The Statute of the International Court of Justice identifies three primary sources of public international law: (1) international conventions; (2) international custom; and (3) general principles of law. In this chapter, we discuss the emergence and evolution of the second source, customary law, from the perspective of law and economics. Let us begin by looking at what the term customary international law (CIL) means. The term ‘custom’ in a legal context describes normative practices that develop independently of the law in a decentralized manner, but which gradually take on an obligatory (legal) character. Customs become recognized as ‘customary law’ when they acquire binding force. In its most general form then, customary law is characterized by (a) decentralized formation, and (b) centralized enforcement. Customary law can be found both within domestic legal systems, where it is becoming increasingly rare, and in international law, where it plays a major role. The reasons why customary law should be especially important in an international context are complex and manifold, relating principally to the historical absence of a centralized law-making body and problems in effective adjudication and enforcement prior to the middle of the twentieth century. Without digressing too deeply into the philosophical and historical reasons why international law failed to develop centralized law-making mechanisms, it suffices to observe that the absence of ‘global legislation’ left a law-making vacuum in the international arena – a void which customary law filled.
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