Stop Vulture Fund Lawsuits

A Handbook

image of Stop Vulture Fund Lawsuits

Vulture funds, funds that buy up the debt of sovereign countries at a discount in the hope of making significant profits, have caused considerable problems to a number of highly indebted countries. The Commonwealth Secretariat’s Legal Debt Clinic advises governments on best practice in negotiating loan agreements, and how to respond to the activities of vulture funds. This handbook distils the key lessons from that work, for the benefit of all government officials who may have to deal with these issues.




Until recently lawsuits against sovereign states were rare. In the past, sovereign states enjoyed immunity from litigation. However, this situation changed dramatic ally when countries began to borrow money and entered into loan agreements to raise capital for economic development and infrastructure. Borrowing became an attractive solution for the least developed countries (LDCs), and in many cases a necessity. But borrow ing means repayment, and even for a sovereign state the obligations of a loan contract do not disappear. Creditors cannot be forced to negotiate restructuring or refinancing plans, or an alternative option to demanding repayment. They cannot be barred from taking the ultimate solution under a loan agreement – suing the sovereign state before a court of law.


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