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Resolving Argentina's Sovereign Debt Crisis: US Courts and Multilateral Solutions

Explore Argentina's default on $100 billion debt, court rulings, bondholder impasse, and the need for multilateral systems for debt resolution. Analyze impact on trade and propose policy solutions.

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Resolving Argentina's Sovereign Debt Crisis: US Courts and Multilateral Solutions

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  1. Argentine Sovereign Debt and US Courts Thomas Vari

  2. Overview • 2002 – Argentina defaults on $100 Billion in sovereign debt • 2005 & 2010 – 92% of bondholders accept restructuring for between 25 and 29 cents on the dollar • 2012 – US district judge rules remaining 8% of holdout bondholders must be paid in full • 2013 – Argentina’s appeal against ruling not accepted; Argentina and holdouts at impasse

  3. Issues • US court does not face mechanism to force payment by Argentina • Backlash from bondholders who accepted restructuring • Question of how far the jurisdiction of US courts goes when ruling on the affairs of sovereign nations • No multilateral system exists to force payment.

  4. Policy Proposal • To address how Argentina and its bondholders, both holdout and restructured, can reach a middle ground resulting in payment of bonds • To clarify the power of US courts with regards to sovereign nations • To examine possible multilateral solutions to avoid future recurrences of debt standoffs • To examine the impact of the court’s ruling on international trade and how this impact may be mitigated

  5. Sources • http://www.reuters.com/article/2013/02/28/us-argentina-debt-appeal-idUSBRE91Q1CC20130228 • http://www.nytimes.com/2013/03/02/world/americas/argentina-us-court-orders-debt-repayment-plan.html?_r=0 • http://www.economist.com/blogs/americasview/2013/04/argentinas-debt-default • http://ehis.ebscohost.com.mutex.gmu.edu/ehost/detail?vid=4&sid=9d304a28-daec-4adc-91e3-a0000e963987%40sessionmgr13&hid=2&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT1zaXRl#db=bth&AN=84394614 • http://ehis.ebscohost.com.mutex.gmu.edu/ehost/detail?vid=4&sid=9d304a28-daec-4adc-91e3-a0000e963987%40sessionmgr13&hid=2&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT1zaXRl#db=bth&AN=44131722 • http://www.ft.com/cms/s/0/6ccc360e-99f0-11e2-83ca-00144feabdc0.html#axzz2Qg1NAFYg • http://online.wsj.com/article/SB10001424127887323466204578384421042409206.html

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