Abstract

http://ssrn.com/abstract=2189997
 
 

References (34)



 
 

Citations (2)



 
 

Footnotes (39)



 


 



Sovereign Defaults in Court


Julian Schumacher


Hertie School of Governance and Free University Berlin

Christoph Trebesch


Ludwig-Maximilians-Universität München; CESifo (Center for Economic Studies and Ifo Institute)

Henrik Enderlein


Hertie School of Governance and Harvard University

May 6, 2014


Abstract:     
Sovereign debt is widely regarded as non-enforceable and immune from legal action. This paper takes a different perspective and builds a comprehensive new dataset on creditor lawsuits filed against defaulting sovereigns since 1976. The data show a drastic rise of sovereign debt litigation. In recent years, almost 50% of sovereign defaults involved legal disputes abroad, compared to just 5% in the 1980s. Our case studies and econometric results also indicate significant externalities outside the courtroom: litigation is associated with (i) a loss of access to international capital markets, (ii) a decline in international trade, and (iii) delays in crisis resolution. We conclude that the legal consequences of sovereign defaults are much greater than commonly thought. This is consistent with theoretical models with sanctions and creditor retaliation.

Number of Pages in PDF File: 57

Keywords: Sovereign Debt, Litigation, Creditor Rights, Debt Enforcement

JEL Classification: F34, H63, K12

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Date posted: December 16, 2012 ; Last revised: May 7, 2014

Suggested Citation

Schumacher, Julian and Trebesch, Christoph and Enderlein, Henrik, Sovereign Defaults in Court (May 6, 2014). Available at SSRN: http://ssrn.com/abstract=2189997 or http://dx.doi.org/10.2139/ssrn.2189997

Contact Information

Julian Schumacher
Hertie School of Governance and Free University Berlin ( email )
Schlossplatz 1
Berlin, 10178
Germany
Christoph Trebesch (Contact Author)
Ludwig-Maximilians-Universität München ( email )
Schackstr. 4
Munich, 80539
Germany
HOME PAGE: http://https://sites.google.com/site/christophtrebesch/
CESifo (Center for Economic Studies and Ifo Institute) ( email )
Poschinger Str. 5
Munich, DE-81679
Germany

Henrik Enderlein
Hertie School of Governance and Harvard University ( email )
Schlossplatz 1
Berlin, 10178
Germany
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