Chicago Journal of International Law


The idea of an IBC is not new; the idea of universalism, or "one law, one court," has enticed academics for years. However, until the recent International Monetary Fund ("IMF") proposal to create an IBC, there had been no effort to turn the abstract into reality. Though the IMF action is welcomed, it is imperfect. Some flaws are minor, while others are inherent to the IMF itself and are incurable regardless of the specific plan. A fundamental flaw in the proposal is the IMF Creditor Problem: the IMF cannot be an objective and unbiased arbiter in cases where it has a substantial financial interest as a creditor. This Development uses US law as a guide to analyze the problems of having the IMF as both a creditor and international arbiter of sovereign bankruptcies. Part I provides a brief background of sovereign bankruptcies, global capital markets, and the IMF. Part II illustrates the effectiveness of the US system, and how the application of the US Code could efficiently handle some problems inherent in an IMF-based bankruptcy proceeding. Part III deals with the IMF Creditor Problem. The Development does not argue normatively whether an IBC in the abstract should exist. And though it specifically analyzes the unique problem of an IMF-run court, the initial conclusions of Part II apply equally to any IBC effort.