Chicago Journal of International Law


Argentina's 2001 default led to a unique development in the realm of sovereign debt restructuring. During the lengthy process of negotiations, exchange offers, and haircuts, some of the country's creditors began to allege violations of their bilateral investment treaties (BITs) with Argentina and filed suit in the International Centre for the Settlement of Investment Disputes (ICSID). Before this unprecedented action, it had been uncertain whether sovereign debt could be considered an "investment" covered by BITs at all. In August 2011, however, the ICSID determined that it may be and that its tribunals have jurisdiction over these claims. This decision has created a path to increased ICSID involvement in future sovereign debt restructurings and has raised the question of the consequences for the current European debt crisis. This Comment evaluates the ramifications of the introduction of international investment arbitration into the realm of sovereign debt restructuring, particularly in light of the situation in Europe. Despite some legitimate concerns, the Comment suggests that this development may prove positive, increasing creditor protections and balancing negotiations, strengthening the market for sovereign debt, and potentially lessening the gravity of the crisis itself.