The crux of Argentina’s sovereign debt saga

Author: | Published: 13 Aug 2014

Why the government's pari passu litigation is no surprise

The present Argentine sovereign debt crisis results from the pari passu clause in the 1994 Argentine Fiscal Agency Agreement (FAA). The meaning of that pari passu clause was litigated in the US District Court for the Southern District of New York, and the Second Circuit Court of Appeals. The US Supreme Court declined to consider an appeal by the Republic of Argentina.

A conventional pari passu clause typically consists of one sentence, two common examples of which being:

The obligations of the Borrower rank, and will rank, pari passu in right of payment with all other present and future unsecured and unsubordinated External Indebtedness of the Borrower; or All of the obligations and liabilities of the Borrower hereunder rank, and will...