Footnotes:
1 Mauro Megliani, Sovereign Debt: Genesis, Restructuring, Litigation (2015) 188.
2 Wolfgang Friedmann, Law in a Changing Society (1972) 472–73.
3 Lee Buchheit, Mitu Gulati, and Ignacio Tirado, ‘The Problem of Holdout Creditors in Eurozone Sovereign Debt Restructurings’ (2013) 4 JIBFL 191, 193.
4 Joseph Cotterill, ‘Ukraine’s Bonds: A Little Local Leverage’ (26 March 2015) FT Alphaville.
5 Restatement (Second) on Conflict of Laws (1969) §§187–88.
6 Federico Sturzenegger and Jeromin Zettelmeyer, Debt Defaults and Lessons from a Decade of Crises (2006) 58.
8 From forty-two questionnaires sent, eighteen responses were received: Albania, Argentina, Australia, Belgium, Brazil, Bulgaria, Costa Rica, Cyprus, Czech Republic, Denmark, Estonia, Finland, Hungary, Latvia, Lithuania, Switzerland, the United Kingdom, and Uruguay.
10 The Information Memorandum relating to the Issue, Stripping and Reconstitution of British Government Stock (published on 20 August 2007 and subsequently updated on 15 August 2011) s 103.
11 See, eg, 2% Index-Linked Treasury Stock 2035, Issue of £675,000,000, United Kingdom, 2 December 2003 (no choice of law clause).
12 See, eg, Kahler v Midland Bank [1950] AC 24, 28; Zivnostenska Banka v Frankman [1950] AC 57, 69–70. See also Re United Railways of Havana and Regla Warehouses Ltd [1961] AC 1007, 1067–68 (per Lord Denning); Clive Schmitthoff, ‘The International Government Loan’ (1937) 19(4) J Comp L & Intl L 179, 193.
13 Art 6, Law of the Russian Federation on the Particularities of the Issuance and Trading of State and Municipal Securities (1998).
14 IMF, ‘Sovereign Debt Restructuring Mechanism—Further Considerations’ (2002) 12. Similarly, no single criterion is used in defining ‘External Indebtedness’, a definition used by many sovereign bonds. ‘External Indebtedness’ is either defined through the place of issuance (see, eg, Commonwealth of Bahamas, US$100,000,000, 7.125% Notes due 2038, p 32), currency (see, eg, Arab Republic of Egypt, US$1,000,000,000, 5.75% Notes due 2020, p 82), or governing law (see, eg, Republic of Slovenia, €1,500,000,000, 4.700%, Notes due 2016, p 18).
15 Henrik Enderlein, Christoph Trebesch, and Laura von Daniels, ‘Sovereign Debt Disputes: A Database on Government Coerciveness during Debt Crises’ (2011) 30 J Intl Mon & Fin 1, 12 (in six domestic debt restructurings large shares of domestic debt were held by foreign residents); Carmen Reinhart and Kenneth Rogoff, ‘The Forgotten History of Domestic Debt’ (2008) NBER Working Paper 13946, 45–48; Kevin Cowan, Eduardo Levy-Yeyati, Ugo Panizza, and Federico Sturzenegger, ‘Sovereign Debt in the Americas: New Data and Stylized Facts’ (2006) Working Paper of Inter-American Development Bank No 577, 21.
17 League of Nations Study Committee Report, II Econ and Finan (1939b) II.A 10, 6–7.
18 Edwin Borchard, State Insolvency and Foreign Bondholders, vol 1 (1951) 75.
19 Canevaro Brothers (Italy v Peru), 3 May 1912 (1912) 6 AJIL 746, 750 (but refraining from inquiring what the decision would have been had the debt been owed to foreign residents at the time of the restructuring of bonds).
20 Herbert Kronke, ‘Capital Markets and Conflict of Laws’ (2000) 286 Recueil des Cours 245, 300–01; Francisco Garcimartín Alférez, ‘Cross-Border Listed Companies’ (2007) 328 Recueil des Cours 9, 78–79.
