espanolEste articulo se centra en un area especifica de los escritos de Kelsen, reevaluada por Pa... more espanolEste articulo se centra en un area especifica de los escritos de Kelsen, reevaluada por Paolo Carrozza: la Stufenbau, la estructura piramidal para el ordenamiento de las fuentes del derecho. La Seccion Uno examina la teoria jerarquica formal de las fuentes del derecho. La Seccion Dos aborda la relevancia practica de esta teoria con respecto a las fuentes hibridas o privadas en el campo del derecho de la reestructuracion de la deuda soberana. Y la Seccion Tres alude al surgimiento de una ley blanda derivada de las autoridades publicas, en el area de la regulacion financiera.Recibido: 11 mayo 2019Aceptado: 21 junio 2019Publicacion en linea: 31 julio 2019 EnglishThis article focuses on a specific area of the writings of Kelsen, reassessed by Paolo Carrozza: the Stufenbau, the pyramidal structure for the ordering of the sources of law. Section One examines the formal, hierarchical theory of the sources of law. Section Two focuses on the practical relevance of this theory with reg...
Among the measures adopted to tackle the financial crisis in Europe, part of the sovereign debt o... more Among the measures adopted to tackle the financial crisis in Europe, part of the sovereign debt of the Greek government was restructured in early 2012.The current Greek predicament bears a significant resemblance with Argentina's situation after the 2001 economic crisis. Its sovereign debt restructuring has been challenged before an investment arbitral tribunal by a group of Italian bondholders, who have thus far succeeded at the jurisdictional phase. The Abaclat and others v. Argentina case is the first International Centre for Settlement of Investment Disputes (ICSID) arbitration which deals with a sovereign debt workout. Albeit the award on the merits is still pending, the importance of the dispute cannot be overestimated. It signals a new forum bondholders could use, when they do not participate in an exchange, to still seek to obtain their interest and capital from the debtor State. This article aims at assessing the possibility of analogous developments for Greece, and pot...
The myth of neutrality permeates many spheres of international law. In the law of sovereign debt ... more The myth of neutrality permeates many spheres of international law. In the law of sovereign debt restructuring, it is under pressure, especially in the aftermath of the Global Financial Crisis. The key assumption is that the status quo allows the market to freely develop its own standards, and use contracts to autonomously structure their bargains. Secondly, the actors of sovereign debt restructuring (such as the Institute of International Finance) are sometimes labelled as hybrid public-private entities. This aims at legitimating them as neutral, by implying that they fairly and adequately take into account and balance all the interests at stake. Thirdly, the procedure followed by the International Monetary Fund (IMF) during a restructuring is supposed to be neutral, and follow the same steps for all countries affected. This paper critiques each of these assumptions. Firstly, it takes issue with the notion that the current framework for sovereign debt restructurings is purely an offspring of the practices of market actors. Free markets and freedom of contract are commonly held as the keystones of neutrality: the entities active on a market are free to shape their economic bargains in the manner that best suits their needs and interests. Without external, top-down imposition of rules, these rational actors will come to an efficient contractual settlement of their transactions. In the sovereign debt restructuring field, this translated into the adoption and diffusion of collective action clauses (CACs). Commonly used in corporate bonds under English law, such provisions allow a majority of bondholders to bind all of them to a change of bond terms. Both in 2001-3 and in 2014-5, when, respectively, the IMF and the UN General Assembly debated the establishment of public international law mechanisms to restructure sovereign debt, the political response was to point to CACs as the most feasible alternative, which had come about from the market itself. This brought to an end a momentum which could have led to significant legal reforms on both occasions. However, the contractual solution based on CACs was not the natural outgrowth of the markets. It was a considerable effort on the part of the US Treasury (and others) that spurred the introduction and subsequent reform of CACs. In 2015, the final outcome was left to a representative of private actors, the International Capital Market Association, in order to present the clauses as a market standard. In reality, the objective was to preserve the US’ role in international financial markets by keeping New York law and its courts in charge of sovereign debt disputes. The problems arising from the extraterritorial reach of Judge Thomas Griesa’s orders for Argentina’s restructured bondholders are clear indicators of the magnitude of the power that a contractually-designated domestic court enjoys, instead of a potential international forum. Secondly, the paucity of international fora, and the rapid changes in the form of sovereign debt (from syndicated bank lending to bonds) have resulted in the legitimation of new institutions. The paramount example is the Institute of International Finance. It played a major role in the