The UNIDROIT Principles as global background law

After twenty years of existence, it becomes apparent that the role actually played by the UNIDROIT Principles of International Commercial Contracts (PICC) is quite different from the one originally intended. This article first presents nine surprising findings concerning the actual use of the PICC, as it can be assessed on the basis of published opinions, legislation, and scholarship. It then uses these findings to suggest that the PICC should not be viewed as a code or even a non-state law. Instead, their nature is that of a Restatement of global general contract law, and their function is that of a global background law. The article finally discusses implications of these findings for concrete questions: their use in private international law, their use to interpret the CISG, their relationship with other non-State codifications, and their relationship with a possible global commercial code.


I. Introduction
The International Institute for the Unification of Private Law's (UNIDROIT) Principles of International Commercial Contracts (PICC) turn twenty. 1 For their authors, this is certainly a reason to celebrate, as it is for UNIDROIT as an institution.For the rest of us, the anniversary is an occasion to assess, as objectively as possible, what role the PICC have come to play in the contemporary legal landscape and what this tells us about the state of transnational law.That the PICC do play a role is obvious-not just from the numerous publications but also from numerous references in arbitral and judicial decisions and legislative projects.However, what this role is exactly remains somewhat opaque.The task of assessing their actual role is not made easier by the fact that much scholarship still rehashes the plethora of purposes the PICC see for themselves in their preamble2 and shows little interest in either empirical findings as to actual use or theoretical and analytical analyses as to what the actual use tells us about the role the PICC play.
In this contribution, I first want to assess, as objectively as possible, where the PICC have played a role and where they have not.Insofar as judicial and arbitral practice are concerned, the picture can be derived, with fairly acceptable accuracy, from the UNILEX information database.Although that database is not complete, 3 it remains the most comprehensive, and best structured, collection of opinions referring to the PICC.As concerns their influence on legislation, both domestic and international, a similar database does not exist, nor am I aware of comprehensive scholarship, but my own research shows tentative results as well.I draw on materials collected for, and referenced in, the forthcoming commentary on the preamble on the PICC. 4 Whereas that contribution follows the structure of the preamble of the PICC and is as comprehensive as possible, in this article I want to focus especially on nine surprising findings that emerge.
Second, I use these synthetic insights towards a concrete goal, namely to determine analytically what role the PICC play in the contemporary legal landscape.I suggest that attempts to characterize the PICC as a non-State code, or even a non-State legal system-for example, a new lex mercatoria-are ill-fated, not just theoretically but also empirically.Instead, I find that their nature is that of a restatement of global general contract law and their function is that of a global background law. 5 I also ask what this means for the current state of transnational law.
Finally, I suggest some concrete implications for currently relevant questions that emerge from this determination.These implications concern their use in private international law, their use to interpret the UN Convention on Contracts for the International Sale of Goods 6 (CISG), their relationship with other non-State codifications, and their relationship with a possible global commercial code.

II. The actual uses made of the PICC: nine surprising findings
The PICC were originally drafted as a restatement of transnational contract law. 7heir original function was, rather modestly, to serve as preparatory work towards a possible uniform code. 8Yet once the text was coming together, its authors expanded on this function.The preamble of the PICC lists a whole plethora of possible purposes, and the list is not even exclusive. 9With little exaggeration, it can be said that the PICC offer themselves for whatever use people want to make of them.
Nonetheless, the preamble suggests a certain hierarchy of such uses.At the top of this hierarchy certainly stands the application of the PICC as the law chosen by the parties, the only use marked as mandatory in the preamble ('shall be applied,' as opposed to 'may be applied').At the bottom of this hierarchy stood, for a long time, the use for domestic purposes, particularly as a model for purely domestic contracts (the official comments suggest their model character insofar mainly for countries with undeveloped law for foreign economic relationships and countries after dramatic socio-political changes 10 ).Their use for the interpretation and supplementation of domestic law was not even considered in their original version and was only added for the 2004 version. 11Most scholarship has followed this hierarchy.While there are literally hundreds of publications dedicated to the question whether the PICC can be applied as the chosen law, studies of their role as a model for domestic law and for the supplementation of domestic law are comparably rare and confined, almost always, to the law of a specific domestic system. 12And yet, surveying the practice of the first twenty years of their existence 6  19 ILM 668 (1980 reveals that their main uses lie elsewhere, as the following sections make clear.I discuss nine counter-intuitive findings

Parties rarely choose the PICC
The PICC offer themselves to parties for a variety of purposes-not only as a chosen law but also as a model for contracts and as a checklist for contract drafting.In reality, however, it appears that parties make relatively little use of the PICC.Early studies suggested that the PICC were relatively unknown. 13This appears to have changed, to some extent. 14And yet, scholarly claims to the contrary notwithstanding, it seems that parties rarely use the PICC.They rarely use them as a model or checklist for drafting purposes except very occasionally. 15nterestingly, the same is true for choice-of-law purposes.It is not surprising that parties rarely attempt to choose the PICC in contracts before State courts, given the near unanimous unwillingness of State courts to enforce such a choice. 16owever, we are told things are different in arbitration, where the PICC are regularly chosen.As far as can be determined, this is untrue. 17At the time of writing, UNILEX lists only 19 arbitral decisions addressing applicability of the PICC as rules of law governing the contract in disputes before an arbitral tribunal, out of 186 arbitral decisions that mention the PICC. 18Out of these 19, no more than four (!) concern matters in which the parties had chosen the PICC in their contract. 19In two others, they were chosen in the terms of reference. 20The vast majority are cases in which the PICC were chosen by the parties at the beginning of the arbitration, either at the suggestion of the arbitrator (three cases) 21 or without such an explicit suggestion appearing from the abstract (10 cases). 22uch a choice during the arbitral proceedings is hard to distinguish, in practice, from the case in which the arbitrator herself designates the PICC as applicable law in the absence of a party choice and then asks the parties for their agreement. 23omparable numbers emerge from a recent analysis of previously unpublished decisions by the International Court of Arbitration.Here, the PICC were mentioned in only 54 proceedings or 0.8 per cent of all proceedings. 24rom another report, we learn that, between 2007 and 2011, the PICC were mentioned in contracts in only seven matters referred to arbitration under the International Chamber of Commerce (ICC), as opposed to 3,551 in which national law was chosen. 25Considering that the ICC has generally been sympathetic to the PICC and has organized several symposia on them, this is a remarkably low figure.

