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International trade in the olden days was often marked with conflicts, disputes or even violence that threatened sprouting of wars between contracting nations. Thus, the lex mercatoria or law merchant came into being to govern international trade, all international merchants and especially monopolistic chartered companies such as the East India Company, South Sea Company and the Hudson Bay Company which needed to be reined over to protect small-scale merchants . Suddenly, international commercial arbitration governed by lex mercatoria was utilised to settle international trade disputes. Here, an aritrator applied the usages and customs of international trade and the “rules of law which are common to all or most of the states engaged in international trade” . But despite this, the problem of diversity of sales laws in some 200 trading countries, forum shopping by nations in dispute, no level playing field, high transaction costs demanded that conflict rules of international law be applied to avoid rising incidents of disputes.
As international trade metamorphosed into a highly complex trade deals that involved tariffs and non-tariff barriers, dumping of goods, trade in services, trade in intellectual property, patents, trademarks, copyright rights etc., institutions designed to supervise, police and liberalise international trade as well as negotiate and implement trade agreements, had to be established. Moreover, as authors Trebilcock and Howse pointed out, there was an imperative need to regulate international trade because a favourable balance of trade had to be perpetually maintained and this meant formulating policies that encouraged aggressive exportation while at the same time restricted importation. ...