Global public debt has surpassed US $300 trillion, providing creditors and investors in sovereign debt with new opportunities.
Pursuing sovereign assets can be complex, time-consuming, and highly public, often involving legal battles across jurisdictions and public scrutiny.
Adopting cross-border strategies that move beyond the traditional litigation playbook that sovereigns expect can improve recovery outcomes and shorten enforcement timelines.
Kobre & Kim currently represents ConocoPhillips in its efforts to enforce over US $10 billion in judgments and arbitration awards against the Republic of Venezuela and related state-owned entities.
A recent victory in the U.S. Third Circuit Court of Appeals has cleared a path for ConocoPhillips to enforce a judgment recognizing an ICSID award against Venezuela's state-owned oil company's shares in its Delaware subsidiary.
This victory shows how the "alter ego" theory can be used as an effective leverage point against a recalcitrant sovereign debtor, increasing claimant chances of achieving favorable returns.
Creditors and investors in sovereign debt are riding a wave of new opportunities driving returns with global public debt projected to exceed US$100 trillion by the end of 2024, making it possible to reap higher returns on claims against sovereigns previously thought too difficult to enforce.
A well-thought-out strategy can increase returns and accelerate enforcement timelines.
As geopolitical tensions pressure sovereign debt, more investors are taking their disputes against sovereign states and entities to arbitration and judicial forums. There is a world of difference between demanding payment of a defaulted debt, judgment, or award from a sovereign and seeing the sovereign pay up.
Meanwhile, Chinese private investors have become more prominent in sovereign-related investments through acquisitions, joint ventures, and infrastructure projects in Europe, Africa and Latin America.
Investors and other claimants should not be afraid to stand up to sovereign debtors with aggressive non-traditional strategies.
Prices of Russian and other sovereign debt are falling as their economies buckle, presenting both opportunities and challenges for investors.
Enforcing the debt against sovereign entities is already difficult, more so when sanctions are involved.
As our Claim Monetization & Dilution team explains, non-traditional strategies may go further in putting maximum pressure on sovereigns and maximizing returns.