Adjudicators use the PICC even when they have not been chosen
The result is rather startling.Were it only for the most-discussed use, namely application by party choice, the PICC could be considered nearly irrelevant to adjudication and arbitration.In fact, they are not irrelevant at all.However, their importance is due to their use not by parties but, rather, by judges and arbitrators, who do refer to the PICC with some frequency, even if only very rarely due to a choice by the parties.More frequent is the use of the PICC in situations where the parties referred to the lex mercatoria, general trade customs, or the like.Yet more frequently they are referred to in the absence of party choice.By far the biggest portion of decisions are those, however, in which the PICC are used for the interpretation and supplementation of international law and, even more frequently, domestic law (Figure 1).While their use for the interpretation and supplementation of international commercial law is still in line with their original purpose, their use in the context of domestic law may seem surprising.
Note also that in many of these situations the PICC will be only one of many legal texts used by adjudicators.A typical example is a recent decision by the Spanish Supreme Court, which cited, for principles of contract interpretation, not just Article 4.1 of the PICC but also Article 236 of the Portuguese Civil Code, Article 1156 of the French Code Civil, Article 1362 of the Italian Civil Code, and Article 5:101 of the Principles of European Contract Law (PECL). 26The PICC are here not a source, but an element, in a broad comparative survey.Such use is different from their use as the applicable law, which would, in principle, happen with the exclusion of other legal systems.In other words, the PICC do not become 'the' applicable law but, rather, one of several bodies of legal rules on which adjudicators draw-no more but also no less.

The PICC are increasingly used as customs or international trade usage
Another more recent use has not yet been analysed sufficiently in scholarship.With increasing frequency, the PICC are used as trade usages, customs, or the like.In some systems, the PICC are even officially viewed in their entirety as an expression of business customs.This has happened in Ukraine, after the Supreme Economic Court, in 2008, issued a letter entitled 'On Some Issues in the Application of the Civil and Commercial Codes of Ukraine', which established that the PICC, among other texts, can be viewed as an expression of business custom. 27Since then, Ukrainian courts have referred to the PICC in at least 34 cases. 28Similarly, courts in China have referred to the PICC as custom. 29Explicit reference is made to the PICC for determination of usages also in Article 31(3) of the International Trade Center's (ITC) Contractual Joint Venture Model Agreement (three parties or more) 30 and Article 23(3) of this same Agreement (two parties only). 31his use as customs is, at first sight, surprising.The PICC, properly understood, are largely not a restatement of such usages. 32They draw, to a large extent, on official law and represent a universal restatement, whereas trade usage is typically unofficial and specific to a particular trade.If courts, especially in formerly socialist countries, draw on them regardless, it appears they use them as a hook to escape their overly restrictive domestic laws.This gives them a rather powerful role that would deserve further analysis.are mostly used by arbitrators.As far as can be ascertained, both expectations cannot be confirmed.First, at least according to UNILEX, the numbers of application seem to have settled somewhere between 15 and 30 per year-not insignificant numbers, but certainly not very high.These numbers must be taken with a grain of salt: decisions are certainly under-reported.For example, according to one author, in the first nine months of 2013 alone, six Spanish Supreme Court decisions and 65 (!) Spanish lower court decisions made reference to the PICC. 33UNILEX lists one single Spanish judicial decision for the same time.Moreover, arbitral decisions are frequently unpublished.The total number of arbitral awards making reference to the PICC is therefore certainly higher (though nobody can say for sure by how much).
This high number of judicial opinions from Spain points to a second peculiarity.While we have no evidence for an increase in arbitral awards that use the PICC, we can clearly observe such an increase in judicial opinions.This emerges from the numbers on UNILEX (Figure 2).The effect is likely increased if we take into consideration that judicial opinions in Spain have apparently begun to reference the PICC only around 2006; a similar recent development can be observed in Ukraine. 34By contrast, numbers from international arbitration seem to remain low.It has often been argued that a huge number of arbitral decisions using the PICC is simply hidden from view because arbitral decisions are usually unpublished.This does not appear very likely in view of developments in investment arbitration (where decisions are regularly published).Although much has been written recently about the use of the PICC in investment arbitration, 35 we only know of a small handful of cases in which they have actually been used.