restructuring of Greek sovereign debt in 2012. The Institute likes to define itself as a neutral forum which facilitates the exchange of information, a public-private entity which fairly represents the interests of all stakeholders. Nevertheless, a careful analysis of its history, membership, and internal functioning demonstrates that private interests have an overwhelming power. Furthermore, the bigger financial institutions enjoy a more favourable projection than the other members. Thirdly, the procedure that the IMF follows during sovereign debt crises is supposed to be neutral, and assess the sustainability of public debt based on financial data. As a technocratic institution, the Fund purports to establish policies and apply them equally to all countries in need of assistance. However, the recent report by the Independent Evaluation Office has unmistakably shown the different treatment that was reserved to the Eurozone. The urge to safeguard the monetary union led to a significant change in IMF policies. The deference to European authorities not only alienated the other members which had suffered from a harsher treatment in the past, but also resulted in a postponement of the restructuring which proved problematic for Greece. In conclusion, the complexity of the law of sovereign debt restructuring conceals its lack of neutrality. This applies to the content of the law (the contractual approach), the actors involved (the Institute of International Finance), and the processes followed (the IMF’s handling of crises). In a changing geopolitical landscape, the imbalances of such non-neutral system might be radically challenged.
The International Court of Justice gave its Advisory Opinion on the “Accordance with internationa... more The International Court of Justice gave its Advisory Opinion on the “Accordance with international law of the unilateral declaration of independence in respect of Kosovo” few months ago. It found no prohibition in general international law, including state practice, the principle of territorial integrity, Security Council resolutions, the principle of self-determination and the right to remedial secession. Neither Resolution 1244 (1999) nor the Constitutional Framework prevented the authors from declaring independence. The author analyses the Court’s approach, its conclusions and the issues which remain open.
Giuseppe Martinico, joven «García Pelayo» fellow en el Centro de Estudios Políticos y Constitucio... more Giuseppe Martinico, joven «García Pelayo» fellow en el Centro de Estudios Políticos y Constitucionales de Madrid, ha publicado esta última obra en diciembre 2011. Se trata del resultado de años de investigación y de reflexiones presentadas en artículos precedentes y ponencias en diversas universidades europeas. Es un libro muy fluido, con un razonamiento claro, que va desde el principio hasta el final
The on-going global financial crisis has hit Europe in an especially significant manner. With the... more The on-going global financial crisis has hit Europe in an especially significant manner. With the legal vacuum surrounding sovereign debt restructurings, Bilateral Investment Treaties (BITs) and Free Trade Agreements (FTAs) signed by European countries can provide grounds for litigation in future debt crises. The sovereign debt crisis in the heart of the Eurozone has materialized such dangers, and has had an impact on the European Union’s strategy as an actor in international investment. The problems experienced by Argentina before the ICSID have made European countries more aware of the potential hidden in their BITs. This has in turn led to a careful drafting of the CETA and the TTIP, and potentially of all the other major FTAs to follow.
This paper deals with the evolution of investment chapters of Preferential Trade Agreements (PTAs... more This paper deals with the evolution of investment chapters of Preferential Trade Agreements (PTAs). These separate chapters are comparable to self-standing Bilateral Investment Treaties (BITs), and can include both rules on investment liberalisation (non-discrimination safeguards) and on investment protection (standards of treatment afforded by the host State to the foreign investor/investment). The objective is to observe the structure and recurrent patterns of these chapters in order to detect and analyse certain normative trends. The sample of agreements reviewed is limited to the investment agreements concluded (or about to be concluded, when sufficient information is available) by the two major importers and exporters of Foreign Direct Investments (FDIs) – the United States of America and the European Union.After sketching the history and layout of the EU and US systems of investment protection (section 2), section 3 offers a breakdown of the provisions that most effectively illustrates the divide between the two models. In section 4, we examine the current impasse in the new EU’s centralised management of investment policies. Our central claim is then illustrated in section 5: in the long term, the US (NAFTA-like) template is likely to prevail over the European one, because it satisfies the need to fill the gaps in incomplete treaty regimes like those of European BITs. The Canada-EU Trade Agreement (CETA) seems to confirm this trend. In light of these remarks, we observe that future pluri- and multilateral negotiations will increasingly lean towards the NAFTA-model and gradually distance themselves from the European BIT standard (section 6).
