The Legal Profile of Russian Eurobonds : Engineered against Speed
This paper provides an overview of the Russian Federation’s default history, the legal characteristics of the bonds, and potential issues for litigation should a default materialize. The paper’s main argument is that although it is not impenetrable...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2022
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| Online Access: | http://documents.worldbank.org/curated/en/099904004292222497/IDU0858874720f2ac043cc08ae5019c6feadcaf1 http://hdl.handle.net/10986/37401 |
| Summary: | This paper provides an overview of
the Russian Federation’s default history, the legal
characteristics of the bonds, and potential issues for
litigation should a default materialize. The paper’s main
argument is that although it is not impenetrable, this
Eurobond stock is more protective of the debtor than that of
the usual emerging market country. It achieves this through
preservation of all the defenses available under current law
and the presence of broad language in key provisions. For
instance, clauses providing for payment in a different
currency if “reasons beyond its control” stop the debtor
from paying in the denomination currency have drawn
attention. The paper analyzes this and other
characteristics, providing initial assessments on how the
issues could play out. While the bonds’ characteristics
could slow progress toward obtaining judgments when compared
to other sovereign debts, they do not prevent them.
Collecting on the judgments would be, as usual, the harder
part. Ultimately, litigation over these debts could last a
long time; other creditor versus foreign sovereign episodes
involving less debtor-friendly instruments have lasted 15
years, and resolution and recovery would be highly
contingent on political factors. Finally, the paper provides
non-lawyers a general roadmap of debt litigation against
foreign sovereigns in the United States and the United Kingdom. |
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