Sovereign Debt Restructurings as Exercises of International Public Authority: Towards a Decentralized Sovereign Insolvency Law

C. Esposito, J.P. Bohoslavsky, Y. Li (eds.): Sovereign Financing and International Law (Oxford University Press 2013) pp 39-70.

36 Pages Posted: 22 Jun 2012 Last revised: 18 Feb 2018

See all articles by Armin von Bogdandy

Armin von Bogdandy

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Comparative Public Law and International Law

Matthias Goldmann

Max Planck Institute for Comparative Public Law and International Law; Leibniz Institute for Financial Research SAFE; Goethe University Frankfurt - Cluster of Excellence Normative Orders; Goethe University Frankfurt

Date Written: February 28, 2013

Abstract

This paper argues that sovereign debt restructurings as agreed between defaulting states and their multilateral, bilateral, or private creditors constitute exercises of international public authority. Their authoritative character results from their effects on the citizens of the defaulting state, especially through adjustment programs. They also affect taxpayers in lending states as well as shareholders of commercial creditors. Their public and international character derives from their legal basis in hard or soft public international law.

As a consequence of their qualification as exercises of international public authority, sovereign debt restructurings need to be framed by public law in order to ensure their legitimacy. This paper is based on a discursive approach to legitimacy and shows how legal scholarship might promote the development of such a public law framework.

The paper then proposes a set of legal principles for sovereign debt restructurings. Some of them might already exist de lege lata, while others should be understood as proposals de lege ferenda. Legal scholarship is especially useful for developing procedural requirements, while substantive issues require a political decision, with the exception of the need to respect fundamental human rights. Most importantly, however, the qualification of sovereign debt restructurings as exercises of public authority requires domestic and international courts and tribunals to defer to them and to stay proceedings as long as such restructurings are being negotiated or implemented. Domestic and international courts and tribunals might thereby control the legitimacy of these exercises of public authority.

Keywords: sovereign debt, international public authority, sovereign insolvency, state insolvency, debt crisis, Paris Club, London Club, IMF

JEL Classification: E62, H30, H62, H63, H87

Suggested Citation

von Bogdandy, Armin and Goldmann, Matthias, Sovereign Debt Restructurings as Exercises of International Public Authority: Towards a Decentralized Sovereign Insolvency Law (February 28, 2013). C. Esposito, J.P. Bohoslavsky, Y. Li (eds.): Sovereign Financing and International Law (Oxford University Press 2013) pp 39-70., Available at SSRN: https://ssrn.com/abstract=2089480 or http://dx.doi.org/10.2139/ssrn.2089480

Armin Von Bogdandy

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Comparative Public Law and International Law ( email )

Im Neuenheimer Feld 535
69120 Heidelberg, 69120
Germany

Matthias Goldmann (Contact Author)

Max Planck Institute for Comparative Public Law and International Law ( email )

Im Neuenheimer Feld 535
69120 Heidelberg, 69120
Germany

HOME PAGE: http://www.mpil.de/ww/en/pub/organization/scientific_staff/mgoldman.cfm

Leibniz Institute for Financial Research SAFE

House of Finance
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

HOME PAGE: http://www.safe-frankfurt.de

Goethe University Frankfurt - Cluster of Excellence Normative Orders ( email )

Germany

Goethe University Frankfurt ( email )

Theodor-W.-Adorno-Platz 3
HoF H4
Frankfurt, 60629
Germany

HOME PAGE: http://https://www.jura.uni-frankfurt.de/62222403/Goldmann

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