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the sovereign to pay. They will be helped by the widespread existence in sovereign bond issues of waiver of sovereign immunity. 195 Creditors seeking to obtain a judgment in the courts in New York and in England, the two jurisdictions of choice in sovereign bond issues, will not face much resistance on the merits. In fact, courts have no other choice than to grant the claim, mostly in summary judgments. 196 The impact of actions by individual creditors deserves, however, a realistic appraisal. We have seen that recent developments have limited the overall impact of creditor litigation. This is further evidenced by Häseler’s demonstration that the markets almost took no notice of the Elliott case, which has been described as a major event in creditors’ rights litigation. 197 According to Häseler, the analysis of sovereign bond index returns shows that the Elliott case had no noticeable impact. This may be explained by various factors, which are discounted in Häseler’s analysis. One possible explanation, which should be taken into account seriously, is that for the creditors at large, the actions of single creditors are so far off, so remote, that the majority of creditors feel unconcerned by the action. 198 Going further, one may note that even if they succeed in obtaining a judgment, creditors will face substantive hurdles when trying to collect the money owed to them. 199 In some rare cases, the sovereign debtor will have waived its immunity
195. This is perfectly valid and accepted practice: see section 1605(a)(1) of the FSIA, which provides an exception to sovereign immunity when “the foreign state has waived its immunity either explicitly or by implication.” For other references to waiver in the FSIA, see sections 1610(a)-(c), § 1610(d) and § 1611(b)(1). When Argentina defaulted in 2001, the US federal courts found that Argentina was not immune from suit and that the creditors were entitled to be paid. For example, the Second Circuit decided, in EM Ltd. v. The Republic of Argentina, 382 F.2d 291 (2004), that Argentina was required to pay the plaintiff bondholder $740 million on defaulted debt. See section 22 of the 1994 Fiscal Agency Agreement dated October 19, 1994, which governed the bond indebtedness on which a New York court granted a summary judgment in Lightwater Corporation Ltd. v. Republic of Argentina, 2003 WL 1878420 (S.D.N.Y. 14 Apr. 2003). Section 22 of the 1994 FAA states that the Republic waives sovereign immunity and consents to jurisdiction in any state or federal court in the borough of Manhattan in the City of New York. 196. At most, courts have in some cases stayed the judgment in order to win some time, with a view not to disrupt the ongoing restructuring. This is what some US courts have done, using their discretion and ordering a temporary stay. This is what a court in New York did in the case Pravin Banker vs. Banco Popular del Peru, in which the court stayed Pravin’s claims for full repayment by Peru on two occasions to avoid a disruption to the ongoing Brady deal negotiations. See MARCUS MILLER & DANIA THOMAS, ’Sovereign Debt Restructuring: the Judge, the Vulture and Creditor Rights’, Discussion Paper - University of Warwick, Department of Economics, August 2006. 197. See above Part I, section I, under A. 198. S. HÄSELER, “Individual Enforcement Rights in International Sovereign Bonds” MPRA Paper, Nov. 2008. See also S. HÄSELER, “Trustees versus Fiscal Agents and Default Risk in International Sovereign Bonds”, German Working Papers in Law and Economics: 2010(1). On the same issue, consider also the research of Alfaro & Co: L. ALFARO, N. MAURER and F. AHMED, “Gunboats and Vultures: Market Reaction to the ’Enforcement’ of Sovereign Debt”, Rutgers Working Paper. 199. When looking at the difﬁculty of creditors to collect what is owed to them, one cannot but make the link with the enforcement of ICSID awards and awards rendered in furtherance of BIT’s. See on this theme, I. A. LAIRD and A. ALEXANDROFF, “Compliance and Enforcement”, in The Oxford Handbook of International Investment Law, P. MUCHLINSKI et al. (eds.), OUP, 2008, at pp. 1171-1187.

Droit des affaires - Insolvabilité des États et dettes souveraines -1

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