Public Symbol in Private Contract: A Case Study

91 Pages Posted: 26 Sep 2006

See all articles by Anna Gelpern

Anna Gelpern

Georgetown University Law Center

Mitu Gulati

University of Virginia School of Law


This article revisits a recent shift in standard form sovereign bond contracts to promote collective action among creditors. Major press outlets welcomed the shift as a milestone in fighting financial crises that threatened the global economy. Officials said it was a triumph of market forces. We turned to it for insights into contract change and crisis management. This article is based on our work in the sovereign debt community, including over 100 interviews with investors, lawyers, economists, and government officials. Despite the publicity surrounding contract reform, in private few participants described the substantive change as an effective response to financial crises; many said it was simply unimportant. They explained their own participation in the shift as a mix of symbolic gesture and political maneuver, designed to achieve goals apart from solving the technical problems for which the new contract terms offered a fix. Contract terms were adopted for what they said, instead of or in addition to what they did.

Keywords: Contract, boilerplate, sovereign debt, development, emerging markets, financial crisis, IMF, sovereign bankruptcy, collective action clause

JEL Classification: F34, G33, K12

Suggested Citation

Gelpern, Anna and Gulati, Mitu, Public Symbol in Private Contract: A Case Study. Washington University Law Quarterly, 2007 , Duke Law School Legal Studies Paper No. 128, Rutgers School of Law-Newark Research Paper No. 020, Available at SSRN:

Anna Gelpern (Contact Author)

Georgetown University Law Center ( email )

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

Mitu Gulati

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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