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Published online by Cambridge University Press: 21 June 2021
A state should be deemed to be enjoying fiscal sovereignty where it is effectively empowered, without pressure or coercion, to make all policy decisions required to run the state machinery and satisfy the fundamental needs of its people (at the very least), both individual and collective. A state’s effective policy and decision-making power is effectively curtailed where: (1) it has been substituted in these functions by a third state or an organ of that state; (2) it is prevented from taking a particular action, such as unilateral default; (3) it is forced to violate fundamental domestic laws, including its constitution or the result of a referendum; or (4) external pressure is exerted against its government and institutions, with the aim of creating volatility and uncertainty concerning its finances so it succumbs to such pressure.
1 See recently also Legal Consequences of the Separation of the Chagos Archipelago from Mauritius in 1965, ICJ Advisory Opinion [2019] ICJ Rep 2, where the ICJ confirmed that while self-determination is a fundamental human right, there is little support for its application to situations of secession (e.g. Catalunya, Kosovo), although a safety valve is possible where people are grossly oppressed.
2 By way of illustration, the insertion of English law clauses in sovereign debt instruments (including bonds, borrowing agreements and others) is now common practice. In fact, the financing document is now modelled around boilerplate, standardized instruments produced by the London Loan Market Association. See SL Schwarcz, ‘Sovereign Debt Restructuring and English Governing Law’ (2017) 12 Brooklyn Journal of Corporate, Financial & Commercial Law 1; equally, I Bantekas, ‘The Globalisation of English Contract Law: Three Salient Illustrations’ (2021) 137 Law Quarterly Review 130.
3 For example, Arts 75–85 Argentine Constitution.
4 Fiscal self-determination in the scholarly literature commonly refers to the regulatory right of states to impose and collect taxes, with ‘arbitrariness’ given a very narrow meaning even in investment arbitration. See A Lazem and I Bantekas, ‘The Treatment of Tax as Expropriation in International Investor-State Arbitration’ (2015) 30 Arbitration International 1. An eminent scholar has gone as far as argue that where tax competition among states is inherently harmful, it constitutes a form of domination, which in turn violates fiscal self-determination. See L van Apeldoorn, ‘BEPS, Tax Sovereignty and Global Justice’ (2018) 21 Critical Review of International Social & Political Philosophy 478.
5 Self-regulation may be achieved in the absence of formal laws (so-called lex mercatoria and trade usages) as well as in the process of implementing hard law (e.g. implementation of anti-money laundering regulations by the banking sector). In every case, the chief aim of self-regulation is to replace the state in its public law-making function and pre-empt government action altogether. See Haufler, V, A Public Role for the Private Sector: Industry Self-Regulation in a Global Economy (Brookings Institute Press, Washington DC, 2001)Google Scholar.
6 See A Kruck, Private Ratings, Public Regulation: Credit Rating Agencies and Global Financial Governance (Palgrave, London, 2011) and for criticism, F Partnoy, ‘What’s (Still) Wrong with Credit Ratings’ (2017) 32 Washington Law Review 1407.
7 See M Megliani, ‘Paris Club’ (2015) Max Planck Encyclopedia of Public International Law, available at <https://opil.ouplaw.com/view/10.1093/law:epil/9780199231690/law-9780199231690-e2176>.
8 See, for example, Thornhill, C and Ashenden, S, ‘Introduction: Legality and Legitimacy: Between Political Theory and Theoretical Sociology’, in Thornhill, C and Ashenden, S (eds), Legality and Legitimacy: Normative and Sociological Approaches (Baden-Baden, Berlin, 2010) 7–12 Google Scholar.
9 Bodansky, D, ‘The Concept of Legitimacy in International Law’, in Wolfrum, R and Roben, V (eds.), Legitimacy in International Law (Springer-Verlag, Berlin, 2008) 313 Google Scholar; Buchanan, A and Keohane, RO, ‘The Legitimacy of Global Governance Institutions’, in Meyer, LH (ed.), Legitimacy, Justice and Public International Law (Cambridge University Press, Cambridge, 2009) 29 CrossRefGoogle Scholar.