21 Kronke (n 20) 368; Robert Ahdieh, ‘Making Markets: Network Effects and the Role of Law in the Creation of Strong Securities Markets’ (2003) S Cal L Rev 277, 284, fn 20. See also the finding of the District Court that the admittedly domestic bonds of Argentina, governed by its domestic law, were offered outside Argentina (NML Capital Ltd v The Republic of Argentina, 2015 US Dist LEXIS 30625, 40–41 (SDNY 2015)).
22 Order no 60 of the Ministry of Finance of the Russian Federation on the Emission of Internal Bonds of the Russian Federation on International Capital Markets of Bonds, 25 February 2011.
23 The purchase of retail bonds, although limited in practice, can nevertheless be an attractive option for foreign creditors, for two reasons: (1) retail bonds, generally purchased by domestic retail bondholders, are unlikely to be restructured for the reasons of domestic politics; (2) foreign creditors can easily construct a blocking position in the relatively small-scale issue of retail bonds.
24 Hans Blommestein, ‘Responding to the Crisis: Changes in OECD Primary Market Procedures and Portfolio Risk Management’ (2009) 2 OECD Journal: Financial Market Trends, 12. In the EU, only thirteen Member States use the system of primary dealer (Economic and Financial Committee, ‘Progress Report on Primary Dealership in EU Public Debt Management’ (2000), EFC/ECFIN/665/00-En-fin, 1).
25 Jakob de Haan, Sander Oosterloo, and Dirk Schoenmaker, Financial Markets and Institutions: A European Perspective (2012) 143.
28 Norwegian Loans Case (France v Norway), 1957 ICJ Rep 9.
29 Mémoire Soumis par le Gouvernement de la République Française, 20 décembre 1955, 29–30; Réplique du Gouvernement Français, 20 février 1957, 386–89 (available at www.icj-cij.org).
30 Contre-Mémoire du Gouvernement du Royaume de Norvège, 20 décembre 1956, 263 (available at www.icj-cij.org).
31 Norwegian Loans Case (n 28) 23.
33 Abaclat and others v The Argentine Republic, Decision on Jurisdiction and Admissibility of 4 August 2011, ICSID Case No ARB/07/5, para 379 (affirming the procedural character of choice of forum agreements).
34 Georges Delaume, Legal Aspects of International Lending and Economic Development Agreements (1967) 92; ILA, ‘The Hague Conference Report: Sovereign Insolvency Study Group’ (2010b) 9.
35 Stefan Weber, ‘The Law Applicable to Bonds’ in Hans van Houtte (ed), The Law of Cross-Border Securities Transactions (1999) 31.
36 On which see Peter Cresswell, William Blair, and Philip Wood (eds), Butterworths Encyclopaedia of Banking Law (2013) F-228, 251.
37 Giuliano–Lagarde Explanatory Report to the Rome Convention on the Law Applicable on Contractual Obligations [1980] OJ C 282/1, 11.
38 Richard Plender and Michael Wilderspin, The European Private International Law of Obligations (2009) 110. For a contrary view arguing that bonds are indeed negotiable instruments, see Ravi Tennekoon, The Law and Regulation of International Finance (1991) 19, 164–65.
39 Plender and Wilderspin (n 38) 110.
41 Compare the more flexible conflict of laws methodology employed by the US courts in the context of sovereign bonds (Salah Turkmani v The Republic of Bolivia, 193 F Supp 2d 165, 177 (DDC 2002)).
42 Kareda v Benkö, Case C-249/16, ECLI:EU:C:2017:472. See also Kronke (n 20) 349. For a contrary view, see Pietro Franzina, ‘Sovereign Bonds and the Conflict of Laws: A European Perspective’ in Pasquale Nappi et al (eds), Studi in onore di Luigi Costato (2013) 11.
