The Relevance of Law to Sovereign Debt

Annual Review of Law and Social Science, Forthcoming

UNC Legal Studies Research Paper No. 2558718

16 Pages Posted: 2 Feb 2015

See all articles by Mark C. Weidemaier

Mark C. Weidemaier

University of North Carolina School of Law

Mitu Gulati

University of Virginia School of Law

Multiple version iconThere are 2 versions of this paper

Date Written: February 1, 2015

Abstract

The literature on sovereign debt treats law as of marginal significance, largely because the doctrine of sovereign immunity leaves creditors few potent legal remedies against sovereign borrowers. Although sovereign debts can indeed by hard to enforce, the goal of this Essay is to demonstrate that law plays a central, and constantly evolving, role in structuring sovereign debt markets. To list just a few examples, legal rules and institutions (i) decide when a borrower is sovereign, (ii) define the consequences of sovereignty by drawing (or refusing to draw) artificial boundaries between the sovereign and other legal entities, (iii) play some role in cases of state and government succession, and (iv) determine the extent to which the rules of sovereign immunity can be changed by contract. These legal rules and institutions are not set in stone; they evolve in response to the political, economic, and social forces that shape the market for sovereign debt.

Keywords: sovereign debt

JEL Classification: F34

Suggested Citation

Weidemaier, Mark C. and Gulati, Mitu, The Relevance of Law to Sovereign Debt (February 1, 2015). Annual Review of Law and Social Science, Forthcoming, UNC Legal Studies Research Paper No. 2558718, Available at SSRN: https://ssrn.com/abstract=2558718

Mark C. Weidemaier (Contact Author)

University of North Carolina School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States
919.843.4373 (Phone)

Mitu Gulati

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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