A Fair Hearing for Sovereign Debt – Joseph E. Stiglitz and Martin Guzman

Regarding the Argentina debt negotiations, a court in the United Kingdom has decided that ‘Argentina’s interest payments on bonds issued under UK law are covered by UK law, not US judicial rulings”.

Please read which, Joseph Stiglitz and Martin Guzman think, will be the consequences of such decision.

We publish the first three paragraphs and links to the full text   and to court decision.




NEW YORK – Last July, when United States federal judge Thomas Griesa ruled that Argentina had to repay in full the so-called vulture funds that had bought its sovereign debt at rock-bottom prices, the country was forced into default, or “Griesafault.” The decision reverberated far and wide, affecting bonds issued in a variety of jurisdictions, suggesting that US courts held sway over contracts executed in other countries.

Ever since, lawyers and economists have tried to untangle the befuddling implications of Griesa’s decision. Does the authority of US courts really extend beyond America’s borders?

Now, a court in the United Kingdom has finally brought some clarity to the issue, ruling that Argentina’s interest payments on bonds issued under UK law are covered by UK law, not US judicial rulings. The decision – a welcome break from a series of decisions by American judges who do not seem to understand the complexities of global financial markets – conveys some important messages.