Lex Mercatoria:
The International Non-Governmental Voluntary Resolution of Commercial Disputes

The idea of eliminating all political systems is met with alarm, even by "tax-protesting" "Christian Patriots." In their crusade against "commerce," they have demonized the Lex Mercatoria, or Law Merchant.

The Law Merchant was a system of non-political, voluntary arbitration of commercial disputes which existed in the Middle Ages. It is evidence that a global obedience to I Corinthians 6 is possible. This book examines the history of commerce before the rise of nation-states and shows that decentralized, patriarchal societies can more efficiently and peacefully carry out the Dominion Mandate (Genesis 1:26-28) than a world dominated by "archist" structures such as the State.

Date: August 09, 2000 12:13 AM
Author: Anarcho-Kev (Kevin4VFT@vftonline.org)
Subject: Medieval Anarcho-Capitalism

This post answers questions about non-lethal sanctions. It suggests that sanctions such as restitution in commercial settings can be imposed fairly without "the State."

I wrote this paper in 1985. I've thrown in a few new links. I plagiarized the whole concept from a chapter called "Voluntary Justice," in a small book published by Arlington House, William C. Wooldridge, Uncle Sam the Monopoly Man, 1970. I padded the basic structure with a few law review articles. Later, the whole concept was picked up by Bruce Benson, and an entire book was written on "Justice without the State" -- The Enterprise of Law, Pacific Research Institute, 1990. This is a tremendous book.


The Law Merchant and The Ministry of Reconciliation
- A Proposal -

In our book, The Meaning of Vine and Fig Tree(1), we have set forth the vision of a stateless society, brought about by international regeneration and conversion to Christianity, in which the rule of God's Law is manifested in decentralized patriarchal (Family-centered) society, free from manipulated economies, orchestrated wars and shortages, and crowned by Christlike morality and service, and the world-wide restoration of Edenic conditions.

That book was revised and expanded into A Christian Conciliation Manifesto,(2), which applied the vision of Reconciliation and Peacemaking outside the State's secular systems of justice.

In this book, we show how, since the inauguration of the Kingdom at the Advent of Christ, history has been moving toward the "Vine & Fig Tree" vision. Although this progress has seen an ebb-and-flow, up-and-down character, there have been enough high points to indicate not only the movement towards an internationally decentralized human community, but -- more important to some -- the feasibility or "practicality" of a normative social vision based on the "primitive," "pre-industrial" Law of God.

Anarchism, Revolution, and Romans 13
In Volume I of our series of volumes on Patriarchy,(3) we have argued that the State, far from being a "divine institution," is actually a lawless institution which is opposed to the service-ideal of Christian morality, the Rule of Law required in Scripture, and to the Patriarchal (Family-centered) culture espoused therein.(4) In this book, we attempt to illustrate, using the principles of comparative law, how international commercial disputes may be resolved in a Stateless society.

The history of the Lex Mercatoria is a history of the international arbitration of commercial disputes in an age when the State had not yet wrapped its tentacles around spontaneous industrial arrangements and the harmonious re-adjustments of free individuals and voluntary associations. This history is viewed in light of the absolutely binding and authoritative commands of Biblical Law, notably as expressed in the Scriptural concept of "The Ministry of Reconciliation" (2 Corinthians 5:18).

America's Declaration of Independence declares that men have the right "to alter or abolish" any government which "becomes destructive" of the People's rights to "life, liberty, and the pursuit of happiness" and "to institute new government." Our Founding Fathers felt justified in a violent and bloody revolution against the de facto civil government of their day. We have analyzed this view and course of action in Patriarchy Vol. I, and have explicitly rejected such revolution. However, the traditional understanding of Romans 13 as legitimizing Secular Empire was also found to be utterly inconsistent with other passages of Scripture (e.g., Isaiah chapters 10 and 13), and we were led to reject the Biblical legitimacy of the concept of the "State." However, that our Founding Fathers took such violent and dedicated a stand as they did against a government which taxed at a rate of less than 5% and which wouldn't have dreamed of legalizing the wanton murder of millions of unborn people should soften the "revolutionary" character of our "anarchist" and "utopian" speculations.(5)

Forgiveness and Substantive Law
We begin by very briefly analyzing economic and commercial activity from a Biblical perspective. We both rely on and reject the analysis of the Christian Reconstructionists, notably economist Gary North.