The PICC are used very differently in different countries
Another finding is interesting.The majority of decisions with a reference to the PICC come from a very small number of jurisdictions.At least according to UNILEX, courts in only 10 countries referred to the PICC in more than four decisions: Russia (25), Ukraine (21), Spain (20), Australia (13), China (13), Italy (12), Netherlands (11), United Kingdom (UK) (9), Argentina (6), and USA (5).At first, this list does not seem to follow a systematic pattern: the list contains three common law countries, four civil law countries, and three former socialist systems.
A closer look reveals some commonalities within each group.It seems different factors are at stake for each of these three groups.Further research would be useful.
In the common law jurisdictions, a disproportionate number of the references concern only two issues.Seven of the Australian decisions deal with the general question of whether there is, or should be, a general principle of good faith as in Article 1.7 of the PICC or whether a clause requiring conduct to be in good faith can be enforced and what it implies. 36Five UK decisions and two Australian decisions as well as three of the four reported decisions from New Zealand that refer to the PICC do so for a specific issue-namely whether pre-contractual negotiations can be used for the interpretation of a contract. 37On both issues, the solution of the PICC is mostly rejected.The PICC are used, in other words, mostly as an anti-model rather than as a model.Still, what may look to be a failure for the PICC is actually a success-they are taken seriously, even if their solutions are rejected in the specific case.
No such limited use emerges from the case law of civil law courts.Instead, references are made to different specific rules from the PICC for comparative law purposes.The desire of judges seems to be to ascertain that a solution they find in domestic law is compatible with what is considered a global consensus.The PICC are not cited as applicable law nor are they usually the only source used, but their use is for the purpose of information and confirmation.Remarkably, such use is very frequent in some jurisdictions (for example, Spain) and virtually non-existent in others (for example, Germany).The reason might be that German lawyers are more confident in the self-sufficiency of their legal system than are Spanish lawyers, but this is mere conjecture.It seems more likely that this is a matter of chance, depending on whether the relevant legal actors at a certain time do or do not draw on the PICC.
The most interesting use, however, emerges from formerly socialist countries.In Ukraine, the PICC are regularly referred to as evidence of international custom, as was mentioned earlier in this article. 38In Russia, a large number of recent decisions refer to Article 1.1 (freedom of contract). 39Presumably, the PICC are used here less as evidence of actual international customs and more as a way to enable courts to transcend the limiting provisions of their domestic laws and, nonetheless, to rest their decisions on actual formulated legal rules.

Use as a system is rare and rarely successful
Moving on from who uses the PICC to how they are used, we find further unmet expectations.The PICC were drafted as a relatively comprehensive codification, but in reality they are rarely used in this way.There are two ways in which the PICC offer themselves in their entirety.The first of these is as the applicable law.Yet parties rarely choose the PICC as the explicable law, as was discussed earlier, and when adjudicators use them in the absence of a party choice, they rarely treat them as the applicable law either, as was seen before.
The second potential use of the PICC as a comprehensive code is as a model code.Here, success is decidedly mixed at best.Although the PICC are rarely ignored altogether in legislative projects, 40 they are rarely used in their entirety. 41or example, the Civil Code of Lithuania, which famously draws in large measure on the PICC, 42 is still in most areas distinct.The same can be said about recent 38  legislative projects in Spain, 43 where the PICC figure prominently among the influences.The Scottish Law Commission referred to the PICC frequently in the 1990s and again since 2011 in the reform of domestic contract law, but always in very specific areas and not for every project. 44nd where the PICC are used as a comprehensive model, the reform is not successful.The starkest example is the Organization for the Harmonization of Corporate Law in Africa's (OHADA) draft contract code. 45Drafted by a Belgian scholar and modelled in large part on the PICC, the draft code was supported by UNIDROIT and discussed a lot (including in a large conference held in Ouagadougou in 2007). 46At the moment, however, it seems to have been tabled.The reasons are not fully clear-they may have to do with insufficient sensitivities to African peculiarities, 47 difficulties between common law and civil law systems, or simply a lack of political will.Similarly unsuccessful has been a recent attempt by the Australian government to internationalize its contract law on the basis of the PICC. 48Doubts have been mentioned considering the opentextured nature of their provisions, 49 the role of good faith, 50 and the need of consumer protection, 51 so the project went nowhere. 52Finally, mention can be made of the idea of a global commercial code on the basis of the PICC, which has been proposed but never enacted. 53These examples may be too few for generalization, but they do allow for one conclusion: So far at least the PICC have never served as a comprehensive model for any law reform.This finding suggests that the internal coherence and consistency for which the authors strove does not play a great role in practice.

