What could possibly trigger me enough to break a two-year blogging hiatus? A sudden burning desire to consider the difference among budget accountability, debt accountability, and the inane, moronic, irrational, exploding human appendix ****show that is the debt ceiling.
Figuring out the right damages measure for default on an actively traded financial asset such as a government bond is, at first, obvious -- just pay what you promised on the bond. But then, when one thinks about features of damages law such as the option to substitute performance or mitigation, things get murkier.
As the Russia-Ukraine conflict continues and the amount of destruction to lives and property grows exponentially, a question that has come up is whether Russian assets overseas should be confiscated and made available to those who the Russian invasion has harmed (e.g., here). The list of those is growing larger minute by minute: refugees, families of those who have died, people whose homes and livelihoods have been blown apart and on and on and on.
Rumor is that close to thirty leading international law firms have put in bids to assist Sri Lanka in its upcoming debt restructuring. Makes sense -- there is a fat paycheck for whoever gets the mandate. Given the stakes, my guess is that these firms -- and I'm just guessing -- are busy trying to "influence" whomsoever they can in both the current government and in the opposition (after all, the current government might fall any day now) to get ahead in the competition. Yuck.
After months of waffling, Sri Lanka’s head-in-sand government has finally acknowledged that it cannot pay its debts. The cavalry (IMF) has been called in and we guess that hordes of potential restructuring advisers are flying to Colombo to offer their services. Assuming they have done their homework, their proposals surely will consider both the government’s own debt and a Sri Lankan airline bond that the government has guaranteed.
We almost hate to post this, because it is so simple, and so fundamental, that it seems almost surely wrong. But if it’s wrong, we can’t see why. Maybe a reader can explain? Here goes.
Bailiffs for Gunboats is the title I have given to a short paper to be published in a Festschrift for the famous German scholar, Christoph Paulus, lately head of the law faculty at Humboldt, Berlin. It discusses a case remarkably overlooked despite its unusual facts, its major legal and political implications, and its role as a prelude to the horrors of the current war in Ukraine.
