Security Enforcement in International Finance

The assurance that the international lender can enforce the security provided by the borrower is one of the most challenging aspects of international finance. The problems of attachment and dealing on the asset to realize the security vary due to rules and procedure within various jurisdictions.

Within the municipal system, it more straightforward but when lenders are dealing with assets within national frontiers way off their sphere of operation, issues such as applicable law, priority, etc. come in to apply.

Also, where sovereign borrowers are involved several doctrines of international law become applicable. Some of the lenders, now tie lending to resource control of the borrowing nation or commodity purchase as security for repayment. Several Chinese loans in Africa, examined elsewhere, are now structured along those lines.

The important point is that security facilitates lenders confidence to provide facilities that can be directed to developments activities for countries and for large corporations.