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30th October 2023

The Birth of English Commerical Law

Jonathan Willoughby

Jonathan Willoughby

A Brief History of Commercial Traders

Throughout the trials and tribulations of human history, commercial traders’ abilities to keep trading and flourishing remains undiminished.

For centuries, it was not the English common law that decided disputes between international traders, but law from the maritime courts, the piepowder courts[1] and medieval commercial courts.

The courts were required to be competent in not just English common law, but civil and foreign mercantile law and to contain an equal number of foreign jurors.[2] There was much to admire about these courts. The international trader appreciated the rapidity with which the courts resolved disputes.

They were less formal than regular courts and they accepted that there had to be reciprocal trust between areas so that trade may continue unhindered across Europe, thus providing a basis of stability for traders and markets.

Resolutions For Traders

To accomplish speedy resolutions for the international traders, statutes such as Carta Mercatoria (1303) and the Statute of Staples (1353) were enacted. In commercial disputes, this merchant’s law or lex mercatoria was applied without fail and the mercantile courts enjoyed supremacy in commercial disputes.[3] Debts such as promissory notes (not yet recognized in English common law) allowed the creditor to seize the debtor’s land and chattels until payment was made. If not, the creditor had the right to have the debtor incarcerated in a debtor’s prison until the full payment had been paid in full.

Lex Mercatoria

The lex mercatoria recognized all negotiable instruments, even that they could be bestowed on another even if they had not been endorsed. Indeed, it was Italy that gave birth to the lex mercatoria and not England. Its commercial entities, lawyers, banks and insurers were instrumental in creating a variety of commercial solutions to enable trade, such as the bill of exchange and the bill of lading. The commercial aspect was the overriding feature of the lex mercatoria. Lawyers, with their technical mumbo jumbo were considered business blockers and were prevented from interfering with proceedings were possible.

Although this commercial awareness was lacking in the regional courts in England, as time went on, the central courts were dealing with commercial matters and were building a substantial body of law that dealt with traders’ concerns with similar efficiency to that of European commercial courts utilizing lex mercatoria.

However, English common law courts would put an end to lex mercatoria in England. The diminution of the Court of Admiralty, the Merchant Court and the Staples Court was in part due to Sir Edward Coke, who staunchly believed that the English common law and its courts should acquire and govern all commercial litigation. This was eventually achieved and accredited to two phenomenal lawyers, Chief Justice Holt and Lord Mansfield. The lex mercatoria started to fade in the 1600s in England and by the 1800s, it was gone, replaced with English Commercial law.

[1] Phillips, John. F. The History of Arbitration [1981] Journal of Arbitration 47(1), 16-17

[2] Carta Mercatoria 1303

[3] Statute of Staple, cc 5,6,8, 21