Debt restructuring, vulture funds and human rights
The Independent Expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of human rights
At the 70th session of the General Assembly
As sovereign insolvency has obvious implications for the enjoyment of economic, social and cultural rights by debtors’ populations and of their right to development, international human rights law should be considered when defining and identifying the rules governing debt restructuring processes. Standstill agreements, seniority, the distribution of financial losses between debtors and creditors and among creditors, the legitimacy of decision-making processes, holdout creditors’ rights, and the procedural and substantive aspects of vulture funds litigation are concrete examples of problems and challenges posed by every debt restructuring.
In this report, the Independent Expert presents his findings in this area and when suitable, advocates for a human rights-based approach to debt restructuring and debt relief.
Timeline of work undertaken
The General Assembly of the United Nations adopted on 9 September 2014 resolution
68/304 in which it decided to elaborate through a process of intergovernmental negotiations a
multilateral legal framework for sovereign debt restructuring processes.
On 26 January 2015, the Independent Expert on foreign debt and human rights, Juan Pablo Bohoslavsky made
a submission to the ad-hoc committee established by General Assembly resolution
69/247 that was tasked with elaborating a multilateral legal framework for sovereign debt restructuring processes. He identified six human rights benchmarks States should consider during their negotiations.
On 25 February 2015, the Independent Expert was invited to a take part in a session by the Human Rights Council Advisory Committee that had been requested by Human Rights Council resolution
27/30 to prepare a research-based report on the activities of vulture funds and their impact on human rights. His remarks and suggestions are available
In August 2015 the Advisory Committee of the Human Rights Council considered a draft progress report on the issue (A/HRC/AC/15/CRP.1). The Advisory Committee submitted its progress report on vulture funds and human rights to the thirty-third session of the Human Rights Council in September 2016 (A/HRC/33/54).
On 10 September 2015, the General Assembly adopted resolution
69/319 declaring that sovereign debt restructuring processes should be guided by nine Basic Principles, including the right to sovereign debt restructuring, good faith, transparency, equitable treatment, sovereign immunity, legitimacy, sustainability and the principle of majority restructuring.
The General Assembly emphasised that sustainability implies that sovereign debt restructuring workouts are completed in a timely and efficient manner and lead to a stable debt situation in the debtor State, preserving at the outset creditors’ rights while promoting sustained and inclusive economic growth and sustainable development, minimising economic and social costs, warranting the stability of the international financial system and respecting human rights.
The Independent Expert welcomed the adoption of the Basic Principles on Sovereign Debt Restructuring Processes, calling them as a positive step towards clarifying which existing rules and principles of international law apply to sovereign debt issues. He underlined that the Basic Principles reflect to a large extent reflects customary law and general principles of international law and are in this respect binding. His statement is available
here. In his report to the seventeenth session of the General Assembly in 2015 (A/70/275), the Independent Expert included a reflection how to balance contractual debt obligations with human rights obligations.
Letters and submissions:
- Report to the General Assembly (A/70/275) from 4 August 2015 by Juan Pablo Bohoslavsky, Independent Expert on foreign debt and human rights
- Report of the Advisory Committee of the Human Rights Council on vulture funds and human rights (A/HRC/33/54) from 20 July 2016
- Thematic report on vulture funds and human rights (A/HRC/14/21), from 29 April 2010, by Cephas Lumina, Independent Expert on foreign debt and human rights
- Country visit report, Argentina (A/HRC/25/50/Add.3), from 2 April 2014, by Cephas Lumina, Independent Expert on foreign debt and human rights
Resolutions of the Human Rights Council:
Resolutions of the General Assembly:
69/319: Basic Principles on Sovereign Debt Restructuring Processes
Research report of the Human Rights Council Advisory Committee on vulture funds