When Governments Write Contracts: Policy and Expertise in Sovereign Debt Markets

Contractual Knowledge: One Hundred Years of Experimentation in Global Markets (Cambridge Univ. Press), Forthcoming

Duke Law School Public Law & Legal Theory Series No. 2015-51

32 Pages Posted: 3 Nov 2015

See all articles by Mark C. Weidemaier

Mark C. Weidemaier

University of North Carolina School of Law

G. Mitu Gulati

Duke University School of Law

Anna Gelpern

Georgetown University Law Center

Date Written: October 29, 2015

Abstract

At least three times in the past two decades, national governments and institutions at the regional and international levels have tried to reform sovereign bond contracts to facilitate debt restructuring. Increasingly, these efforts have focused on promoting majority modifications clauses, a species of collective action clause (CAC) that facilitates a binding debt restructuring. Rather than legislate or regulate, governments have convened expert commissions, produced model CACs, and aggressively marketed these clauses to debtors and creditors. When events prove the existing CAC template inadequate or irrelevant, the process begins anew. This paper considers this mode of government intervention, which has a long pedigree dating to at least the 1930s. Public officials have long justified contract reform initiatives by invoking a narrative of market failure in which market actors do not understand the relevance and importance of CACs. We cast doubt on this narrative and explore why contract reform holds such allure as a policy tool.

Suggested Citation

Weidemaier, Mark C. and Gulati, Gaurang Mitu and Gelpern, Anna, When Governments Write Contracts: Policy and Expertise in Sovereign Debt Markets (October 29, 2015). Contractual Knowledge: One Hundred Years of Experimentation in Global Markets (Cambridge Univ. Press), Forthcoming; Duke Law School Public Law & Legal Theory Series No. 2015-51. Available at SSRN: https://ssrn.com/abstract=2683513

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)

Gaurang Mitu Gulati

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

Anna Gelpern

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
97
Abstract Views
1,028
rank
266,912
PlumX Metrics