Code Law Systems
The term “code-law systems” is usually employed, as a legal term of art, with two different, if related, meanings. First, “code” refers to the reduction of the laws customarily observed by a particular people to a more or less permanent, organized, and written form through a comprehensive piece of legislation or codification. Strictly speaking, a “code” may denote a constitution or similar public-law enactment of fundamental laws; but more usually the term is limited to compilations of the private law (contracts, torts, property, agency, marriage, matrimonial property, and related matters), although many countries also have codifications of their criminal law, criminal procedure, civil procedure, and commercial law. It is in the general sense of there being a collection in a single, comprehensive statute of particular national laws on one or more main subjects that the code-law systems are normally opposed to un-codified, or common-law, systems. In the latter systems, in general, the private law at least remains an uncodified body of what were originally custom-derived rules or principles that purport to be reflected in the judgments of the highest national courts and in piecemeal statutes that may be passed ad hoc to correct or extend those judicial decisions.
In a second and more popular sense, the term “code-law systems” denotes the body of continental European civil law, which, as represented principally in the two major acts of codification of modern times, the French civil code (or Code Napoleon) of 1804 and the German civil code (BÃ¼rgerliches Gesetzbuch, or B.G.B.) of 1900, has spread throughout the world. The German civil code of 1900 had a decisive influence on the drafting and adoption of the present Japanese civil code and on the precommunist Chinese code. The Code Napoleon has been widely copied or borrowed from in the codifications of the Middle East, former French Africa, and Latin America generally.
It is in this particular sense of referring to the substantive civil-law content of the two great western European acts of codification that the term “code-law systems” is normally distinguished from the common law of the English-speaking countries. The common law of England was carried by process of conquest, occupation, or settlement, to the original American states and to the British colonies overseas. With some modifications based on deference to existing local, customary law, in the case of certain countries having an indigenous, predominantly non-English or non-European population, the common law has remained in these countries even after British political power has formally and practically disappeared. Thus the common law is today the basic private law of Great Britain, the Commonwealth countries, and the United States. The term “common law” applies both where the common law has itself been codified-as is the case in most of the English-speaking countries in regard to commercial law and criminal law-and even where the law was originally Romanist (as in South Africa and Ceylon) and, while still formally uncodified, was transformed by successive decisions of the Privy Council in London into a semblance of the common law, case law system of precedents. An act of codification is always something of a revolutionary step in the sense that it represents a certain intellectual break with the past. Although all the codes purport to be merely a restatement of the old, pre-existing law, most of the great codifying commissions have used the opportunity to make innovations and changes in the old law; and the act of codification itself, in the sense that it involves reducing a large and hitherto unorganized mass of materials to comprehensive form, necessarily involves a certain clarification and streamlining of the existing law.
The great codifying projects have usually coincided with eras of great political or social change or upheaval, probably because in such periods it may be easier to obtain that minimum degree of consensus among the decision-making elite necessary to force such projects through to completion. It may be only in such periods that the conflicting pressures for stability and change can be satisfactorily reconciled to the point of reducing the laws to a single, comprehensive enactment. The French civil code was adopted in the wake of years of revolutionary turmoil in France and was one of the first projects of the Emperor Napoleon, who personally guided it through to completion, to the point of sometimes presiding himself at the sessions of the codifying commission. In Germany the codification movement only really got under way and received official blessing after the achievement of German political union, in federal form, in 1871; and codification was then looked upon as an instrument for assisting and furthering the spirit of national unity.
In the case of Quebec, the civil code of 1866 was adopted at the time of the pending political incorporation of French-speaking Roman Catholic Lower Canada into a Canadian confederation in which French Canadians would be heavily outnumbered by English-speaking Protestants: the codification of French Canada’s civil law was viewed as a defensive measure to protect the distinctive social values and institutions of Quebec (for example, the family law, with its emphasis on the family unit with paternal control, the absence of any divorce, and the institution of the joint matrimonial property system) against the encroachment, after confederation, of an alien common law that was viewed as incorporating Anglo-Saxon Protestant values.
The modern Japanese and Chinese civil codes, with their large German civil law influences and derivations, were adopted as part of a deliberate policy of modernization or “Westernization” of basic social institutions, with a view to speeding large-scale industrialization and development.