The recent decision on jurisdiction and admissibility in Abaclat and others v. Argentina has brou... more The recent decision on jurisdiction and admissibility in Abaclat and others v. Argentina has brought to the public’s attention the issue of sovereign defaults and restructuring. Whilst in the Abaclat case, claimants were mostly individual retirees who then assembled to file a class action, a more frightening protagonist is made up of “vulture” funds. These are hedge funds, or other financial vehicles, which purchase sovereign (or corporate) bonds on secondary markets when their prices are extremely low due to the debtor’s repudiation or inability to pay back. They then litigate before national courts or international arbitral tribunals in order to recover the entire sums accrued. The analysis in this article begins with an overview of the process of sovereign debt restructuring. We then explore the case of a vulture fund which does not participate in a debt restructuring, and proceeds to enforce an award condemning a State to pay on its bonds, outside of the ICSID framework. Art. V(2) of the New York Convention offers two potential grounds to the State: non-arbitrability and public policy. We examine the interpretations given to the two notions in several cases most relevant to our research. Arguably, the interests involved in debt restructuring proceedings do appear to be sufficient to preclude arbitrability of the subject matter, and thus the enforcement of the award may be prevented. Secondly, the permeability of the public policy exception to economic considerations of fundamental importance – such as those involved in sovereign debt restructuring – finds supporting evidence in a host of jurisdictions. The two grounds might thus be used by States to “break the bond” and prevent non-participating vulture funds from obtaining an unfair advantage over the rest of the creditors. The recent decision on jurisdiction and admissibility in Abaclat and others v. Argentina has brought to the public’s attention the issue of sovereign defaults and restructuring. Whilst in the Abaclat case, claimants were mostly individual retirees who then assembled to file a class action, a more frightening protagonist is made up of “vulture” funds. These are hedge funds, or other financial vehicles, which purchase sovereign (or corporate) bonds on secondary markets when their prices are extremely low due to the debtor’s repudiation or inability to pay back. They then litigate before national courts or international arbitral tribunals in order to recover the entire sums accrued. The analysis in this article begins with an overview of the process of sovereign debt restructuring. We then explore the case of a vulture fund which does not participate in a debt restructuring, and proceeds to enforce an award condemning a State to pay on its bonds, outside of the ICSID framework. Art. V(2) of the New York Convention offers two potential grounds to the State: non-arbitrability and public policy. We examine the interpretations given to the two notions in several cases most relevant to our research. Arguably, the interests involved in debt restructuring proceedings do appear to be sufficient to preclude arbitrability of the subject matter, and thus the enforcement of the award may be prevented. Secondly, the permeability of the public policy exception to economic considerations of fundamental importance – such as those involved in sovereign debt restructuring – finds supporting evidence in a host of jurisdictions. The two grounds might thus be used by States to “break the bond” and prevent non-participating vulture funds from obtaining an unfair advantage over the rest of the creditors.
Stanford Journal of International Law, Jun 22, 2014
The present study is concerned with the evolution of investment chapters of Free Trade Agreements... more The present study is concerned with the evolution of investment chapters of Free Trade Agreements (FTAs). Our purpose is to observe the structure and recurrent patterns of the normative content of these chapters in order to ascertain and analyse certain trends. The sample of agreements reviewed is limited to the investment agreements concluded (or about to be concluded, when there is sufficient information) by the two major importers and exporters of Foreign Direct Investment (FDI)—the United States and the European Union. After an overview illustrating the history and layout of the EU and U.S. systems of investment protection (Part I), we provide a breakdown of the provisions that create a gulf between the two models (Part II). In Part III, we describe and analyse the current impasse in the European Union’s newly centralised management of investment policies. Our central claim is then illustrated in Part IV, where we argue that the U.S. (NAFTA-like) template is likely to prevail over the European one, in the long run, because it fills the gaps in incomplete treaty regimes like those recurrent in European Bilateral Investment Treaties (BITs). The Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union seems to confirm this trend. In light of these remarks, we conclude that, in the future, pluri- and multilateral negotiations will increasingly lean towards the NAFTA model and gradually distance themselves from the European BIT standard.
