NEWSLETTER-2017

5 COMMERCIAL LAW to the development of lex mercatoria . The instruments put forward by the ICC fulfills two functions of the lex mercatoria, referred to, above: (i) the legislative function is achieved through instruments such as ICC Model Contracts, URDG, UCP 600, (ii) the adjudicative function comes in to play through arbitral awards given by the ICC Court of International Arbitration where the ICC Arbitration Rules are applied. In general terms, the law is applied by the coercive power of the state. However, soft law poses a situation where such coercive power is nonexistent. Nevertheless, soft law possesses relative degrees of normative power. Such normativity has different sources 6 : • Voluntary development of doing business (usage, practice and norms) by merchants which are self-referential and self- enforcing • Recognition of trade usages in court and arbitral decisions • More universally accepted trade usage such as INCOTERMS 2010 and UCP 600 • Arbitral tribunals acting as users and developers of soft law In order to promote their wide use, the drafting of specific types of contracts should be done in a neutral way, ideally by neutral busi- ness organizations like the ICC. The success behind the INCOTERMS and UCP lies within the fact that they were drafted in a neutral manner. Ways of Use . Soft law instruments may be utilized in a number of ways, since they pose advantages over positive law instruments in terms of harmonization, and the lack of need for ratification. Among these, three are of particular significance. Firstly, the soft law instru- ments may be used to constitute a basis for further work, such as model laws. These model laws are intended to be the basis of adoption by individual jurisdictions (e.g. UNCITRAL Model Law on Arbitration or UNCITRAL Model Law on Electronic Commerce) and to set stan- dards for legislation. These instruments are drafted to conform to the structural requirements of a treaty or a convention, in order to facilitate their transposition to legislation. On the other hand, certain soft law 6 DiMatteo, p. 8.