10 Bodansky (n 9), 313.
11 A modest attempt, which does not address constitutionalism, may be found in the essays contained in RP Buckley, E Avgouleas and DW Arner (eds), Reconceptualising Global Finance and Its Regulation (Cambridge University Press, Cambridge, 2016). See also See Lastra, RM, ‘Global Financial Architecture and Human Rights’ in Bohoslavsky, JP and Letnar, J Černič (eds), Making Sovereign Financing and Human Rights Work (Hart, Oxford, 2016) 137 Google Scholar; this chapter argues that the IMF could recommend human rights reforms.
12 Industrialized creditor nations routinely object to any international or unilateral action promoting the notion of odious or illegal debt. But see the Tinoco arbitration [Great Britain v Costa Rica] (1923) 1 RIAA 371, where it is clearly stated that knowingly providing a loan to a government that will not be beneficial to its people constitutes a hostile act and merits no entitlement for repayment; see also Report of the UN Independent Expert on the Effects of Foreign Debt on Human Rights, UN Doc A/70/275 (4 August 2015), which points out that an ‘absolutist view of the principle of pacta sunt servanda does not form part of positive law nor is it part of customary international law. Debt contracts exist in a broader legal and economic universe, in which human rights law, the agency relationship between states and their populations and economic constraints interact with the rights of creditors.’
13 In BCB Holdings Ltd and Belize Bank Ltd v Attorney-General of Belize, [2013] CCJ 5 (AJ), a newly elected Belize government repudiated a tax concession granted to a group of companies by means of a settlement deed negotiated by its predecessor because it had not been approved by the Belize legislature, was confidential (hence non-transparent) and was manifestly contrary to the country’s tax laws. The Caribbean Court of Justice argued that whether or not the concession violated public policy should be assessed by reference to ‘the values, aspirations, mores, institutions and conception of cardinal principles of law of the people of Belize’ as well as international public policy. The tax concession could only be considered illegal if it was found to breach ‘fundamental principles of justice or the rule of law and represented an unacceptable violation of those principles’. It should be noted that BCB and the Bank of Belize bypassed the CCJ by seeking to enforce the award in New York and ultimately succeeded. Government of Belize v Belize Social Development Ltd [formerly BCB], US Ct Appeals judgment (13 May 2016), cert den US Supreme Court decision (12 January 2017).
14 See Kupelyants, H, Sovereign Defaults before Domestic Courts (Oxford University Press, Oxford, 2018) 111–40CrossRefGoogle Scholar.
15 UNGA Res 1803 (XVII) (14 December 1962), entitled ‘Permanent Sovereignty over Natural Resources’. Principle 1 stipulates that: ‘The right of peoples and nations to permanent sovereignty over their natural wealth and resources must be exercised in the interest of their national development and of the well-being of the people of the state concerned.’ See Schrijver, N, Sovereignty Over Natural Resources: Balancing Rights and Duties (Cambridge University Press, Cambridge, 2008)Google Scholar and Bungenberg, M and Hobe, S (eds), Permanent Sovereignty Over Natural Resources (Springer, Berlin, 2016)Google Scholar.
16 This is the rationale underlying the UN Guiding Principles on Foreign Debt and Human Rights, UN Doc A/HRC/20/23 (10 April 2011).
17 Interestingly, such an outcome does not lead to a failed state. This is because, in the opinion of this author, a state is rendered failed by the corrupt or similar conduct of its government or exogenous conditions (e.g. war, famine) and not by contract or agreement, as would be the case with an agreement to retain an unsustainable or odious debt. See the Failed States Index (2016) as produced by the US Fund for Peace, available at: <http://fsi.fundforpeace.org>.
18 Krassner, SD, Sovereignty: Organised Hypocrisy (Princeton University Press, Princeton, NJ, 1999) 9 CrossRefGoogle Scholar.
19 Jackson, RH, Quasi-States, Sovereignty, International Relations and the Third World (Cambridge University Press, Cambridge, 1990) 1–12, 27–29 Google Scholar.
