Collective Action and the Competence of Courts: The Lessons of <i>NML v. Argentina</i>

Abstract

The Second Circuit decision in NML Capital v. Argentina, in which the court upended settled understanding of a common provision of sovereign debt contracts, has garnered a great deal of attention for its implications for Argentina, the sovereign bond market, and debt restructuring. This Article takes a different tack, and instead identifies and elaborates a crucially important yet almost entirely overlooked aspect of the holding: the court's fundamental misunderstanding of the purpose and function of contractual collective action clauses. The court's error in this regard raises questions about the capacity of the U.S. judiciary to grapple with the complexities of modern globalized finance.