Category Archives: Legal History

The Great War and Dutch Contract Law

Throughout the Great War, the Kingdom of the Netherlands tried frantically to maintain a position of armed neutrality between the Central Powers and the Entente Forces. Although it more or less succeeded in doing so, the war did leave distinct marks on Dutch society and economy. These marks caused both sudden and more gradual legal change. Overall, the impact of the Great War on Dutch law and regulation was enduring and lasting, even though this was not always appreciated at the time.

I recently published an article on the influence of the Great War on these sudden and more gradual changes of Dutch private law (“The Great War and Dutch Contract law – Resistance, Responsiveness and Neutrality” (2014) 2(2) Comparative Legal History 303–324). This blog entry briefly summarizes some of findings.

Sudden changes and gradual shifts

Never since the introduction of the Dutch Civil Code in 1838 had the Netherlands been exposed to such a disruptive international conflict as the Great War. Therefore, the war presented the first systemic test of Civil Code doctrines such as impossibility and force majeure. As far as these doctrines are concerned, some have argued that the Great War was no different from other, less disruptive economic events. However, on closer inspection one may find that the application of private law doctrines under war conditions seemed to reflect the Dutch neutrality doctrine. The courts strictly construed and enforced contracts, mostly rejected defences involving ‘impossibility’ and vis maior, and often held that contracting parties had knowingly assumed the risks associated with contracting during a war. Moreover, the Great War marked the end of nineteenth-century laissez-faire notions in regulatory policies, which in turn caused a gradual shift in balance between public law and freedom of contract. In hindsight, the War can also be regarded as the turning point in Dutch doctrinal thinking on the respective roles of and the relationship between force majeure, unforeseen circumstances and good faith. Another way of looking at judicial application of contract law during the Great War is to consider this as an extension of the Dutch neutrality doctrine. Both viewpoints are explored in  “The Great War and Dutch Contract law – Resistance, Responsiveness and Neutrality“.

The article discusses the impact of the war on Dutch society and economy and it then goes on to explain the peculiar role that its private law system played in keeping Dutch international trade afloat. The discussion serves to sketch the background against which we should understand the development in Dutch case law and academic legal debate of the key contract law doctrines of impossibility and force majeure. Then, the article turns to the influence of the Great War on the gradual development of the good faith principle and a proper doctrine of unforeseen circumstances in Dutch law. In the concluding section, Dutch contract law is considered in terms of its contribution to the wider Dutch neutrality doctrine during the Great War.

Hard on all parties, irrespective of nationality

The Great War was the first intensive test of the contract law framework of the 1838 Civil Code. This test showed that the conceptual structure of impossibility and vis maior was flawed: the judicial application of these concepts brought to light the fact that impossibility is not identical to vis maior, nor is it a necessary condition for vis maior. Thus, the courts felt compelled to bend these two statutory concepts to evaluate subjective impossibility as a potential excuse for non-performance. The war conditions also showed that the courts were extremely unwilling to let debtors off the hook easily, that the vis maior defence was more often rejected than sustained, and that the Dutch Supreme Court long resisted attempts to jeopardise the ‘neutrality of private law’. In this sense, the Dutch courts were predictable and firm enforcers of promises. Interestingly enough, they were also trying, or so it appears, to emulate the Dutch neutrality doctrine through their contract law decisions. Dutch courts were hard on all sellers, debtors and whoever defaulted on promises, irrespective of nationality.

Influence on courts through legal scholarship?

In terms of the marks left by the Great War on Dutch legal scholarship, two influential post-war monographs stand out. Wery’s 1919 book on vis maior benefited from pre-war work by others but it also offered an outline for the future development of ‘imputable and non-imputable non-performance’ as an alternative model for dealing with vis maior. As such, it signified a move away from the malleable concept of ‘impossibility’ towards a more transparent approach of assigning responsibility. The 1923 monograph by Levenbach on the disruption of the contractual synallagma fuelled the debate on unforeseen circumstances as a separate doctrine of contract law. Although the Supreme Court was late in acknowledging good faith as the engine for the introduction of such an innovation in contract law, it was clear after the Great War that several lower courts and academics were convinced that this was indeed the right path. It was not until well after the Second World War that the Supreme Court proved them right.

