1932
0
  1. Home
  2. A-Z Publications
  3. Annual Review of Law and Social Science
  4. Volume 11, 2015
  5. Article

Annual Review of Law and Social Science

Volume 11, 2015

The Relevance of Law to Sovereign Debt

Abstract

The literature on sovereign debt treats law as of marginal significance, largely because the doctrine of sovereign immunity leaves creditors few potent legal remedies against sovereign borrowers. Although sovereign debts can indeed be hard to enforce, the goal of this article is to demonstrate that law plays a central, and constantly evolving, role in structuring sovereign debt markets. To list just a few examples, legal rules and institutions () decide when a borrower is sovereign, () define the consequences of sovereignty by drawing (or refusing to draw) artificial boundaries between the sovereign and other legal entities, () play some role in cases of state and government succession, and () determine the extent to which the rules of sovereign immunity can be changed by contract. These legal rules and institutions are not set in stone; they evolve in response to the political, economic, and social forces that shape the market for sovereign debt.

Keyword(s): odious debt, public debt, sovereign immunity, state succession
Loading

Article metrics loading...

/content/journals/10.1146/annurev-lawsocsci-120814-121408
2015-11-03
2024-04-26
Loading full text...

Full text loading...

/deliver/fulltext/lawsocsci/11/1/annurev-lawsocsci-120814-121408.html?itemId=/content/journals/10.1146/annurev-lawsocsci-120814-121408&mimeType=html&fmt=ahah