Stanford Journal of International Law, Jun 22, 2014
The present study is concerned with the evolution of investment chapters of Free Trade Agreements... more The present study is concerned with the evolution of investment chapters of Free Trade Agreements (FTAs). Our purpose is to observe the structure and recurrent patterns of the normative content of these chapters in order to ascertain and analyse certain trends. The sample of agreements reviewed is limited to the investment agreements concluded (or about to be concluded, when there is sufficient information) by the two major importers and exporters of Foreign Direct Investment (FDI)—the United States and the European Union. After an overview illustrating the history and layout of the EU and U.S. systems of investment protection (Part I), we provide a breakdown of the provisions that create a gulf between the two models (Part II). In Part III, we describe and analyse the current impasse in the European Union’s newly centralised management of investment policies. Our central claim is then illustrated in Part IV, where we argue that the U.S. (NAFTA-like) template is likely to prevail over the European one, in the long run, because it fills the gaps in incomplete treaty regimes like those recurrent in European Bilateral Investment Treaties (BITs). The Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union seems to confirm this trend. In light of these remarks, we conclude that, in the future, pluri- and multilateral negotiations will increasingly lean towards the NAFTA model and gradually distance themselves from the European BIT standard.
Chapter from the book "Transparency in International Investment Arbitration. A Guide to the UNCIT... more Chapter from the book "Transparency in International Investment Arbitration. A Guide to the UNCITRAL Rules on Transparency in Treaty-Based Investor-State Arbitration", edited by Dimitrij Euler, Markus Gehring, and Maxi Scherer, published by Cambridge University Press in 2015.
The recent decision on jurisdiction and admissibility in Abaclat and others v. Argentina has brou... more The recent decision on jurisdiction and admissibility in Abaclat and others v. Argentina has brought to the public's attention the issue of sovereign defaults and restructuring. Whilst in the Abaclat case, claimants were mostly individual retirees who then assembled to file a class action, a more frightening protagonist is made up of “vulture” funds. These are hedge funds, or other financial vehicles, which purchase sovereign (or corporate) bonds on secondary markets when their prices are extremely low due to the debtor's repudiation or inability to pay back. They then litigate before national courts or international arbitral tribunals in order to recover the entire sums accrued.
The analysis in this article begins with an overview of the process of sovereign debt restructuring. We then explore the case of a vulture fund which does not participate in a debt restructuring, and proceeds to enforce an award condemning a State to pay on its bonds, outside of the ICSID framework. Art. V(2) of the New York Convention offers two potential grounds to the State: non-arbitrability and public policy. We examine the interpretations given to the two notions in several cases most relevant to our research.
Arguably, the interests involved in debt restructuring proceedings do appear to be sufficient to preclude arbitrability of the subject matter, and thus the enforcement of the award may be prevented. Secondly, the permeability of the public policy exception to economic considerations of fundamental importance – such as those involved in sovereign debt restructuring – finds supporting evidence in a host of jurisdictions. The two grounds might thus be used by States to “break the bond” and prevent non-participating vulture funds from obtaining an unfair advantage over the rest of the creditors.
espanolEste articulo se centra en un area especifica de los escritos de Kelsen, reevaluada por Pa... more espanolEste articulo se centra en un area especifica de los escritos de Kelsen, reevaluada por Paolo Carrozza: la Stufenbau, la estructura piramidal para el ordenamiento de las fuentes del derecho. La Seccion Uno examina la teoria jerarquica formal de las fuentes del derecho. La Seccion Dos aborda la relevancia practica de esta teoria con respecto a las fuentes hibridas o privadas en el campo del derecho de la reestructuracion de la deuda soberana. Y la Seccion Tres alude al surgimiento de una ley blanda derivada de las autoridades publicas, en el area de la regulacion financiera.Recibido: 11 mayo 2019Aceptado: 21 junio 2019Publicacion en linea: 31 julio 2019 EnglishThis article focuses on a specific area of the writings of Kelsen, reassessed by Paolo Carrozza: the Stufenbau, the pyramidal structure for the ordering of the sources of law. Section One examines the formal, hierarchical theory of the sources of law. Section Two focuses on the practical relevance of this theory with reg...
