AuthorPoornimah Devi Sookun
We have seen that nothing shor t of legislation will stop these investors
from their outrageous practices.
Nick Dearden, Director of the Jubilee Debt Campaign66
Whatever the hopes and whatever moral pressure is applied, there has been increas-
ing recognition that without legislation to regulate vulture funds it will be dif ficult
to stop their exploitative practices.
Jurisdictions such as those of the UK, USA and France have been very involved, since
commercial creditors opt for the favourable law of contract of these countries in
nearly all loan agreements. Whilst commercial creditors can easily afford to defend
cases in these countries, sovereign debtors cannot. The negative outcome of a law-
suit has even more devastating consequences for a country than its immediate socio-
economic ef fects, especially if the lawsuit is not dealt with properly from a legal
perspective. It is a mistake to consider this as a purely socio-economic issue which
can be dealt with on a voluntary basis or by passing moral judgements.
According to the law of contract, both parties are bound by their intentions and
their intentions are reflected in the loan agreement. In such cases it is impossible to
ask the court to interpret the obligations of the sovereign debtor in a manner contrary
to the stipulations made in the agreement. The only exception that can be validly used
to cancel the obligation of either party is if the nature of the contract is against
public order. Even if it is clear that aggressive litigation by a vulture fund is disrupt-
ing the greater global good, the court still has to interpret according to the terms
of the loan agreement. In the recent vulture fund case of Hamsah Investments and
Wall Capital Ltd brought against Liberia in the UK courts, the judge, Mr Justice
Burton, said:67
The only issue raised is plainly a sad one, that Liberia is a poor country, and can-
not afford it.

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