Literature Cited

  1. Aguiar M, Amador M. 2014. Sovereign debt. Handb. Inst. Econ. 4:647–87 [Google Scholar]
  2. Arellama C, Ramanarayanan A. 2013. Default and the maturity structure in sovereign bonds Res. Dep. Staff Rep. 410, Minneap. Fed. Reserv., Minneapolis, MN. http://www.minneapolisfed.org/research/sr/sr410.pdf
  3. Bainbridge SM. 2001. Abolishing veil piercing. J. Corp. Law 26:3479–535 [Google Scholar]
  4. Bank of New York v. Yugoimport 745 F.3d 599 2014.
  5. Bardozzetti A, Dottori D. 2014. Collective action clauses: How do they affect sovereign bond yields?. J. Int. Econ. 92:2286–303 [Google Scholar]
  6. Becker T, Richards A, Thaicharoen Y. 2003. Bond restructuring and moral hazard: Are collective action clauses costly?. J. Int. Econ. 61:1127–61 [Google Scholar]
  7. Bi R, Chamon M, Zettelmeyer J. 2011. The problem that wasn't: coordination failures in sovereign debt restructurings Work. Pap. 11/265, Int. Monet. Fund, Washington, DC
  8. Blocher J, Gulati M. 2015. A market for sovereign control?. Work. Pap., Duke Law, Durham, NC. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2557830
  9. Bolton P. 2003. Toward a statutory approach to sovereign debt restructuring. IMF Staff Pap. 50:41–68 [Google Scholar]
  10. Bolton P, Skeel DA Jr. 2007. Odious debts or odious regimes?. Law Contemp. Probl. 70:483–108 [Google Scholar]
  11. Bradley M, Gulati M. 2014. Collective action clauses for the Eurozone. Rev. Financ. 18:62045–102 [Google Scholar]
  12. Brookings Inst., Comm. Int. Econ. Policy Reform 2013. Revisiting Sovereign Bankruptcy. Washington, DC: Brookings Inst.
  13. Buchheit LC. 1978. Secession: The Legitimacy of Self Determination New Haven, CT: Yale Univ. Press
  14. Buchheit LC, Gulati M, Thompson RB. 2007. The dilemma of odious debts. Duke Law J. 56:51201–62 [Google Scholar]
  15. Bulow J, Rogoff KS. 1989a. A constant recontracting model of sovereign debt. J. Polit. Econ. 97:1155–78 [Google Scholar]
  16. Bulow J, Rogoff KS. 1989b. Sovereign debt: Is to forgive to forget?. Am. Econ. Rev. 79:143–50 [Google Scholar]
  17. Chamon M, Schumacher J, Trebesch C. 2014. Foreign law bonds: Can they reduce sovereign borrowing costs?. http://conference.nber.org/confer/2014/IFMf14/Chamon_Schumacher_Trebesch.pdf
  18. Choi SJ, Gulati M, Posner EA. 2012. The evolution of contractual terms in sovereign bonds. J. Legal Anal. 4:1131–79 [Google Scholar]
  19. Clare A, Schmidlin N. 2014. The impact of foreign governing law on European government bond yields. Draft March 8. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2406477
  20. Eichengreen B. 2003. Restructuring sovereign debt. J. Econ. Perspect. 17:475–98 [Google Scholar]
  21. Eichengreen B, Hausmann R, Panizza U. 2003. The pain of original sin. Other People's Money: Debt Denomination and Financial Instability in Emerging-Market Economies B Eichengreen, R Hausmann 13–44 Chicago: Univ. Chicago Press [Google Scholar]
  22. Eichengreen B, Mody A. 2004. Do collective action clauses raise borrowing costs?. Econ. J. R. Econ. Soc. 114:495247–64 [Google Scholar]
  23. Enderlein H, Müller L, Trebesch C. 2008. Sovereign debt disputes: testing the role of politics and institutions in financial crisis resolution Presented at Polit. Econ. Int. Financ. Conf., Claremont, CA
  24. Esteves R, Tuncer A. 2014. Feeling the blues: moral hazard and debt dilution in Eurobonds before 1914. Discuss. Pap. No. DP9860, Cent. Econ. Policy Res., Washington, DC. http://www.novasbe.unl.pt/images/novasbe/files/INOVA_Seminars/eurobonds_nov_2013.pdf
  25. European Community v. RJR Nabisco, Inc. 764 F.3d 129 2014.
  26. Feibelman A. 2007. Contract, priority, and odious debt. N.C. Law Rev. 85:3728–71 [Google Scholar]
  27. Gaillard N. 2014. When Sovereigns Go Bankrupt Springer Briefs in Economics. New York: Springer [Google Scholar]
  28. Gates v. Victor Fine Foods 54 F.3d 1457 (9th Cir. 1995.
  29. Gelpern A. 2007. Odious, not debt. Law Contemp. Probl. 70:381–114 [Google Scholar]
  30. Gelpern A. 2014. Debt sanctions can help Ukraine and fill a gap in the international financial system. Policy Brief PB14-20, Peterson Inst. Int. Econ., Washington, DC. http://www.iie.com/publications/pb/pb14-20.pdf
  31. Gelpern A, Gulati M. 2006. Public symbol in private contract: a case study. Wash. Univ. Law Rev. 84:1627–715 [Google Scholar]
  32. Gennaioli N, Martin A, Rossi S. 2014. Sovereign default, domestic banks and financial institutions. J. Financ. 69:2819–66 [Google Scholar]
  33. Great Britain v. Costa Rica 1 RIAA 375 1923.
  34. Hagan S. 2005. Designing a legal framework to restructure sovereign debt. Georget. J. Int. Law 36:1299–339 [Google Scholar]
  35. Hagan S, Krueger A. 2005. Sovereign workouts: an IMF perspective. Chic. J. Int. Law 6:1203–23 [Google Scholar]
  36. Jeanne O. 2009. Debt maturity and the international financial architecture. Am. Econ. Rev. 99:52135–48 [Google Scholar]
  37. La Générale des Carrières et des Mines v. F.G. Hemisphere Assoc. LLC UKPC 27 2012.
  38. Lienau O. 2008. Who is the “sovereign” in sovereign debt?: reinterpreting a rule-of-law framework from the early twentieth century. Yale J. Int. Law 33:163–111 [Google Scholar]
  39. Oosterlinck K. 2013. Sovereign debt default: insights from history. Oxf. Rev. Econ. Policy 29:4697–714 [Google Scholar]
  40. Panizza U, Sturzenegger F, Zettelmeyer J. 2009. The economics and law of sovereign debt and default. J. Econ. Lit. 47:31–47 [Google Scholar]
  41. Reinhart C, Rogoff K. 2009. This Time Is Different: Eight Centuries of Financial Folly Princeton, NJ: Princeton Univ. Press
  42. Republic of Argentina v. Weltover 504 U.S. 607 1992.
  43. Republic of Serbia v. ImageSat International NV (2009) EWHC (Comm) 2853 (3) (Eng.)
  44. Richards A, Gugiatti M. 2003. Do collective action clauses influence bond yields? New evidence from emerging markets. Int. Financ. 6:3415–47 [Google Scholar]
  45. Sachs J, Cohen D. 1982. LDC borrowing with default risk Work. Pap. 925, Natl. Bur. Econ. Res., Cambridge, MA
  46. Samples T. 2014. Rogue trends in sovereign debt: Argentina, vulture funds, and pari passu under New York law. Northwest. J. Int. Law Bus. 35:149–86 [Google Scholar]
  47. Société NML Capital Ltd. v. République Argentine Cour de Cassation (1ère Chambre Civile), No. 09-72.057 (Sept. 28 2011.
  48. Stephan PB. 2007. The institutionalist implications of an odious debts doctrine. Law Contemp. Probl. 70:3213–74 [Google Scholar]
  49. Tomz M. 2007. Reputation and International Cooperation: Sovereign Debt Across Three Centuries Princeton, NJ: Princeton Univ. Press
  50. Tomz M, Wright MLJ. 2013. Empirical research on sovereign debt and default. Annu. Rev. Econ. 5:247–72 [Google Scholar]
  51. Torres-Alamo v. Puerto Rico 502 F.3d 20 (1st Cir. 2007.
  52. United States v. National City Bank of New York 90 F. Supp. 448 (S.D.N.Y. 1950.
  53. Verdier P, Voeten E. 2015. How does customary international law change? The case of state immunity. Int. Stud. Q. 58:209–22 [Google Scholar]
  54. Weidemaier WMC. 2009. Disputing boilerplate. Temple Law Rev. 82:11–54 [Google Scholar]
  55. Weidemaier WMC. 2014. Sovereign immunity and sovereign debt. Univ. Ill. Law Rev. 2014:167–114 [Google Scholar]
  56. Weidemaier WMC, Gelpern A. 2014. Injunctions in sovereign debt litigation. Yale J. Regul. 31:189–218 [Google Scholar]
  57. Weidemaier WMC, Gulati M. 2015. Sovereign debt and the “contracts matter” hypothesis. Oxford Handbook of Law and Economics. New York: Oxford Univ. Press. In press http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2511251 [Google Scholar]
  58. Weinschelbaum F, Wynne J. 2005. Renegotiation, collective action clauses and sovereign debt markets. J. Int. Econ. 67:147–72 [Google Scholar]
/content/journals/10.1146/annurev-lawsocsci-120814-121408
Loading
  • Article Type: Review Article

Most Cited Most Cited RSS feed

This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error