Sovereign debt litigation in Argentina: Implications of the Pari Passu default

Abstract

On 31 July 2014, Argentina defaulted on its sovereign bonds for the second time in the 21st century. It was also its eighth default since independence1; at such frequency, this was perhaps not an especially noteworthy event. What made it so extraordinary was not that another domestic financial crisis triggered the payment default, but rather an injunction handed down by a federal district court in New York. However, despite public outrage, the wider impact of this decision is likely to be limited. That is even more so if reforms that have already started continue to be implemented.