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UN rights expert welcomes decision to establish a multilateral legal framework for debt restructuring

Debt restructuring / human rights

10 September 2014

GENEVA (10 September 2014) – UN human rights expert Juan Pablo Bohoslavsky welcomed the adoption on Tuesday of a General Assembly resolution which “decides to elaborate...a multilateral legal framework” to regulate the sovereign debt restructuring process.

“A multilateral legal framework would help to fill the current legal void and reduce uncertainty related to debt restructuring processes,” said the Independent Expert charged by the UN Human Rights Council to monitor the effects of foreign debt on the enjoyment of all human rights, particularly economic, social and cultural rights.

Bohoslavsky highlighted in particular the disruptive impact of so-called “vulture funds”, which buy unserviceable debt at a huge discount, refuse to participate in debt restructuring and later litigate for the full value and interest of bonds acquired by them.

"Vulture fund litigation not only prevents indebted countries from using resources freed up by debt relief for social and economic rights, it also complicates debt restructuring processes," Bohoslavsky noted. "Those who do not participate in a debt restructuring and litigate against the sovereign debtor might get fully repaid, while creditors who accept a ‘haircut’ will see the value of their bonds significantly reduced. Creditors will thus probably be much more reluctant to conclude debt restructuring agreements with sovereign debtors, meaning that debt crises will last longer and become more difficult to resolve, with less predictable outcomes."

In a letter to the Group of G77 countries sent before the General Assembly discussion on the resolution, Bohoslavsky stressed that “financial markets need more prudence, not less”.

He added that international human rights law should inform discussions about a multilateral legal framework from its inception.

“Financial business enterprises, including hedge funds or so-called 'vulture funds' have to respect human rights and should exercise human rights due diligence to identify, prevent, mitigate and account for adverse human rights impacts as outlined by the Guiding Principles on Business and Human Rights,” Bohoslavsky said.

He added that “financial business enterprises active on the secondary debt market, or courts called upon to find fair solutions to debt disputes, have not yet fully considered the implications of these principles for their transactions or in their jurisprudence.”

“An international legal framework should be seen as complementary to existing UN Guiding Principles on Foreign Debt and Human Rights and on Business and Human Rights, to national legislation limiting vulture fund litigation and to collective action clauses in sovereign bonds. It would promote more responsible financial behaviour and more orderly, timely and speedy debt restructuring processes,” Bohoslavsky said.

The Independent Expert underlined that "building broad international consensus around this initiative is crucial and should include all relevant stakeholders, sovereign debtors, multilateral lenders, private financial business and civil society organizations."


Mr. Juan Pablo Bohoslavsky was appointed as Independent Expert on the effects of foreign debt and human rights by the United Nations Human Rights Council on 8 May 2014.  Before, he worked as a Sovereign Debt Expert for the United Nations Conference on Trade and Development (UNCTAD) where he coordinated an Expert Group on Responsible Sovereign Lending and Borrowing. His mandate covers all countries and has most recently been renewed by Human Rights Council resolution 25/16.

Learn more, log on to:

Read the letter of the Independent Expert to the Chair of the G77:

Read the General Assembly resolution GA resolution 68/304 

Read the report on vulture funds submitted to the Human Rights Council in April 2010 by the previous Independent Expert, Mr. Cephas Lumina:  

For more information and media requests, please contact, Gunnar Theissen (+41 22 917 9321 / [email protected]).

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