Commercial Law: Lex Mercatoria 1

Lex Mercatoria

Ahmed-Yasin Sh.A. Ayaanle

New Generation University College

This assignment is submitted to explain what Lex Mercatoria means and how it works

in ancient times and Describe its historical background and also to explain the principle of

Ex Aequo et Bono.

February, 2023
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What does lex Mercatoria mean and How did it Work During Ancient Times ?

Lex mercatoria is the latin expression for the body of trading principles used by
merchants. Literally, it means “Merchant Law” which is developed primarily by the International
community itself based on customs , industry and general principles of law that are applied in
commercial arbitrations . Lex Mercatoria was a body of law that regulated the economic relations
between foreigners and Roman citizens . Lex Mercatoria enables merchants to escape conflicts
between various local customs and rules to avoid submitting to the authority of judges attached to
pre-existing jurisdictions. Martiskova, M.(2018, January 27). What is lex mercatoria? Lawyarit.
https://www.lawyr.it/index.php/articles/reflections/1193-lex-mercatoria

Lex Mercatoria Came to existence due to the insufficiency of the Civil law to respond to
the growing needs of commerce. Lex mercatoria was developed by traders not the States of
Commercial law between the 5th and 15th Centuries in Europe. By that time there were no states in
Europe , there were empires, mainly the Roman Empire.

The most important role Lex Mercatoria emphasized was contractual freedom and
preservation of property. Lex Mercatoria solves disputes between trade parties, informal
proceedings and liberal procedure through the mechanism of Alternative Dispute Resolution
(ADR).

Eventually, lex mercatoria became Superior law, which Constituted a Solid legal basis for
the great expansion of Commerce in the middle ages for almost 800 years. Lex Mercatoria rules
were applied throughout Western Europe among traders(Abdiaziz Y. Ali, 2023).
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The Historical Background of Lex Mercatoria

The formation of Lex Mercatoria is deeply rooted in ancient times. It is associated with the
overseas trade which was conducted mainly in the area of Greece, Egypt, phoenicia and especially
Rome. There were many factors which influenced Lex Mercatoria in the medievaL times. The ending
influence of the arabic Empire in the Mediterranean, The blossoming of the port cities crusades, the
general revival of trade in Europe, and The migration of the merchants who Were using the trade
right and Commercial practices of their own territory. Martiskova, M.(2018, January 27). What is lex
mercatoria? Lawyarit. https://www.lawyr.it/index.php/articles/reflections/1193-lex-mercatoria

lex mercatoria Consisted of the business practice agreed by traders in particular areas. Lex
mercatoria was a special area of law governing only part of the legal system and specific types of
relationships, mainly the trade relationships. During the 12th and 13th centuries, the establishment of
the special courts in the areas where markets were held to Solve trade disputes and apply lex
mercatoria took place in France, Italy, and England (Rozelnavals 1994. P.198).
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The Principle of Ex Aequo et Bono or Amiable Compositeur

Some of the principles of lex Mercatoria are good faith (promise must be kept) No
discrimination between foreign and nations, No discrimination between States, Third party
dispute settlement to submit impartial third party as conciliator. Equitable disposition of
disputes, institution, Knowledgeable persons. Principle of Fairness, arbitration and dispute
settlement(O'Connell, International Law (2nd ed., 1970), Vol. 1, p. 14).

Ex Aequo et bono “latin for according to the right and good” or from (equity and
conscience.) is a latin phrase that is used as a legal term of art.

In the context of arbitrations, it refers to the power of arbitrators to dispense with

consideration of lie law but consider solely what they consider to be fair and equitable in the
case at hand(O'Connell, International Law (2nd ed., 1970), Vol. 1, p. 14).
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