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international finance archive 2021

Week 5: February 25:Here is the reading material for week 5: International Finance Chapter 3c: Sovereigns 3
Lecture: Standard Form Contracts (including CACs)

This packet of material includes material in 3 different sections:

First, 2 cases arising out of the situation in Venezuela where Juan Guaidó’s claims to be recognized as interim President, accepted by many countries, led to situations involving competing claims to control of assets. So these cases raise different issues relating to sovereigns to those we have looked at so far. Not how courts adjudicate claims by creditors against sovereign debtors, but how courts may navigate sovereignty in other contexts.

Second, a question whether Ukraine can avoid obligations under a note issue to Russia (the holder of the notes) based on claims that the notes were entered into as a result of duress. The claim is brought in the English courts, so involves a domestic court navigating a dispute between two sovereigns. Normally we would expect this type of litigation to take place in an international court or arbitral forum, but that is not what is happening here.

Third, a case involving the English High Court deciding what impact unilateral US sanctions have on financial activity based in London (but where the deposit accounts in question are denominated in US dollars). This material at the end refers to IOSCO Principles for Financial Market Infrastructures, and therefore also relates to the regulation topic.

At the end of class on February 18 I noted the IMF’s suggestion that perhaps the UN Security Council might be an appropriate body to take action relating to sovereign debt issues created by the pandemic. Later on we will consider sanctions measures adopted by the Security Council. In Chapter 1 I wrote that mostly in the international finance context we are not dealing with international law as such. And when we were reading about sovereign immunity we were really focusing on the application of domestic statutes (in particular the FSIA) rather than on the international law relating to sovereign immunity. Again in thse cases we are seeing domestic courts applying domestic law, but there are also questions about the extent to which what the courts are doing is consistent with international law.

After Thursday’s class I added a couple of links to material I mentioned in class. You can find those links on the archive page now.

For week 4 (Class on February 18): International Finance Chapter 3b: Sovereigns 2.
Lecture: Sovereign debt: pari passu

In class February 18 I mentioned the ICMA CACs from 2014. If you are interested in the ICMA documentation you can look here.

If you are interested in Argentina’s 2020 restructuring you might enjoy: Andres de la Cruz & Ignacio Lagos, CACs at Work: What Next? (December 10, 2020). Available at SSRN: https://ssrn.com/abstract=3765825 or http://dx.doi.org/10.2139/ssrn.3765825.

For week 3 (class on February 11) For this class please read International Finance Chapter 3a: Sovereigns 1.
At the end of this section of the materials I outline what I think you learn from these materials:

We have begun to learn about the issue of holdout creditors, who have been able to disrupt the ability of sovereigns to restructure debt effectively.
We have learned something about the assignment of interests in sovereign debt, and the trading of financial claims.
With respect to assignment of debt and champerty we have seen that New York law is favorable to financial transactions (the rules facilitate assignment and also restrict the availability of the champerty defense). This may help to explain why New York law is commonly chosen as a governing law for financial transactions.
We have also learned something about standard form contracting, where standard language may be used without the contracting parties thinking too carefully about what the provisions mean (the pari passu clause).

For week 2 (Class on February 4): International Finance Materials Chapter 2: Transnational Investment in Securities
I think it makes sense for class on Thursday to spend most time on the US materials rather than on the examples from other jurisdictions.
Added February 2: Lecture: Transnational Investment in Securities 1; Transnational Investment in Securities 2

Just for your information, here is a link to the statement by SEC Commissioners on the GameStop etc issues we discussed last week. Here is an excerpt:

As always, the Commission will work to protect investors, to maintain fair, orderly, and efficient markets, and to facilitate capital formation. The Commission is working closely with our regulatory partners, both across the government and at FINRA and other self-regulatory organizations, including the stock exchanges, to ensure that regulated entities uphold their obligations to protect investors and to identify and pursue potential wrongdoing. The Commission will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities.

Assignment for Thursday January 28

Here are the Class Policies

Here are the reading materials for the first week of class: International Finance Chapter 1: Introduction.

Materials for the class will be available here. You can find the information about the zoom sessions on Blackboard. I move material from this page to the archive page each week so the current information appears on this page. There is also a page where I collect the class materials for this semester.

I look forward to seeing you next week. Happy New Year.

For the first class: People who take this class often have very varied backgrounds and one of my objectives for the first class is to learn something about you and your interests, so please be prepared for that on Thursday. The course materials page is organized around the topics I plan to cover but this is a class where we have some flexibility, so if you have areas/issues you would like to learn about I will see what I can do to accommodate those interests.

Here is a short narrated powerpoint presentation on writing a paper: Writing a Paper
And here is another: An Introduction: Current Issues
Please watch/listen to these before class on Thursday.

For week 2 (Class on February 4): International Finance Materials Chapter 2: Transnational Investment in Securities