"The time has come," the Walrus said,
"To talk of many things:
Of shoes-and ships-and sealing-wax
Of cabbages and kings."1
The aftershocks of last year's financial sector implosion continue to reverberate. Policymakers, lawmakers, and regulators coming together under the umbrella of the Group of Twenty (G20)2 seek to create new standards and structures to address weaknesses at the global and national levels so as to prevent further economic dislocations in financial markets around the world.3 They draw on history's lessons from past financial crises to help guide their policy responses.
This Article suggests that another discipline - the law of the sea and its subsequent codification into treaty-based law during the twentieth century-holds important lessons for the development of global financial intermediation activity and its regulation at the international level. The three main lessons are:
1. The path towards codified global consensus is neither linear nor inevitable. In fact, the controversies generated by the law of the sea codification process during the twentieth century suggest that more reliable and pragmatic arrangements based on customary international law are needed in the financial context.
2. Some level of codification and sovereignty sharing are inevitable and necessary when cross-border economic and political activity reaches a critical mass.
3. In particular, credible and durable global standards require real, predictable, and accepted enforcement mechanisms in order for institutional stability that can support growth enhancing cross-border economic activity to evolve.
Absorbing these lessons will help policymakers build a more resilient global structure that can deliver confidence and economic growth - two components that remain missing from today's environment.
The body of law known as the law of the sea spans the centuries and, like its namesake, is vast. This Article does not attempt to describe all aspects of that body of law, nor does it attempt to address all modern political controversies associated with it. Instead, this Article focuses on the evolution from economic need to customary international law to codification in order to draw lessons for today's normative efforts regarding finance and economics at the global level. One key controversy merits immediate attention, however.
During the twentieth century, the law of the sea had been criticized as having a democratic deficit because the customary standards articulated in treaty-based codifications deprived modern and newer nation-states from participating in the standard-setting process.4 Some might suggest that therefore the law of the sea does not provide the best example for modern global normative processes. This Article does not opine on the merits of the democratic deficit debate regarding the law of the sea. This Article instead asserts that the modern global normative process in the financial sector area composed of the G20 and its observers (the international regulatory standard-setters) make irrelevant the democratic deficit argument raised by law of the sea critics because all relevant standard-setters are global in their constituency.5 The Article focuses on the process of developing global international law frameworks and, for this purpose, the law of the sea discipline is both helpful and instructive.
II. SHOES AND SHIPS
The discipline we know today as "public international law" in the non-war context is rooted in economic activity arising from ocean exploration for commercial and state purposes and the need for certainty in the delineation of rights and responsibilities among increasingly strong and centralized "modern" nation-states.6 Hugo Grotius, his intellectual colleagues, and his successors created a conceptual framework allocating rights and responsibilities of sovereigns with overlapping interests and jurisdictions in an atmosphere of heady globalization, intense technological innovation, and intense competition among emerging nation-states whose wealth and power were growing as their global trading activities increased. …