References

See also:

  • J.W. Oosterhuis, Unexpected Circumstances Arising from World War I and its Aftermath: ‘Open’ Versus ‘Closed’ Legal Systems, Erasmus Law Review, Vol. 7, No. 2, 2014. Available at SSRN: http://ssrn.com/abstract=2520398
  • C. Jansen, De Impact van de Eerste Wereldoorlog op het Nederlandse
    privaatrecht, Nederlands Juristenblad 2014, p. 1491 e.v.

The Great War and its impact on law

What did the Great War do for the law?

This year marks the centenary of the outbreak of the Great War, the First World War. The remembrance events, museum exhibitions, TV-programs and numerous publications rightly draw attention to the Great War. Obviously, in the past century much scholarly work has been dedicated to the Great War, its causes and consequences and its lasting impact on individuals, societies, economies and cultures. However, considerably less material is available on what effects – if any – the Great War had on the development of law, legal thinking and jurisprudence. This summer, I had the privilege of editing the most recent issue of Erasmus Law Review, which just came out. The issue is dedicated to that particular significance of the Great War. With this blog entry, which was derived from my introduction to the Erasmus Law Review WW1 issue, I briefly introduce the topic.

As early as 1852, the great Rudolph von Jhering posited:

(…) war can exert a wholesome influence on legal development is less a paradox than it appears. A well-timed war can do more to encourage development in few years than centuries of peaceful existence”.[1]

Did the Great War indeed have this ‘wholesome influence’ on legal developments or was the War a mere ripple or perhaps a prelude to bigger and worse things to come? Arguably, the War had been a long time coming. The conditions set by 19th century imperialist expansionism and the concomitant arms race, together with the sparks in the powder keg caused by the least democratic nations in Europe (the German, Austrian-Hungarian and Russian monarchies) started an unparalleled inferno that was to rage over Europe for four long bloody years. The War was of an unseen scale. It was global in the sense that it spread to colonies and dominions in Asia and Africa. It was total in the sense that combat involved land, sea and air. By the time the Armistice was agreed on November 11, 1918, some eight million people had lost their lives. Although the emphasis in the Western European narrative usually lies on the sickening waste of human life on Belgian and French soil, not many know that it was actually the Serbians who suffered the most casualties relative to the size of their population.

The Great War left Europe destroyed and uprooted by combat, migration and border corrections. Moreover, it left the belligerent countries – both victors and vanquished – cash-strapped and in debt for decades. The 440 articles of the 1919 Versailles Treaty in all their detail compelled the Central Powers to accept sole responsibility for starting the Great War, to endure border corrections, to disarm and to make debilitating large payments to the victors. Thus, the peace terms brought about a state of economic and political instability in Europe which, in hindsight, may well be considered to be root cause of the Second World War. Arguably, one enduring political lesson that the Great War may hold is that conquest without a realistic perspective of rehabilitation of the vanquished not only hampers reconciliation of the peoples concerned but may also impede economic growth of all economies concerned. As early as the 1920s, Konrad Adenauer, who was later to become the founding father of the West-German Republic, argued that an organic intertwining the French, Belgian and German economies would ensure lasting and sustainable peace in Europe. The future lay in a United Stated of Europe.

The Great War was different from previous wars – through its scale and intensity it reached and affected just about every corner of European society. The outbreak of the War caused the Western international trade and payment systems to come to a grinding halt. In the first weeks currencies faltered, coinage was hoarded, stocks plummeted and stock trade was quickly suspended. The legislative response to all this was swift but makeshift. Piecemeal moratoria were hastily introduced to create breathing space for debtors who, due to the collapse of international and national trade and banking found themselves in unexpected liquidity problems and were unable to pay their debts as a result. To counter the unbalancing effects of coinage hoarding and bank runs, either formal restrictions on cash withdrawals or informal dissuasion policies were applied. Later, the belligerent nations experienced inflation and dramatic exchange rate fluctuations, necessitating some countries to suspend the gold standard.

Apart from these emergency responses, the Great War also marked the beginning of the end of the long 19th century for European economies and societies. The Victorian laissez-faire approach to society and markets, in which freedom of trade and contract was deemed normatively superior to protection of labourers, tenants, the poor and weaker parties generally, was already eroding fast in the late 19th century and early 20th century. Universal suffrage was in the air; labour rights movement was firmly established and the plight of the lower classes had more political relevance than a hundred years earlier. The Great War did not cause these developments but it did much to accelerate them.

