Sovereign debt of developing countries: the problems, their human rights implications and the possibility of a bankruptcy procedure for states in international law

Abstract

This thesis elaborates on the problem of unsustainable debt burdens of developing countries. Debt service is a major cause of poverty and has negative effects on development. In international law, there are general rules about state succession into debt and about economic competences of a state, but there is no effective legal mechanism to restructure or cancel crushing debt burdens. Allegedly problem-resolving policies adopted by the international community so far have not addressed the sovereign debt problem in its profundity and sometimes have even proved counterproductive. Many important documents published in the field of human rights urge the involved actors to find a more sustainable solution. Such a solution could be provided creating a ‘bankruptcy procedure for states’ in international law. Diverse models of such a procedure have been developed. A bankruptcy procedure for states based on analogy to municipal bankruptcy in domestic law would guarantee the rule of law principles of fairness and impartiality, balance the interests of all involved actors, allow the debtor state to reach a sustainable debt level and leave enough space for human rights concerns. Although them institutionalisation of such a procedure encounters several technical difficulties, its main principles are applicable and would pave the way for a more sustainable solution of problems arising from sovereign debt.