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Legitimacy in global governance of sovereign default: the role of international investment agreements

[working paper]

Brahms, Lisa

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Corporate Editor Freie Universität Berlin, FB Politik- und Sozialwissenschaften, Otto-Suhr-Institut für Politikwissenschaft Arbeitsstelle Internationale Politische Ökonomie
Abstract This paper analyzes the legitimacy of investor-state arbitration under international investment agreements in sovereign debt restructuring. The paper presents mechanisms governing sovereign default generally, namely collective action clauses and informal negotiation in the London and Paris clubs and then discusses how sovereign debt restructuring is governed by IIAs, looking at how the clauses affect restructuring. Taking the conception of legitimacy in global governance by Buchanan and Keohane as a theoretical framework, the legitimacy of IIAs as a mechanism of governing sovereign debt disputes is questioned, looking at the aspects transparency, accountability, minimal moral acceptability, institutional integrity and comparative benefit. It is concluded that investor-state dispute settlement on the basis of IIAs lacks legitimacy to decide on sovereign debt restructuring.
Keywords foreign investment; international agreement; economic agreement; fiscal policy; global governance; legitimacy; transparency; responsibility; national debt; crisis; Greece; Argentina
Classification Economic Policy; National Economy
Document language English
Publication Year 2013
City Berlin
Page/Pages 17 p.
Series PIPE - Papers on International Political Economy, 16/2013
ISSN 1869-8468
Status Published Version; reviewed
Licence Basic Digital Peer Publishing Licence