Among the measures adopted to tackle the financial crisis in Europe, part of the sovereign debt o... more Among the measures adopted to tackle the financial crisis in Europe, part of the sovereign debt of the Greek government was restructured in early 2012.The current Greek predicament bears a significant resemblance with Argentina's situation after the 2001 economic crisis. Its sovereign debt restructuring has been challenged before an investment arbitral tribunal by a group of Italian bondholders, who have thus far succeeded at the jurisdictional phase. The Abaclat and others v. Argentina case is the first International Centre for Settlement of Investment Disputes (ICSID) arbitration which deals with a sovereign debt workout. Albeit the award on the merits is still pending, the importance of the dispute cannot be overestimated. It signals a new forum bondholders could use, when they do not participate in an exchange, to still seek to obtain their interest and capital from the debtor State. This article aims at assessing the possibility of analogous developments for Greece, and pot...
The myth of neutrality permeates many spheres of international law. In the law of sovereign debt ... more The myth of neutrality permeates many spheres of international law. In the law of sovereign debt restructuring, it is under pressure, especially in the aftermath of the Global Financial Crisis. The key assumption is that the status quo allows the market to freely develop its own standards, and use contracts to autonomously structure their bargains. Secondly, the actors of sovereign debt restructuring (such as the Institute of International Finance) are sometimes labelled as hybrid public-private entities. This aims at legitimating them as neutral, by implying that they fairly and adequately take into account and balance all the interests at stake. Thirdly, the procedure followed by the International Monetary Fund (IMF) during a restructuring is supposed to be neutral, and follow the same steps for all countries affected. This paper critiques each of these assumptions. Firstly, it takes issue with the notion that the current framework for sovereign debt restructurings is purely an offspring of the practices of market actors. Free markets and freedom of contract are commonly held as the keystones of neutrality: the entities active on a market are free to shape their economic bargains in the manner that best suits their needs and interests. Without external, top-down imposition of rules, these rational actors will come to an efficient contractual settlement of their transactions. In the sovereign debt restructuring field, this translated into the adoption and diffusion of collective action clauses (CACs). Commonly used in corporate bonds under English law, such provisions allow a majority of bondholders to bind all of them to a change of bond terms. Both in 2001-3 and in 2014-5, when, respectively, the IMF and the UN General Assembly debated the establishment of public international law mechanisms to restructure sovereign debt, the political response was to point to CACs as the most feasible alternative, which had come about from the market itself. This brought to an end a momentum which could have led to significant legal reforms on both occasions. However, the contractual solution based on CACs was not the natural outgrowth of the markets. It was a considerable effort on the part of the US Treasury (and others) that spurred the introduction and subsequent reform of CACs. In 2015, the final outcome was left to a representative of private actors, the International Capital Market Association, in order to present the clauses as a market standard. In reality, the objective was to preserve the US’ role in international financial markets by keeping New York law and its courts in charge of sovereign debt disputes. The problems arising from the extraterritorial reach of Judge Thomas Griesa’s orders for Argentina’s restructured bondholders are clear indicators of the magnitude of the power that a contractually-designated domestic court enjoys, instead of a potential international forum. Secondly, the paucity of international fora, and the rapid changes in the form of sovereign debt (from syndicated bank lending to bonds) have resulted in the legitimation of new institutions. The paramount example is the Institute of International Finance. It played a major role in the restructuring of Greek sovereign debt in 2012. The Institute likes to define itself as a neutral forum which facilitates the exchange of information, a public-private entity which fairly represents the interests of all stakeholders. Nevertheless, a careful analysis of its history, membership, and internal functioning demonstrates that private interests have an overwhelming power. Furthermore, the bigger financial institutions enjoy a more favourable projection than the other members. Thirdly, the procedure that the IMF follows during sovereign debt crises is supposed to be neutral, and assess the sustainability of public debt based on financial data. As a technocratic institution, the Fund purports to establish policies and apply them equally to all countries in need of assistance. However, the recent report by the Independent Evaluation Office has unmistakably shown the different treatment that was reserved to the Eurozone. The urge to safeguard the monetary union led to a significant change in IMF policies. The deference to European authorities not only alienated the other members which had suffered from a harsher treatment in the past, but also resulted in a postponement of the restructuring which proved problematic for Greece. In conclusion, the complexity of the law of sovereign debt restructuring conceals its lack of neutrality. This applies to the content of the law (the contractual approach), the actors involved (the Institute of International Finance), and the processes followed (the IMF’s handling of crises). In a changing geopolitical landscape, the imbalances of such non-neutral system might be radically challenged.