How can we best expand our market: by cut-throat competition and sharp "caveat emptor"-type practices, or by practicing principles of self-sacrifice, abundant giving, and endeavoring to "procure, preserve, and further the wealth and outward estate of others."(6) If "capitalism" is truly "Looking Out for #1"(7) based on "The Virtue of Selfishness"(8), then Christianity is plainly opposed to "capitalism."(9) The kind of business practices we may envisage in a dominantly Christian culture would unquestionably be based on the principle of "good faith" dealing,(10) and undoubtedly would require a return to previous understandings of this concept (when Christian thought was more dominant) and then would entail significant advancement in our understanding of that concept from a Biblical perspective.(11)

Forgiveness and Procedural Law
In the event that a man of "bad faith" deals in an evil way with us, what kind of justice would we want in a Christian culture? How should we respond to the merchant who contractually smites us on the right cheek?(12) The Biblical principles of reconciliation and forgiveness clearly demand that we think more of the well-being of our neighbor, business partner, client, customer, and even competitor, than we do of ourselves.(13)

One aspect of this concern should be a desire to see a sinner repent, i.e., turn from economic lawlessness and embrace Christ in His Law.(14) And while this repentance would surely bring forth fruits of restitution(15), we must be careful to distinguish our desire for his repentance from our quest for vengeance, which is forbidden to us.(16)

Thus, a Christian theory of business, based as it must be upon the Eighth commandment, must be concerned with "avoiding unnecessary law-suits."(17) Those of us who are tempered by our times, accustomed as we are to a "litigious society,"(18) will perhaps find this perspective "unrealistic," "idealistic," or "impractical." But when viewed from the perspective of God's Covenant, we understand that only human action which is in accord with the legal principles of Scripture will be blessed according to the provisions of His Covenant with us.(19)

The Ministry of Reconciliation
Some theologians have suggested that the "church" has a "ministry of reconciliation" (i.e., of men to God) and that the "state" is a "minister of justice" (i.e., between men).(20) There is no Biblical support for this institutionalization, nor this dichotomy, nor still the characterization of the State in such positive terms. Reconciliation and justice are concerns of every man in his Family.(21) Thus, the Church or Bride of Christ is concerned with both justice and reconciliation.(22) Finally, the State is never called a "minister of justice" in Scripture. It is a minister of judgment, "the rod of mine anger," given a "command to take the spoil, and to take the prey, and to tread them (the objects of God's judgment) down like the mire of the streets" (Isaiah 10:5-6). But for these acts of war, taxation, and vengeance, the State is always destroyed (v. 12; cf. Ezekiel 25:15-17), because this behavior -- the very essence of the State -- is utterly prohibited by God's Law and is cursed according to the terms of His Covenant.(23)

A Godly society is not characterized by revenge and punitive destruction. It is characterized by economic stability and prosperity. This harmony is evidence of God's Blessing upon Godly service and faith.(24) The business dealings of a Godly Society are smooth and just, not coercive and fraudulent.

The history of the Law Merchant (Lex Mercatoria) and a comparative study of international commercial law shows that a Godly society is not one dominated by the State or by conflicting systems of national law, but by voluntary justice and Christian reconciliation.

The Law Merchant
On Monday the twelfth of May, some 699 years ago, William of Lawford had a classic business dispute with Reginald of Northampton. Agreeing on a trade for a horse at a price of five marks, Reggie offered a bolt of ray, valuable shiny cloth. Having previously agreed to pay in goods (anyone can run a printing press, but honest money (commodity) is hard to come by), Bill balked, contending that the ray could never bring five marks. Disgruntled seller, unsatisfied buyer, disagreement over the value of goods; we have everything we need for litigation.

