GoJIL Vol. 4, No. 1 (2012)
Sovereign Debt Crises as Threats to the Peace: Restructuring under Chapter VII of the UN Charter?
Sovereign debt crises might significantly decrease the level of socio-economic rights enjoyment for the population in the affected state. According to recent data, they even increase the risk of civil unrest. However, the resolution of sovereign debt crises is compromised by legal obstacles which result from the absence of a statutory, obligatory bankruptcy procedure for states. On the one hand, creditors might refuse to accept an exchange of their debt instrument in the frame of a workout and choose to litigate against the state. On the other hand, states might worsen their situation by unnecessarily delaying inevitable workouts. This article explores whether and to what extent the powers UN Security Council could be deployed in order to mitigate these problems. This requires a reconsideration of the concept of peace in Article 39 UN Charter. The article concludes that, at the request of the International Monetary Fund (IMF), the Security Council might put a stay on the enforcement of creditors' claims or order workout negotiations.
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