Can Parallel Lines Ever Meet? The Strange Case of the International Standards on Sovereign Debt and Business and Human Rights

39 Pages Posted: 3 Jul 2016 Last revised: 5 May 2017

See all articles by Daniel Bradlow

Daniel Bradlow

American University - Washington College of Law; University of Pretoria - Centre for Human Rights

Date Written: July 1, 2016


Sovereigns have a long history of defaulting on their debts. Despite the bitter lessons learned through this history, the international community has not yet developed an effective method for dealing with these events. As a result, each sovereign’s debt restructuring process is likely to be conflict ridden, inefficient and to have a high probability of resulting in a sub-optimal outcome. In fact, the risk of sub-optimal outcomes has increased as financial markets have become larger and more globalized so that sovereign debtors - at least those with access to financial markets - are able to borrow from a broader range of creditors. One consequence is that sovereign debt restructurings (SODRs), are difficult, often traumatic, experiences for the sovereign debtors and their populations, and frustrating and potentially costly for their creditors.

Given these high stakes, it is not surprising that efforts have been made over the past seventy years to improve the process. One recent manifestation of this effort has been the promulgation of a number of international norms and standards that either explicitly or implicitly are applicable to SODRs. Interestingly, the documents dealing with the SODR process all recognize that SODRs have substantial social and political effects in addition to their financial and economic consequences. In fact, they all appear to accept that the parties to the SODR will need to take these impacts into account in arranging a sustainable SODR. However, they do not provide detailed guidance to the parties on how they should deal with these social and political impacts in negotiating and agreeing on a sustainable SODR. This is surprising given the norms and standards that companies and states have developed for dealing with the social responsibilities of businesses, including in regard to human rights.

The seeming disconnect between the developments in regard to the SODR process and to business and human rights is intriguing, particularly because many of the world’s most significant financial institutions have publicly available human rights policies that, at least prima facie, are applicable to all their business operations and relations.

The disconnect between these two developments raises at least two questions. First, should the human rights and business standards be applied to the SODR process. Second, if they should be applied to the SODR process, how should they be applied? The primary purpose of this article is to answer these two questions. This exercise serves three purposes. First, it will enable us to see if these human rights and business standards can add value to SODRs in the sense of reducing their human rights costs without unduly increasing their financial costs. Second, it will provide some additional insight into how easily human rights law can be adapted to financial transactions specifically and to business more generally. Third, this exercise might help us better understand how to plug the gap in global economic governance that allows different actors in global governance to develop international standards on SODR and on business and human rights on parallel tracks that do not seem to communicate with each other.

Keywords: international financial law, sovereign debt, international law, international relations, sovereign debt, sovereign bankruptcy, international law, debt sustainability, human rights, business and human rights, global governance, debt crisis, financial crisis

JEL Classification: F34, F53, F55, K33, O19

Suggested Citation

Bradlow, Daniel David and Bradlow, Daniel David, Can Parallel Lines Ever Meet? The Strange Case of the International Standards on Sovereign Debt and Business and Human Rights (July 1, 2016). Yale Journal of International Law, Vol. 41, 2016, Available at SSRN: or

Daniel David Bradlow (Contact Author)

University of Pretoria - Centre for Human Rights ( email )

Private Bag X20
Hatfield 0028
South Africa

American University - Washington College of Law ( email )

International Legal Studies Program
4801 Massachusetts Avenue N.W.
Washington, DC 20016
United States
202-274-4205 (Phone)
202-274-4116 (Fax)


Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics