Lesson 2 – How is International Law Created?

In the previous lesson we learned that there are four major sources of law. We saw that the power to create law doesn’t just reside with the government. This becomes even clearer in this lesson on how international organizations create law.

Origins of International Law

The origins of international law have generally been attributed to Grotius (Hugo de Groot) and Gentili. Early forms of international law were mainly to regulate the interactions between nations at war.¹⁾ Tom Bingham, “The Rule of Law,” (Penguin UK, Reprint edition, London, 2011): Chapter 2 – Some History, Part 11: War.
“Under the influence of writers such as Gentili (1552-1608) and Grotius (1583-1645) a body of customary international law began to grow up, fed by sources such as the 150 Articles of War signed by Gustavus Adolphus II of Sweden in 1621and deriving its authority from the practice of the nations, regards by them as a matter of obligation.”

Over the years, developments like international trade, economic cooperation, wars and subsequent peace treaties, and many multinational governing bodies have led to what is known as international law. It can be described as follows:

“…the body of rules and principles that determine the rights and duties of states, primarily in respect of their dealings with other states and the citizens of other states, determine what is a state and within what geographical territory they exist.”  ²⁾ Vaughan Lowe, “International Law (Clarendon Law Series),” (Oxford University Press, 1th edition, November 17, 2007): Chapter 1.2, “The Scope and Nature of International Law”

How is International Law created?

No central authority exists to enforce international law. There is no constitution and no world government that creates it. Article 38 of the charter of the International Court of Justice in The Hague defines three main ways of creating international law: ³⁾ “Statute Of The International Court Of Justice,” Charter of the United Nations, accessed on March 31, 2018, http://legal.un.org/a’vl/pdf/ha/sicj/icj_statute_e.pdf

A) International conventions, whether general or particular, establishing rules expressly recognized by the contested states.
B) International custom, as evidence of a general practice accepted as law.
C) The general principles of law recognized by civilized nations.

The first method is straightforward; States sign treaties with one or multiple other states. This creates a body of law that governs their interactions.

However, the second and third methods involve the words “accepted” and “recognized” respectively. This implies that international law is accepted over time due to consensus. When a certain practice has been a custom over time, or once it becomes a general principle of law, it gradually establishes itself as international law.

There are a lot of famous organizations that create international law, such as the United Nations and the European Union. And there are other organizations that focus on specific areas of economic cooperation, including the World Trade Organization and the International Maritime Organization.

Next, there are international conventions that establish universal rules, like the Geneva Convention on the Treatment of Prisoners of War.⁴⁾ United Nations, “III GENEVA CONVENTION RELATIVE TO THE TREATMENT OF PRISONERS OF WAR OF 12 AUGUST 1949,” (Geneva, August 12, 1949), https://www.un.org/en/genocideprevention/documents/atrocity-crimes/Doc.32_GC-III-EN.pdf And finally, there are rulings from International Courts.

Hard Laws vs Soft Laws

A lot of the international organizations, such as the OECD, generally only create rules that are qualified as “soft laws.” Soft laws are rules that do not have any legally binding force, or whose binding force is weaker than the binding force of traditional laws. The latter are often referred to as “hard laws.” ⁵⁾Thysse, W., de Lange, M.A., “Transfer Pricing: Rules and Practice,” (Amazon Digital Services LLC, May 8, 2019): 2.4.1 – Hard vs Soft Laws

In order for soft laws to have effect, States must implement them in domestic laws or treaties to become hard laws. However, as the next section demonstrates, they usually do so without delay.

Why does International Law have influence?

Despite its somewhat opaque origins, international law is very influential. Vaughan Lowe (2007) writes in his book on international law:

“International Law has no legislature. Nor is there a police force, or even a compulsory system of court before which States can be compelled to appear. Nevertheless, most States comply with most of the rule of International Law most of the time.”  ⁶⁾ Vaughan Lowe, “International Law (Clarendon Law Series),” (Oxford University Press, 1th edition, November 17, 2007): Chapter 1,6

…Why is this?

Most international law is based on treaties signed by countries and customs of these countries. They comply with international law because they make the rules to suit themselves. It is of course in their interest to be seen as trustworthy partners. At the same time, it offers tools to control countries that step out of line. ⁷⁾ Vaughan Lowe, “International Law (Clarendon Law Series),” (Oxford University Press, 1th edition, November 17, 2007):
Chapter 1.6, “One powerful reason why States do, and always have, complied with International Law is, therefore, that they make the rules to suit them. International Law constrains errant States, which seek to break away from established patterns of behaviour or to abandon treaty commitments that they have made.”

Moreover, international law often focuses on large global issues considered to big for a single government to tackle, such as large humanitarian crises, illicit trade, or multinational tax avoidance. It offers an important framework for States to cooperate. To summarize: governments take international law very seriously.

It must also be said that multinational organizations provide massive benefits for employees, such as high salaries, freedom from ordinary administrative burdens (such as taxation), and high levels of immunity. It offers real power without that pesky democratic oversight and provides a soft landing after a tumultuous career in national politics.