43 For a similar reasoning in the context of supply and promotion of products, see Print Concept v GEW [2002] CLC 352.
44 Lord Collins of Mapesbury et al (eds), Dicey, Morris & Collins on the Conflict of Laws, vol 2 (2012) 2057; Peter Kaye, The New Private International Law of the European Community (1993) 182.
45 [2015] EWHC 3419 (Comm), para 92.
46 See, eg, Haeger & Schmidt GmbH v Mutuelles du Mans Assurances IARD (MMA IARD), Case C-305/13, ECLI:EU:C:2014:2320, paras 43–51 (finding that when the first forwarding agent has been replaced by the second forwarding agent, the court has to apply the law of habitual residence of the first forwarding agent).
47 Megliani (n 1) 198–99.
48 Eva Lein, ‘Jurisdiction and Applicable Law in Cross-Border Mass Litigation’ in Fausto Pocar, Ilaria Viarengo, and Francesca Clara Villata (eds), Recasting Brussels I (2012) 169–70; Linda Silberman, ‘The Role of Choice of Law in National Class Actions’ (2007–08) 156 U Pa L Rev 2001, 2022–24, 2031; Astrid Stadler, ‘Conflicts of Laws in Multinational Collective Actions—A Judicial Nightmare?’ in Duncan Fairgrieve and Eva Lein (eds), Extraterritoriality and Collective Redress (2012) 207–08.
49 Stadler (n 48) 208, 212–13; Lein (n 48) 171.
50 Stadler (n 48) 208, 211.
51 André Jacquemont, L’Emission des emprunts euro-obligataires (1976) 176; Megliani (n 1) 196–97.
52 Smith v Weguelin (1869) LR 8 Eq 198, 213 (holding that ‘the same law should regulate the whole’ of loan obligations contracted by the sovereign); Goodwin v Robarts (1876) 1 App Cas 476, 495; PCIJ, Serbian Loans Case, Ser A, No 21 (1929), 42 (attempting to determine a single law to govern the network of relations between various bondholders and the sovereign debtor, implicitly rejecting the possibility of subjecting the bonds to diverse laws). See also the decision of the Swedish Supreme Court in Skandia Insurance Company Ltd v Swedish National Debt Office (1937) 18 BYBIL 215, 216.
53 [2015] EWHC 3419 (Comm), para 94.
54 Mount Albert Borough Council v Australasian Temperance and General Mutual Life Assurance Society [1938] AC 224, 239.
55 Borchard (n 18) 67; FA Mann, ‘The Proper Law of Contracts Concluded by International Persons’ in FA Mann, Studies in International Law (1973), 220; Jean-Flavien Lalive, ‘Recent Version: Abrogation or Alteration of an Economic Development Agreement between a State and a Private Foreign Party’ (1961–62) 17 Bus Law 434, 436, fn 7; Smith v Weguelin (1869) LR 8 Eq 198, 213; Skandia Insurance Company Ltd (n 52) 215, 216; Conseil d’Etat 28 novembre 1958, ‘Dame Langlois’ (1960) Clunet 444; Gouvernement Ottoman c. Comptoir d’escompte et consorts, Trib civ de la Seine, 3 mars 1875 (1877) Sirey 25.
56 US–Mexican General Claims Commission, George Cook v United Mexican States (1927) RSA IV 213, 215.
57 Ser A, No 21 (1929), 42, No 22 (1929), 121. See also Separate Opinion of Judge Sir Hersch Lauterpacht in the Case of Certain Norwegians Loans (France v Norway) (1957) ICJ Rep 37; Separate Opinion of Abdel Badawi in the Case of Certain Norwegians Loans (France v Norway) (1957) ICJ Rep 30; Saudi Arabia v Aramco (1963) 27 ILR 117, 167.
