FOREIGN DEBTS

Abstract

This chapter describes legal aspects of foreign debts. Foreign debts are liabilities of States, intergovernmental organizations, persons, or corporate entities vis-a-vis other States, intergovernmental organizations, persons, or corporate entities in another State. The specific nature of such payment obligations in terms of private or public international law has to be considered in the light of each of these legal relationships. Public debts conceived as liabilities between States ensue from treaties or from international torts. They are to be considered under the rules of public international law. Notwithstanding the doctrinal and practical significance of interstate obligations arising from torts, their economic importance falls short by far of the financial impact of liabilities established by treaties. States are free to determine the substance of intergovernmental contractual payments obligations. Where their agreement only specifies the amount of the debt, the date of payment and the interest to be paid, recourse must be had to general precepts of monetary law to determine the currency in which the accounts are to be kept, the currency to be used for payment, and the place and other prerequisites for payment, such as the enforceability and scope of value clauses.