20 Krassner (n 18) 125–27.
21 C Reus-Smit, ‘Human Rights and the Social Construction of Sovereignty’ (2001) 27 Review of International Studies 519; see also I Bantekas, ‘The Linkages Between Business and Human Rights and Their Underlying Causes’ (2021) 43 Human Rights Quarterly 118.
22 Krassner (n 18) 1.
23 Bellamy, AJ, Responsibility to Protect (Polity Press, Cambridge, 2009) 21–22 Google Scholar.
24 Deng, FM, Kimaro, S, Lyons, T, Donald, R and Zartman, IW, Sovereignty as Responsibility: Conflict Management in Africa (Brookings Institute Press, Washington, DC, 1996) 33 Google Scholar.
25 UNGA Res 63/319 (29 September 2015), entitled ‘Basic Principles on Debt Restructuring Processes’, particularly Art 1; but see also UNGA Res 68/304 (17 September 2014), entitled ‘Towards the Establishment of a Multilateral Framework for Sovereign Debt Restructuring Processes’; equally UNGA Res 67/198 (21 December 2012), ‘External Debt Sustainability and Development’, preamble.
26 Zimmermann, CD, A Contemporary Concept of Monetary Sovereignty (Oxford University Press, Oxford, 2013)CrossRefGoogle Scholar.
27 See, for example, RM Lastra and Lee Buchheit (eds), Sovereign Debt Management, (Oxford University Press, Oxford, 2014); PS Kenadjan, K-A Bauer and A Cahn (eds), Collective Action Clauses and the Restructuring of Sovereign Debt (de Gruyter, Berlin, 2013); Olivares-Caminal, R, The Legal Aspects of Sovereign Debt Restructuring (Sweet & Maxwell, London, 2009)Google Scholar.
28 The Committee issued its first preliminary report as Truth Committee on Public Debt, Preliminary Report (June 2015), available at: http://cadtm.org/IMG/pdf/Report.pdf. Its second report, released in September 2015, is available at: <http://cadtm.org/IMG/pdf/7AEBEF78-DE85-4AB3-98BE-495803F85BF6-Mnimonio_ENG.pdf>.
29 See I Bantekas and R Vivien, ‘The Odiousness of Greek Debt in Light of the Findings of the Greek Debt Truth Committee’ (2016) 22 European Law Journal 539.
30 Debt Committee First Preliminary Report (n 28), paras 8–22.
31 Federation of Employed Pensioners of Greece (IKA-ETAM) v Greece, ECSR Merits (7 December 2012), paras 66–81; Pensioners’ Union of the Agricultural Bank of Greece (ATE) v Greece, ECSR Merits (16 January 2012) para. 48; Capital Bank AD v Bulgaria, (2005) 44 EHRR 48, para 90.
32 UNDP, Human Development Report (Oxford University Press, Oxford, 2014) 5.
33 Societé Commerciale de Belgique (SOCOBEL) v Greece, (1939) PCIJ Rep, Series A/B, no. 78. This statement, which is attributed to the respondent’s counsel, was accepted in full by counsel for Belgium.
34 LG & E Corp v. Argentina, Award on Merits, ICSID Case No ARB/02/1 (3 October 2006) para. 234.
35 Continental Casualty Co v Argentina, Award on Merits, ICSID Case No ARB/03/9 (15 September 2008) para. 180.
36 In Achmea BV v Slovak Republic, PCA Arbitration Rules, Award on Jurisdiction (20 May 2014), para. 251, the tribunal held that it is not empowered to interfere in the democratic processes of a state, as is the case with its design of a public healthcare policy. It went on to emphasise that the design and implementation of such a policy ‘is for the state alone to assess and the state must balance the different and sometimes competing interests, such as its duty to ensure appropriate healthcare to its population and its duty to honour its international investment protection commitments’.
37 Watson’s Bay and South Shore Ferry Co Ltd v Whitfield [1919] 27 CLR 268, 277; Redericktiebolaget Amphitrite v King [1921] 2 KB 500, 503.
