Stop Vulture Fund Lawsuits
Vulture funds, funds that buy up the debt of sovereign countries at a discount in the hope of making significant profits, have caused considerable problems to a number of highly indebted countries.
The Commonwealth Secretariat’s Legal Debt Clinic advises governments on best practice in negotiating loan agreements, and how to respond to the activities of vulture funds. This handbook distils the key lessons from that work, for the benefit of all government officials who may have to deal with these issues.
Abbreviations and Acronyms
PART I Briefing
1. Vulture Funds
1.1 What is a vulture fund?
1.2 The rise of vulture funds
1.3 Legal rights of vulture funds
2. Loan Agreements
2.1 What is a loan agreement?
2.2 Structure of a loan agreement
2.3 Concepts under a loan agreement
3.1 Legal defences available to a sovereign debtor
3.2 Legal arguments supporting vulture fund claims
3.3 Effects of lawsuits
PART II Actions and Responses
4.1 When is negotiation possible?
4.2 What is negotiation?
4.3 Negotiation methods
5. Debt Management
5.1 What is public debt management?
5.2 Why is public debt management important?
5.3 How to achieve effective debt management
5.4 Identifying loans which are targets for vulture funds
6. Responding to Lawsuits
6.2 Contractual terms
6.3 ‘Name and shame’ campaigns
6.4 Legal support for sovereign debtors
PART III Challenges and Solutions
7.1 Belgian law (2008)
7.2 UK law (2010)
7.3 US law (2008 and 2009)
7.4 French law (2007)
8. International Initiatives
8.1 HIPC debt relief initiatives (1996)
8.2 Norway (1998)
8.3 G8 (2005)
8.4 The Paris Club Initiative (2007)
8.5 China (2007)
8.6 Jubilee Debt Campaign
9. Ways Forward
9.1 International framework for restructuring sovereign debt
9.2 International arbitration court
9.3 Regulatory framework for public financial management
List of Cases
Annex 1. US Court Judgment in FG Hemisphere Associates, LLC v Democratic Republic of Congo and Société Nationale D’Electricité (S.N.E.L.)
Annex 2. Belgian Legislation
Annex 3. The UK Debt Relief (Developing Countries) Act 2010
Devi Sookun (Author)Devi Sookun is a Mauritian lawyer and formerly ran the Commonwealth Secretariat Legal Debt Clinic.
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