Unfortunately law didn't lagged behind, and it wasn't the Germans fault. The laws were as the great powers wanted them to be.
For example, according to the Hague Rules of Air Warfare (1923 - at that time Germany's Air Force didn't even exist):
bombardment is legitimate only when directed exclusively at the following objectives: military forces; military works; military establishments or depots; factories constituting important and well-known centers engaged in the manufacture of arms, ammunition, or distinctively military supplies; lines of communication or transportation used for military purposes.
The bombardment of cities, towns, villages, dwellings, or buildings not in the immediate neighborhood of the operations of land forces is prohibited. In cases where the objectives specified [...] are so situated, that they cannot be bombarded without the indiscriminate bombardment of the civilian population, the aircraft must abstain from bombardment.
But the 1923 Rules weren't adopted, and nothing was done to restrain aerial bombing till 1939.
In 1939 Roosevelt's initiative forbidding bombing of towns/cities was initially accepted by Germany and the Allies, but later independently rejected by both sides because it was seen burdensome and harmful to their war efforts.