in terms of binding effect, is minimal about the
fundamental question of whether or not the State come to a resolution to take the
international text.53

48 John Manzella, 'The New UCP 600: Better Rules To Better Facilitate International Trade' (The
Manzella Report | The Premier Source For Global Business And Economic News, 2016)
<http://www.manzellareport.com/index.php/trade-finance/438-the-new-ucp-600-better-rules-to-better-
facilitate-international-trade> accessed 13 December 2016.
49 Ibid.
50
C Chandrasegar, 'UCP600-Key Issues' (2007) <http://www.tpclaw.com.sg/200701_UCP600_KeyChanges.pdf>
accessed 15 December 2016.
51
Andrzej Blajer, 'UCP 600: Article By Article Analysis - Renan Consulting' (Renan Consulting, 2017)
<http://www.renanconsulting.com/introduction-early-and-contemporary-history-of-letter-of-credit-rules/>
accessed 15 December 2016.
52 Ibid
53 Ibid.

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Model Law on International Commercial Arbitration 1985, amended in 2006, is the

most successful instrument in transnational commercial law. A lot of jurisdictions has
adopted this. Although its ambit is restricted to commercial and international arbitration,
this model law was utilised as a blueprint to modernise laws governing both commercial and
non-commercial law, as well as domestic and national legislation.54 It required arbitration
agreement to be in written form. Yet, under Article 7(4) (2006 amended version), it was held
that the prerequisite which require arbitration agreement to be in writing can be fulfilled by
an electronic communication supposing the information included therein is accessible and
useable for subsequent reference. In short, parties who enter into the contract
electronically will be able to meet the requirement of writing form.55

54Ibid.
55'UNCITRAL Model Law On International Commercial Arbitration:' (2016)
<http://investorstatelawguide.com/documents/documents/OTI-
0035%20-%20UNCITRAL%20Model%20Law%20on%20International%20Commercial%20Arbitration
%20(Excerpts).pdf> accessed 15 December 2016.
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Conclusion:
As a conclusion, conventions is an indispensable harmonisation instrument as it have
make a great contribution in the process of harmonisation. Although there are several
challenges in the use of conventions, it will still be a good solution in harmonize the law
from various countries. In my view, conventions can be used together with the soft law
instrument which can be act as a supplement of conventions. By doing so, both hard and
soft law can function effectively in harmonization process.

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Books:

 Bogdan M, Concise Introduction To Comparative Law (1st edn, Europa Law Publishing
2013)

 DiMatteo L, International Sales Law (1st edn, Cambridge University Press 2014)

 Goode R, Transnational Commercial Law (1st edn, Oxford University Press 2007)
Cases:

 Ali Shipping Corporation v Shipyard Trogir [1997] EWCA Civ 3054

 Zapata Hermanos Sucesores v. Hearthside Baking Co, [2001], U.S. District Court

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Conventions:

 United Nations Convention on Contracts for the International Sale of Goods

 United Nation Convention on the Use of Electronic Communications in International

Contracts

 Convention on the Recognition and Enforcement of Foreign Arbitral Awards

 Convention on International Interests in Mobile Equipment

 New York Convention on the Recognition and Enforcement of Foreign Arbitral

Awards1958

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