38 See CESCR, ‘General Comment 2: International Technical Assistance Measures’ UN Doc E/1990/23 (2 February 1990) para. 9, which emphasised that ‘international measures to deal with the debt crisis should take full account of the need to protect economic, social and cultural rights’.
39 TH Cheng, ‘Renegotiating the Odious Debt Doctrine’ (2007) 70 Law and Contemporary Problems 7.
40 Among the many sources, Bedjaoui – who was the International Law Commission’s (ILC) rapporteur on the Vienna Convention on the Succession of States in respect of State Property, Archives and Debts, so his opinion is decisive – notes that a debt is considered odious if the debtor state contracted it ‘with an aim and for a purpose not in conformity with international law’. M Bedjaoui, ‘Ninth Report on Succession of States in Respect of Matters other than Treaties’, UN Doc. A/CN.4/301 (1977), reprinted in (1977) Yearbook ILC 70.
41 Article 103 of the UN Charter may serve as additional justification for this argument, under the assumption that human rights are central to the aims of the Charter and the parties’ obligations.
42 BCB Holdings Ltd and Belize Bank Ltd v Attorney-General of Belize (n 13).
43 Waibel, M, Sovereign Defaults Before International Courts and Tribunals (Cambridge University Press, Cambridge, 2011) 3–19 CrossRefGoogle Scholar.
44 In Postova Banka AS and Istrokapital SE v Greece, Award on Merits, ICSID Case No ARB/13/8 (9 April 2015) para 324, it was held that ‘sovereign debt is an instrument of government monetary and economic policy and its impact at the local and international levels makes it an important tool for the handling of social and economic policies of a State. It cannot, thus, be equated to private indebtedness or corporate debt.’
45 See V Paliouras, ‘The Right to Restructure Sovereign Debt’ (2017) 20 Journal of International Economics 115.
46 EnCana Corporation v Republic of Ecuador, LCIA Case No UN3481, Award and Partial Dissent (3 February 2006) para 173.
47 El Paso Energy International Company v Argentine Republic, Award on Merits, ICSID Case No ARB/03/15 (31 October 2011) para 295, quoting El Paso’s Memorial at 362.
48 Ibid.
49 See Mugasha, A, The Law of Multi-Bank Financing (Oxford University Press, Oxford, 2007) 88–91 Google Scholar.
50 See M Megliani, ‘Private Loans to Sovereign Borrowers’ in I Bantekas and C Lumina (eds), Sovereign Debt and Human Rights (Oxford University Press, Oxford, 2018) 69, 74–76; see also I Bantekas, ‘The Emerging UN Business and Human Rights Treaty and Its Codification of International Norms’ (2021) 12 George Mason International Law Journal 1.
51 IMF Decision 13588-(05/99) MDRI-I Trust Fund (23 Nov 2005). The MDRI is an additional debt relief mechanism for countries that have completed the HIPC and allows for 100 per cent debt relief in respect of ‘eligible debts’ owed to the IMF, the IDA, and the African and American Development Banks.
52 The PRSP requires the borrower state, in consultation with civil society, to sufficiently elaborate and explain its financial situation, the steps taken to improve it and the ways in which the loan or debt relief under the terms of the PRGF or HIPC would be utilised, as well as elaborate on the expected outcome. See Stewart, F and Wang, M, ‘Poverty Reduction Strategy Papers within the Human Rights Perspective’ in Alston, P and Robinson, M (eds) Human Rights and Development: Towards Mutual Reinforcement (Oxford University Press, Oxford, 2010) 447 Google Scholar.
53 The concept of ‘local ownership’ is prevalent in transitional justice, international development law and finance, UN peacekeeping missions and general human rights law. See generally A Friedman, ‘Transitional Justice and Local Ownership: A Framework for the Protection of Human Rights’ (2013) 46 Akron Law Review 727. Although this seems to be the case with debt relief schemes, as this article goes on to demonstrate, there is no effective ‘local ownership’ that would satisfy the rudimentary demands of self-determination. See also UNGA Res 62/186 (31 January 2008), which emphasizes the role of national ownership and sovereignty in the management of sovereign debt.
