Committee for the Abolition of Illegitimate Debt

Abstract :

Several legal mechanisms enable States to unilaterally repudiate or suspend debts that are illegitimate, odious, illegal or unsustainable.

A first range of mechanisms are dedicated to the repudiation of illegitimate, odious and illegal debt since they integrate subjective elements that take into account the behavior of the creditors. Unilateral repudiation is justified by peremptory considerations of jus-tice and equity Equity The capital put into an enterprise by the shareholders. Not to be confused with ’hard capital’ or ’unsecured debt’. , but is also founded on sovereignty and self-determination. This is the case where there is an absence of good faith based on Article 26 of the Vienna Convention on the Law of Treaties (VCLT) which pro-vides that treaties are binding and must be performed in good faith. Bad faith in the case at hand was to be achieved by rendering Greece financially subservient and by imposing measures violating fundamental so-cio-economic and civil and political rights of the Greek people as well as domestic legislation. Moreover, the sustained pressure on Greece to bypass its constitu-tion and violate its human rights obligations, as well as the creditors’ interference in the country’s political and economic affairs constitutes a form of coercion. Such coercion is in itself a ground of invalidity under Article 52 VCLT. The VCLT’s reference to “force” in Article 52 may be construed as including forms of economic co-ercion. It is then to be noted that, in the case at hand, statements made by creditors, even speculative ones which were known to culminate, or which would have knowingly had the effect of deteriorating/harming the Greek economy and the livelihood of the Greek people constitute a species of unilateral coercive measures. These are prohibited under international law and vi-olate the UN Charter. It is well accepted that when a country becomes the target of actions that are known to harm its economy (especially to the benefit of its lenders) and the livelihood of its people, it may resort to lawful countermeasures. Indeed, under customary and Articles 49ff of the ILC’s Articles on State Responsibility (ASR) an injured state may violate an otherwise international obligation against another (respon international lawsible) state if that other state has committed an internationally wrongful act. The violation committed by the injured state has the purpose of inducing the responsible state to comply with its obligations.

Finally, one should highlight the fact that the Greek people have not received an unjust advantage or any other benefit from the accrued debt, and thus Greece is under no obligation to repay that part of the initial capital (deemed odious, illegal or illegitimate) as a form of unjust enrichment.

A second range of mechanisms apply in respect of unsustainable debt. Contrary to the ones listed above, these are mechanisms that apply objectively, irrespective of the creditor’s behavior. In such situations, the debt cannot be repudiated but merely suspended. In this respect, Greece may lawfully have recourse to two grounds that render its debt obligations invalid. The first concerns the state of necessity. In accordance with Article 25 of ILC’s ASR, the term “necessity” is used to denote those exceptional cases where the only way a state can safeguard an essential interest threatened by a grave and imminent peril is, for the time being, not to perform some other international obligation of lesser weight or urgency. In the case at hand, due to the economic and social crisis in Greece, the conditions required for the defence of necessity are satisfied. The second ground concerns the right to unilateral insolvency. Although creditors are generally opposed to such possibility as it precludes them from being paid, sovereign insolvency is a reality in international affairs, acknowledged in both theory and practice. If a state then enjoys the right to become insolvent, it is clear that unilateral insolvency constitutes a circumstance precluding wrongfulness of the borrower’s international obligations, namely its borrowing obligations.

 SECTION I: THE RIGHT TO UNILATERAL REPUDIATION OF ODIOUS, ILLEGAL AND ILLEGITIMATE DEBT UNDER INTERNATIONAL LAW

The existence of odious, illegal or illegitimate debt may justify its unilateral repudiation by the debtor state if such repudiation is not arbitrary, discriminatory and does not give rise to unjust enrichment. The absence of significant case law or a large body of unilateral denunciations is due to the fact that in most cases debt-or states (and their lenders) find it more appropriate, politically and financially, to come to other negotiated terms. Such negotiated settlements, however, do not di-minish the rule against odious debt Odious Debt According to the doctrine, for a debt to be odious it must meet two conditions:
1) It must have been contracted against the interests of the Nation, or against the interests of the People, or against the interests of the State.
2) Creditors cannot prove they they were unaware of how the borrowed money would be used.