The Soviet Russian civil code of 1922 was adopted at a time when governmental pressures in the Soviet Union were all for stability, clarity, and certainty in law, after the disastrously chaotic experiences in the era of free law finding from 1917 to 1921. During that period, the tsarist codes and laws had been largely swept away and Soviet judges and administrators were often bound by a no more sure and reliable criterion for decision than their own “spirit of revolutionary consciousness.” The year 1922 also marked the introduction in the Soviet Union of the New Economic Policy, with an official relaxation of controls on economic activity and a new encouragement of entrepreneurial business activity and of foreign trade and investment in the country. It was, therefore, argued that a fixed and definite civil code-which manifestly, in its structure and organization and in a great deal of its substantive principles, too, did not depart too much from the main continental European civil-law stream-would be an invaluable asset in promoting a more liberal Soviet official image, both at home and abroad.
Individual national codes differ widely, depending principally upon whether their makers have looked to the French or to the German civil code for their main intellectual inspiration. The Code Napoleon is direct, lucid, and often sparkling in structure and in language, reflecting perhaps both the inherently graceful qualities of the French language and the personality and techniques of its original drafting commission, whose members, essentially practicing lawyers, under some prodding from the Emperor Napoleon produced their final code in a matter of several months. The B.G.B., by contrast, is heavy, pedantic, and profuse, both in language and in drafting, reflecting in measure the essentially professorial and bureaucratic character of its main drafters and the years of research, public debate, and criticism that preceded its final adoption; for although the actual project for codification was put under way in 1874, with the appointment of the members of the codifying commission, it was not until 1896 that the final draft was completed and approved, to take effect from 1900. The Emperor Napoleon had said that his aim was to have the code so simple and convenient in its arrangement that the French peasant, reading it in its single, slim, pocket-book form by candlelight, would be able to know his legal rights; and so successful has the code been, from the viewpoint of legal writing, that Stendhal is said to have read a few pages of it each day to improve his literary style. The German code, by contrast, remains essentially a legal technician’s code, without any particular claims to literary elegance or refinement of style.
This reference to a distinctive national psychology or personality-or Volksgeist, as Savigny called it-and its relationship to individual acts of national codification calls attention to the question of whether there are any particular periods in a nation’s history that are especially ripe for codification, and perhaps it also poses the even more basic question of why some countries have achieved codes and others have not. In 1814, in reaction against the various French invasions and military occupations of the revolutionary and Napoleonic eras, Anton Thibaut and the German nationalist movement urged the immediate codification of German laws. Savigny, who opposed these pressures, argued that since a code existed primarily as a restatement or concretization of a nation’s law it would act as a brake on national development if any nation should seek to codify its laws before it had reached its full political, social, and economic maturity. Savigny added a nationalistic argument to his injunction against any “premature” codification. He stated that, given the condition of German law at the opening of the nineteenth century, when only the loose, diffuse, and prolix Prussian code of 1794-an original project of Frederick the Great acting under the impulse of French rationalism-was available as a strictly Germanic model, any German act of codification, unless it were to be a reproduction in terms of the Code NapolÃ©on, which had been carried into the Rhineland and other parts of Germany by Napoleon’s armies, would require legal talents and resources beyond the then existing intellectual capacities of the German university law faculties.
It was far better, in Savigny’s view, to keep the existing patchwork quilt of German law. In the Rhineland states, for example, the Code Napoleon would be retained; in Prussia and the areas under its control, the code of 1794; in the other states, the uncodified common law, or “received Roman law.” The absorption of this uncodified law into Germany had taken place over the course of the fourteenth, fifteenth, and sixteenth centuries. In the process of that absorption and in the subsequent intensive study in the university law schools, it was progressively refined and restated. There is a particular irony in Savigny’s argument against codification by appeal to German nationalistic traditions, since the received Roman law, which dominated so much of Germany at the opening of the nineteenth century, became ultra-Roman in content and character. Even the Code Napoleon, for example, while drawing heavily on the Roman law of southern France (or the pays de droit Ã©crit), was still greatly influenced as to its substantive principles by the Germanic customary law of the northern provinces of France (or pays de coutumes).
