Unidroit and Al Majalla Term Paper

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UNIDROIT & Al-Majalla

In a world that is increasingly interconnected, the need to reconcile competing legal paradigms is paramount. In the first part of the year, there was an article in the Atlantic, entitled "The Rise of the New Global Elite."[footnoteRef:1] Among other things, the article surveys an emerging category of entrepreneurs whose profits do not necessarily depend on the wealth of their own countrymen or on the regulation of their governments. The article struck a cord, because often entrepreneurs pave the way for radical changes and create opportunities which force governments and communities at large to alter the manner in which they conduct business. In exploring the regulation of global transactions it is clear that UNIRDROIT Principles of International Commercial Contracts (UNIDROIT) -even with its still limited membership- remains as important today as it was in 1940. (CITE) In line with the international movement for singularly unified universally applied commercial codes my interest leads me to look at the Ottoman version of UNIDROIT known as Al- Majalla Al Ahkam Al Adaliyyah (Al-Majalla), which during its time attempted to expand and codify civil law on the basis of Sharia law.[footnoteRef:2] I focus on a comparison between those provisions in UNIDROIT which address the Performance component of contracts and their equivalent provisions, if any, in Al-Majalla. [1: Chrysta Freeland, The Rise of the New Global Elite, The Atlantic, Jan. 2011, online, http://www.theatlantic.com/magazine / archive/2011/01/the-rise-of-the-new-global-elite/8343/7/] [2: In provision 1in the introduction of Al-Majalla it states that "the questions of Islamic jurisprudence [which]…concern this world, [are] divided into sections dealing with domestic relations, civil obligations, and punishment." ]

The principles in the Al-Majalla are organized into books, than chapters, sections, than continuously numerated provisions. Such that though the chapters and sections are numbered from the beginning with each successive book -- the provisions are numbered from 1 in Book 1 to 1851 in Book XVI. As such, simply referring to the provisions adequately identifies the specific language being cited. The Al-Majalla is the codification of issues dealing with civil obligations; it does not address questions of criminal punishment or questions of family law. In provision1 it articulates its own missions as gathering "the questions which are of he most frequent occurrence "as with respect to civil obligations and compiling them into a code. (Al-Majalla, Introduction, Pro. 1) For our purposes Book XII which addresses the Settlement and Release- or the fulfillment and discharge of contractual obligations- is of primary concern.

Overall the western contractual elements including the nature of the offer, the modes of acceptance, and the need for consideration can all be found in the terms of Islamic jurisprudence laid out in Book XII. The codified civil law in the Ottoman Empire finds many parallels with western characterizations of contracts. An interesting difference is that under the Al-Majalla the completion of the contract requires both the discharge of an obligation and the "renunciation of a right" this occurs "where one person releases another person by relinquishing the whole of claims" an individual could bring against the other party. (Al-Majallah, Bk. VII, Pr. 1536). Whereas in the western sense an individual's obligations is discharged when their end of the bargain is fulfilled, Islamic Jurisprudence requires an additional step by the obligee acknowledging receipt and relinquishing the right to bring causes of action later on. Interestingly enough, this affirmative waiver of subsequent causes of action would serve to litigation based on ambiguity and battles of forms. This would be so, in light of the fact that each transaction would conclude with some articulate form of satisfaction and the waiver of litigation.

CHAPTER 6 -- PERFORMANCE

SECTION 1: PERFORMANCE IN GENERAL

ARTICLE 6.1.5

(General Performance"

The UNIDROIT Principles (Principles) hold that when a contract is in force and a date has been set, the contracting party who has the obligation (the obligor) to perform may perform earlier, provided that the other party who is owed the money has not rejected the earlier performance for a legitimate reason. (Art. 1.6.5(1)) In subsection 2, the Principles hold that regardless of the early performance on the part of one party, so long as the performance time frames were independent of one another the earlier time frame controls. Finally, in subsection 3, the Principles find that if additional expenses are caused to the obligee they are to be paid for by the party causing the additional expenses through their early performance-namely, the obligor.