58 Dissenting Opinion in the Brazilian Loans Case, Ser A, No 21 (1929) 130.
60 Ser A, No 21 (1929), 114. Provided, of course, that the doctrine has any role to play in debt contracts (William Bratton, ‘The Interpretation of Contracts Governing Corporate Debt Relationships’ (1983–84) 5 Cardozo L Rev 371, 380–81). Sovereign bonds are not strictly speaking contracts of adhesion, given that the underwriters would generally negotiate the terms and conditions of sovereign bonds.
66 On diverse factors affecting the composition of government debt, see Allan Drazen, ‘Towards a Political–Economic Theory of Domestic Debt’ (1997) NBER Working Paper 5890; Peter Diamond, ‘National Debt in a Neoclassical Growth Model’ (1965) 55(5) Am Econ Rev 1126; Eduardo Levy Yeyati, ‘Dollars, Debt, and International Financial Institutions: Dedollarizing Multilateral Lending’ (2007) 21(1) World Bank Economic Review 21.
67 For dicta that might be read in the same way, see Smith v Weguelin (1869) LR 8 Eq 198, 213; Goodwin v Robarts (1876) 1 AC 476, 494. Rex v International Trustee for the Protection of Bondholders [1937] AC 500, 566 rejected such an extensive reading of these cases.
69 Note, ‘Decisions of National Tribunals involving Points of Public or Private International Law’ (1937) 18 BYBIL 210, 218; Wilfred Jenks, ‘The Authority in English Courts of Decisions of the Permanent Court of International Justice’ (1939) 20 BYBIL 1, 6.
71 Note, ‘Conflict of Laws and the Gold Clause in Foreign Government Bonds’ (1937) 46(5) Yale LJ 891, 895; Bruno Zanghirati, ‘Sovereign Indebtedness: The Complex Relations between Banks and States’ (1896–97) 7 IYBIL 133, 145.
72 Delaume (n 34) 101–02. See also Jean-Flavien Lalive, ‘Unilateral Alteration or Abrogation by either Party to a Contract between a State and a Foreign National’ in Symposium on the Rights and Duties of Foreigners in the Conduct of Industrial and Commercial Operations Abroad, Rights and Duties of Private Investors Abroad (1965) 271; Cresswell et al (n 36) F-305. Contra see Georges Sausser-Hall, ‘La clause-or dans les contrats publics et privés’ (1937) 60 Recueil des Cours 651, 754.
73 The Metamorphosis [1953] 1 WLR 543, 547.
74 George van Hecke, Problèmes juridiques des emprunts internationaux (1964) 75–76 (citing Swedish, Austrian, and Norwegian cases).
75 Schmitthoff (n 12) 192–93.
76 Haeger & Schmidt GmbH v Mutuelles du Mans Assurances IARD (MMA IARD), Case C-305/13, ECLI:EU:C:2014:2320, paras 43–51 (finding that the habitual residence of the second forwarding agent should be taken into account in locating the manifestly more closely connected law).
77 Delaume (n 34) 91. But the language of the contract might not carry great weight.
78 Davidson Sommers, Aaron Broches, and Georges Delaume, ‘Conflict Avoidance in International Loans and Monetary Agreements’ (1956) 21 L & Contemp Prob 463, 472.
79 Richard Fentiman, International Commercial Litigation (2015) 210–14.
80 Mount Albert Borough Council v Australasian Temperance and General Mutual Life Assurance Society [1938] AC 224, 239 (in respect of local authorities),
81 Apple Corps v Apple Computer [2004] EWHC 768, para 63.
82 Perry v United States, 294 US 330, 348 (1935).
83 See, eg, Art 115(1) of the Basic Law of the Federal Republic of Germany on which see in detail, Paul Kirchhof, ‘The Public Debt, Democratic Principles and the Rules of Law’ in Detlev Dicke (ed), Foreign Debts in the Present and a New International Economic Order (1986) 339.
84 See, eg, Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, 2 March 2012.
86 Cresswell et al (n 36) F-306.
87 Derek Bowett, ‘State Contracts with Aliens: Contemporary Developments on Compensation for Termination or Breach’ (1988) 59 BYBIL 49, 53.