But these men did not file with the closest King's judge. Like most merchants of their day, William of Lawford and Reginald of Northampton took advantage of private arbitration at the Fair Court of St. Ives. Speedily, fairly, the case was decided by arbitrators who knew more of merchant law than any of the King's courts. Purely voluntary, in fact, extralegal, neither the King nor Parliament imposed the rules or enforced the decisions of the Fair Court.

Yet far from novel or unique, Bill and Reggie's dispute was handled in the same way the overwhelming majority of commercial disputes were handled in that day, as it had for centuries, and would for centuries to come.(25)

The Threat to the State
As kings vied for power and control in the centuries approaching the Renaissance, the competition from non-political courts became unbearable to the State. Because judges were paid a fee for each case settled, a movement grew to usurp the powers of the voluntary courts and monopolize them in the hands of the State. Throughout Europe, the State closed the Fairs and assumed commercial law into the Common Law and Civil Law systems.(26)

Modern Fair Courts
But as the inefficiency of non free-market systems of dispute resolution became clearer, it was inevitable that voluntary systems would again emerge. When statist forces in the Northeastern portion of America resolved to destroy the (distorted) vestiges of decentralized Christian culture in the South (the War of Northern Aggression, 1861-1865), they disrupted trade and the economy. Contracts were thwarted and ships were sunk trying to run the blockade. The courts were also swamped with claims in insurance, neutrality, and contraband-of-war laws which would have taken years to untangle, and longer if the State had tried to resolve them wisely and justly(!). A voluntary association of merchants who handled the great bulk of trade (Liverpool Cotton Association) agreed to insert an arbitration clause in all their contracts. "Arbitration proved so successful in adjusting differences without the expense, inconvenience, and hard feeling of suits that other Liverpool commercial associations took up the device. . . ."(27) By 1883 a correspondent of the London Times could write that "whole trades and professions have virtually turned their back" on the courts.(28) Owen D. Young, chairman of the board of General Electric (1922-39) and RCA (till 1929) as well as chairman of the American section of the International Chamber of Commerce (1925-28), was an enthusiastic propagandist for private arbitration.(29)

The New Lex Mercatoria
Seeing its success, efficiency, low-cost, speed, and expertise, international arbitration has caught on, and has been called "the New Lex Mercatoria."(30) More commercial disputes are settled by extra-legal arbitration than in the courts of the various States.(31)

The current growth in "extra-judicial" resolution of disputes is encouraging for those with a vision of Christian Conciliation. But equally encouraging is a long history of law which saw the "free-market" work harmoniously without coercive intervention from the State.

Our vision of a reconstructed society is greatly aided by a close scrutiny of oft-neglected manifestations of Godly economics and law which have occurred throughout history.

Micah's "Vine & Fig Tree" vision

Creationist Anarcho-Socialism

1. [note omitted]

International Regeneration


Christlike morality

2.[note omitted]







3.[note omitted] Click here.

4. [note omitted]














5. See the essay, "Unlucky 13, &c.," which follows the outline mentioned in note 4.

6. ". . . as well as our own." Westminster Larger Catechism, Q. 141.

7. Number One best-seller by Robert J. Ringer, New York: Fawcett Crest Books, 1977.

8. Subtitled , "A New Concept of Egoism," by Ayn Rand, New York: Signet Books, 1964.

9. See Volume V of the PATRIARCHY series, as well as the Vine & Fig Tree Studyletter, THE DEBT PAPERS.

10. Powell, Raphael, "Good Faith in Contracts," 9 Current Legal Problems 16 (1956); Holmes, Eric M., "A Contextual Study of Commercial Good Faith: Good Faith Disclosure in Contract Formation," 39 University of Pittsburgh Law Review 381 (1978).