54 See IMF, ‘Debt Relief under the Highly Indebted Poor Countries Initiative’, available at: <http://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/16/11/Debt-Relief-Under-the-Heavily-Indebted-Poor-Countries-Initiative>.
55 See IMF, HIPC Initiative: [Report on the] Status of Non-Paris Club Official Bilateral Credit Participation (10 Oct 2007) 7–11. The IMF and the Paris Club have identified several legal impediments to debt relief agreements. Among these one may note: (1) impediments arising where central banks are the holders of the debt; (2) those cases where some creditors have argued that the mandate of specialized agencies holding guaranteed claims does not allow them to provide debt relief at HIPC Initiative terms; and (3) sale of HIPC claims to private investors, which increases the likelihood of litigation. Id, IMF HIPC Report, 12–13.
56 N Villaroman, ‘The Loss of Sovereignty: How International Debt Relief Mechanisms Undermine Economic Self-Determination’ (2009) 2 Journal of Politics and Law 3, 5.
57 Ibid 6.
58 In the crucial vote on the 2015 UN General Assembly draft resolution on sovereign debt restructuring, Greece – a heavily indebted country – abstained. Such a political stance is inconceivable given that the substance of the resolution was of the utmost national importance for a heavily indebted country such as Greece (and the terms of the resolution were favourable). Greece ultimately succumbed to the EU Common Position on the UN Draft Resolution A/69/L.84, Doc 11705/15 (7 September 2015).
59 See R Wilde, International Territorial Administration: How Trusteeship and the Civilizing Mission Never Went Away (Oxford University Press, Oxford, 2008); SR Ratner, ‘Foreign Occupation and International Territorial Administration: The Challenges of Convergence’ (2005) 16 European Journal of International Law 695. The administration of territories by United Nations Interim Authorities, such as in the cases of East Timor, Cambodia and Kosovo, constitute a co-imperium to the extent that in neither of these territories did absolute sovereignty pass to the United Nations or its members. Some authors have gone so far as to claim a status of ‘trustee occupant’ in order to describe Israel’s occupation of the West Bank following the 1967 Six-Day War. See A Gerson, ‘Trustee Occupant: The Legal Status of Israel’s Presence in the West Bank’ (1973) 14 Harvard International Law Journal 1.
60 See Art 2.2.5(1) UNIDROIT Principles of International Commercial Contracts (an agent exceeding his authority does not bind the principal) and Art 2.2.7(1), id (whereby in the event of a conflict of interest by the agent in their dealing with a third party, the ensuing agreement does not bind the principal).
61 See specifically Loizidou v Turkey (1997) 23 EHRR 513 and Al-Skeini and Others v UK (2011) 53 EHRR 18.
62 I have used the word ‘effective’ several times in this article. Although there does exist a general (yet far from ambiguous) meaning in international law, namely that efficacy (actual observance) of law as distinguished from its validity (binding force), this is not useful. For the legal meaning, see H Taki, ‘Effectiveness’, Max Planck Encyclopedia of International Law (2013), available at: <https://opil.ouplaw.com/view/10.1093/law:epil/9780199231690/law-9780199231690-e698>. Its use here corresponds to the ordinary meaning of ‘effective’, as well as that provided by political scientists. Governance is considered to be effective where it manages to achieve policy goals. See A Underdal, ‘The Concept of Regime Effectiveness’ (1992) 27 Cooperation and Conflict 227.
63 It is now beyond doubt that the effectiveness of a political order or governance dictates its legitimacy, to the extent that the two are inextricably linked. See M Levi and A Sacks, ‘Legitimating Beliefs: Sources and Indicators’ (2009) 3 Regulation & Governance 311.
64 Points (1) and (3), and to some degree (2), are also common to the four indicators applied below in order to accurately quantify the circumstances under which a conditionality entails the loss of sovereignty and violates self-determination.
65 UNGA Res 63/319 (29 September 2015) (n 16), Art 1.
66 See generally principles 25–27 of the UN Guiding Principles on Foreign Debt and Human Rights, UN Doc A/HRC/20/23 (10 April 2011).
