Sovereign Friday Bits: Pari Passu Preview; DRC Wins in Jersey

The panel for Monday's Second Circuit hearing in NML v. Argentina is Judges Raggi, Pooler and Parker (follow link, click on name for official bio). Recall it was the eleventh-hour recusal of Judge Leval that pushed the hearing off a month. Judge Pooler is no stranger to Argentina debt litigation -- she was on the panel that decided the case where the same plaintiffs tried to attach Argentina's central bank funds. (Argentina won, cert. denied, 552 U.S. 818.) Then again, by the time we are done, there might not be a judge left in the world that did not hear an Argentina debt case. Note also that the case is being heard by its lonesome on Monday afternoon--it's that special!

Speaking of central bank funds ... The question of what assets may be used to satisfy claims against defaulting sovereigns vexes judges worldwide. Earlier this week, the UK Privy Council barred collection of old Zaire debts against the assets of a state-owned mining company of the Democratic Republic of Congo (DRC), bolstering the presumption that state-owned enterprise assets are unavailable to pay general state debts. (Opinion here shortly.) In the end, it is good to have the case resolved on the merits. Had it been brought in England--or had Jersey legislated earlier-- it would have been blocked by an anti-vulture law without deciding precedential questions of immunity.

It is also interesting to see the extent to which the distressed sovereign claim universe is occupied by repeat players. The fellow who sued Zambia and inspired the UK anti-vulture legislation also appears to have been involved early in the DRC deal, according to The Guardian. ... And just like the debt in Donegal v. Zambia, the debt in the DRC case appears to have started as a government-to-government claim. I continue to have reservations about trading these: they are political apples to commercial debt oranges, often extended with mixed motives, poorly documented, sold by cash-strapped transition economies, and prone to abuse.