Injunctions in Sovereign Debt Litigation
Mark C. Weidemaier
University of North Carolina (UNC) at Chapel Hill - School of Law
Georgetown University Law Center
November 15, 2013
Yale Journal on Regulation, 2014, Forthcoming
UNC Legal Studies Research Paper No. 2330914
Injunctions against foreign sovereigns have come under criticism on comity and enforcement grounds. We argue that these objections are overstated. Comity considerations are important but not dispositive. Enforcement objections assign too much significance to the court’s inability to impose meaningful contempt sanctions, overlooking the fact that, when a foreign sovereign is involved, both money judgments and injunctions are enforced through what amounts to a court-imposed embargo. This embargo discourages third parties from dealing with the sovereign and, if sufficiently costly, can induce the sovereign to comply. Nevertheless, we are skeptical about injunctions in sovereign debt litigation. They are prone to dramatic spillover effects precisely because they cannot reach their primary target, the sovereign government. Recent decisions in NML v. Argentina illustrate the way in which a court’s inability to compel compliance by the sovereign may lead it to impose dramatic and potentially unwarranted costs on third parties, turning traditional equitable analysis on its head.
Number of Pages in PDF File: 40
Keywords: sovereign debt, sovereign immunity, injunctions, Argentina
JEL Classification: F34, K41Accepted Paper Series
Date posted: September 27, 2013 ; Last revised: November 16, 2013
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