Odious Debts: The Power of a Mythical Doctrine

6 Pages Posted: 18 Jan 2024 Last revised: 19 Jan 2024

See all articles by Kim Oosterlinck

Kim Oosterlinck

Université Libre de Bruxelles (ULB)

Ugo Panizza

Graduate Institute of International and Development Studies (IHEID) - Department of Economics; CEPR

Mark Weidemaier

University of North Carolina School of Law

Mitu Gulati

University of Virginia School of Law

Date Written: January 16, 2024

Abstract

Legal analysts who study sovereign debt often refer to the doctrine of “Odious Debts.” As a rule, a state remains liable for its debts notwithstanding a change in government. The doctrine of Odious Debts purports to identify an exception in cases where lenders know that a despot’s borrowing does not benefit the public. In such cases, the doctrine posits that a new government may repudiate the debt after it assumes power. The doctrine is aspirational, in the sense that no court or tribunal has unequivocally acknowledged its existence. Yet this has not diminished its appeal. Our Essay sets out the basics of this phenomenon.

Keywords: Odious Debts, Government Succession, Sovereign Debt

JEL Classification: K22, G15, H63

Suggested Citation

Oosterlinck, Kim and Panizza, Ugo and Weidemaier, Mark and Gulati, Mitu, Odious Debts: The Power of a Mythical Doctrine (January 16, 2024). Virginia Public Law and Legal Theory Research Paper No. 2024-08, Virginia Law and Economics Research Paper No. 2024-04, Available at SSRN: https://ssrn.com/abstract=4697112 or http://dx.doi.org/10.2139/ssrn.4697112

Kim Oosterlinck

Université Libre de Bruxelles (ULB) ( email )

Ugo Panizza

Graduate Institute of International and Development Studies (IHEID) - Department of Economics ( email )

Geneva Avenue de la Paix 11A
Geneva, 1202
Switzerland

CEPR

London
United Kingdom

Mark Weidemaier

University of North Carolina School of Law ( email )

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

Mitu Gulati (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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