Most use is made of individual provisions and in connection with other laws
Instead, the PICC play their main role where individual provisions are used.This is certainly the case in adjudication.Note that, in arbitration (and also in the Draft Hague Principles on Choice of Law in International Commercial Contracts (Hague Principles)), the PICC can be chosen only as 'rules of law' (the language of most arbitration legislation), not as 'law' (the language of most State rules on choice of law. 54Often, 'rules of law' are understood to be nothing more than a placeholder term for a broader concept of law that includes non-State law.However, once we take the words 'rules of law' literally, we see that the difference between State courts and arbitration is that the latter allows for the choice not just of whole legal systems but also of individual rules.Indeed, this explains a core difference in the decision-making process, which is, in arbitration, more loosely based on one legal system. 55hen we switch from the use of the PICC in the sense of private international law to the (more pertinent) supplementary use, this notion becomes even clearer.Mostly, adjudicators use individual provisions of the PICC.As it seems, a rule of the PICC is not applied or consulted because it is part of the generally applicable law or even because such reference to the PICC is generally expected.Instead, individual provisions are referred to because they seem of particular relevance or usefulness.Indeed, whereas a considerable number of provisions of the PICC seem to never have been used at all, other provisions find repeated use.Short of a systematic analysis of which provisions are the most successful, there appear to be two very different types of situations in which such use is made (with some overlap between them).The first is to support a general statement on the existence of a certain rule that permeates many legal systems, which can explain the frequent references to Articles 1.1 (freedom of contract) or Article 1.7 (good faith and fair dealing).A second frequent use of the provisions of the PICC is to concretize certain abstract principles.Articles 6.2.2 and 6.2.3 (hardship) and Article 7.4.9(interests), for example, are frequently used because they provide adjudicators with very specific rules.Both uses are based on quite different justifications: for the first type, a provision invoked as a restatement of generally accepted rules; for the second type, in contrast, a provision used because of its superior quality.
Remarkably, we find the same phenomenon in legislation.Mostly, legislators draw on individual provisions.As in adjudication, influence exists for individual provisions-either because they represent a general trend or because they seem particularly successful.An additional insight matters.The PICC are never used exclusively.Instead, they are usually one of several models used.In one way, of course, this represents a great success for the PICC.They are, as a model, on the same level as binding laws, domestic or national.In another way, it represents a failure.If the PICC were once intended to make recourse to domestic law superfluous, they have not succeeded at this goal.

Adjudicators frequently apply the PICC to domestic situations
Another issue is whether the PICC are used predominantly internationally or nationally.They were conceived, at least according to their drafters, explicitly for international contracts (as becomes clear from their name).Domestic application, although never ruled out, was viewed as only tangential.Presumably, this restriction was inspired by the CISG, which unifies sales law only for international contracts, while leaving domestic law untouched.In reality, in regard to the PICC, no big difference in application can be seen between international and domestic situations.If anything, they are used more domestically than internationally.
In regard to adjudication, we already saw that the PICC are rarely applied as the applicable law, a consequence of private international law.Their main use is in the interpretation and supplementation of other law.Of course, this alone would not rule out their use for international contracts.When Chinese and Ukrainian courts apply the PICC as evidence of international trade usage, their (assumed) international character still shows.Beyond that, however, a surprising fact emerges.On the one hand, the PICC are not used as regularly for the interpretation of international contract law, as one might expect.Even their use for the CISG, for which they were specifically aimed, is often rejected, not infrequently with the rather formalistic argument that they cannot underlie the CISG because they are younger.On the other hand, not infrequently, they are used for the interpretation of domestic law in purely domestic situations.Most of the Spanish decisions reported concerned domestic matters, occasionally even domestic consumer contracts. 56The same is true for the English decisions concerning the use of pre-contractual negotiations for contract interpretations.The internationality of the PICC serves here as a backdrop-adjudicators are interested in knowing whether they are in accordance with views elsewhere.

The PICC are a model more for domestic than international law-making
The same is true, even more strongly, for legislation.The PICC have not, as might have been expected, become an important model for international legislation.Not only have suggestions to turn the PICC into a global commercial code not been heeded.The recent proposal for a global commercial code, proposed to the United Nations Commission on International Trade Law (UNCITRAL) by the Swiss delegation,57 is largely independent of the PICC (presumably due to institutional competition between UNCITRAL and UNIDROIT) and also unlikely to succeed, not least in the face of firm opposition from the USA. 58In European contract law, the PICC maintain their role as one inspiring model even besides the PICC, though they compete with other influences. 59Other regional projects such as the proposed Principles of Asian Contract Law and a similar Latin American project are also not, as far as can be seen, based on the structure of the PICC. 60At present, OHADA's contract code remains the only transnational project explicitly based on the PICC.On the other hand, it is domestic legislators who habitually draw on the PICC for inspiration even for purely domestic projects.The new Cuban Law on Economic Contracts, which shows influence from the PICC, is even inapplicable to international contracts.6110.Summing up: how the PICC are, and are not, used Some preliminary insights follow from this overview.Quantitatively, the PICC have come to play a significant role in today's law-less so than is sometimes alleged by their supporters, but more so than would be apparent from a narrow perspective on situations in which the PICC are chosen as the applicable law in adjudication or arbitration.Their importance seems to have stabilized, more or less.In regard to the question which institutions use them, the most important role for the PICC is no longer, if it ever was, about party choice and arbitration.How important the PICC are today is hard to assess beyond hearsay because so many arbitral awards are still not made public.What can be said with certainty, however, is that the PICC play a role in legislative reform and academic debate all around the world, and they are referred to with some frequency by the courts of a number of countries.
Doctrinally, the PICC are rarely an 'applicable law' in the sense of private international law.Instead, they enter judicial opinion in a variety of other ways.The most important way is in the course of comparative legal argument for questions where judges do not find a clear and/or satisfying answer in their own legal system.In addition, they are referred to in other interesting contextsmost surprisingly, perhaps, as international custom or usage.
In regard to the nature of the PICC themselves, their importance does not lie in their (alleged) role as a non-State legal order-a system.Where the PICC offer themselves in their entirety-whether as a model for legislation, such as OHADA's contract code, or as a chosen law in arbitration-they are rarely successfully chosen.Their biggest influence, by contrast, comes when individual rules and issues are at stake.The PICC serve more as a reservoir for solutions than as a legal order.Finally, contrary to their explicitly international character, the PICC are used in similar intensity in domestic and international situations.

III. The PICC as a global background law
The PICC serve more as an objective law than as an object of choice.They are used more by officials-judges and legislators-than by private parties or in privatized adjudication.They are treated not as a code, much less as a legal system, and instead as a compendium of individual provisions, in combination with other legal texts.And their main role lies not in international, but, rather, in domestic, law.What does this say about their legal nature?And what does it say about the state of global law?

The idea of a background law
The PICC are frequently compared to the lex mercatoria, the (alleged) non-State legal order of transnational commerce, existing outside of States and created by merchants, not legislators. 62However, this position has never been very convincing.The PICC resemble a lex mercatoria neither substantively (they are derived mostly from domestic and international law, hardly at all from practice) nor formally (they are a codification, while it is crucial for the lex mercatoria to remain uncodified). 63At most, they can replace the lex mercatoria as a non-State law that is more easily applicable, but the rarity with which parties choose them suggests that this role is not important.More importantly, for the comparison to hold, we should see the PICC being applied as an alternative to State law, not, as they really are used, as a supplement. 64n reality, the PICC should be viewed not as a new lex mercatoria but, instead, as linked to a new ius commune, modelled on the old ius commune, the common law of continental Europe prior to the codification and nationalization of private law 65 or the common law prior to the twentieth century. 66Formally, the foundation of these common laws lay not in legislative law-making but, rather, in scholarship (as concerns the ius commune).What characterized these laws was not so much their common substance, as their common vocabulary.This is certainly true for the continental ius commune, but it can also be said about the common law-different jurisdictions differed in their views about contributory versus compensatory.As such, these common laws provided the background for scholarship, adjudication, and local law-making.
Like ius commune and common law, the PICC serve as a global background law.They are not the applicable law in adjudication, and they are not incorporated, fully-fledged, into new legislation.However, we find, more and more, that judges and legislators justify their decisions against a global consensus (whether imagined or real) that they find, amongst others, in the PICC.It is not (yet?) the case that recourse must be had to the PICC to understand domestic law decisions.However, the PICC are becoming, more and more, a sort of general benchmark against which legal arguments take place.
This role of a background law is far from unimportant.A background law serves as residual law-it applies if and insofar as the foreground law does not provide an answer.But this is not its only role.In addition, a background law provides the background against which foreground law is interpreted.Since foreground law cannot be interpreted on its own terms, it must be understood against the background law.Moreover, a background law properly understood provides the framework within which foreground law functions-its structure and, so to speak, its language and its grammar.

Background law and statutes 67
Like the PICC, neither ius commune nor common law ever represented the entirety of private law.The ius commune-this largely scholarly law-was interspersed by statutes, according to Helmut Coing 'like isolated little islands in the sea'. 68Many of these statutes were specific interventions.They implemented specific policy goals specifically against the content of the ius commune and were interpreted with these goals in mind.Other local statutes were more in alignment with the ius commune; their goal was to provide certainty on rules of traditional private law with no additional instrumentalist goals.In both cases, however, the ius commune functioned as the background law against which statutes were drawn.Although statutes trumped the ius commune, their interpretation was a matter of ius commune, and they were interpreted narrowly-not necessarily because of the judicial desire to minimize legislative restriction to the common law, but more because they were thought to represent specific policy choices, not generalizable principles.
Like the ius commune, the common law was interspersed by statutes.In fact, the image of statutes as islands in an ocean of common law originates with Jeremy Bentham, 69 and it has since been repeated by others. 70Statutes have traditionally been viewed as instrumental in nature, which was reflected in their interpretation.Few attempts were made to integrate statutes into a broader system of common law. 71Further, ideas on the relation resemble those in the ius commune.Thus, on the one hand, statutes trump the common law; the idea of the judicial review of statutes against some non-legislative standard is very limited.On the other hand, however, statutes were to be interpreted narrowly with a view to their instrumentalist character and the specific regulatory goal the legislator had in mind.
The PICC contain no rules based on specific regulatory policies and are, in this sense, purely 'private' law.Even attempts to codify a rule invalidating contracts based on corruption have failed.Regulatory policies come in from national laws through the opening clauses (O ¨ffnungsklauseln) of Articles 1.4 and 3.3.1.According to Article 1.4, domestic mandatory rules remain applicable, and according to Article 3.3.1, the consequences of a breach of these rules must be derived from this law.This dual decision-to not address regulatory policies within the PICC and to refer to domestic laws for them-is wise.It reflects the fact that the PICC-like the ius commune-lack the democratic legitimacy that would be needed for such policy choices.
What emerges, then, is a fascinating combination between a (potentially) transnational law, namely the PICC, and (mostly) local/domestic mandatory rules drawn from domestic laws.It may be representative of a broader trend in which general private law becomes more and more global, whereas regulatory law remains within the sphere of local lawmakers.