67 See M Milanovic, Extraterritorial Application of Human Rights Treaties: Law Principles and Policy (Oxford University Press, Oxford, 2013). Extraterritoriality does not just apply in respect of civil and political rights, but is also recognised in relation to socio-economic rights. See para 9 of the 2011 Maastricht Principles on Extraterritorial Obligations of States in the Area of ESC Rights.
68 I employ the term ‘sui generis’ here because belligerent occupation as such is inapplicable and hence its use in this context in the form of an analogy with the law of occupation.
69 It is clear that if states are able to attribute otherwise personal action to intergovernmental organizations (IGOs) to escape their human rights obligations, then in equal manner the states affected by the measures adopted by such IGOs can claim that they were required by treaty to adhere to them. In both cases, there is an artificial absence of obligations and a corresponding absence of liability. Such a result is untenable and lacks legal foundation, and has rightly been condemned by international and domestic courts – despite claims to the contrary by collaborating states. This type of liability is recognised in Article 61 of the ILC Articles on the Responsibility of International Organisations: see I Bantekas, ‘Exceptional Recognition of Governments and Political Entities in respect of Sovereign Loans: The Greek Case’ (2013) 82 Nordic Journal of International Law 317.
70 Readers are directed to E Benvenisti, The International Law of Occupation (Oxford University Press, Oxford, 2013) for a general understanding of the rights and duties of the occupying power. But see also A Evans-Pritchard, ‘Greece is Being Treated like a Hostile Occupied State’, Telegraph, 13 July 2015.
71 See Bartels, L, Human Rights Conditionality in the EU’s International Agreements (Oxford University Press, Oxford, 2005)CrossRefGoogle Scholar; Grabbe, H, The EU’s Transformative Power: Europeanization through Conditionality in Central and Eastern Europe (Palgrave, London, 2005)Google Scholar.
72 This now constitutes standard practice in aid disbursement and, while it does violate sovereignty to some degree, it is viewed as beneficial to financial self-determination and capacity building. See I Bantekas, ‘Effective Management of International Aid Through Inter-governmental Trust Funds’ (2021) Loyola Chicago International Law Review forthcoming; equally, see I Bantekas, ‘The Emergence of Intergovernmental Trusts in International Law’ (2011) 81 British Yearbook of International Law 224.
73 The Greek Fund for Privatisations of State Assets (TAIPED) took paid advice from a German consultancy firm, itself a subsidiary of the consultancy firm, which advised privatization and the sale of airports (at relatively low prices) to FRAPORT. FRAPORT is a subsidiary of Lufthansa. This involved a clear conflict of interest at all levels for the non-state actor and clear knowledge of the circumstances.
74 The Greek Debt Truth Committee demonstrated, for example, that only about 8 per cent of all loan agreements from the IMF/EU/ECB to Greece since 2010 were earmarked for expenses other than debt repayment. See (n 28). As a result, Greece would have been better off had it not received ‘bail-out’ funds, as these generated further repayment of capital and interest at a time when the original debt had already been deemed unsustainable and the economy was stagnant.
75 In the post-2010 ‘bail out’ of Greece, given that the lending countries and institutions had triple-A credit rating, they turned the ‘bail out’ into a successful business venture. This was achieved because they were able to attract loans with low interest and then lend to Greece with a much higher interest. The ECB purchased Greek sovereign bonds from secondary markets at half their nominal value, but later demanded an extortionate rate of interest from Greece while all the time claiming to have bought Greek sovereign bonds in order to contribute to the Greek economy and bailout. See Greek Debt Truth Preliminary Report (n 28) 59.
76 By way of illustration, the Greek Debt Truth Committee, in its preliminary report (n 28) 34–35, demonstrated that real wage losses as a result of the fiscal austerity were 17.2 per cent. By using the methodology developed in a report for the ILO, the report estimated that the effects ‘of a 1 per cent fall in the wage share leads to a fall in GDP by 0.92 per cent. Using this finding, we estimate the loss in tax revenues, and the rise in interest payments and public debt as a consequence of the fall in the wage share in Greece. Our estimates show that the fall in the wage share has led to a 7.80 per cent increase in the public debt-to-GDP ratio. The fall in wages alone explains more than a quarter (27 per cent) of the rise in the public debt-to-GDP in this period.’
