The New Paraguayan Law On International Contracts: Back To The Past?

Professor Joachim Bonell's leadership has undisputedly been decisive for the remarkable developments which in recent decades have led to the gradual harmonization of contract law in the world. Deeply upset when, in 2008, Europe unsatisfactorily modified its conflict-of-laws rules for international contracting (signalling a resounding defeat for the harmonization crusaders in the continent), his unbendable spirit led him to affirm that hope is the last thing to be lost,1 and that the time was ripe to address and resolve this matter adequately on a global scale. Even though I have admired Professor Bonell for many years through his work, I only met him for the first time in The Hague in 2010, and from there on several times in the Netherlands and in Italy, where I became even more impressed with his wit, deep understanding of contract law and relentless determination to advance his beliefs on the subject. The work in The Hague was eventually concluded in 2015 and many of its accomplishments in favour of a less fragmented world in the field of international contracting can be traced back to Professor Bonell, whose principled guidance proved decisive for the fate of the endeavour and for the favourable outcome, which meant a step towards cosmopolitanism. Professor Bonell and many other missionaries (this is how the late Professor Allan Farnsworth described himself in promoting the virtues of universalism in contract law) may have lost the battle, but the defeat was merely pyrrhic: they are destined to win the war. This article, written in honour of the already legendary Professor Bonell, recounts the battle of the crusade, won in the country of Paraguay, together with the huge victory in The Hague.

INTRODUCTION

Some years ago, French legal philosopher Michel Villey, complained that after the ancient Greeks and Romans, not much progress had been made effectively to grasp the notions of law and justice.2 In more "mundane" matters, not long ago Professor Friedrich Juenger of the University of California noted that the old Roman ius gentium and ius commune and the lex mercatoria of the Middle Ages, proved much more effective in private commercial relationships with foreign elements than the conflict-of-laws rules that spread across a multi-state world from the XIX century onwards.3

In 2015, Paraguay promulgated a brand-new law on international contracts. This Law can be qualified as a forward-looking piece of legislation, in line with recent proposals advanced by prestigious codifying organizations of the world and the Americas and taking into account current developments and the necessities of day-to-day commerce. Moreover, it may well pave the way for a return to the old cosmopolitan days, earlier aborted by the "balkanized" conception of an influential stream of "conflictualism" - leading to the application of national law to private international relationships.

In this contribution, its author will present and explain the new Paraguayan Law,4 focusing on its universal spirit - thus leaving behind years of chauvinism in the field of international contracting. The author is convinced that there has been nothing new under the sun since Cicero's proclamation of the virtues of cosmopolitanism5 (when he stated that the day would come when the law was the same in Rome, in Athens and all around the world),6 and this should be particularly the case with Contract Law in a multi-State world.

I REVERSAL OF TWO CENTURIES OF MISCHIEF

The pendulum is indeed swinging again. We are moving back towards the universal spirit of the old Roman ius gentium and later, of the Middle and Modern Ages' ius commune and lex mercatoria. This was interrupted when the consolidation of modern States led to the nationalization of the law in the nineteenth century, which gave a tremendous boost to the discipline of Private International Law, understood as law intended to solve "conflicts of national laws".

Many factors are contributing to the swift changes of recent times.7 Inter alia, party autonomy is consolidating as a principle in international contracting. This leads to parties avoiding the unpredictable "conflictualism", via relevant provisions in their agreements or a clear choice of the legal regime that will govern them. Additionally, arbitration is consolidating as a widespread means for solving commercial disputes, providing the arbitrators with powerful tools to arrive to fair solutions in trans-border problems, beyond the mere automatic application of national laws in accordance with a conflict-of-laws mechanism.

On a theoretical level, the basis of this orthodox "conflictualism" suffered numerous attacks, and, in practice, it has been demonstrated that the system simply does not work when it comes to providing adequate responses to the necessities of transnational commercial activity.

International organizations have responded to the need to harmonize norms governing trans-border mercantile activities and thus, to leave behind an outdated "conflictualism" in this field.8 Remarkable efforts include those...