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Collective Action And The Competence Of Courts: The Lessons Of Nml V. Argentina, Jesse Kaplan

Stanford Journal of Law, Business & Finance

The recent Second Circuit decision in NML Capital v. Argentina, in which the court upended settled understanding of a common provision of sovereign debt contracts, has garnered a great deal of attention for its potential market and debt restructuring implications. This Essay takes a different tack, and instead identifies and elaborates a crucially important yet almost entirely overlooked aspect of the holding: the court’s fundamental misunderstanding of the purpose and function of contractual collective action clauses. The court’s error in this regard raises questions about the capacity of the U.S. judiciary to grapple with the complexities of modern globalized finance.