A good part of the dynamics of a codification movement certainly comes from the spirit of rationalism. There have been powerful codification movements in both Great Britain and the United States. Bentham and his disciples, as part of their general law-reform movement in the early nineteenth century, launched a codifying project designed, in Bentham’s own words, to render the law “cognoscible” to the layman. But the movement, except for some sustained influence in certain specialized areas of law, especially the criminal law and commercial law, and in the British colonies overseas, had largely petered out by the middle and late nineteenth century, probably because of the tenacious resistance of the vested professional interests of the judiciary and the practicing bar. The intellectual thoughtways of these special skill groups were attuned to that pragmatic, problem-by-problem development of legal principles inherent in the case-law system, and they were firmly opposed to any a priori postulation of principles through an act of codification. Since university teaching of law in England was very weak and largely unorganized until well into the nineteenth century, the practicing profession’s influence was dominant in legal education through the Inns of Court, and this acted as a further intellectual barrier to codification.
In the United States the codification movement had its impact, represented in the great Field-Carter debate of the mid-nineteenth century; but the influence of codification has been very slow and, outside the commercial sphere, limited in area of impact. On the other hand, some factors have been very conducive to uniformity in the development of American private law, notwithstanding the existence of fifty formally separate and autonomous state jurisdictions. Especially important are the Restatements of American Law and the influence of the prestigious “national” law schools of the pattern of Yale and Harvard, which purport to teach a truly national, as distinct from a particularist or local law.
Once they have been drafted, there is a certain tendency for codes to become invested with a great deal of the seeming permanence, rigidity, and immutability of constitutions or similar fundamental laws. This particular truth, which had been observed by Savigny, seemed to be amply vindicated by the detailed history of the interpretation and application of the Code NapolÃ©on during the nineteenth century. In France a highly conservative judiciary, aided by a strict and literal “grammatical” construction or exegesis of the text of the code, insisted on confining its practical application to a highly individualistic laissez-faire philosophy, at a time when France as a whole, speaking in social and political terms, had experienced a full-scale industrial revolution and had largely accepted collectivist or social democratic ideas. Yet, by the close of the nineteenth century the judiciary, aided by the work of a brilliant group of text writers and commentators, had begun systematically to reinterpret the Code NapolÃ©on to take account of the new climate of an advanced industrial civilization, in which the code must operate. The operational tools for this transformation of the code were the new techniques of teleological interpretation (or interpretation in terms of social purposes), themselves products of Geny’s call (1889) for free scientific research in law (la Wore recherche scientifique). These developments in French code law in action parallel and anticipate the later realist and sociological emphases in North American jurisprudence.
Codes, like constitutions, if they are to be viable, must change with the society in which they operate; and this preferred relationship, or symbiosis, between law and society is assisted by the use of broad general formulas in drafting them. When the German Social Democrats were disposed to challenge the draft B.G.B. because of its alleged liberal, individualistic bias, the great jurist Rudolf Stammler was able to assure them that the lapidarian quality of the code’s general provisions would make it continually adjustable to the community’s own acceptance of social democratic ideas. The very generality of a code’s key provisions-like the “due process” clauses in the fifth and fourteenth amendments to the United States constitution-enables new content to be poured into the old formulas. Thus the process of interpretation can serve to effect change and innovation in the law while avoiding the apparently radical step of direct legislative amendment.
“Legal Systems.” International Encyclopedia of the Social Sciences. 1968
The civil law system is the predominant legal system in the world. It developed out of Romano-Germanic law-the law of continental Europe-based on a mixture of Roman, Germanic, ecclesiastical, feudal, commercial, and customary law. The beginnings of the civil law tradition can be traced to the Twelve Tables, written in 449 BCE, which laid the foundation for Roman law and would eventually become one of the most advanced systems of law in history.
Following the rise of the nation-state system in Europe, natural or civil codes were established in several countries, including France, Spain, Germany, and several Latin American and East Asian countries. The purpose behind the civil codes was to create a unified system of laws or statutes derived from basic principles and upon which judicial decisions are based. Perhaps the most widely known civil code is the Napoleonic Code established in France in 1804, which is the foundation for the civil law systems of Quebec and Louisiana. The German Civil Code, too, provides the legal foundation for the civil law systems of the former Soviet bloc countries, Japan, South Korea, China, and Taiwan. Most of Latin America also uses the civil law system as a result of the influence of its former colonial masters in Europe.
