Who is the Sovereign in Sovereign Debt?
Reinterpreting a Rule-of-Law Framework from the Early Twentieth Century

49 Pages Posted: 12 Jun 2008  

Odette Lienau

Cornell University - Law School

Abstract

Combining legal interpretation with political science analysis, this Article highlights the competing "statist" and "popular" conceptions of sovereignty at stake in sovereign debt issues. It argues that these two dominant approaches do not exhaust the offerings of intellectual history and considers an alternative approach that emerged in the early twentieth century and may be of relevance again today. The Article contends that U.S. Chief Justice Taft's foundational 1923 "Tinoco" decision, which grounds the current approach to sovereign governmental recognition, has been misinterpreted to support a purely statist or absolutist conception of sovereignty. It argues that a proper interpretation presents an intermediate or "rule of law" framework that coincides with Taft's domestic jurisprudence and provides an alternate conception of sovereignty for the current lending system. In emphasizing the historical and theoretical contingency of the current sovereign debt regime, this Article problematizes the assumption in mainstream international finance that only a narrow conception of sovereignty and a strict practice of debt repayment are consistent with a functioning sovereign credit market. Considering the economic and geopolitical context of Taft's decision, the Article also suggests that the changing nature of creditor competition may partially account for variations in the concept of sovereignty underlying sovereign debt.

Keywords: sovereign debt, sovereignty, odious debt, Taft, Tinoco arbitration, rule of law

Suggested Citation

Lienau, Odette, Who is the Sovereign in Sovereign Debt? Reinterpreting a Rule-of-Law Framework from the Early Twentieth Century. Yale Journal of International Law, Vol. 33, No. 1, 2008. Available at SSRN: https://ssrn.com/abstract=1143063

Odette Lienau (Contact Author)

Cornell University - Law School ( email )

Myron Taylor Hall
Cornell University
Ithaca, NY 14853-4901
United States

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