We must underline that according to the doctrine of odious debt, the nature of the borrowing regime or government does not signify, since what matters is what the debt is used for. If a democratic government gets into debt against the interests of its population, the contracted debt can be called odious if it also meets the second condition. Consequently, contrary to a misleading version of the doctrine, odious debt is not only about dictatorial regimes.

(See Éric Toussaint, The Doctrine of Odious Debt : from Alexander Sack to the CADTM).

The father of the odious debt doctrine, Alexander Nahum Sack, clearly says that odious debts can be contracted by any regular government. Sack considers that a debt that is regularly incurred by a regular government can be branded as odious if the two above-mentioned conditions are met.
He adds, “once these two points are established, the burden of proof that the funds were used for the general or special needs of the State and were not of an odious character, would be upon the creditors.”

Sack defines a regular government as follows: “By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with.”

So clearly for Sack, all regular governments, whether despotic or democratic, in one guise or another, can incur odious debts. and the entitlement of states to unilaterally repudiate it. Indeed, unilateral repudiation is justified by peremptory considerations of justice and equity [2], but is also founded on sovereignty and self-determination. In the present report, the legal basis of a Greek unilateral repudiation of that part of its debt which is odious, illegal and illegitimate is pred-icated on the following considerations:

1. Absence of good faith

Under Article 26 of the Vienna Convention on the Law of Treaties (VCLT) treaties are binding and must be performed in good faith [3]. The ILC Commentary stresses that good faith is a legal principle and forms an integral part of pacta sunt servanda. The principle whereby agreements are to be honored applies only where both parties act in good faith. In fact, Article 69(2) VLCT is adamant that “acts performed in good faith before the invalidity was invoked are not rendered unlawful by reason only of the invalidity of the treaty”; thus implicitly accepting that acts performed in bad faith are always unlawful. Although the absence of good faith does not automatically always lead to the invalidity of an agreement, it justifies in exceptional circumstances denunciation of the treaty under Article 56 (1) (b) VCLT (a right of denunciation implicit in the nature of the treaty). In the case at hand, the agreements entered into between Greece and its creditors were known to all parties to violate the Greek constitution. In addition, it was known to all parties that they violated Greece’s treaty obligations under pertinent human rights treaties and customary international law. In the situation at hand, bad faith is additionally manifested through the ultimate aim of the creditors, which was not to secure Greece’s liquidity Liquidity The facility with which a financial instrument can be bought or sold without a significant change in price. (so-called bail out), but rather, among others, to transform private debt into public debt and thus salvage big private banks and their shareholders.

This was to be achieved by rendering Greece financially subservient and by imposing measures violating fundamental socio-economic, civil and political rights of the Greek people. Equally, lender states and financial institutions with excellent credit rating and thus access to low interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. were able to lend to Greece with a much higher interest under the guise of a ‘bailout’, such as the ECB ECB
European Central Bank The European Central Bank is a European institution based in Frankfurt, founded in 1998, to which the countries of the Eurozone have transferred their monetary powers. Its official role is to ensure price stability by combating inflation within that Zone. Its three decision-making organs (the Executive Board, the Governing Council and the General Council) are composed of governors of the central banks of the member states and/or recognized specialists. According to its statutes, it is politically ‘independent’ but it is directly influenced by the world of finance.

https://www.ecb.europa.eu/ecb/html/index.en.html ’s purchase of sovereign bonds from secondary markets at half their nominal value but later demanding an extortionate rate of interest from Greece while all the time claiming to have bought Greek sovereign bonds in order to contribute to the Greek economy and bailout. In addition, Greece’s need for liquidity was met with a set of measures whose aim was to extinguish its economic and political sovereignty.

2. The legal effect of creditors violating domestic laws

Bad faith was further manifested in the blatant violation of Greek law, particularly the Constitution. A characteristic example was the promulgation of Article 1(9) of Law 3847/2010, which effectively bypassed Articles 28 and 36 of the Greek constitution as regards the requirement of parliamentary approval in respect of foreign agreements. Such constitutional violations were clearly engineered by both parties as they paved the way for legislation recommended by the creditors (or agreements dictated by creditors) to be adopted as law without parliamentary approval. While generally obligations under international law supersede contrary obligations under domestic law, this principle is inapplicable where the parties’ agreement knowingly and purposely violates fundamental provisions of domestic law (particularly of a constitutional nature). This is because such an agreement violates the principle of legality, fails to satisfy good faith and breaches other parties’ legitimate expectations. Article 46(1) VCLT expressly states that the violation of domestic law regarding competence to conclude treaties is a ground invalidating that state’s consent if the violation, as in the case at hand, was ‘manifest and concerned a rule of law of its internal law of a fundamental importance’.

