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Legitimacy in global governance of sovereign default: the role of international investment agreements
[working paper]
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... view more
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.... view less
Keywords
foreign investment; international agreement; economic agreement; fiscal policy; global governance; legitimacy; transparency; responsibility; national debt; crisis; Greece; Argentina
Classification
National Economy
Economic Policy
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