International Law vs Private Affairs

We saw that international law determines “the rights and duties of states.” We can add that it governs all activities of public authorities that involve a foreign element, including foreign citizens.⁸⁾ Vaughan Lowe, “International Law (Clarendon Law Series),” (Oxford University Press, 1th edition, November 17, 2007): Chapter 1.5,
“International Law governs all activities of states that involve a foreign element: that is to say, all dealings by public authorities with foreign States or foreign citizens or with matters outside the borders of the State.” This implies that international law does apply to the dealings of individuals, but only as far as they involve a State.

However, there are developments in the creation, enforcement and reach of international law―hat are also highly influential on the Crypto-Space―that tell us otherwise. This becomes clear when we look at the actions of organizations such as the Financial Action Task Force on Money Laundering (FATF) and the Organisation for Economic Co-operation and Development (OECD). These organizations form a foundation for a multinational approach to combat money laundering⁹⁾ “What we do,” FATF, accessed on April 3, 2018, http://www.fatf-gafi.org/about/whatwedo/:
“The Financial Action Task Force (FATF) was established in July 1989 by a Group of Seven (G-7) Summit in Paris, initially to examine and develop measures to combat money laundering.” and tax evasion.¹⁰⁾ “Standard for Automatic Exchange of Financial Account Information in Tax Matters, Second Edition,” OECD, accessed on April 3, 2018, https://www.oecd.org/tax/exchange-of-tax-information/standard-for-automatic-exchange-of-financial-account-information-in-tax-matters-second-edition-9789264267992-en.htm
“The Standard draws extensively on earlier work of the OECD in the area of automatic exchange of information. It incorporates progress made within the European Union, as well as global anti-money laundering standards (editor: FATF), with the intergovernmental implementation of the Foreign Account Tax Compliance Act (FATCA) having acted as a catalyst for the move towards automatic exchange of information in a multilateral context.”

These policies are better known as KYC (Know Your Customer) and AML (Anti Money Laundering) legislation.

As discussed, these organizations are not considered States and don’t have the power to enforce law. However, their policies are implemented around the world almost universally. They do this not by creating law, but by creating “recommendations.” Countries can choose to accept these recommendations by incorporating them in their national legislation, or ignore them.

In practice, they have no choice but to accept. If not, they could end up on a “gray” or “black” list of “non-cooperative jurisdictions” and risk getting cut off from the global financial system.¹¹⁾ “High-risk and other monitored jurisdictions,” FATF, accessed April 3, 2018, http://www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/

If you have ever have gone through a privacy sensitive process to access a bank or crypto-currency exchange, know that these standards are created by people you never elected; your local politicians are overruled here.

A new International Legal System?

As a result, multinational organizations now regulate (and in many cases restrict) the interaction between individuals and private organizations.

One could argue that these developments alter the basic concept of international law because they are neither based on treaties, nor acceptance―they are enforced in a top-down fashion. Moreover, they expand the scope of international law by determining the rights and duties of private parties.

Is this a power grab?

There is no denying that international laws are highly influential. Those creating and administering it are becoming more powerful every day. In addition, it remains an abstract and technocratic realm of which the regular man has no understanding and where he holds no power. Elections don’t matter here.

More and more people are becoming aware of this process and are concerned by it. And these are not just the regular anarchists and anti-globalists. The political party that won the last election in the Netherlands has this issue high on the agenda.¹²⁾ Thierry Baudet, the leader of the political party called Forum for Democracy often argues against the influence of international law. He even wrote a book called: “The Attack on the Nation State.” In March 2019 his party won the Provincial Elections

And even US President Donald Trump has been backing the US out of further treaties and canceling existing ones―something he has been heavily criticized for.¹³⁾ Donald Trump has for example withdrawn from the Paris climate agreement, and various nuclear agreements. When a country doesn’t implement international laws, they don’t become hard laws as explained above.

Never let a crisis go to waste…

The areas in which international law is most present are sensitive global issues, such as international taxation, climate change, and the global economy. There is nothing wrong with having multinational cooperation to tackle crucial issues. But we need to stay on guard.

Once you understand this process you can see it everywhere. Whenever a new “crisis” hits, a task force is created and soon an avalanche of new legislation is issued. Next, national governments eagerly sign away their sovereignty.

And then the media stirs up a new crisis and the process starts again.

…Rinse, repeat…

International Law = Decentralized

One could argue that international law is already decentralized. It requires no central authority to be effective. This also means that it, for the most part, is followed voluntarily. If such a system can exist on such a large scale, it surely can exist on a smaller one too.

Most importantly, the creation of contemporary international law already happens in large part outside the (direct) control of national governments. This leads to an important conclusion:

There is no need for the involvement of national governments to create law. Once a piece of legislation or a practice becomes accepted and recognized, it eventually becomes part of international law, one of the highest and most influential forms of law in existence.

Given that an unelected group can create worldwide-accepted regulations based on their interpretation of reality, why can’t the crypto-community create its own laws?

This rhetorical question is further explored in our next lesson…

This article is part of a series of lessons on Decentralized Law (view summary).

Cite this article

Thysse W., “Lesson 2 – How is International Law Created?” (Decentralized Law Lessons, December 28, 2019), available on: https://decentralizedlegalsystem.com/law/international-law/

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