BITs and Bonds: The International Law and Economics of Sovereign Debt

Abstract

Recent jurisdictional decisions suggest that sovereign debt will be subject to bilateral investment treaties (BITs) for the foreseeable future. This Article demonstrates that applying BITs to sovereign bonds threatens to undermine the core economic function of those treaties by encouraging inefficient State and creditor behavior. It further argues that this dilemma can be resolved through an interpretative approach that leads to the equal treatment of like creditors.