Placing contemporary sovereign debt: The fragmented landscape of legal precedent and legislative pre-emption

Abstract

Since 2003, the battle between holdout creditors and the Argentine government in US courts has inspired a number of judicious studies on its legal underpinnings and repercussions. It has also prompted so-called ‘anti-vulture funds’ laws in countries like the UK, Belgium, and France. Despite these developments, the role of place in debt restructurings has remained relatively neglected. The paper analyses domestic laws protecting foreign debtors from minority holdout litigation and injunctive orders in federal courts that incite contractual changes as part of a fragmented landscape of local, and at times overlapping, spheres of sovereign debt governance, paradoxically embedded in a deeply integrated global financial system. A key finding of this analysis is that while contracts ground debt dynamics in specific jurisdictions (financial centres), they do not reduce uncertainty in the outcomes of sovereign debt restructurings. Moreover, financial centres have functioned not only as sites for private market-making, but also for public experimentation in international debt processes.