The International Court of Justice gave its Advisory Opinion on the “Accordance with internationa... more The International Court of Justice gave its Advisory Opinion on the “Accordance with international law of the unilateral declaration of independence in respect of Kosovo” few months ago. It found no prohibition in general international law, including state practice, the principle of territorial integrity, Security Council resolutions, the principle of self-determination and the right to remedial secession. Neither Resolution 1244 (1999) nor the Constitutional Framework prevented the authors from declaring independence. The author analyses the Court’s approach, its conclusions and the issues which remain open.
Giuseppe Martinico, joven «García Pelayo» fellow en el Centro de Estudios Políticos y Constitucio... more Giuseppe Martinico, joven «García Pelayo» fellow en el Centro de Estudios Políticos y Constitucionales de Madrid, ha publicado esta última obra en diciembre 2011. Se trata del resultado de años de investigación y de reflexiones presentadas en artículos precedentes y ponencias en diversas universidades europeas. Es un libro muy fluido, con un razonamiento claro, que va desde el principio hasta el final
The on-going global financial crisis has hit Europe in an especially significant manner. With the... more The on-going global financial crisis has hit Europe in an especially significant manner. With the legal vacuum surrounding sovereign debt restructurings, Bilateral Investment Treaties (BITs) and Free Trade Agreements (FTAs) signed by European countries can provide grounds for litigation in future debt crises. The sovereign debt crisis in the heart of the Eurozone has materialized such dangers, and has had an impact on the European Union’s strategy as an actor in international investment. The problems experienced by Argentina before the ICSID have made European countries more aware of the potential hidden in their BITs. This has in turn led to a careful drafting of the CETA and the TTIP, and potentially of all the other major FTAs to follow.
This paper deals with the evolution of investment chapters of Preferential Trade Agreements (PTAs... more This paper deals with the evolution of investment chapters of Preferential Trade Agreements (PTAs). These separate chapters are comparable to self-standing Bilateral Investment Treaties (BITs), and can include both rules on investment liberalisation (non-discrimination safeguards) and on investment protection (standards of treatment afforded by the host State to the foreign investor/investment). The objective is to observe the structure and recurrent patterns of these chapters in order to detect and analyse certain normative trends. The sample of agreements reviewed is limited to the investment agreements concluded (or about to be concluded, when sufficient information is available) by the two major importers and exporters of Foreign Direct Investments (FDIs) – the United States of America and the European Union.After sketching the history and layout of the EU and US systems of investment protection (section 2), section 3 offers a breakdown of the provisions that most effectively illustrates the divide between the two models. In section 4, we examine the current impasse in the new EU’s centralised management of investment policies. Our central claim is then illustrated in section 5: in the long term, the US (NAFTA-like) template is likely to prevail over the European one, because it satisfies the need to fill the gaps in incomplete treaty regimes like those of European BITs. The Canada-EU Trade Agreement (CETA) seems to confirm this trend. In light of these remarks, we observe that future pluri- and multilateral negotiations will increasingly lean towards the NAFTA-model and gradually distance themselves from the European BIT standard (section 6).
The recent decision on jurisdiction and admissibility in Abaclat and others v. Argentina has brou... more The recent decision on jurisdiction and admissibility in Abaclat and others v. Argentina has brought to the public’s attention the issue of sovereign defaults and restructuring. Whilst in the Abaclat case, claimants were mostly individual retirees who then assembled to file a class action, a more frightening protagonist is made up of “vulture” funds. These are hedge funds, or other financial vehicles, which purchase sovereign (or corporate) bonds on secondary markets when their prices are extremely low due to the debtor’s repudiation or inability to pay back. They then litigate before national courts or international arbitral tribunals in order to recover the entire sums accrued. The analysis in this article begins with an overview of the process of sovereign debt restructuring. We then explore the case of a vulture fund which does not participate in a debt restructuring, and proceeds to enforce an award condemning a State to pay on its bonds, outside of the ICSID framework. Art. V(2) of the New York Convention offers two potential grounds to the State: non-arbitrability and public policy. We examine the interpretations given to the two notions in several cases most relevant to our research. Arguably, the interests involved in debt restructuring proceedings do appear to be sufficient to preclude arbitrability of the subject matter, and thus the enforcement of the award may be prevented. Secondly, the permeability of the public policy exception to economic considerations of fundamental importance – such as those involved in sovereign debt restructuring – finds supporting evidence in a host of jurisdictions. The