Azerbaijan bonds case reinforces Gibbs rule

Author: Jimmie Franklin | Published: 30 Jul 2019

A recent case concerning bonds sold by the International Bank of Azerbaijan (IBA) has shown that, despite its critics, the rule in Gibbs is still able to wield influence.

The century-old rule protects creditors’ rights on cross-border deals.

"I do think the rule in Gibbs has its benefits," said Allen and Overy partner Jennifer Marshall, a lawyer with expertise in restructuring and insolvency. "It offers certainty to those who are drafting contracts because, without that rule, if you had an English law document it could be discharged or varied by compromise proceedings in another jurisdiction."

While it has cushioned lenders active in the emerging markets, it has drawn criticism due to the fact it can be perceived as isolationist, acting against the interest of cross-border cooperation.

KEY TAKEAWAYS

The rule in Gibbs has helped uphold the rights of holders of Eurobonds issued by the International Bank of Azerbaijan;Experts feel Gibbs...