Background law and codification
Now, the ius commune no longer exists, at least in its historical form.In continental legal systems, private law has been codified on a national basis.As a consequence, at least in principle, law is now to be derived from a code instead of the ius commune.Is the idea of a background law incompatible with codification?That would be fatal for my claim, given that the PICC are themselves a codification.
In reality, there are two important connections between codification and the idea of a background law.The first one is that a code itself serves as a background law of its own.Contrary to a widespread belief in comparative law, codes are not meant to be comprehensive.For example, on the same day on which the German Civil Code was passed, a number of specific private law statutes were passed alongside it but deliberately left out of the code.Such special statutes were formulated with the Code in mind, but as explicit deviations.In French law, there is a greater tendency to integrate instrumentalist statutes into the Code Civil.Yet even here, these statutes often remain distinguishable from the rest of the Code both by their numbering and their distinct regulatory style. 72In this sense, then, the relationship between statutes and the code resembles that of statutes to the common law.
There is a second connection between codification and background law.Although codes are thought to supplant completely the pre-existing background law, in reality this background law still shines through.This was not so in the early days of European codes.Although these codes, to a large extent, merely restated the pre-existing ius commune, judges and scholars rarely referred to the ius commune for purposes of interpretation.Instead, they used the new codes as a sole object of interpretation. 73More recently, however, this exclusive focus has been opened up, and courts use comparative law in order to resolve cases before them.Judges find their codes not hermetically sealed.They pierce through them to resort to some background law that they find represented in either decisions of foreign laws or indeed the PICC.In doing so, they revive the transnational character of general principles of law, as opposed to the regulatory elements of law that are, necessarily, linked to a sovereign lawmaker. 74ndeed, courts thematize this transnational character of the PICC not only when they follow them but also when they do not.An example of the latter is the common law case law on the question whether pre-contractual negotiations can be used for the interpretation of contracts.The traditional position in English law was that they could not. 75In 2005, Lord Nicholls suggested the exclusion should be changed in view of developments in the rest of the world, including the PICC.English law should not remain isolated. 76Several courts, especially outside of England, invoked the PICC in favour of a change to the exclusionary rule.When the House of Lords, in 2009, rejected this change, it did so with the suggestion that Article 4.3 of the PICC is not representative of general contract law but, rather, reflects, specifically, 'French philosophy of contractual interpretation, which is altogether different from that of English law.' 77 This may or may not be so. 78What matters here is the implicit suggestion that the PICC could serve as a relevant background law if they represented a general consensus, but not if they are incompatible with the specifics of the judge's own law, which trumps.

The PICC as restatement
The PICC have a lot in common with the ius comune.Both are transnational.Both serve as background laws.Both provide not so much the substance of individual decisions as a common grammar and structure.But there are also important differences.One of the more significant differences is that the PICC are themselves a code, whereas the ius commune was a common law that was based, and only in part, on a sort of code, namely the Justinian Code.A second, bigger difference is that the ius commune was indeed comprehensive.Its substance was not coherent-different views on all kinds of legal questions existed side by side within the ius commune, and no institution had the final say on any question.The PICC, by contrast, are not comprehensive (as we have seen earlier), and the decisions taken by their drafters stand in competition with the decisions taken by drafters of other legal texts-the CISG, the PECL, or domestic laws.As we have seen, the PICC are almost never applied to the exclusion of other texts.
This suggests that it would be wrong to view the PICC themselves as a new ius commune.Instead, they must be seen as a restatement of that new ius commune.That the PICC are a restatement was emphasized a lot, especially in their early days.They were originally conceived as a restatement of international commercial practice more than a new ius commune, but in many ways that was more a marketing term than a real description.In reality, the PICC drew less on commercial practice and more on domestic contract laws (which, in turn, derive to a large extent from the old ius commune, as was pointed out earlier).
However, does such a new ius commune exist and do general principles of contract law on a global level actually exist?The authors of the PICC admitted freely that differences between existing contract laws existed and that they frequently chose one over the other on the basis of quality.In reality, it matters little whether such general contract law existed prior to the PICC or whether it took the PICC to bring one about, as long as the PICC are treated in this way.
What does matter, however, is that if the PICC are treated as a mere restatement, they are not used as a code.This explains why only individual provisions are used.It also explains why these provisions are mostly not applied because of their superior quality, although that is frequently claimed.Legislators will likely draw on those PICC provisions they find qualitatively attractive, but adjudicators can rarely choose rules based on their perceived substantive quality.Formally, the fact that they are formulated as rules makes them easily applicable and thus becomes an important reason for their authority. 79Substantively, the reason must be that they are viewed as representative of the new ius commune.

IV. Consequences
Understanding the PICC as a global background law is not merely of theoretical interest.Instead, the insight helps answer several practical questions concerning the role the PICC should play today.

The PICC as applicable law chosen by the parties?
First, should the PICC be made available as the applicable law in the sense of private international law?This has been a major project since their beginning, supported by countless scholarly articles and a number of legislative proposals.In Europe, a draft for the Rome I Regulation had provided for the choice of non-State law-the final text enables the choice of the PICC only through incorporation. 80The new Hague Principles now provide explicitly for the choice of 'rules of law' (which is meant to include the PICC), but whether they will be influential remains to be seen. 81As of now, the PICC can be chosen for sure only under the law of Oregon, but no pertinent case is known. 82iven the lack of interest shown by parties, this question hardly seems relevant.As a matter of fact, the PICC are simply not a very good object for choice.They are not a full codification, much less a legal order; they are 'rules of law,' not 'law'.Even within their area, the law of contracts, they are incomplete in two important regards.First, the PICC contain no rules on specific contracts.They are like the PECL and the Common European Sales Law 83 (CESL), confined to rules of general contract law.Second, the PICC contain opening clauses for the entry of State national law, in particular its mandatory rules (Articles 1.4 and 3.3.1).And they make it clear that matters not expressly settled within them must, in the last resort, be resolved by State law (Article 1.6, comment 4).This means, on the one hand, that the parties will not be able to select, in the PICC, rules catered specifically to their specific contracts.And it means, on the other hand, that precisely those rules they most want to avoid through their choice remain applicable.With these restrictions, the PICC, as chosen law, can have only a supplementary character-they supplement not only the explicit contract terms but also additional relevant rules on specific contracts (for example, the CISG) and mandatory rules from domestic and international law. 84his result is actually not surprising.Recall that one main goal of the PICC was to overcome the uncertainties involved in choice of law. 85The goal was not, thus, to add yet another law to the number of laws that can be chosen but, instead, to make such a choice dispensable altogether.Put differently, the point was not to raise the number of eligible laws (which would be attractive for a competition of legal orders) 86 but, instead, to establish a common core of the existing contract laws.Their nature as a restatement is an additional good reason for why they are rarely chosen as the applicable law-US restatements, the inspiration for this nature, are never chosen as applicable law either.