The Al-Majalla includes no similar provision but I see no conflict from the implications of this article and the Al-Majalla.

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ARTICLE 6.1.6

(Place of performance)

As to the location where obligations ought to be fulfilled, the Principles urge that in general if the contract is silent on said location, the transaction should be completed at the creditor's place of business-if the obligation is a monitory contribution. (Art. 1.6.6(1)). If the on the other hand, the obligation is one defined by building or presenting some service than it should be completed at the place of business of the obligor.

The Al-Majalla prefers ease of convenience and clarity of transaction; because of the era in which the Al-Majalla was composed the location of performance will be determined more by practical considerations. These considerations will include things such as the ability to move personal property or the measurement of the true boundaries of real property.

ARTICLE 6.1.7

(Payment by cheque or other instrument)

Payment to the obligee is determined by the currency used in the usual course of business at the location of the transaction unless; the creditor has made alternate arrangements. (Art. 6.1.7(1-2)) Note that a promise to pay is presumed to be valid only if the obligor honors said promise.

The Al-Majallah gives guidance as to the nature of payment by assuring us during litigation that the court will find the currency of the locality to be dispositive.

ARTICLE 6.1.8

(Payment by funds transfer)

The Principles indicate that if a contract is silent as to the account for the electronic funds transfer, transfer into any of the known accounts of the obligee will suffice to complete the fulfill the obligor's obligation as soon as the transfer to the obligee's bank is finalized. (Art. 1.6.8(1-2)).

There is no equivalent provision. The nature of funds transfer was simply not available in this form during the era of the Al-Majalla. Additionally, this provision would not be compatible with the larger philosophy of the Hanafi definition of obligation. If you remember in the introduction we discussed the concept of 'release'. Under the UNIDROIT's payment by funds transfer, the obligation is discharged once the funds clear the financial institution. However, the concept of release necessitates that there be an additional step on the part of the obliggee such that the mere clearance of funds at the bank would not suffice to end the transaction.

ARTICLE 6.1.9

(Currency of payment)

With respect to the currency which can be used to discharge a financial obligation, the principles are not very rigid. The type of currency may be strictly determined by the language of the contract, as in subsection 1(c), or it may be subject to factors about impracticability in conversion in subjection 1(a). What is clear that in subsection 1(b), the place of payment controls the currency as long it is freely convertible.

Although the Al-Majallah does not include a specific provision equivalent to the Principles' Article 6.1.9, we can infer from the manner in which the Codes expects plaintiffs to plead their case what currency the codes consider appropriate. In an action against a party the plaintiff must plead a case which includes details about the nature, variety, amount, and a description of the monetary debt. The Codes state the following about how the currency will be evaluated. "If the amount is stated in general terms" than the determination of whether the currency is Ottoman or English will depend on the "the custom prevailing in the locality" where the transaction will occur (Pr. 1626). From this we can infer that

ARTICLE 6.1.10

(Currency not expressed)

Provided that the currency to be used in discharging the financial obligation is not articulated by the contract, than the monetary obligation will be fulfilled when it is rendered in the currency of the location where payment occurs.

The analysis from Provision 1626 of the Al-Majalla applies here as well. Location of the payment will determine the currency in which the financial obligation must be discharged. There is an additional caveat in 1626 however, which states; that when a locality has two equal circulating currencies the currency with less value will control the transaction. (Al-Majalla, Pr.1626)

ARTICLE 6.1.11

(Costs of performance)

In a refreshingly egalitarian twist, the Principles provide that the costs associated with fulfilling an obligation belong to each party. Though the Al-Majalla does not specifically include a provision stating the distribution of costs of performance, the general tenor of the Al-Majall would suggest that the burden of a cost belongs to the party who cannot fulfill his own obligations under.....

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