11. Ours is a Theonomic defintion of "faith": "By this faith, a Christian believeth to be true whatsoever is revealed in the Word, for the authority of God Himself speaking therein; and acteth differently upon that which each particular passage thereof containeth; yielding obedience to the commands, trembling at the threatenings, and embracing the promises of God for this life, and that which is to come." (Westminster Confession of Faith, "Of Saving Faith," XIV:ii.

12. Matthew 5:39-42.

13. WLC Qq. 131-132; Philp. 2:3-4; Romans 12:10; Eph. 5:21.

14. "By it (repentance), a sinner . . . so grieves for, and hates his sins, as to turn from them all unto God, purposing and endeavoring to walk with Him in all the ways of his Commandments." WCF, "Of Repentance Unto Life," XV:ii.

15. Exodus 22:1-17; Luke 19:8-9.

16. See our essay, "The Legal Pimp," attached to this proposal.

17. See the exposition of the Eighth Commandment in The Larger Catechism, Q.141.

18. Jethro K. Lieberman, New York: Basic Books, (1981).

19. Deuteronomy 28:1-14; see Ray R. Sutton, That You May Prosper: Dominion By Covenant, Tyler, TX: Institute for Christian Economics, (1987).

20. Gary North, Unconditional Surrender, Tyler, TX: Geneva Press, (1981), p. 130.

21. Genesis 18:19; 26:5; Proverbs 1:3; Jeremiah 22:15-16.

22. 2 Corinthians 5:18-19; Matthew 23:23; John 16:7-11.

23. Romans 12:17-21; I Samuel 8:7; 10:19; 12:17; Deut. 28:15-68; Matt. 26:52.

24. See the extract from the essay, "Angels and God's Throne of Government," attached to this proposal.







25. Hundreds of similar cases are recorded in the publications of the Seldon Society, Select Cases Concerning the Law Merchant, 3 vols., 1908, 1930, 1932.




26. S. Todd Lowry, "Lord Mansfield and the Law Merchant: Law and Economics in the Eighteenth Century," 7 Journal of Economic Issues 605 (1973). Bernardo M. Cremades and Steven L. Plehn add, "As the modern nation-state developed during the sixteenth century, rulers of sovereign states began to regard the autonomous Lex Mercatoria as an external threat to internal cohesiveness." ("The New Lex Mercatoria and the Harmonization of the Laws of International Commercial Transactions," 2 Boston University International Law Journal 317, 319 (1984).


27. William C. Wooldridge, "Voluntary Justice," in Uncle Sam the Monopoly Man, 1970, p. 99.

28. See Samuel Rosenbaum's note in A Report on Commercial Arbitration, (American Judicature Society, Oct. 1916).

29. Wooldridge, p. 101.

30. Leon E. Trakman, "The Evolution of the Law Merchant: Our Commercial Heritage," 12 Journal of Maritime Law and Commerce 173ff. (1981); Cremades & Plehn, supra. note 26; Ole Lando, "The Lex Mercatoria in International Commercial Arbitration," 34 International and Comparative Law Quarterly 747 (1985).

31. Yves Derains, "New Trends in the Practical Application of the ICC Rules of Arbitration," 3 International Law and Business 39 (1981).

Lex Mercatoria and H diakonia thV kataggaghV



Reynolds, Susan, "Law and Communities in Western Christendom, c. 900-1140, 25 The American Journal of Legal History. 205 (1981).

Donahue, Charles, Jr., "The Interaction of Law and Religion in the Middle Ages," 31 Mercer Law Review 466 (1980).

Baker, J. H., "The Law Merchant and the Common Law Before 1700," 38 Cambridge Law Journal, 295, (1979).

Berman, Harold J., "The Background of the Western Legal Tradition in the Folklaw of the Peoples of Europe," 45 The University of Chicago Law Review 553 (1978).

Lobringier, Charles Sumner, "Lex Christiana: The Connecting Link Between Ancient and Modern Law," 20 Georgetown Law Journal, 1 and 160 (1931, 1932).

