Law Commons^™

Sovereign Debt As A Commodity: A Contract Law Perspective, Dania Thomas

Osgoode Hall Law Journal

The ad hoc institutional configurations that facilitated the resolution of sovereign insolvency for over thirty years are fragmenting. Recent court decisions interpreting the pari passu clause in sovereign debt contracts reveal the dangers of pressuring common law courts to enforce contracts and mediate structural flaws in the market. The courts have dismantled sovereign protections in international law and common law checks and balances. They have gone beyond precedent to innovate remedies justified by interpreting a clause whose meaning and function were not clearly understood by the contracting parties themselves. They have also opened up a possible inter-creditor obligation that circumvents …