Towards a Multilateral Framework for Recovery from Sovereign Insolvency

This chapter proposes that the UN General Assembly formulates a set of principles to guide governments and international institution creditors when restructuring sovereign debt and guide the IMF as representative of the international community in assessing restructuring needs. The principles would also guide national courts which would oversee restructuring of sovereign bonds and bank loans issued under national law. An innovative feature is that UNCITRAL would prepare a model law for national governments that would provide common guidance across jurisdictions for court supervision of restructuring of private claims. While sovereigns would continue to negotiate restructurings separately with each class of creditors, the indebted government or creditor groups could appeal the workout to the Permanent Court of Arbitration in The Hague for violating the principles.