3. Precedence of human rights over other contractual obligations

As the present report has shown, Greece was effectively coerced into violating fundamental human rights obligations through a series of agreements, such as the 2010 Intercreditor Agreement and Loan Facility Agree-ment and MoUs whereas sovereign creditors have an obligation not to frustrate or force another party to violate its obligations. The violation of human rights through conditionalities affects the validity of the debt contracts [4].

Such an obligation for creditors to respect human rights is first and foremost an ethical one, for no state can legitimately claim to be discharging its own hu-man rights obligations territorially while at the same time actively pressuring another state to violate its own obligations. Secondly, convincing a state to effectively and totally suspend or contract out of its human rights obligations constitutes a clear interference in its domestic affairs, irrespective if the latter formally consents. To the extent that Greece’s agreements with creditors are in conflict with jus cogens norms (e.g. eco-nomic self-determination) these are void under Article 53 VCLT.

The primacy of human rights has been clearly enshrined in Article 103 of the UN Charter but also in many reports and statements made by UN institutions. According to Article 103 of the UN Charter: “In the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the present Charter shall prevail”. These obligations include the promotion of universal re-spect for, and observance of, human rights for all.

The UN Guiding Principles on Foreign Debt and Human Rights, which although not binding as such but reflecting customary law where it iterates the human rights obligations of states, emphasizes that:

“All States have the obligation to respect, protect and fulfil human rights. In this regard, they should ensure that any or all of their activities concerning their lending and borrowing decisions, those of international, national public or private institutions to which they belong or in which they have an interest, the negotiation and implementation of loan agreements or other debt instruments, the utilization of loan funds, debt repayments, the renegotiation and restructuring of external debt, and the provision of debt relief when appropriate, do not derogate from these obligations” (para. 6).

“International organizations have an obligation to respect human rights. This implies a duty to refrain from formulating, adopting, funding and implementing policies and programmes which directly or indirectly contravene the enjoyment of human rights” (para. 9).

“States should ensure that their rights and obligations arising from external debt agreements or arrangements do not hinder the progressive realization of economic, social and cultural rights” (para. 16).

4. Coercion in debt restructuring

The majority of the debt instruments encompassed a degree of coercion. Indeed, where a state is coerced into violating its constitutional, treaty and customary obligations in order to secure credit and liquidity, especially where it is forced to forego a significant part of its legislative and socio-economic sovereignty, it is deemed as having consented under a high degree of coercion. In the case at hand this was further manifested through reprehensible conditionalities, combined with interference in constitutional processes (such as severe opposition to a proposed referendum in 2011 and unveiled threats to the Greek electorate in all elections since 2010). Coercion as a ground of invalidity under Article 52 VCLT refers to the threat or use of force. The VCLT’s reference to “force” may be construed as including forms of economic coercion and should not neces-sarily be limited to “armed force”. Indeed, a number of international instruments refer to economic pressure as a form of aggression [5].

This type of economic coercion also qualifies as unlawful intervention in the domestic affairs of a state which, although does not invalidate consent, may nonetheless offer a basis for denouncing a treaty under Article 56 (1) (b) VCLT.

The employment of coercion in the negotiation and signing of an instrument, whether a treaty or contract, gives rise to severe implications for the instrument in question as well as the parties’ relationship [6]. Although Articles 51 and 52 of the VCLT refer to the coercion of individual state negotiators or coercion through the threat or use of force, it is clear that in situations where a government as a whole is forced to accept significantly unbalanced terms, lest be sanctioned with an acute (real or speculative) financial crisis (especially when its origin and effects are controlled by the other parties) [7] with unforeseen consequences, that the level of coer-cion is tantamount to that envisaged in Article 52 VCLT.

5. Unilateral coercive measures by creditors

The creditors’ bad faith and illegitimate pressure (coercion or duress) on Greece to accept the terms of the various agreements and instruments, as well as the financial consequences of unilateral acts, ultimately culminated into a situation whose legal effects are tantamount to unilateral coercive measures. In the case at hand, statements made by creditors, even speculative ones which were known to culminate, or which would have knowingly had the effect of deteriorating/ harming the Greek economy and the livelihood of the Greek people constitute a species of unilateral coercive measures. Unilateral coercive measures are prohibited under international law, violate the UN Charter and are not considered lawful countermeasures [8].