The PICC as applicable law absent a choice?
Arguably, the focus on choice of the PICC has overshadowed a potentially more important role the PICC could play, namely as the applicable law in the absence of a party choice.In principle, this role is excluded in current private international law. 87The Governing Council of UNIDROIT, consequently, had rejected a comparable express function of the PICC in their original version. 88It was introduced into the preamble in 2004 after encouraging experiences in arbitral practice. 89Indeed, State choice of law regimes do not allow for application of the PICC as objective contract law. 90The situation is different in arbitration, where the arbitrator is not bound to the ordinary State choice-of-law rules but can, instead, through 'voie directe', determine the applicable legal rules.This is so at least when the relevant arbitral law speaks of 'rules of law' and not, for example, as in Article 28(2) of the UNCITRAL Model Law on International Commercial Arbitration, of 'law'. 91owever, the notion 'rules of law' already makes it clear that the PICC, when they are applicable, apply as individual rules, not as a whole legal order.Indeed, what we see in practice is that even if arbitrators apply the PICC, they rarely do so to the exclusion of other law. 92The application of 'rules of law' in arbitration resembles more a general argument inspired by legal rules from different origins than the true application of one law.Here, the role of the PICC is that of a background law whose rules are used individually.Doctrinally, this is a matter less of application in the sense of paragraphs 2-4 of the preamble and more of construction and supplementation in the sense of paragraphs 5-6.
Arguably, when the PICC are used-by adjudicators and legislators alike-they are used as a restatement, in line with their original designation.Recall that the US Restatement of the Law, the model of restatements, is never even considered as an object of party choice. 93If it is applicable at all, then it is not because parties choose it but, rather, because adjudicators consider it adequate.At the same time, the Restatement is applicable not as an alternative of the law of any particular State but, instead, within the framework of that law, as a solution that resembles that of State law or, where State law has a gap, provides a convincing filler for that gap.In other words, the law function of the Restatement is a consequence of its restatement function in the narrow sense (its ability to adequately depict existing law) and its model function (its substantive quality), not in isolation from those.
Nonetheless, it seems not inconceivable to allow for a more prominent role for the PICC in the absence of party choice.One of their models, the CISG, does indeed apply automatically unless the parties choose a different law.The PICC could, in theory, be given a similar status by choice-of-law rules.I show elsewhere how such applicability would be justifiable, at least theoretically, under US principles of choice of law. 94The same should be possible under traditional European choice of law.
Notably, the PICC could not be the applicable law at large, simply because they are not comprehensive.However, their role as an objective background law could be acknowledged.Such a role was formulated explicitly in Article 9(2)(2) of the Mexico Convention. 95It runs against traditional private international law, which distinguishes neatly between private international law rules that designate the applicable law and substantive law that is provided exclusively by domestic law.But breaking up this neat distinction, at least in part, would respond to the insight that courts already go beyond domestic law and refer to transnational principles such as the PICC.

Applicability of the PICC to interpret the CISG
Recognizing the PICC as a restatement of the new ius commune also helps assess the question whether they can be used to interpret the CISG or other international conventions.Such use was one of the main aims of the PICC from the beginning, and there has been disappointment about the rather lukewarm reception.
Two arguments against such use can be dispensed with from the outset.The first is the suggestion that the CISG must, according to Article 7(1), be interpreted autonomously.What this means, properly said, is only that the CISG, as an international instrument, must be interpreted without reference to one particular legal system.Obviously, it does not rule out the use of other materials, such as judicial and scholarly opinions.And for the same reason, it cannot mean that the use of a text such as the PICC is ruled out, which serves similar purposes.
The second ill-fated argument, which can be found frequently, is that the PICC cannot be the 'Principles underlying the CISG', as referenced in Article 7(2) of the PICC, because they did not exist when the CISG was drafted.What did exist then, however, were general principles of contract law.And to the extent that the PICC restate these general principles, it is unproblematic to view them as the principles in Article 7(2).This does not mean, however, that the PICC can be used in their entirety. 96nstead, they become a repertory of possible solutions, and their use for interpretation of the CISG, just like their use in other regards, must be determined provision by provision. 97Some provisions should be useable without big problems because they do indeed restate common principles of general contract law.Examples include the calculation of damages (Articles 7.4.2 and 7.4.3 of the PICC) 98 and the definition of standard terms in Article 2.1.19 of the PICC. 99rguably, one can go even further.One example where the PICC could be used, in my opinion, is the issue of calculation of interests. 100This was left open in Article 78 of the CISG because treaty parties were unable to agree. 101onsequently, the majority's view is that this question must therefore be answered with reference to domestic law. 102However, the disagreement many decades ago was due to governmental policies at the time, now long discarded, that interest rates as damages had to be kept artificially below actual market rates.Today, Article 7.4.9 of the PICC formulates a rule that represents something close to an international consensus and is thus certainly more appropriate than the rule of any one domestic law. 103t the same time, because the PICC formulate rules of general contract law, some of their rules are not well suited to the CISG. 104One example of a rule that does not fit well is the provision on hardship (Articles 6.2.2 and 6.2.3 of the PICC).
These rules are useful for long-term contracts and changed circumstances.By contrast, the typical sales contract, as governed by the CISG, is a one-off transaction that would be severely impaired if it stood under a general hardship exception.

