Inefficient customs in international law.

• Author: Kontorovich, Eugene

ABSTRACT

This Article explores whether and when rules of customary international law (CIL) can be expected to be efficient. Customary rules are often regarded as desirable because in certain circumstances, they promote the welfare of the group in which they arise. Unless these circumstances apply among states, the efficiency arguments for the legalization of customary norms do not apply.

The Article takes as its central observation the divergent treatment of custom in domestic and international law. In international law, if a customary behavior of states can be identified, it is automatically elevated to the status of legal obligation without any independent examination of whether the custom is a good one. International custom is customary international law. This reification of custom is in marked contrast to the treatment of custom in private law. No one doubts that customary behaviors exist in various societal subgroups, but tort law does not assume that customs are normatively desirable, and does not automatically transform customs into legally binding obligations. Thus tort law does not take custom to dictate the standard of care; the fact-finder must independently determine whether the practice is efficient, though its customary status has some positive evidentiary value.

Law and economics scholars have varied views about whether custom is presumptively efficient in the private law context. The most optimistic view holds that private custom will generally be welfare enhancing, and thus courts should give legal recognition to such practices. Yet even the optimistic view holds that efficient custom would only arise in certain circumstances: when there are thickly repeated dealings between members of an insular, homogenous group whose members play reciprocal roles.

The Article takes these earmarks of efficient custom and examines whether they apply to international custom. It finds that much of international custom should not be expected to be efficient even in the most optimistic view of custom. Some areas of CIL, like diplomatic privileges, might satisfy efficient custom criteria. This suggests that, contrary to current practice, CIL should not be treated as one undifferentiated phenomenon. Rather, the standards for establishing a CIL norm should vary across different substantive contexts and different groups of states.

TABLE OF CONTENTS INTRODUCTION I. THE ROLE OF CUSTOM IN INTERNATIONAL AND PRIVATE LAW A. International Law 1. Defining CIL 2. Universal Scope 3. Special Custom B. Private Law 1. Tort 2. Property 3. Contract II. THE POTENTIAL EFFICIENCY OF CUSTOMS A. Custom Optimism B. Custom Pessimism C. Factors Promoting Efficient Custom 1. Group Size 2. Repeat Transactions 3. Homogeneity 4. Reciprocal Roles 5. Insiders vs. Outsiders III. ASSESSING THE EFFICIENCY OF INTERNATIONAL CUSTOMS A. Efficient Custom Literature B. A World Community? C. Group Size D. Repeat Transactions E. Homogeneity F. Reciprocal Roles G. Problems of Custom Formation H. The Problem of Codified Custom I. Summary IV. IMPLICATIONS FOR CIL DOCTRINE A. What Alternative to CIL? 1. No Custom 2. Treaties 3. Adjudication 4. Special Custom B. Persistent Objectors C. New States D. Instant Custom, Soft Law, and State Practice E. NGOs V. A NEW APPROACH TO LEGALIZING STATE PRACTICE A. Structural Adjudication B. Diplomatic Relations C. War D. Human Rights CONCLUSION INTRODUCTION

Custom is one of the two sources of international law and, in some areas, the only source of international norms. (1) Thus whether customary international law (CIL) improves the welfare of nations is a significant question. However, customs are not designed to improve welfare or for any other normative goal. They are not designed at all, but rather emerge from a system of interactions within a group. This Article shows that there is little reason to expect that international customs will improve states' joint welfare.

Although most legal systems operate against a backdrop of custom, they differ in the deference they show to it. Some legal systems give no deference to customary norms or even seek to undermine them. The common law takes a middle course, looking to custom but also often overriding it. International law lies at the other extreme. It reifies custom. International law (IL) automatically transforms customary norms into binding legal obligations. (2)

International law is regarded as a progressive, liberalizing force. (3) Custom is generally seen as conservative, even reactionary. The champions of custom as a source of law are Burke and Hayek, not Rousseau and Dworkin. This makes IL's unparalleled reliance on custom surprising. Customary norms develop slowly, through a mix of tradition and incremental modification, through the uncoordinated actions of numerous private parties. (4) Custom is a form of privatized lawmaking, whereby the regulated actors gradually develop their own rules of conduct rather than having them legislated from above.

The extraordinary embrace of custom by international law is all the more striking in contrast to the more cautious approach taken by the common law, particularly tort law. The common law does not assume that customs are normatively desirable, and thus does not automatically bestow on them the status of binding law. (5) In tort cases, for example, customary practice does not define the level of legal obligation; it is at best persuasive evidence which the fact-finder can consider along with other evidence. (6)

This Article uses the markedly different treatment of customary norms in international and common law as the point of departure for examining when one can expect the customary practices of states to develop into welfare-enhancing norms. As will be seen, customary practices are only likely to be efficient under conditions that do not generally obtain or obtain only weakly in the international setting. (7) This calls into doubt one of the central maxims of IL--that customary international norms should be reflexively elevated to the status of customary international law. (8)

International law scholars generally assume that customary norms are efficient. (9) The contrasting status of custom in international and domestic law has scarcely been noted (10) and its implications for customary international law have gone unexplored. This is a particularly striking gap in the international law literature given that custom plays a much larger role in IL than in private law. CIL is like heaven: some people believe it exists, others do not, and some take the middle view of seeing it as a metaphor. But no one doubts that it is a good thing. Yet the literature has not sought to justify this assumption, and thus leaves open the question of why the customary practice of some or even most states should be law for all states. (11)

In private law, on the other hand, the relationship between law and customary norms has received significant attention in recent years. (12) The literature has recognized that customs should not be given the force of law unless they would tend towards efficiency. Because customary practices, which develop over time and with no particular author, are by definition not designed to improve efficiency, the theory must explain why the process of their formation would result in efficient norms. (13)

There is no general assumption that the customary practices are efficient. However, the scholarship on custom points to several conditions that support the emergence of efficient customary norms. The group in which the norm emerges cannot be too large. (14) Its members should have a significant degree of homogeneity and interact frequently. (15) They should be known to each other. The participants in the formation of the custom should over time find themselves on both sides of the emerging norm; (16) for example, each should act as both buyer and seller, as both polluter and pollutee. The paradigmatic incubator for efficient customs is a geographically circumscribed ethnic or trade group, such as the cattle ranchers of Shasta County, California. (17) Finally, even when an efficient norm evolves within a group, it may not be efficient as applied to outsiders with whom the group interacts. To be sure, not all of these factors need to coincide for an efficient norm to develop, nor is it clear to what degree they must be present. This Article will explore to what extent the factors that promote efficient custom obtain among the nations in the world.

A few words should be said about this Article's relation to the literature on CIL. The basic observation that international customs are akin to social norms in the decentralized manner of their creation and enforcement is not novel. (18) The attraction of social norms literature to IL scholars is obvious. International law's central weakness is a lack of centralized enforcement--there is no power above states. Social norms literature suggests the possibility of a robust normative system enforced by the parties themselves, through decentralized mechanisms such as reputation and internalization. (19) However, most international law scholarship has ignored the important differences between the contexts in which social norms and CIL develop. (20)

Goldsmith and Posner have drawn on international relations and game theory to argue that CIL has no force in itself. (21) What international lawyers regard as binding customary norms are merely the predictable behavioral regularities of pairs of self-interested states. (22) It is the incentives faced by states, rather than exogenous norms, that guide their behavior. As a result, states' behaviors will change when incentives change. (23) In this model, the behavioral regularities of each pair of interacting states are independent of each other, and thus do not combine to form a general custom. In response to Goldsmith and Posner's critique, several scholars have themselves turned to game theory to show that genuine multilateral...