4 Governing Law of Sovereign Bonds

Subject(s):

Bonds — Debt — Sovereign debt

Chapter 4 examines the law applicable to sovereign domestic bonds in the absence of a choice of law provision. It is commonly believed that the domestic debt is necessarily governed by the law of the sovereign. The chapter challenges that premise by arguing that the law of the creditor should apply instead on the ground that the creditor is the party providing the characteristic performance. The chapter examines the possibility of escaping the governing law in favour of, among others, the law of the sovereign debtor. Lastly, the chapter examines the applicability of mandatory provisions in sovereign debt litigation.