Relationship with other non-state codifications
How do the PICC relate to other transnational texts, whether non-State (like the PECL or the newer recent projects from Latin America and Asia) or treaties such as the CISG outside of their scope of application?Does not the fact that several such codifications exist and differ in detail demonstrate that general principles of contract law do not exist on a global level?This would be a valid criticism against the claim that the PICC represent the substance of existing principles.
One can well argue that we are observing an overkill of transnational texts, 105 but this is a problem only of redundancy, not actual conflict.This is so because the PICC are no more than a restatement of these general principles-as are, to various degrees, the other codes mentioned.Different non-State codes stand in a similar relation to each other as do different treatises on the ius commune-they rest on the same materials and aim at correctness, but none of them can claim ultimate authority.Both courts and legislators appear to perceive this issue when they refer to the PICC side by side with other non-State texts and even domestic legal texts.They look at these texts in an attempt to assess which view is more widespread and more convincing, instead of applying one at the expense of the other.

A global commercial code?
Finally, we find an answer to discussions on a global commercial code.Recently, a proposal for the drafting of such a code has been made to UNCITRAL by the Swiss delegation to that organization. 106Most delegations were critical, suggesting that there was no need for such a project, it would be too costly and chances of success were small. 107Some suggested especially that it would make little sense to duplicate efforts by negotiating a new instrument that would essentially cover the same ground as the PICC. 108And, indeed, it has been proposed that the PICC themselves should be transformed or at least incorporated into such a codeeither as a model code 109 or as a binding text. 110ow, experience with the PICC suggests that a binding code is neither necessary nor desirable.The function of a global commercial code would be to provide a general background law for the existing specific contract law instruments.This function is already performed today by the PICC. 111The big advantage of the PICC over a treaty is not that they can be changed more easily (in the twenty years of existence, very little has been changed) 112 but, rather, that, due to their nonbinding character, adjudicators can draw on those provisions they deem attractive and leave out the others.
Ole Lando has argued against the use of the PICC as a background law on formal grounds.For him, 'the mating of binding rules of the specific contracts and nonbinding rules of the general contract law . . .will produce a strange hybrid.' 113 In reality, such a hybrid is no anomaly at all.It constitutes the situation of law both on a national and a transnational level.The foreground is filled by explicit legislation and case law, but all of this must be understood against a background law that is frequently uncodified, not even always binding, and nonetheless necessary.

V. Conclusion
My suggestion has been that the PICC are, in fact, playing the role of a global background law.This suggestion is in contrast with much of the scholarship that views the PICC as something other-a non-State law, a legal order, a comprehensive code, a new lex mercatoria, and so on.It is in accordance, however, with the original purposes of the PICC.When the PICC were drafted, they were drafted as a restatement of global contract law, with no direct view to actual application.This is actually in tune with the general role of restatements. 114Restatements reformulate and order the existing law, but they do not strive for application, and their comprehensiveness is only formal.When restatements are most successful, they are so as background law-they come to shape adjudication and legislation, while, as non-binding law, always remaining hierarchically subordinate to them.The PICC have not been very successful in uses that are independent of their role as a restatement, but they have successfully established themselves as a global background law.That is not a small achievement at all.

62 Figure 1 .
Figure 1.Adjudicatory and arbitral uses of the PICC by type of application

Figure 2 .
Figure 2. Number of decisions reported per year in courts and arbitration respectively See n 21 above. 39A considerable number of decisions can be found at <http://base.consultant.ru/>accessed 21 October 2014.See also, more generally, AS Komarov, 'Reference to the UNIDROIT Principles in International Commercial Arbitration Practice in the Russian Federation' (2011) 16(3) Uniform Law Review 657. 40See the detailed references in Michaels (n 4) paras 156-167. 41For a parallel insight, see Sefan Vogenauer, 'The DCFR and the CESL as Models for Law Reform' in G Dannemann and S Vogenauer (eds), The Common European Sales Law in Context: Interactions with English and German Law (OUP 2013) 732. 42T Z ˇukas, 'Reception of the UNIDROIT Principles of International Commercial Contracts and the Principles of European Contract Law in Lithuania' in E Cashin Ritaine and E Lein (eds), The UNIDROIT Principles 2004: Their Impact on Contractual Practice, Jurisprudence and Codification (Schulthess 2007) 231, 238-9; T Z ˇukas, Einfluss der 'UNIDROIT Principles of International Commercial Contracts' und der 'Principles of European Contract Law' auf die Transformation des Vertragsrechts in Litauen (Sta ¨mpfli 2011); V S ˇidlauskaite _ and S Selelionyte _, 'UNIDROIT ir europos sutarc ˇiu teise _s princip i ˛taka lietuvos' (2009) <http://vddb.library.lt/obj/LT-eLABa-0001:E.