Sovereign debts are persistent--as financial obligations of a sovereign state, these debts survive the regime which contracted for them and bind future governments until the creditors are satisfied. Only under limited circumstances does international law allow for the cancellation of such debts. In the early twentieth century, Alexander Sack defined a class of sovereign debts--“odious debts”--which are particularly deserving of cancellation. To qualify as “odious,” a debt’s proceeds must have been literally or effectively stolen by a tyrant, leaving the population she once ruled to pick up the check.
Sack’s purpose for what has become known as the Odious Debt Doctrine is laudable: the former subjects of a deposed dictator should not be accountable for the odious debts that ruler contracted. The current doctrinal formulation, however, is unworkable. Courts are ill-suited to screen debts or regimes for “odiousness,” and contemporary sovereign lending practices are not adequately addressed by Sack’s rule. These twin problems of administrability and scope have kept the Odious Debt Doctrine from becoming an enforceable rule of international law.
Unlike much of the extant scholarship concerning odious debt, this Article aims to reconstruct an independent legal doctrine that is both judicially administrable and applicable to a wide variety of debts. The key to this novel conceptualization of the odious debt problem is that it replaces the traditional objects of analysis--the debt or regime in question--with a new analytical target: the debtor’s expenditures. For decades, the national laws of taxation have reliably sorted expenditures for favorable or unfavorable tax treatment, and the doctrine I propose--the Odious Expenditure Doctrine--co-opts this framework for a similar purpose. At base, it is not the people who contract them, the creditors who lend them, or the terms of their transfer that make debts “odious.” What makes a debt odious is the villainy it funds. The Odious Expenditure Doctrine reflects this realization, and constructs a rule that enables the judicial enforcement of Sack’s original goals.
- odious debt,
- sovereign lending,
- sovereign bankruptcy
Available at: http://works.bepress.com/bradley_lewis/1/