Abstract
The United States Court of Appeals for the Second Circuit in NML Capital Ltd. v. Republic of Argentina has focused the minds of many around the world on, of all things, the meaning of the pari passu clause in sovereign bond issues. For many the decision came as a startling and disturbing surprise. Because, however, we are addressing problematic language in contracts, we can quite readily repair and correct that language so that, at least in new bonds, the language actually says what is meant. All that is required is consensus on the repairs needed - and the will to make them. So, if ‘papering around’ the problem would be effective and legally enforceable in overcoming the NML ruling, why, in an estimated over 90% of foreign law-governed sovereign bonds issued since the NML Second Circuit rulings, have most sovereigns failed to change their pari passu clauses?
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