Taking International Soft Law Seriously: Its Implications for Global Convergence in Corporate Governance

Abstract

The normative power of international soft law has constantly increased through the activities of various international organizations and the reliance that state practice places on the new form of international legal prescription. The recent unprecedented pace of such development has been seen in such financially - troubled East Asian countries as Korea. This article describes the changes and developments within the Korean economy and industries since the end of 1997 with particular emphasis on corporate governance and regulation of financial markets, directly and indirectly mandated by various international soft law rules. This article suggests that the national law principles developed in capital exporting (and providing) countries will serve as the predominant model for the convergence of national institutions and regulations, particularly corporate governance institutions and regulation of financial markets, which inevitably supports the convergence-from-competition hypothesis. The Korean case also clearly shows how a particular group of international soft law rules can fundamentally change a nations economic system. This article argues that the Korean case shows the legitimacy of the normative power of international soft laws in its ability to shape and fulfill the regulatory needs of a globalizing market.