77 The Eurogroup is an informal mechanism at ministerial level that discusses the shared responsibilities of EU member states related to the Eurozone. See <http://www.consilium.europa.eu/en/council-eu/eurogroup>.
78 Greek Debt Committee Preliminary Report (n 28) 34.
79 Heavily indebted states in Africa or South America are not parties to ‘strong’ regional integration mechanisms, such as the European Union, and hence the withdrawal of sovereignty paradigm discussed in this article concerns their relationship with the IMF (chiefly), regional international development banks and perhaps other World Bank institutions, such as the Multilateral Investment Guarantee Agency (MIGA). But see, Olmos, MB Giupponi, Rethinking Free Trade, Economic Integration and Human Rights in the Americas (Hart, Oxford, 2017)Google Scholar.
80 The difference is that, under the troika regime, mere employees of the ECB, EC and IMF were responsible for suggesting conditionalities and conversing with the Greek government (including the Prime Minister), while under the ‘institutions’ regime, the three creditors converse with the Greek government through ministers. See I Bantekas, ‘The Legal Personality of World Bank Funds Under International Law’ (2020) 56 Tulsa Law Review 101.
81 Bilateral creditors in the troika are represented and coordinated by the EC Commission – on the basis of an inter-creditor agreement concluded among themselves on 8 May 2010 – whereas the IMF represents itself. The text of the consolidated version of the inter-creditor agreement is available at: <http://www.irishstatutebook.ie/eli/2010/act/7/schedule/1/enacted/en/html>.
82 It was only in Eugenia Florescu and Others v Casa Jude ̧teana ˘ de Pensii Sibiu and Others, Case C-258/14, Judgment of the Court (Grand Chamber) of 13 June 2017, EU:C:2017:448, para 36 that the CJEU came to the conclusion that MoUs concluded under EU financial assistance mechanisms and balance-of-payment processes qualified as EU acts under Art 267(1)(b) TFEU, and hence were susceptible to interpretation by the Court.
83 In Joined Cases C-105-109/15 P, Konstantinos Mallis and Others v European Commission and European Central Bank, EU:C:2016:702, the CJEU found that the Eurogroup is an informal grouping of the Euro Area finance ministers and as a result its acts could not be attributed to the Commission or the ECB. But see Joined Cases C-8-10/15P, Ledra Advertising Ltd and Others v European Commission and European Central Bank, EU:C:2016:701, where the CJEU held that where the EC Commission is involved in the signing of a MoU within the framework of the European Stability Mechanism, it is acting within the sphere of EU law. Therefore, it is bound to refrain from MoUs that are inconsistent with EU law, including the EU Charter of Fundamental Rights.
84 See Case T-531/14, Leïmonia Sotiropoulou and Others v Council of the EU, EU:T:2017:297, which entrenched the non-contractual liability of the EC Council concerning decisions adopted within the framework of Articles 126 and 136 TFEU (Excessive Deficit Procedure).
85 The Financial Oversight and Management Board established by section 201(b)(1)(N) of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) 2016, was obliged to ‘respect the relative lawful priorities or lawful liens, as may be applicable, in the constitution, other laws, or agreements of a covered territory or covered territorial instrumentality, in effect prior to the date of enactment of this Act’. Much of this is a direct reference to the contractual rights of foreign bondholders.
86 Article 5(1)(e) of the (Consolidated) Inter-creditor Agreement (12 December 2012) (n 81), stipulates the following condition for the disbursement of funds by the EFSF: ‘The entry into and performance by it of, and the transactions contemplated by, this Agreement (including the Facility Specific Terms or any Pre-Funding Agreement) and the MoU (and the transactions contemplated therein) does not and will not (i) violate any applicable law, regulation or ruling of any competent authority or any agreement, contract or treaty binding on it or any of its agencies.’