88 Delaume (n 34) 86–88, 91, 100.
91 Michael McParland, The Rome I Regulation on the Law Applicable to Contractual Obligations (2015) 415.
94 Writers have since long noted the artificiality of the distinction (Anna Gelpern, ‘Domestic Bonds, Credit Derivatives, and the Next Transformation of Sovereign Debt’ (2008) 83 Chi-Kent L Rev 101, 133; UNCTAD (n 32) 5).
95 See Chapter 6, section II.
96 Banco Santander Totta Sa v Companhia Carris De Ferro De Lisboa Sa [2016] EWCA Civ 1267, paras 65–67.
97 Dexia Crediop SPA v Comune di Prato [2017] EWCA Civ 428, paras 130–34.
98 Jonathan Harris, ‘Mandatory Rules and Public Policy under the Rome I Regulation’ in Franco Ferrari and Stefan Leible (eds), The Rome I Regulation (2009) 315.
99 Lord Collins of Mapesbury et al (n 44), vol 2, para 32-096.
100 Andrea Bonomi, ‘Article 9’ in Ulrich Magnus and Peter Mankowski, Rome I Regulation: European Commentaries on Private International Law (2017) 647.
101 Kareda v Benkö, Case C-249/16, ECLI:EU:C:2017:472.
102 Bonomi, ‘Article 9’ in Magnus and Mankowski (n 100) 645–46.
103 Definitely Maybe Ltd v Lieberberg GmbH [2001] 1 WLR 1745, para 4.
104 De Beéche v South American Stores (Gath & Chaves) Ltd [1935] AC 148 (bills of exchange handed over in Chile where the controls were adopted).
106 [1997] All ER (D) 124.
109 Trevor Hartley, International Commercial Litigation: Text, Cases and Materials on Private International Law (2015) 672.
110 [2015] EWHC 2377 (Comm), paras 38–40.
111 Republik Griechenland v Grigorios Nikiforidis, Case C-135/15 [2016] ECR EU:C:2016:774.
114 Ispahani v Bank Melli Iran [1997] All ER (D) 124. See also Republic Griechenland v Grigorios Nikiforidis, Case C‑135/15, ECLI:EU:C:2016:774.
115 Weber, ‘The Law Applicable to Bonds’ in van Houtte (n 35) 39.
116 Ispahani v Bank Melli Iran [1997] All ER (D) 124; Wilson, Smithett & Cope Ltd v Terruzzi [1976] QB 683. In support of this position, see, eg, Lester Nurick, ‘The IMF Articles of Agreement’ in David Sassoon and Daniel Bradlow (eds), Judicial Enforcement of International Debt Obligations (1987) 107.
117 Libra Bank Ltd v Banco Nacional de Costa Rica, 570 F Supp 870, 897 (SDNY 1983); J. Zeevi & Sons, Ltd v Grindlays Bank (Uganda) Ltd, 37 NY 2d 220 (NY 1975).
118 Weston Banking v Turkiye Garanti Bankasi, 57 NY 2d 315, 326 (1982).
119 George Weisz, Nancy Schwarzkopf, and Mimi Panitch, ‘Selected Issues in Sovereign Debt Litigation’ 12(1) U Pa J Intl Bus L 1 (1991), 1–2. In support of this position, see Dominique Carreau, ‘Rapport du directeur d’études de la section française du centre’ in Dominique Carreau and Malcolm Shaw (eds), The External Debt (1995) 22. But see Armin von Bogdandy and Mathias Goldmann, ‘Sovereign Debt Restructurings as Exercises of International Public Authority: Towards a Decentralized Sovereign Insolvency Law’ in Espósito Carlos, Li Yuefen, and Bohoslavsky Juan Pablo (eds), Sovereign Financing and International Law: The UNCTAD Principles on Responsible Sovereign Lending and Borrowing (2013) 63 (German courts do not accept the expansive interpretation of Art VIII).