In 2001, Argentina defaulted on more than ninety-five billion dollars in external debt. At the time, this constituted the largest sovereign default in history. Argentina initiated two restructurings in 2005 and 2010, allowing holders of defaulted bonds to exchange their bonds for new debt at a rate of twenty-five to twenty-nine cents on the dollar, thus restructuring more than ninety-one percent of the foreign debt on which it had defaulted in 2001. Hedge funds specializing in trading distressed sovereign debt, such as Elliott Associates, purchased large amounts of Argentinian debt at a significant discount on the secondary market, and “held out”—they refused to join the restructurings and sought full collection of their debt.
In February 2012, Judge Griesa of the District Court for the Southern District of New York issued orders enjoining Argentina from making payments on its restructured 2005 and 2010 debt without making ratable payments to NML Capital, a distressed-debt hedge fund affiliated with Elliott Associates. In October 2012, a unanimous panel of the Second Circuit substantially affirmed the orders. Argentina was not to make full payment on its restructured debt without also making full payment to the holdout plaintiffs.
According to commentators, Judge Griesa’s orders constituted an attempt at reviving an infamous and supposedly long-dead doctrine: the “ratable payment” interpretation of the pari passu clause. Pari passu is a latin phrase meaning “by equal step,” or “[p]roportionally; at an equal pace; without preference.” The “ratable payment” interpretation consists in reading the pari passu clause as requiring ratable payment of all creditors. When the Second Circuit affirmed Judge Griesa’s orders, many commentators announced the end of sovereign debt restructuring as we know it. Central to any sovereign debt restructuring is resumption of payment to restructured bondholders only, and the ratable payment interpretation of the pari passu clause makes this selective resumption of payment impossible. The decision, therefore, would seem to doom consensual sovereign debt restructuring.
“[Al Qaeda] does not follow a traditional command structure, wear uniforms, carry its arms openly, or mass its troops at the borders of the nations it attacks.”
Strengthening Judicial Independence in the New Constitutional Democracies of Central and Eastern EuropeWritten by Hon. John M. Walker, Jr. and Daniel J.T. Schuker
Last summer, chief justices and leading jurists of Central and Eastern Europe convened in Prague for a three-day Conference of Chief Justices—the first regional gathering of its kind. The participants, representing the judiciaries of fifteen countries in the area, discussed the particular challenges they face in building effective judiciaries consistent with the rule of law.
Climate change is popularly reported as a story about shifting geopolitics, new and emerging economies, and scientific intrigue. Although those characterizations are accurate, climate change is most importantly about people. The consequences of climate change—melting glaciers, ocean acidification, more frequent and intense storms, and droughts —threaten people’s daily lives, cause health crises, threaten food security, destroy industries and infrastructure, render borders unstable, and cripple economies. In Kiribati, a small island country in the South Pacific, rising seas have forced the government to prepare to resettle its entire population—and upend its ancient history, culture, and way of life.
Throughout the past months, Iran and the United States have been rattling their sabers over nuclear inspections and new sanctions. A potential flashpoint is the waterway Strait of Hormuz, which Iran is threatening to close. The Middle East region supplies 70 percent of the world’s energy needs, with about 35 percent of the world’s seaborne oil exports shipped through this tight sea passage in the Persian Gulf separating Oman and Iran. A blockade of the Strait of Hormuz would be fatal for the world economy.
As cyber-warfare rapidly evolves from a theoretical possibility into an imminent threat, scholars have rightly focused on how international law should apply to this new security concern. Of particular debate is how to define which cyber-acts would constitute an "armed attack" implicating a state’s right to forcible self-defense under Article 51 of the U.N. Charter. The leading proposal for answering this question is an effects-based inquiry that asks whether the impacts of a cyber-attack resemble those caused by military force. But this approach is as notable for what it leaves out of the "armed attacks" category as what it brings into it. Under an effects-based analysis, a broad range of damaging and disruptive cyber-actions would remain outside the scope of "armed attacks" under international law. Jus ad bellum only gets you so far on the cyber frontier.
New Directions in Responsibility: Assessing the International Law Commission’s Draft Articles on the Responsibility of International OrganizationsWritten by Kristen E. Boon
The International Law Commission’s (ILC) Draft Articles on the Responsibility of International Organizations (Draft Articles) are a critical new development in the law regulating international organizations (IOs). If adopted, these Articles will create a legal framework—although not a forum—to sue IOs that commit internationally wrongful acts. The Draft Articles create a law of "consequences": they lay out rules of attribution, excuses precluding wrongfulness, effects of a breach, and principles of reparations. The 2011 military intervention in Libya highlights the practical application of these principles.