87 See Judgment No 668/2012 (20 February 2012), para 29, decided by the Plenary of the Greek Conseil d’Etat (ΣτΕ), the majority of whose members agreed with such an interpretation of Art 28(2). See I Bantekas, ‘The Contractualisation of Public International Law and Its Impact on the Rule of Law’ (2021) 21 International Journal of Law in Context 1.
88 Law no 3845/2010, Annex II.
89 See principles 28–32 of the UN Guiding Principles (n 16), which render transparency a cardinal principle.
90 It was only in 2018 that the CJEU in Florescu (n 82), para 41 accepted – albeit with no elaboration on their legal nature – that MoUs entered into by EU institutions in implementation of EU law were in fact ‘mandatory’. See M Markakis, ‘Bailouts, the Legal Status of Memoranda of Understanding, and the Scope of Application of the EU Charter: Florescu’ (2018) 55 Common Market Law Review 643.
91 See Greek Debt Committee Preliminary Report (n 28) 48–49.
92 K Oosterlinck, ‘The Historical Context of Sovereign Debt’ in Bantekas and Lumina (n 50) 13, 15ff. See also ES Rosenberg, Financial Missionaries to the World: The Politics and Culture of Dollar Diplomacy, 1900–1930 (Duke University Press, Durham, NC, 2003).
93 Agreement between EFSF, Greece, the Greek Financial Stability Fund and the Bank of Greece, as amended by the Amendment Agreement of 12 December 2012. See I Bantekas, ‘Multilateral Development Banks as Agents of Contract’ (2021) 4 Asian Infrastructure Investment Bank Yearbook of International Law forthcoming.
94 Debt Committee Preliminary Report (n 28) 54.
95 TAIPED was set up by Law 3986/2011. See I Sagounidou-Daskalaki, TAIPED: An Instrument for the ‘Sell-Off’ of Public Property and for the Abolition of National Sovereignty of Greece [in Greek] (Nomiki Vivliothiki, Athens, 2014).
96 See M Dionellis, C Tzanavara, ‘German Investors of the Air’ Efimerida Syntakton, 8 February 2017, available at: <http://www.efsyn.gr/arthro/germanoi-ependytes-toy-aera> (in Greek). The same company was found to have corrupted Philippine officials under similar circumstances. See Fraport v Philippines, Award on Merits, ICSID Cases No ARB/03/25 and ARB/11/12 (10 December 2014).
97 See M Raco, State-Led Privatisation and the Demise of the Democratic State (Routledge, London, 2016); equally, I Bantekas, ‘The Contractual and Transnational Nature of Sovereign Donor-Trustee International Aid Contributions’ (2021) 49 Syracuse Journal of International Law and Commerce forthcoming.
98 See, for example, Article 4(9) of the (Consolidated) Inter-creditor Agreement 2012 (n 81), which reads, ‘After serving an Acceptance Notice in respect of an installment and receiving the beneficiary member state’s written acknowledgement of the terms set out therein, subject to any conditions applicable to the provision of Financial Assistance under the relevant Facility as set out in the applicable Facility Specific Terms, EFSF shall issue to the beneficiary member state a Confirmation Notice setting out the financial terms applicable to each installment or Tranche, as the case may be. In the case of an installment made up of a series of Tranches, a separate Confirmation Notice shall be issued for each Tranche. By acknowledging the terms of an Acceptance Notice, the beneficiary member state shall be deemed to have accepted in advance the terms of the Financial Assistance set out in each Confirmation Notice.’
99 See, for example, E Maurice, ‘Creditors Put More Pressure on Greece’ EU Observer, 27 January 2017, available at: <https://euobserver.com/economic/136694>.
100 See A Nicolaides and CM van der Bank, ‘Globalisation, NEPAD, Fundamental Human Rights, South African and Continental Development’ (2013) 1 International Journal of Development and Economic Sustainability 54, who claim that economic globalization has resulted in a race to the bottom in South Africa and that NEPAD is questionable from a human rights perspective; see I Bantekas, ‘The Human Rights and Development Dimension of Foreign Investment Laws: From Investment Laws with Human Rights to Development-Oriented Investment Laws’ (2020) 31 Florida Journal of International Law 339.