Collective Action Clauses Reexamined: Thank You Argentina

The back and forth negotiation of Argentina’s most recent efforts to restructure its sovereign debt has given rise to novel issues of interpretation and use of collective action clauses (CACs), accompanied by charges and countercharges of abuse by Argentina of this important addition to the international financial architecture, on the one hand, and an alleged desire on the creditor side to walk back advances in the orderly restructuring of sovereign debt for narrow reasons of self-interest. Beneath the noise, however, there are important, previously unexamined issues of the policies underlying CACs and a need to improve the drafting of these clauses in order to ensure that they in fact further the policies that inspired them.