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Sovereign Debt Restructuring: A Model-Law Approach

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  • Schwarcz Steven L.

    (The Stanley A. Star Professor of Law and Business, Duke University School of Law, P.O. Box 90360, Durham, NC 27708-0360, USA The Centre for International Governance Innovation (CIGI), Waterloo, Canada)

Abstract

Unlike individuals and corporations, countries indebted beyond their ability to pay cannot use bankruptcy laws to restructure unsustainable debt. The United Nations and the International Monetary Fund have attempted to propose treaties to enable that debt restructuring, but the political difficulties of reaching a worldwide consensus have stymied their efforts. This article argues that a model-law approach to restructuring unsustainable sovereign debt should be feasible and effective because the vast majority of sovereign debt contracts are governed by the laws of either the debtor-state or two other jurisdictions. Those jurisdictions individually could enact a model law to give struggling nations a real prospect of equitably restructuring their debt to sustainable levels. By enabling such debt restructuring, that enactment would also help to foster the norms required to facilitate the development of international treaties.

Suggested Citation

  • Schwarcz Steven L., 2015. "Sovereign Debt Restructuring: A Model-Law Approach," Journal of Globalization and Development, De Gruyter, vol. 6(2), pages 343-385, December.
    • Handle: RePEc:bpj:globdv:v:6:y:2015:i:2:p:343-385:n:8
    DOI: 10.1515/jgd-2015-0031
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    References listed on IDEAS

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    1. Martín Guzmán, 2015. "In the quest of a Framework for Sovereign Debt Restructuring," Documentos de trabajo del Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET) 2015-7, Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET).
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    5. Brooks Skylar & Lombardi Domenico, 2015. "Governing Sovereign Debt Restructuring Through Regulatory Standards," Journal of Globalization and Development, De Gruyter, vol. 6(2), pages 287-318, December.
    6. Eric Helleiner, 2008. "The Mystery of the Missing Sovereign Debt Restructuring Mechanism," Contributions to Political Economy, Cambridge Political Economy Society, vol. 27(1), pages 91-113.
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    1. Brooks Skylar & Lombardi Domenico, 2015. "Governing Sovereign Debt Restructuring Through Regulatory Standards," Journal of Globalization and Development, De Gruyter, vol. 6(2), pages 287-318, December.
    2. Sourbron Leentje Ann & Vereeck Lode, 2017. "To Pay or Not to Pay? Evaluating the Belgian Law Against Vulture Funds," Journal of Globalization and Development, De Gruyter, vol. 8(1), pages 1-14, June.
    3. Mooney Charles W., 2015. "A No-Tribunal SDRM and the Means of Binding Creditors to the Terms of a Restructuring Plan," Journal of Globalization and Development, De Gruyter, vol. 6(2), pages 215-238, December.

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