Law against the activities of vulture funds

9 December 2017 by Belgian State

CADTM (Committee for the Abolition of Illegitimate Debt) is releasing the text of the Belgian law that aims at curtailing the activities of « vulture funds » and unethical financial speculation. This law, written in consultation with CADTM, CNCD - 11.11.11 and its Flemish counterpart, was approved unanimously by the Belgian parliament on July 12, 2015. A text that is now threatened by a vulture fund registered in the Cayman Islands, NML Capital Ltd. (a subsidiary of Paul Singer’s hedge fund Elliott Management Corp.), lodging a request to the Constitutional Court for its repeal.

Sign our International Call to Support and Internationalize the Belgian Law on Vulture Funds.

Draft law against the activities of vulture funds Vulture funds
Vulture fund
Investment funds who buy, on the secondary markets and at a significant discount, bonds once emitted by countries that are having repayment difficulties, from investors who prefer to cut their losses and take what price they can get in order to unload the risk from their books. The Vulture Funds then pursue the issuing country for the full amount of the debt they have purchased, not hesitating to seek decisions before, usually, British or US courts where the law is favourable to creditors.

Article 1. The present law regulates a matter aimed at article 74 of the Constitution.

Art 2. When a creditor pursues an illegitimate advantage by the purchase of a State’s loan or debt obligation, their rights towards the debtor State will be limited to the price they paid for the purchase.

Notwithstanding the applicable law to the legal relationship between the creditor and the debtor State, no enforcement order may be obtained in Belgium and no precautionary measure may be taken in Belgium by the demand of the said debtor for payment receivable in Belgium if this payment procures them an illegitimate advantage as defined by the law.

The pursuit of an illegitimate advantage is deduced from the existence of a manifest disproportion between the purchase value of the loan or debt obligation by the creditor and the face value of the loan or debt obligation or else between the purchase value of the loan or debt obligation by the debtor and the amount they demand in payment.

In order to consider an illegitimate advantage, the manifest disproportion must be completed by at least one of these criteria:

  • the debtor State was in a proven or imminent state of insolvency or cessation of payments at the time of purchase of the loan or debt obligation.
  • the creditor’s headquarters are located in a State or territory:
  • a) mentioned in the list of non-cooperatives States or territories established by the Financial Action Task Force (FATF), or
  • b) concerned by article 307, first §, indent 5 of the income tax Code of 1992, or
  • the creditor systematically uses judicial proceedings to obtain the refund of the loan or of loans he previously purchased.
  • the debtor State has been subject to measures of debt restructuration, to which the creditor has refused to participate;
  • the creditor has abused of a position of weakness of the debtor State to negotiate an agreement for manifestly unbalanced refundings.
  • the full refund of sums claimed by the creditor would have a recognisable negative impact on the public finance of the debtor State and is susceptible of compromising the socio-economic development of its population.

Art. 3 The application of the present law is subject to the application of international treaties, to the European Union law or to bilateral treaties.

We enact the present law, command that it shall bear the State seal and be published by the Belgian Monitor.

Given in Brussels on the 12th of July 2015

By the King: PHILIPPE, King of the Belgians

The Minister of Finance, J. VAN OVERTVELDT

Sealed with the State Seal:

The Minister of Justice, K. Geens

Read the integral text of the law: also available here.



8 rue Jonfosse
4000 - Liège- Belgique

00324 60 97 96 80