two grounds might thus be used by States to “break the bond” and prevent non-participating vulture funds from obtaining an unfair advantage over the rest of the creditors. The recent decision on jurisdiction and admissibility in Abaclat and others v. Argentina has brought to the public’s attention the issue of sovereign defaults and restructuring. Whilst in the Abaclat case, claimants were mostly individual retirees who then assembled to file a class action, a more frightening protagonist is made up of “vulture” funds. These are hedge funds, or other financial vehicles, which purchase sovereign (or corporate) bonds on secondary markets when their prices are extremely low due to the debtor’s repudiation or inability to pay back. They then litigate before national courts or international arbitral tribunals in order to recover the entire sums accrued. The analysis in this article begins with an overview of the process of sovereign debt restructuring. We then explore the case of a vulture fund which does not participate in a debt restructuring, and proceeds to enforce an award condemning a State to pay on its bonds, outside of the ICSID framework. Art. V(2) of the New York Convention offers two potential grounds to the State: non-arbitrability and public policy. We examine the interpretations given to the two notions in several cases most relevant to our research. Arguably, the interests involved in debt restructuring proceedings do appear to be sufficient to preclude arbitrability of the subject matter, and thus the enforcement of the award may be prevented. Secondly, the permeability of the public policy exception to economic considerations of fundamental importance – such as those involved in sovereign debt restructuring – finds supporting evidence in a host of jurisdictions. The two grounds might thus be used by States to “break the bond” and prevent non-participating vulture funds from obtaining an unfair advantage over the rest of the creditors.
Stanford Journal of International Law, Jun 22, 2014
The present study is concerned with the evolution of investment chapters of Free Trade Agreements... more The present study is concerned with the evolution of investment chapters of Free Trade Agreements (FTAs). Our purpose is to observe the structure and recurrent patterns of the normative content of these chapters in order to ascertain and analyse certain trends. The sample of agreements reviewed is limited to the investment agreements concluded (or about to be concluded, when there is sufficient information) by the two major importers and exporters of Foreign Direct Investment (FDI)—the United States and the European Union. After an overview illustrating the history and layout of the EU and U.S. systems of investment protection (Part I), we provide a breakdown of the provisions that create a gulf between the two models (Part II). In Part III, we describe and analyse the current impasse in the European Union’s newly centralised management of investment policies. Our central claim is then illustrated in Part IV, where we argue that the U.S. (NAFTA-like) template is likely to prevail over the European one, in the long run, because it fills the gaps in incomplete treaty regimes like those recurrent in European Bilateral Investment Treaties (BITs). The Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union seems to confirm this trend. In light of these remarks, we conclude that, in the future, pluri- and multilateral negotiations will increasingly lean towards the NAFTA model and gradually distance themselves from the European BIT standard.
Stanford Journal of International Law, Jun 22, 2014
The present study is concerned with the evolution of investment chapters of Free Trade Agreements... more The present study is concerned with the evolution of investment chapters of Free Trade Agreements (FTAs). Our purpose is to observe the structure and recurrent patterns of the normative content of these chapters in order to ascertain and analyse certain trends. The sample of agreements reviewed is limited to the investment agreements concluded (or about to be concluded, when there is sufficient information) by the two major importers and exporters of Foreign Direct Investment (FDI)—the United States and the European Union. After an overview illustrating the history and layout of the EU and U.S. systems of investment protection (Part I), we provide a breakdown of the provisions that create a gulf between the two models (Part II). In Part III, we describe and analyse the current impasse in the European Union’s newly centralised management of investment policies. Our central claim is then illustrated in Part IV, where we argue that the U.S. (NAFTA-like) template is likely to prevail over the European one, in the long run, because it fills the gaps in incomplete treaty regimes like those recurrent in European Bilateral Investment Treaties (BITs). The Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union seems to confirm this trend. In light of these remarks, we conclude that, in the future, pluri- and multilateral negotiations will increasingly lean towards the NAFTA model and gradually distance themselves from the European BIT standard.
Chapter from the book "Transparency in International Investment Arbitration. A Guide to the UNCIT... more Chapter from the book "Transparency in International Investment Arbitration. A Guide to the UNCITRAL Rules on Transparency in Treaty-Based Investor-State Arbitration", edited by Dimitrij Euler, Markus Gehring, and Maxi Scherer, published by Cambridge University Press in 2015.
