Bases for Legal Systems

Four heritages form the bases for the majority of the legal systems of the worlds: (1) common law, derived from English law and found in England, the United States, Canada, and other countries once under English influence (2) civil or code law, derived from Roman law and found in Germany, Japan, France, and in non-Islamic and non-Marxist countries; (3) Islamic law, derived from the interpretation of the Koran and found in Pakistan, Iran, Saudi Arabia, and other Islamic states; and (4) a commercial legal system in the Marxist socialist economies of Russia and the republics of former Soviet union, Eastern Europe, China, and other Marxist socialist states whose legal system entered on the economic, political and social policies of the state. As each country moves toward its own version of a free market system and enters the global market, a commercial legal system is also evolving from those Marxist socialist tenets. China has announced that it will adopt a constitution based socialist legal system Chinese characteristics.

The differences among these four systems are of more than theoretical importance because due process of law may vary considerably among and within these legal systems. Even though a country’s laws may be based on the doctrine of one of the four legal systems, its individual interpretation may vary significantly from a fundamentalist interpretation of Islamic law as found in Pakistan to a combination of several legal systems found in the United States, where both common and code law are reflected in the legal system.

One measure of the importance of the legal system in each country is the number of attorneys per capita. Judging by that metric the legal system is called upon to settle commercial disputes much more frequently in the United States than in China. As Japan continues to become more integrated in the global market the need for attorneys is burgeoning. There are approximately 23,000 attorneys there now and the Japanese government intends to grow that number to 50,000 by 2018.

Common and Code Law:

The basis for common law is tradition, past practices and legal precedents set by the courts through interpretations of statutes, legal legislation and past rulings. Common law seeks interpretation through the past decisions of higher courts which interpret the same statutes or apply established and customary principles of law to a similar set of facts. Code law on the other hand, is based on an all inclusive system of written rules (codes) of law. Under code law, the legal system is generally divided into three separate codes: commercial, civil and criminal.

Common law is recognized as not being all inclusive, whereas code law is considered complete as a result of catchall provisions found in code law systems. For example, under the commercial code in a code law country, the law governing contracts is made inclusive with the statement that a person performing a contract shall do so in conformity with good faith as determined by custom and good morals. Although code law is considered all inclusive, it is apparent from the foregoing statement that some broad interpretations are possible in order to include everything under the existing code.

Under common law, ownership is established by use, under code law, ownership is determined by registration. In some code law countries certain agreements may not be enforceable unless properly notarized or registered in a common law country, the same agreement may be binding so long as proof of the agreement can be established. Although every country has elements of both common and code law, the differences in interpretation between common and code law systems regarding contracts, sales agreements and other legal issues are significant enough that an international marketer familiar with only one system must enlist the aid of legal counsel for the most basic legal questions.