Santa Anna and His Black Eagle: The Origins of Pari Passu?

37 Pages Posted: 20 Feb 2014 Last revised: 25 Dec 2014

Benjamin Remy Chabot

Federal Reserve Bank of Chicago

G. Mitu Gulati

Duke University School of Law

Date Written: February 18, 2014

Abstract

One of the most debated issues in international finance is the meaning of the pari passu clause in sovereign bonds. The clause is ubiquitous; it is in almost every single foreign-law sovereign bond out there. Yet, almost no one seems to agree on its meaning. One way to cut the Gordian knot is to track down the origins of the clause. Modern lawyers may have simply copied the clause from the documents of their predecessors without understanding its meaning. But surely the people who first drafted the clause knew what it meant. Four enterprising students at Duke Law School may have found the very first sovereign bond to contain a pari passu type provision; General Santa Anna's Black Eagle. This Essay tells the story of that bond and its equal treatment clause.

Keywords: sovereign debt, pari passu

JEL Classification: F34, H63, K12, N2

Suggested Citation

Chabot, Benjamin Remy and Gulati, G. Mitu, Santa Anna and His Black Eagle: The Origins of Pari Passu? (February 18, 2014). Available at SSRN: https://ssrn.com/abstract=2397929 or http://dx.doi.org/10.2139/ssrn.2397929

Benjamin Remy Chabot (Contact Author)

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States

Gaurang Mitu Gulati

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

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