International organizations and the development of international law

• Author: Sean Hagan
• Position: Visiting Professor of Law, Georgetown University Law Center, former General Counsel, International Monetary Fund
• Pages: 863-894

ARTICLES

INTERNATIONAL ORGANIZATIONS AND THE

DEVELOPMENT OF INTERNATIONAL LAW

SEAN HAGAN*

ABSTRACT

This Article examines the contribution that international organizations have

made in the development of international law in two distinct areas: f‌irst, through

the exercise of the “enabling authority” that is provided to these organizations under

the relevant treaty; second, through the development of soft law in the regulation of

domestic f‌inancial institutions and markets. With respect to the exercise of enabling

authority, a comparative analysis of the United Nations, the International Monetary

Fund and the Organization for Economic Cooperation and Development reveals

how the charters of these institutions have enabled them to specify the scope of mem-

bers’ obligations in a dynamic manner; i.e., in a manner that gives them the f‌lexibil-

ity to take into account ongoing developments that are relevant to the mandate of

these institutions. With respect to the development of soft law, a number of interna-

tional organizations have taken the lead in designing the international best practices

and standards that make up the soft law system in the area of domestic regulation.

Moreover, by assessing member countries against these standards, they have also

played a critical role in the “enforcement” of these standards and practices.

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 864

II. THE EXERCISE OF ENABLING AUTHORITY 865

A. The United Nations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 868

B. The International Monetary Fund . . . . . . . . . . . . . . . . . . . 872

1. Exchange Rate Policies . . . . . . . . . . . . . . . . . . . . . 873

2. Provision of Information . . . . . . . . . . . . . . . . . . . . 875

3. Approval of Exchange Restrictions . . . . . . . . . . . . 876

C. The OECD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 878

D. Managing the Overlap . . . . . . . . . . . . . . . . . . . . . . . . . . . 881

III. INTERNATIONAL ORGANIZATIONS AND THE DEVELOPMENT OF SOFT

LAW 883

A. The Initial Catalyst: The Asian Financial Crisis . . . . . . . . . 884

B. The Soft Law System under Stress: The Great Financial Crisis 888

IV. CONCLUDING OBSERVATIONS 891

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* Sean Hagan, Visiting Professor of Law, Georgetown University Law Center, former General

Counsel, International Monetary Fund. V

C 2021, Sean Hagan.

863

I. INTRODUCTION

The recent symposium organized by the Georgetown Journal of

International Law entitled “The Evolution of International Organizations

and Cooperation” (“Symposium Program”) was a timely one.

1

The Symposium took place virtually on April 15-16, 2021. Symposium, The Evolving Role of

International Organizations and Cooperation, GEO. J. INT’L L. (2021), http://www.gjil.org [hereinafter

Symposium Program].

The pan-

demic has dramatically revealed the extent to which the problems we

confront, being global, require global solutions. Yet in that regard, the

international community seems to be confronted with a paradox: on the

one hand, it is evident that more—not less—cooperation is needed on a

global level; on the other hand, over the past several years, we have wit-

nessed a period of resurgent nationalism, where global cooperation,

although increasingly urgent, is increasingly unpopular.

Why? While globalization has generated signif‌icant welfare gains, it

has also created economic dislocation. In advanced economies, there is

the view that this dislocation has been exacerbated by a number of the

rules—or at least the application of these rules—that underpin the

international system. To the extent that international organizations

generate these rules and oversee their implementation, they are seen as

part of the problem—not part of the solution.

2

An article recently written by the former U.S. Trade Representative provides a list of U.S.

concerns with the WTO and the multilateral trading system that it oversees. See Robert E.

Lighthizer, How to Set World Trade Straight, WALL ST. J. (Aug. 20, 2020), https://www.wsj.com/

articles/how-to-set-world-trade-straight-11597966341.

For developing coun-

tries, there is a range of complaints. Among them is the concern that

their own interests are not adequately taken into account in the governance

of the institutions that manage the system, which they still feel is dominated

by advanced countries—whether it be at the World Bank, the International

Monetary Fund, or the Security Council of the United Nations.

3

For example, the April 5 Communique´ of the Group of 24 (made up of 24 developing

countries) calls for the implementation of long-awaited governance reforms within the IMF that

would increase the quota share of emerging markets and developing countries while protecting

the shares of the poorest countries. See Intergovernmental Group of Twenty-Four on International

Monetary Affairs and Development, IMF (Apr. 5, 2021), https://www.imf.org/en/News/Articles/

2021/04/05/g24-communique-april-5-2021. With respect to the reform of the U.N. Security

Council, see Meetings Coverage, General Assembly, Security Council Must Ref‌lect Twenty-First

Century Realities, Delegates Tell General Assembly, with Many Calling for Urgent Expansion of

Permanent Seats (Nov. 16, 2020), https://www.un.org/press/en/2020/ga12288.doc.htm.

So while the international community needs more—not less—cooperation,

it is also clear that both the substantive rules and governance arrangements

that underpin the existing system are in need of reform. Appropriately, the

1.

2.

3.

GEORGETOWN JOURNAL OF INTERNATIONAL LAW

864 [Vol. 52

agenda of the Symposium Program was dedicated to a review of the reform

priorities of the various international organizations, as well as the steps that

individual countries, including the United States, would need to take to ensure

that this agenda is realized. Importantly, the discussion also recognized the

need for multilateral organizations to accommodate and support the trend

towards regional integration.

4

This Article does not seek to outline a forward-looking reform agenda

that would address these important policy issues. Rather, it provides a

retrospective on certain aspects of the legal framework that supports the

existing global architecture. Specif‌ically, it analyzes the contribution that

international organizations have made to the development of interna-

tional law, with a focus on two very different modalities. The f‌irst is the

adoption of decisions with legally binding effect pursuant to the “ena-

bling authority” that is given to the international organization under the

relevant treaty. The second involves the promotion of “soft law” by a

number of these organizations; namely, the promotion of standards and

best practices (primarily in the area of domestic f‌inancial regulation)

that countries agree—pursuant to a nonbinding political commitment—

to adopt as a matter of national law.

The premise of this Article is that a retrospective with respect to these

legal issues is relevant to the forward-looking policy agenda. As coun-

tries debate the reform of the substantive rules that have underpinned

cooperation over the past decades, it is important that consideration

also be given as to how these rules are formulated. In that context, to

what extent does experience to date on the use of enabling authority

and soft law provide guidance as to the optimum way in which we secure

cooperation going forward?

II. THE EXERCISE OF ENABLING AUTHORITY

A central area of inquiry for any student of public international law is

the identif‌ication of the sources of such law. The traditional starting

point of this inquiry is, of course, Article 38 of the Charter of the

International Court of Justice (“ICJ”), the principle judicial organ of

the United Nations and the leading tribunal available for the settle-

ment of disputes among states.

5

Article 38 of the ICJ Charter sets forth

4. See Symposium Program, supra note 1.

5. The International Court of Justice was established pursuant to Chapter XIV of the United

Nations Charter. Although it is available to States as a means of resolving disputes among them,

States must consent to the Court’s jurisdiction. For an overview of the International Court of

Justice, see Hugh Thirlway, The International Court of Justice, in INTERNATIONAL LAW 573––600

(Malcolm Evans ed., 2018).

INTERNATIONAL ORGANIZATIONS

2021] 865