Does Scotland need its own Commercial Law?

Date01 September 2015
Published date01 September 2015

The answer to the question posed in the title of this article is yes and no. But if I were to stop there, you would feel short changed. Perhaps not the disappointment of spectators at a prize-fight ended by a knock-out punch after fifteen seconds, but short changed nonetheless. I will therefore expand on that answer.

Scots law is a fundamental component of Scottish nationhood. In the dramatic political events of 2014 we saw how differing visions of that nationhood clashed, awaking powerful visceral feelings. But, among those who argued that Scotland is best served by remaining part of the United Kingdom, few, if any, have challenged the reality of the concept of a Scottish nation.

The Scottish Parliament on 16 January 1707 enacted the Union with England Act. The English Parliament enacted a mirror statute. The Union came into effect on 1 May 1707. Along with the securing of the Protestant religion and Presbyterian Church government, it was a fundamental part of the deal that gave rise to the United Kingdom of Great Britain that the structure of the Scottish legal system be preserved within the Union. Article 19 of the Articles of Union provided:

That the Court of Session or College of Justice do after the Union and that notwithstanding thereof remain in all time coming within Scotland … with the same authority and privileges as before the Union.

The article allowed the new Parliament to pass regulations to improve the administration of justice in Scotland; but the authority of the senior civil court was preserved, as was the criminal jurisdiction of the High Court of Justiciary.

The Act of Union also recognised the economic reality of the venture which the Union involved: the creation of a unitary economy. That was one of the main purposes of the Union in the eyes of the Scottish parliamentarians who voted for it. Indeed while the Act was passed by 110 votes to 69, the earlier vote on article 6 of the Act, which introduced free trade, had 154 in favour and only 17 against. Article 18 of the Act provided that the “laws concerning regulation of trade, customs and … excises” be the same and also authorised the alteration of the “laws which concern private right” if the alterations were “for the evident utility of the subjects in Scotland”.

So it was that Scottish commercial law came within the control of the UK Parliament but Scots law as a legal system was preserved. And, on the whole, in the last 300 years the governmental institutions of the Union have stuck to the deal and have not sought to undermine Scots law, including our commercial law. In many areas commercial law in the United Kingdom has been changed on a largely uniform basis. The great nineteenth century statutory reforms included the regulation of joint stock companies and the subsequent company legislation, which encouraged enterprise under the protection of limited liability. Other well-known legislation on partnership, bills of exchange, cheques and the sale of goods have come to play an important role in our commercial life and our daily life. But throughout, the legislation has, at least when carefully enacted, had to adapt commercial regulation to accommodate the structure of Scots private law.

Not every public figure in London has shown sympathy towards the preservation of Scots law. In one nineteenth century case concerning barony titles from the thirteenth century and salmon fishings, Lord O'Hagan complained about the burden of deciphering Latin charters and conveyances and comparing their texts with other documents and rude translations into the phraseology of the Scottish Parliament: “obscurum per obscurius”.1

Lord Advocate v Lord Lovat (1880) 7 R (HL) 122 at 151.

Lord Maugham was no more sympathetic, referring on one occasion to “those interesting relics of barbarism, tempered by a few importations from Rome, known to the world as Scots law”.2

R E Megarry, Miscellany-at-law: A Diversion for Lawyers and Others (1955) 323; also cited by Evershed LJ, “Equity after fusion: federal or confederate” [1948] JSPTL 171 at 171.

Over time, law reform, including more recently the invaluable work of the Scottish Law Commission, has removed many relics of our law. The action of assythement was a remedy for the family of a deceased or injured person against the person who killed or injured him and designed “for the pacification of their rancour”,3

Balfour, Practicks 16; J Thomson, Delictual Liability, 5th edn (2014) 3.

in other words to discourage blood feuds. It fell into disuse. When in McKendrick v Sinclair4

1972 SLT 110.

siblings attempted to use it to get round the bar on derivative actions which Eisten v North British Railway Company5

(1870) 8 M 980.

had created, Lord Simon of Glaisdale spoke of it as a Brunnhilde awaking “in our uncongenial modern Niebelheim”, a Rip van Winkle, and even as a Sleeping Beauty who could not be kissed back into life. Whether he was right about its desuetude, the remedy received its quietus in section 8 of the Damages (Scotland) Act 1976. Indeed, several Roman importations or at least Latin sounding rules such as the quadriennium utile, marriage per verba de presenti, and marriage per verba de futuro subsequente copula have gone the way of all flesh. Not even cohabitation with habit and repute has survived. They have fallen victim to legal modernisation, whether from Law Commission initiatives or otherwise

But Lord Maugham was wrong. We have not had a few importations from Rome: the clear and coherent civilian structure of our property law, an importation from Rome via France and the Netherlands, remains a feature of our law that links us to most continental legal systems.

Our property law, which distinguished academics from the University of Edinburgh in particular have done so much to clarify in recent years, is at the heart of our commercial law. In the early nineteenth century, George Joseph Bell used insolvency in his Commentaries as a means of explaining our commercial law.6

The full title of Bell's work, first published in 1804, is Commentaries on the municipal and mercantile law of Scotland: considered in relation to the subject of bankruptcy.

The building blocks, on which commercial law has been built, are the law of property and the law of contract

The basic structure of our commercial law, with a clear distinction between the law of property and the law of obligations, is radically different from Common Law systems with their dichotomy between law and equity. For that reason, if for no other, we need our own commercial law. But, of course, the differences do not stop there. Our law of contract is, unsurprisingly, not so radically different from English law; we do not have the doctrine of consideration and its complexities, but in many cases we can derive great assistance from English case law and textbooks, particularly in the rules of contractual interpretation. Nonetheless, the interface of contract law and other areas of law dictates different rules at the margin. Commercial contractual disputes often contain claims based on unjustified enrichment or personal bar. Our law of unjustified enrichment provides some remedies, while equity provides other remedies in English common law. And our law of personal bar and acquiescence, while having similarities in principle to the English law of estoppel, does not cover the same ground. For example, estoppel by convention forms no part of our law, and as a result our rules on the exclusion of pre-contractual negotiations might not be precisely the same as those in English law.7

The Scottish Law Commission pointed out...

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