The recent decision on jurisdiction and admissibility in Abaclat and others v. Argentina has brou... more The recent decision on jurisdiction and admissibility in Abaclat and others v. Argentina has brought to the public's attention the issue of sovereign defaults and restructuring. Whilst in the Abaclat case, claimants were mostly individual retirees who then assembled to file a class action, a more frightening protagonist is made up of “vulture” funds. These are hedge funds, or other financial vehicles, which purchase sovereign (or corporate) bonds on secondary markets when their prices are extremely low due to the debtor's repudiation or inability to pay back. They then litigate before national courts or international arbitral tribunals in order to recover the entire sums accrued.
The analysis in this article begins with an overview of the process of sovereign debt restructuring. We then explore the case of a vulture fund which does not participate in a debt restructuring, and proceeds to enforce an award condemning a State to pay on its bonds, outside of the ICSID framework. Art. V(2) of the New York Convention offers two potential grounds to the State: non-arbitrability and public policy. We examine the interpretations given to the two notions in several cases most relevant to our research.
Arguably, the interests involved in debt restructuring proceedings do appear to be sufficient to preclude arbitrability of the subject matter, and thus the enforcement of the award may be prevented. Secondly, the permeability of the public policy exception to economic considerations of fundamental importance – such as those involved in sovereign debt restructuring – finds supporting evidence in a host of jurisdictions. The two grounds might thus be used by States to “break the bond” and prevent non-participating vulture funds from obtaining an unfair advantage over the rest of the creditors.
PhD Fellow at the Universities of Oslo and Paris 1 Panthéon-Sorbonne. Member of the Editorial Boa... more PhD Fellow at the Universities of Oslo and Paris 1 Panthéon-Sorbonne. Member of the Editorial Board of the Italian Society of International Law's Blog (SIDIBlog). He graduated in Law from the University of Pisa, and obtained masters in general international law and international economic law at Université Panthéon-Sorbonne. He holds diplomas from the Sant’Anna School of Advanced Studies of Pisa and the Ecole normale supérieure of Paris, and was Visiting Scholar at the Lauterpacht Centre in Cambridge and Fellow of the Centre for Studies and Research of The Hague Academy of International Law. Trainee at the G20 Sherpa Office of the OECD in 2013. Winner of the 2009 Sperduti moot court on European Human Rights Law. Judge at the Spanish national rounds of the Philip C. Jessup International Law Moot Court Competition 2014.
Main research interests: public international law, international economic law, investment law and arbitration, financial regulation, European Union law.
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Papers by Giuseppe Bianco
The analysis in this article begins with an overview of the process of sovereign debt restructuring. We then explore the case of a vulture fund which does not participate in a debt restructuring, and proceeds to enforce an award condemning a State to pay on its bonds, outside of the ICSID framework. Art. V(2) of the New York Convention offers two potential grounds to the State: non-arbitrability and public policy. We examine the interpretations given to the two notions in several cases most relevant to our research.
Arguably, the interests involved in debt restructuring proceedings do appear to be sufficient to preclude arbitrability of the subject matter, and thus the enforcement of the award may be prevented. Secondly, the permeability of the public policy exception to economic considerations of fundamental importance – such as those involved in sovereign debt restructuring – finds supporting evidence in a host of jurisdictions. The two grounds might thus be used by States to “break the bond” and prevent non-participating vulture funds from obtaining an unfair advantage over the rest of the creditors.
The analysis in this article begins with an overview of the process of sovereign debt restructuring. We then explore the case of a vulture fund which does not participate in a debt restructuring, and proceeds to enforce an award condemning a State to pay on its bonds, outside of the ICSID framework. Art. V(2) of the New York Convention offers two potential grounds to the State: non-arbitrability and public policy. We examine the interpretations given to the two notions in several cases most relevant to our research.
Arguably, the interests involved in debt restructuring proceedings do appear to be sufficient to preclude arbitrability of the subject matter, and thus the enforcement of the award may be prevented. Secondly, the permeability of the public policy exception to economic considerations of fundamental importance – such as those involved in sovereign debt restructuring – finds supporting evidence in a host of jurisdictions. The two grounds might thus be used by States to “break the bond” and prevent non-participating vulture funds from obtaining an unfair advantage over the rest of the creditors.
Main research interests: public international law, international economic law, investment law and arbitration, financial regulation, European Union law.