ZBB 2012, 439
The Case for Abolishing Sovereign Debtors’ Privileges
Compared to private debtors, sovereign debtors, especially EU-sovereign debtors, enjoy many privileges under European Union law and under national laws. They are, for example, exempt from the prospectus requirement and not subject to the continuous disclosure obligations. The prohibition on market manipulation does not fully apply to states or their agents and the European Commission intends to expand this exemption even further. This article argues against these exemptions and makes the case for the abolition of sovereign debtors’ privileges.
Contents
- I. Introduction
- II. Privileges Granted to Sovereign Debtors
- 1. Prospectus Requirement
- 2. Continuous Disclosure Obligations
- 3. Market Integrity (Prohibition on Insider Dealing and Market Manipulation)
- 4. Assessment of Credit Risk by Banks
- 5. Conclusion
- III. Learning from the Crisis: Treating Sovereign Debtors and Private Debtors More Alike
- 1. Sovereign Debt is not safer than Private Debt
- 2. Sovereign Debtors have the same Incentives for Opportunistic Behavior
ZBB 2012, 440
- 3. Individual Exemptions are not Justified
- 3.1 Prospectus Requirement
- 3.2 Continuous Disclosure of Information
- 3.3 Market Integrity (Prohibition on Insider Dealing and Market Manipulation)
- 3.4 Assessment of Credit Risk by Banks
- 4. Need for Sovereign Immunity?
- 5. Conclusion
- *
- *)Professor, Dr. iur., LL.M. (Yale), Chair of Civil Law, German and International Corporate, Business and Antitrust Law, Heinrich-Heine-University Düsseldorf, Germany. This article is taken from a larger article (“Combating the Financial Crisis – European and German Corporate and Securities Laws and the Case for Abolishing Sovereign Debtors’ Privileges”) which is forthcoming in 48 Tex. Int’l L.J. (2013); it has been modified and partially supplemented.
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