Out of Thin Air? Tracing the Origins of the UNCTAD Principles in Customary International Law
SOVEREIGN FINANCING AND INTERNATIONAL LAW: THE UNCTAD PRINCIPLES ON RESPONSIBLE SOVEREIGN LENDING AND BORROWING, Juan Pablo Bohoslavsky, Carlos Esposito, Yuefen Li, eds., Oxford University Press, 2013
25 Pages Posted: 21 Oct 2012 Last revised: 12 Nov 2012
Date Written: October 17, 2012
UNCTAD's Draft Principles are an innovative set of best practices for sovereign borrowing and lending. Independent of the desirability of the Principles, it is important to consider whether they depart in important ways from the existing practice on sovereign lending and the resolution of sovereign defaults, or whether they merely confirm some of the trends that are already under way in state practice. The chances of general acceptance of the Principles by states are greater if state practice already supports the content of the Principles, both in a technical sense and in the informal practices of central players in sovereign debt crisis resolution, such as the Paris Club and the International Monetary Fund.
Were the UNCTAD Principles produced out of thin air? Despite some instances of state practice examined here, the project overall shows their unique character. The Principles provide best practice guidelines that comprehensively regulate sovereign lending and borrowing in line with modern governance standards. Their informal character follows the predominant preference in international finance for discretion rather than hard rules. Their voluntariness and non-binding character increase the chances for state and creditor support. The Principles hold great potential for systematically regulating an area of international relations previously left largely to the domestic sphere, but one that is increasingly of international concern.
Keywords: UNCTAD, sovereign debt crises, default, general principles of law, customary international law
JEL Classification: K33, F34
Suggested Citation: Suggested Citation