[Yanying Li is a Ph.D researcher on a legal framework for State insolvency at Leiden University, the Netherlands.]
Following Julian’s
post of Argentina’s attempt to sue the United States in the International Court of Justice, I write to share with you the latest (exciting) development in the world of sovereign debt restructuring!
On September 9, 2014, the United Nations General Assembly adopted a resolution entitled “Towards the establishment of a multilateral legal framework for sovereign debt restructuring processes” (
document A/68/L.57/Rev.1), with 124 votes in favour, 11 votes against (including the United States) and 41 abstentions. The draft resolution was prepared by Bolivia on behalf of the Group of 77 and China. The last two paragraphs of the resolution provide as follows:
5. Decides to elaborate and adopt through a process of intergovernmental negotiations, as a matter of priority during its sixty-ninth session, a multilateral legal framework for sovereign debt restructuring processes with a view, inter alia, to increasing the efficiency, stability and predictability of the international financial system and achieving sustained, inclusive and equitable economic growth and sustainable development, in accordance with national circumstances and priorities;
6. Also decides to define the modalities for the intergovernmental negotiations and the adoption of the text of the multilateral legal framework at the main part of its sixty-ninth session, before the end of 2014.
According to the General Assembly’s
press release, the U.S. delegate stressed at the meeting “that she could not support a statutory mechanism for sovereign debt restructuring as such a mechanism was likely to create economic uncertainty.” Moreover, she expressed the view that “[i]n the past, market-oriented approaches had been preferred and work was ongoing in the International Monetary Fund (IMF) and elsewhere.” In response to that, the Minister for Foreign Affairs of Argentina stated that “[s]overeign debt held development back and the establishment of a better system could improve global economic security.” The Minister continued that “[t]he clear majority agreed it was time to establish a legal framework for restructuring that respected creditors while allowing debtors to emerge from debt safely. The profits currently made by vulture funds were scandalous and were funnelled into campaigning and lobbying to prevent changes to the situation.”
Needless to say, this is a big step forward in terms of the development of international law on sovereign debt restructuring.
