From creditor protection to preventing holdouts: mapping the evolution of the law on sovereign debt defaults and restructurings

Belle, Alexandre (2020) From creditor protection to preventing holdouts: mapping the evolution of the law on sovereign debt defaults and restructurings. PhD thesis, University of Glasgow.

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The law on sovereign debt defaults and restructurings is heavily fragmented. The norms
applying to sovereign debt are scattered across several legal regimes and interpreted by a broad array of jurisdictions, leading to a highly contradictory case-law. At the scholarly level, sovereign debt is seldom treated holistically. Commentators tend to focus on either the domestic law aspects of the debt relationship, or its international law aspects. In addition, sovereign debt as a of legal studies topic is heavily under-theorised.
The purpose of this thesis is to provide a global framework to systematise the law on
sovereign defaults and restructurings, both at the domestic and at the international level. This framework makes sense of the contradictions plaguing the legal study of sovereign debt. It also contextualises the changes which recently occurred within the law, and allows mapping the whole impact of legal norms on sovereigns and their creditors. The result is a better understanding of how the law on sovereign debt incentivise stakeholders within the debt relationship.
This thesis understands the evolution of the law on sovereign debt since the 1970 as a
succession of two paradigmatic regulatory models: the creditor protection model and the anti-holdout model. Under the first model, norms on sovereign debt sought to incentivise the extension of credit to sovereigns by providing creditors with access to independent courts and efficient judicial remedies. From the 1990s onwards, these remedies enabled vulture funds and retail investors to heavily disturb restructuring processes, often at the cost of the debtor’s population. In response to these inefficiencies the anti-holdout model was developed. Its purpose it to disincentivise litigation on sovereign debt to facilitate the restructuring of unsustainable debts. This new model relies on majority-based restructuring decisions, a limitation of remedies available to holdout creditors, and the provision to the sovereign of liquidities to facilitate its return to debt sustainability.
Understanding that these changes are united by a paradigmatic vision of how sovereign debt should be regulated creates a clearer picture of the blind spots in the current regulation of sovereign debt. Notably, this thesis will show that the recent legal changes lead to an increase in the risk of fragmentation of the regime, creates a system that heavily disfavours retail holders of sovereign debt, and does little to incentivise sovereigns to restructure unsustainable debts.

Item Type: Thesis (PhD)
Qualification Level: Doctoral
Keywords: Law, international law, international finance, international economic law, international finance law, sovereign debt, public debt.
Subjects: K Law > KZ Law of Nations
Colleges/Schools: College of Social Sciences > School of Law
Supervisor's Name: Rasulov, Dr. Akbar
Date of Award: 2020
Depositing User: Mr Alexandre L J Belle
Unique ID: glathesis:2020-81619
Copyright: Copyright of this thesis is held by the author.
Date Deposited: 03 Sep 2020 07:07
Last Modified: 31 Aug 2022 10:38
Thesis DOI: 10.5525/gla.thesis.81619

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