A distinguishing feature of the civil law system is that it is based on the idea of flexibility and judicial discretion in interpreting the law. Different schools of judicial interpretation exist in most civil law countries, and the law tends to be a product of these competing schools. Judicial disregard of precedent is considered to be a strength of the civil law system because it allows for alternative interpretations of the law that may be more compatible with the facts and circumstances of a particular case. One of the results of this more flexible approach in applying the law is that judicial opinions tend to be more concise, as courts discuss only the relevant legislation that applies rather than detailing how a decision was reached. However, the civil law system is still subject to the vagaries and uncertainties of judge-made law where the role of precedent has little influence.
“Legal Systems.” International Encyclopedia of the Social Sciences. 2008
Civil Law System
Countries following a civil law system are typically those that were former French, Dutch, German, Spanish or Portuguese colonies or protectorates, including much of Central and South America. Also, most of the Central and Eastern European and East Asian countries follow a civil law structure.
The civil law system is a codified system of law. It takes its origins from Roman law. Features of a civil law system include:
There is generally a written constitution based on specific codes (e.g., civil code, codes covering corporate law, administrative law, tax law and constitutional law) enshrining basic rights and duties; administrative law is however usually less codified and administrative court judges tend to behave more like common law judges;
Only legislative enactments are considered binding for all. There is little scope for judge-made law in civil, criminal and commercial courts, although in practice judges tend to follow previous judicial decisions; consitutional and administrative courts can nullify laws and regulations and their decisions in such cases are binding for all.
In some civil law systems, e.g., Germany, writings of legal scholars have significant influence on the courts;
Courts specific to the underlying codes there are therefore usually separate constitutional court, administrative court and civil court systems that opine on consistency of legislation and administrative acts with and interpret that specific code;
Less freedom of contract – many provisions are implied into the contract by law and parties cannot contract out of certain provisions.
A civil law system is generally more prescriptive than a common law system. However, a government will still need to consider whether specific legislation is required to either limit the scope of a certain restriction to allow a successful infrastructure project, or may require specific legislation for a sector. Please go to Legislation and Regulation and “Organizing Government to think PPP” sections for more information on this.
There are a number of provisions implied into a contract under the civil law system less importance is generally placed on setting out ALL the terms governing the relationship between the parties to a contract in the contract itself as inadequacies or ambiguities can be remedied or resolved by operation of law. This will often result in a contract being shorter than one in a common law country.
It is also important to note in the area of infrastructure that certain forms of infrastructure projects are referred to by well-defined legal concepts in civil law jurisdictions. Concessions and Affermage have a definite technical meaning and structure to them that may not be understood or applied in a common law country. Care should be taken, therefore, in applying these terms loosely. This is further considered under Agreements.
Civil Law Systems – Key Administrative Jurisprudence that can impact PPP arrangements
In many civil law countries a separate administrative law governs PPP arrangements.It is important to seek local legal advice to check whether these rules apply in a particular civil system. It is also important to note that in a civil law jurisdiction, unless the contract specifies that the parties have agreed to arbitration, the contract will be enforced by the administrative courts. Some of the key administrative rules that apply to delegated management arrangements are listed below.
Rights of contracting authority that may override contractual provisions
Right of unilateral modification
The contracting authority may, as in France, have the right to modify aspects of the contract unilaterally when it deems the change to be in the public interest. The contracting authority does not have the right to change the contract’s financial provisions or its fundamental nature, but it can change such aspects as the specification of the service to be provided.
Right of unilateral cancellation
The contracting authority has the right to cancel the contract early (although it must compensate the operator).
Right to continuity of service
The operator in an administrative contract may not suspend the execution of its obligations under the contract, even if the contracting authority breaches the contract. Under a concession or affermage-lease, the operator is deemed to assume duties relating to operating a public service, even beyond those included in the contract (such as investing to address increasing demand or adapting to new technologies).