Teeven, Kevin M., "The Contract Jurisdiction and Procedure of Medieval Courts," 5 Glendale Law Review 35 (1982)*

Trakman, Leon E., "The Evolution of the Law Merchant: Our Commerical Heritage," 12 Journal of Maritime Law and Commerce, 1 and 153 (1980, 1981).

Kerr, Charles, "The Origin and Development of the Law Merchant," 15 Virginia Law Review 350, (1929).

Goodyear, Jacob M., "The Romance of the Law Merchant," 34 Dickinson Law Review 218 (1929-30).

Lowry, S. Todd, "Lord Mansfield and the Law Merchant: Law and Economics in the Eighteenth Century," 7 Journal of Economic Issues 605 (1973).

Mullett, Charles F., "Medieval English Law and the American Revolution," 20 Virginia Law Review 523 (1931).

Steckley, George F., "Merchants and the Admiralty Court During the English Revolution," 22 American Journal of Legal History 137 (1978).

Carter, A. T., "The Early History of the Law Merchant in England," 17 Law Quarterly Review 232 (1901).

Murray, Daniel E., "Arbitration in the Anglo-Saxon and Early Norman Periods," 16 Arbitration Journal 193 (1961).

Jones, Sabra A., "Historical Development of Commercial Arbitration in the United States," 12 Minnesota Law Review 240 (1928)*

Runyan, Timothy J., "The Rolls of Oleron and the Admiralty Court in Fourteenth Century England," 19 American Journal of Legal History 95 (1975).

Moglen, Eben, "Commercial Arbitration in the Eighteenth Century: Searching for the Transformation of American Law," 93 Yale Law Journal 111 (1983).

MacKinnon, F. D., "Origins of Commerical Law," 52 Law Quarterly Review 30 (1936).

Brodhurst, Spencer, "The Merchants of the Staple," 17 Law Quarterly Review 56 (1901).

Teetor, Paul R., "England's Earliest Treatise on the Law Merchant," 6 American Journal of Legal History 178 (1962).

Paulsen, Gordon W., "An Historical Overview of the Development of Uniformity in International Maritime Law," 57 Tulane Law Review 1065 (1983).

Boskey, James B., "A History of Commercial Arbitration," 8 Rutgers-Camden Law Journal 1 (1976).

Mann, Bruce H., "The Formalization of Informal Law: Arbitration Before the American Revolution," 59 New York University Law Review 443 (1984).

Dix, George E., "The Death of the Commerce Court: A Study in Institutional Weakness," 8 American Journal of Legal History 239 (1964).

Radin, Max, "The Sea Law and the Law Merchant," in Handbook of Anglo-American Legal History, West, 1936 (Hornbook Series).

Holdsworth, William, A History of English Law, 16 vols., London: Methuen & Co Ltd, Sweet and Maxwell, 1973 (1925)

__________, The Historians of Anglo-American Law, Hamden, CN: Archon Books, 1966 (1928).

Pollock, Frederick, and William Maitland, The History of English Law, 2 vols., Cambridge: University Press, 1968 (1895).

Rich, E.E., ed., The Staple Court Books of Bristol, Bristol: Bristol Record Society, 1934.

McGrath, Patrick, ed., Records Relating to the Society of Merchant Venturers of the City of Bristol in the Seventeenth Century, Bristol: Bristol Record Society, 1952.

__________, ed., Merchants and Merchandise in Seventeenth Century Bristol, Bristol: Bristol Record Society, 1955.

Gross, Charles, Select Cases Concerning the Law Merchant, Vol. I, Local Courts, London: (Seldon Society), 1908.

Hall, Hubert, Select Cases Concerning the Law Merchant, Vol. II, Central Courts, London: (Selden Society), 1930.

__________, Select Cases Concerning the Law Merchant, Vol III, Supp., London: (Seldon Society), 1932.



Thayer, Philip W., "Comparative Law and the Law Merchant," 6 Brooklyn Law Review 139 (1936).

Kuhn, Arthur K., "The Function of the Comparative Method in Legal History and Philosophy," 13 Tulane Law Review 350 (1939).