The experience of a drawn-out war of this scale and intensity was new. It necessitated rethinking of the economic framework of state and society both in terms of the regulatory architecture of markets – ranging from foodstuffs to financial products, from fuel to transport services – and the budgetary choices and leeway of nation states. The Great War prompted the introduction of emergency interventionist legislation most parts of socio-economic life. Thus, it introduced restrictions on freedom of contract in the areas of labour, rent and housing, food production, transport. Typical war provisions such as trading restrictions were introduced and increasingly tightened. Moreover, market interventions ranging from price capping to property requisitioning, forced purchase and compulsory (re)distribution of scarce resources were introduced on an unparalleled scale. All this marked a permanent change of the role of the state; when the guns were finally silenced, the state had become the regulator of economic life and the distributor of wealth. Its role would never change back to that which it had assumed during the long 19th century.

The Great War had a huge impact on state finances. Not merely the cost of combat itself but also the enduring expense of war pensions caused a lasting rise in government expenditure of the combatant nations. Moreover, the Great War necessitated governments to redesign their legislative frameworks for securing income streams. Initially, financing the war effort was a far bigger problem for those countries such as France which did not have direct taxation instruments easily adjustable to generate revenues to alleviate sovereign debt and Germany which did have an imperial army but lacked the power of direct federal (income) taxation. Therefore, in comparison to the UK, France and Germany had to rely more on other instruments of financing such as government bonds and money creation than on taxation. Traders who profiteered from war conditions were levied a war profits tax.

Naturally, the Great War also signalled a next stage in the development of international law and its theoretical underpinnings. As a direct outcome of the War, the Versailles Treaty created the League of Nations for the promotion of global peace and stability.

The contributions

From the previous, it is clear that the Great War and all it entailed had a lasting impact on societies, markets, the political landscape in European countries and on the trajectory of international law. As a consequence, the legal doctrines and conditions somehow changed as well. In the contributions to this issue of Erasmus Law Review, four different viewpoints of this change are presented: colonial constitutional law and governance; contract law; international relations and public international law; and finally international criminal law. Obviously, these four themes do not cover the entirety of the breadth of subjects that could be addressed in this regard. They do, however, exemplify the influence of the Great War on law, legal thinking and jurisprudence.

Erasmus Law Review

The first theme concerns colonial constitutional law and governance. In his contribution titled “The First World War and the Constitutional Law for the Netherlands Indies”, Nick Efthymiou asks what the contribution of the Great War was to two major events in the Netherlands Indies constitutional governance structure.The second theme concerns contract law; it explores how courts in Europe grappled with the question how contract law doctrines should respond to the economic chaos and upheaval caused by the Great War. Janwillem Oosterhuis investigates “Unexpected Circumstances Arising from Word War I and Its Aftermath: ‘Open’ Versus ‘Closed’ Legal Systems”. The third theme centres around the development of public international law thinking in the U.S.A. before and after the Great War. Ignacio de la Rasilla del Moral analyses ‘The Ambivalent Shadow of the Pre-Wilsonian Rise of International Law’. The fourth theme is concerned with what we would now call international criminal law. Co-authors Paul Mevis and Jan Reijntjes deal with the intriguing ‘what if’ question raised by article 227 of the Versailles Treaty.

Fitting commemoration

In conclusion, this issue of Erasmus Law Review paints a picture of the legacy of the Great War for law, legal thinking and jurisprudence. I hope the issue is a fitting commemoration of one of the greatest atrocities suffered by mankind.

The work I did on this issue was my final contribution as editor of this fine legal periodical. Together with the Editor in Chief, professor Ellen Hey, I was involved in the editorial board of Erasmus Law Review from its inception. As said, editing the Great War issue was my final contribution and I look back on a pleasurable time with the entire team. I especially thank Vera Willems and her predecessors for the management of the journal and Ellen Hey for her professional attitude and cooperative collegiality.

 

Reference

[1] „Daß der Krieg auf die Entwicklung des Rechts und Staats den heilsamsten Einfluß ausüben kann, ist weniger paradox, als es klingt. Ein Krieg zur rechten Zeit kann diese Entwicklung in wenig Jahren mehr fördern, als Jahrhunderte friedlicher Existenz”. See R von Jhering, Geist des römischen Rechts auf den verschiedenen Stufen seiner Entwicklung. Erster Theil (Verlag von Breitkopf und Härtel, Leipzig 1852) 239.