Protections of operator implied by law
Operator’s right to financial equilibrium
The operator is protected in certain circumstances by the right to have the “financial equilibrium” of the contract preserved. For example, when the contracting authority imposes a unilateral modification, it must also adjust the financial terms of the arrangement so that the operator is not worse off (for example, if the contracting authority required higher service standards, it might also have to allow a higher tariff). Particular doctrines that form part of the operator’s right to “financial equilibrium” in France, which have counterparts in other civil law countries, include:
o Fait du prince. Relief is granted when the contracting authority has caused the operator’s profits to decrease without breaching the contract. Relief under fait du prince requires the following conditions:
§ the contracting authority’s action has adversely affected the operator and was unforeseeable when the contract was concluded;
§ the contracting authority’s action is beyond the scope of the contract (otherwise the action would merely constitute a breach of the contract); and
§ the action taken by the contracting authority must be specific to the operator (general decisions concerning all enterprises are not considered as fait du prince, but they may give rise to damages on the basis of the imprÃ©vision principle; see below).
o ImprÃ©vision. The operator is entitled to compensation for financial difficulties arising from large and unforeseen changes in economic conditions that render execution of the agreement financially hazardous. Examples of possible compensation events under imprÃ©vision include a major devaluation, price control decided by an authority other than the contracting authority, or a reduction in working hours that increases labor costs. The adverse economic impact of these events must not only be exceptional but beyond all limits foreseen by the contract. The operator’s compensation is not equal to the total losses or damages incurred (an administrative circular provides for the administration to bear 90 percent of the losses as an indicative rule).
o SujÃ©tions ImprÃ©vues The operator is entitled to compensation for unexpected material conditions that make construction and/ or operations more costly.
Unpredictable and uncontrollable events that render the performance of the contract materially impossible exonerate the operator from its obligations. For example, a spill from a chemical factory causing permanent pollution of the only water source would be considered force majeure. Natural phenomena such as hurricanes and droughts may also be considered force majeure.
Governments may wish to include these rules in the arrangement, and when they are part of the background law it may not be necessary to repeat them in the contract. But relying on just the background rules is problematic because the rules are sometimes ambiguous. For example, the jurisprudence on restoring the “financial equilibrium” of the contract is not clear on what “financial equilibrium” really means.
A contract that takes a background administrative law principle and spells out exactly how it is to be applied will generally be effective. But, changing or overriding an administrative law principle may or may not be legally possible-that would need to be checked. For example, it may not be possible to completely remove the ability of a contracting authority to unilaterally change service standards. In France the law makes void any attempt to override the contracting authority’s ability to unilaterally cancel a contract. Some civil law codes also contain mandatory notice periods before termination for breach of contract that cannot be avoided or overridden.
Other Civil Law rules that can impact PPP arrangements
where there is a contractual commitment on the Operator to pay a penalty in the case of default and the amount is fixed by contract, under French law a judge may reduce or increase the amount of penalties (as long as it is not reduced below the actual damage suffered). Similar concepts exist in Mali, Tunisia and Algeria, for example.
under the French tax code (article 1678 quarter) gross-up clauses related to indemnification of withholding taxes on interest are not to be binding on French tax administration when the debtor is a French entity.
in Common law jurisdictions, such as England and the US, the emphasis when a business gets into financial trouble is on seeking a reorganization rather than a liquidation to keep the business as a going concern (eg US, Chapter 11, UK administration). In Civil law jurisdictions the process focuses on liquidation (although reform of some bankruptcy laws such as France and OHADA countries is now permitting reorganizations of debtors before they become insolvent).
Financial Assistance (European doctrine), “Corporate Benefit ” (French doctrine)
these doctrines prohibit or severely restrict a target company and its subsidiaries from giving guarantees (up-stream and cross-stream) or security in connection with the acquisition of the target company’s shares of particular relevance to PPPs involving private sector taking a stake in a utility (joint venture) and/ or privatizations. Other civil law countries such as the OHADA countries (Article 639 of Uniform Act related to commercial companies) and Algeria (Article 715 bis 60 of Commercial Code) have similar concepts.
Security interests and syndicated loans
Common law systems have greater flexibility in granting different types of security over assets – an important feature of PPP arrangements involving commercial funding such as BOTs. They also have the concept of trusts, which enable security interests to be held by a trustee for lenders in a syndicated loan situation without the need for formal transfer or re-registering of security interests in names of new lenders. Civil law does not have such a concept and so security interests generally required to be re-registered in the name of the new lender (involving additional registration costs and notarial fees). France is in the process of introducing a trust law which will resolve a number of these issues. In OHADA countries, however, filings involving public notary are required for formalizing security interests.
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