Max Planck Lecture Series: Prof. Mathias Audit delivered a lecture on the “Implications of Recent Sovereign Debt Litigation: Lessons from Argentina and Greece”

18 November 2016
Prof. Mathias Audit gave the third lecture of the Max Planck Lecture Series on Sovereign Debt. His lecture builds on the first two lectures in the series and adds practical insights drawn from the sovereign debt restructuring experiences of Argentina and Greece.

On 3 November 2016, Prof. Mathias Audit (Paris I University, Sorbonne Law School) and Prof. Régis Bismuth (Sciences Po Law School) presented the challenges sovereign debtors face in restructuring their debt in the event of financial distress.

Prof. Mathias Audit’s lecture was focused on the implications of the legal cases brought against Argentina and Greece in the aftermath of their latest sovereign debt crises. Prof. Audit illustrated the underlying problems of sovereign debt restructuring through the multiple legal cases brought against these two countries before different domestic courts and international tribunals. As some of the key lessons to be drawn from the sovereign debt restructuring experiences of Argentina and Greece he highlighted multiple fora litigation, a high risk of inconsistent judgments, and the absence of insolvency proceedings, which treat financially distressed sovereign debtors as insolvent states.. Prof. Audit took the view that these challenges are mainly brought about by the absence of a formal mechanism for sovereign debt restructuring akin to bankruptcy regimes for private entities. He then assessed the existing sovereign debt restructuring mechanisms in light of the potential stakeholders (i.e. claimants and defendants) in sovereign debt disputes. Having explained the limitations of the existing mechanisms (e.g. negotiations and arbitration) to tackle the sovereign debt restructuring problem, he discussed the prospect and feasibility of potential solutions.  Audit used this last part of his lecture to make the case for the International Centre for the Financial Safeguard of States (ICEFSS) – an academic project he developed together with other researchers at the Paris X Nanterre University to address the sovereign debt restructuring problem.

Prof. Bismuth offered a complementary view of the issues raised by Prof. Audit. He started the discussion by mapping sovereign debt disputes based on the parties involved and their legal relationship (i.e. contractual versus extra-contractual) as well as litigation fora. He then went on to discuss some of the key issues concerning sovereign debt investment arbitration inter alia whether bondholders qualify as investors for the purpose of bilateral investment treaties (BITs). The final part of Prof. Bismuth’s presentation was focused on the adverse effects of sovereign debt litigation on sovereign immunity. 

For a picture gallery of the lecture, please click here.