5 Unilateral Modification of Sovereign Domestic-Law Bonds

Subject(s):

Bonds — Debt — Sovereign debt

Chapter 5 addresses whether the State may modify domestic-law governed bonds in a unilateral fashion by passing an Act of Parliament. Contrary to the common belief, the chapter claims that English courts will, or at least should, deny recognition to unilateral modifications of domestic-law obligations so long as they conflict with English public policy. The chapter makes a reservation for certain types of unilateral modification (e.g. moratorium on payment) which are not so objectionable a modification as to trigger the exception of public policy.