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The Market Reaction To Legal Shocks And Their Antidotes: Lessons From The Sovereign Debt Market, Michael Bradley, James D. Cox, Mitu Gulati
The Market Reaction To Legal Shocks And Their Antidotes: Lessons From The Sovereign Debt Market, Michael Bradley, James D. Cox, Mitu Gulati
Faculty Scholarship
In October 2000 a hedge fund holding an unpaid debt claim won an enormous victory against the debtor, the Republic of Peru, through an opportunistic interpretation of the common pari passu clause by a Brussels court. This development was met by charges from policy makers and practitioners that the court's decision (its novel interpretation of the pari passu clause) would lead to a dramatic increase in the risks of holdout litigation faced by sovereign debtors. Over the ensuing years, multiple reform solutions were proposed including the revision of certain contractual terms, the filing of amicus briefs in a key case, …
Applied Legal History: Demystifying The Doctrine Of Odious Debts, Sarah Ludington, Mitu Gulati, Alfred L. Brophy
Applied Legal History: Demystifying The Doctrine Of Odious Debts, Sarah Ludington, Mitu Gulati, Alfred L. Brophy
Faculty Scholarship
"Odious debts" have been the subject of debate in academic, activist, and policymaking circles in recent years. The term refers to the debts of a nation that a despotic leader incurs against the interests of the populace. When the despot is overthrown, the new government — understandably — does not wish to repay creditors who helped prop up the despot. One argument has focused on whether customary international law supports a "doctrine" of odious debts that justifies the nonpayment of sovereign debts when three conditions are met: (1) the debts were incurred by a despotic ruler (without the consent of …