Interconnected and Conflicting Rights

Abstract

Abstract Chapter 6 discusses how intercreditor equity rules in international and domestic law are interrelated de jure and de facto, including which rights may collide and how these collisions may be solved. This is important in case of payment difficulties, and often in a debt restructuring, because a debtor state needs to prioritize between creditors who holds both debt instruments governed by domestic law and international law. The chapter examines how intercreditor equity rules in domestic law may interfere with intercreditor equity rules stemming from international law. Moreover, it discusses the reverse situation: how intercreditor equity rights stemming from international law may interfere with intercreditor equity rights stemming from domestic law. What will become clear is that not all conflicts between intercreditor equity rights and obligations can be solved. Both sovereign debtors and creditors may face situations where intercreditor equity obligations conflict de jure or de facto. In these cases, they may be forced to violate one obligation in order to be able to fulfil another. Not only can sovereign debtors be faced with conflicting intercreditor equity obligations, creditors too can end up in situations where they are subject to conflicting creditor obligations. One reason for this is that international law subjects who have rights and obligations under international law, such as states and international organizations, may purchase commercial debt instruments governed by domestic law.