Law & Economics Working Papers
In much of the scholarly literature on international law, there is a tendency to condemn violations of the law and to leave it at that. If all violations of international law were indeed undesirable, this tendency would be unobjectionable. We argue in this paper, however, that a variety of circumstances arise under which violations of international law are desirable from an economic standpoint. The reasons why are much the same as the reasons why non-performance of private contracts is sometimes desirable—the concept of "efficient breach," familiar to modern students of contract law, has direct applicability to international law. As in the case of private contracts, it is important for international law to devise remedial or other mechanisms that encourage compliance where appropriate and facilitate noncompliance where appropriate. To this end, violators ideally should internalize the costs that violations impose on other nations, but should not be "punished" beyond this level. We show that the (limited) international law of remedies, both at a general level and in certain subfields of international law, can be understood to be consistent with this principle. We also consider other mechanisms that may serve to "legalize" efficient deviation from international rules, as well as the possibility that breach of international obligations may facilitate efficient evolution of the underlying substantive law.
Alan O. Sykes & Eric Posner, "Efficient Breach of International Law: Optimal Remedies, “Legalized Noncompliance,” and Related Issues" (John M. Olin Program in Law and Economics Working Paper No. 546, 2011).