Sovereign Debt Litigation on the Rise.

On Wednesday, the United States Court of Appeals for the Second Circuit will hear argument in a sovereign debt lawsuit that could have a major impact on world debt markets.

The case centers on a group of investors who sued Argentina seeking payment for $1.3 billion relating to bonds that the country defaulted on in 2001.

While the court has already sided with investors on several issues, the most important issue is still undecided. issue that the appeals court is still undecided–how to pressure Argentina to pay up on the disputed bonds. 

Unlike Argentina, some countries have ponied up and cut deals with holdouts in the past to get on with important economic overhauls, most recently Greece on certain smaller foreign-law bonds.

While there is a chance that the appellate court’s decision could be appealed to the United States Supreme Court, it is more likely that its ruling will be the final word on the lower court order.

We’ll learn soon enough.


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