International Investment Law and the Global Financial Architecture
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International Investment Law and the Global Financial Architecture

Edited by Christian J. Tams, Stephan W. Schill and Rainer Hofmann

This book explores whether investment law should protect against such regulatory measures, including where these have the support of multilateral institutions. It considers where the line should be drawn between legitimate regulation and undue interference with investor rights and, equally importantly, who draws it.
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Chapter 5: Restructuring sovereign debt on the basis of collective action clauses

Christoph Ohler


The chapter argues that the introduction of collective action clauses (CAC) in sovereign bond issues helps close a lacunua in state insolvency law. In the euro-area this step was made with the establishment of the European Stability Mechanism. These CACs do not form part of public international law but of domestic civil law. This means, however, that they can be tested under the standards of international investment law. It is suggested that the existing CACs are compatible with these standards as they are of procedural nature only and do not affect the substantive legal position of the private creditors. This could even be assumed if, as in the case of Greece, CACs were introduced with retroactive effect, pursuing the legitimate purpose of international financial stability. Keywords: Collective Action Clauses, financial stability, Greece, Greek Bondholder Act, international insolvency law

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