Berman, Harold J., and Colin Kaufman, "The Law of International Commerical Transactions (Lex Mercatoria)," 19 Harvard International law Journal 221 (1978).

Herman, Shael, "From Philosophers to Legislators, and Legislators to Gods: The French Civil Code as Secular Scripture," 1984 University of Illinois Law Review 597 (1984).

Powell, Raphael, "Good Faith in Contracts," 9 Current Legal Problems 16 (1956).

Holmes, Eric M., "A Contextual Study of Commercial Good Faith: Good-Faith Disclosure in Contract Formation," 39 University of Pittsburgh Law Review 381 (1978).

Gilmore, Grant, "Formalism and the Law of Negotiable Instruments," 13 Creighton Law Review 441 (1979).

Schelsinger, Rudolf B., Comparative Law, Mieoloa, NY: Foundation Press, 1980 (4th ed.).



Perlman, Lawrence, and Steven C. Nelson, "New Approaches to the Resolution of International Commercial Disputes," 17 International Lawyer 215 (1983).

Biggs, Donald, "Avoiding the Arbitration Trap," in How To Avoid Lawyers, NY: Garland Publ. Inc., 1985.

Derains, Yves, "New Trends in the Practical Application of the ICC Rules of Arbitration," 3 International Law & Business 39 (1983).

[Author]*, "Dispute Resolution in the United Nations: An Inefficient Forum?" 10 Brooklyn Journal of International Law 435 (1984).

Hayes, Louise Hertwig, "A Modern Lex Mercatoria: Political Rhetoric or Substantive Progress?" 3 Brooklyn Journal of International Law 212 (1977).

Sussman, Mark L., "Case Comment: Scherk v. Alberto-Culver Company," 1 Brooklyn Journal of International Law 73 (1975).

Cremades, Bernardo M., and Steven L. Plehn, "The New Lex Mercatoria and the Harmonization of the Laws of International Commerical Transactions," 2 Boston University International Law Journal 317 (1984).

Lando, Ole, "The Lex Mercatoria in International Commercial Arbitration," 34 International and Comparative Law Quarterly 747 (1985).

Neyroud, Philippe, and William W. Park, "Predestination and Swiss Arbitration Law: Geneva's Application of the Intercontonal Concordat," 2 Boston University International Law Journal 1 (1983).

Coulson, Robert, "International Arbitration - A Smorgasbord of Systems," in Business Arbitration: What You Need to Know, NY: AAA, 1982 (ch. 5).

Cohen, J. H., "Commerical Arbitration and the Rules of Law: A Comparative Study," 4 University of Toronto Law Journal 1 (1941).

Friedman, David, "Private Creation and Enforcement of Law: A Historical Case," 8 Journal of Legal Studies 399 (1977).

Phillips, Philip G., "Rules of Law or Laissez-Faire in Commercial Arbitration," 47 Harvard Law Review 590 (1934).

Kronstein, Heinrich, "Business Arbitration - Instrument of Private Government,"54 Yale Law Journal 36 (1944).

__________, "Arbitration is Power," 38 New York University Law Review 661 (1963).

Lazarus, Steven, et al, Resolving Business Disputes, NY: American Management Association, 1965.

Strauss, Donald, (American Arbitration Association), New Strategies for Peaceful Resolution of International Business Disputes, NY: AAA, 1971.

Hoellering, Michael F., (American Arbitration Association), Arbitration & the Law, 1983, NY: AAA, 1984.

Rolph, Elizabeth, Introducing Court-Annexed Arbitration, Santa Monica: Rand Institute for Civil Justice, 1984.

Sanders, Pieter, ed., International Arbitration: Liber Amicordum for Martin Domke, The Hague: Martinus N˙hoff, 1967.

Henderson, Dan Fenno, Conciliation and Japanese Law, 2 vols., Seattle: U of Washington Press, n.d. (c. 1966).

Kevin C.

And they shall beat their swords into plowshares
and sit under their Vine & Fig Tree.
Micah 4:1-7