6. Lawful countermeasures

As has been demonstrated in the present report, the creditors have committed internationally wrongful acts by imposing upon the Greek government several measures that violate rights enjoyed by the Greek people.

Furthermore, in the run-up to the Greek debt crisis, EU member states and the IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org , among others, entered into negative statements about the Greek economy that had a direct adverse impact on the country’s capacity to borrow with lower interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation. . Further speculation through other statements about the country’s exit from the Eurozone had an analogous impact and among other effects induced a significant number of Greek deposits to flee abroad. The same is true of similar measures and statements following the election to power of a new government in 2015.

The outcome of these observations is that when a country becomes the target of actions that are known to harm its economy (especially to the benefit of its lenders) and the livelihood of its people, it may resort to lawful countermeasures. Greece is therefore entitled to pertinent countermeasures, especially by repudiating debts attached to, or arising from, the MoUs, the 2010 Intercreditor Agreement and Loan Facility Agreement.

Indeed, under customary international law and Articles 49ff of the ILC’s Articles on State Responsibility (ASR) an injured state may violate an otherwise international obligation against another (responsible) state if that other state has committed an internationally wrongful act. The violation committed by the injured state has the purpose of inducing the responsible state to comply with its obligations.

7. The absence of unjust enrichment

Bad faith, the satisfaction of self-interests, the absence of legality and the detrimental effects of the conditions imposed on Greece to its economy and the livelihood of its people render the pertinent part of the debt odious, illegal or illegitimate. The Greek people have not received an unjust advantage or any other benefit – quite the contrary – from the accrued debt, therefore Greece, is under no obligation to repay that part of the initial capital (deemed odious, illegal or illegitimate) as a form of unjust enrichment [9]. The same is true in respect of interest (simple or compound) which arises as a result of odious, illegal or illegitimate capital in the form of loans, assurances or other. The case against unjust enrichment is further reinforced by the fact that while Greece has made a surplus and has dramatically slashed public spending its debt continues to grow.

 SECTION II: THE RIGHT TO UNILATERAL SUSPENSION OF UNSUSTAINABLE DEBTS UNDER INTERNATIONAL LAW

1. Unilateral debt suspension based on the state of necessity

The definition of necessity is provided by Article 25 of the ILC Articles on State Responsibility which has been widely used and recognized by international courts and tribunals [10]. As explained in the commentary to Article 25, the term “necessity” is used to denote those exceptional cases where the only way a state can safeguard an essential interest threatened by a grave and imminent peril is, for the time being, not to perform some other international obligation of lesser weight or urgency [11]. Pursuant to Article 25, four conditions are required for a lawful invocation of necessity. The Greek case satisfies them all. Greece can therefore suspend the unsustainable part of its debt.

a) The measure shall safeguard an essential interest of the State against a grave and imminent peril

In the Socobel case [12], counsel for the Greek Govern-ment rightly stated that “doctrine recognizes in this matter that the duty of a Government to ensure the
proper functioning of its essential public services outweighs that of paying its debts. No State is required to execute, or to execute in full, its pecuniary obligation if this jeopardizes the functioning of its public services and has the effect of disorganizing the administration of the country. In the case in which payment of its debt endangers economic life or jeopardizes the administration, the Government is, in the opinion of authors, authorized to suspend or even to reduce the service of debt” [13]. The Counsel for the Belgian government replied that: “a learned survey... Mr. Youpis [the counsel for the Greek government] stated yesterday that a State is not obliged to pay its debt if in order to pay it would have to jeopardize its essential public services. So far as the principle is concerned, the Belgian Government would no doubt be in agreement.”

An ICSID ICSID The International Centre for the Settlement of Investment Disputes (ICSID) is a World Bank arbitration mechanism for resolving disputes that may arise between States and foreign investors. It was established in 1965 when the Washington Convention of that year entered into force.

Contrary to some opinions defending the fact that ICSID mechanism has been widely accepted in the American hemisphere, many States in the region continue to keep their distance: Canada, Cuba, Mexico and Dominican Republic are not party to the Convention. In the case of Mexico, this attitude is rated by specialists as “wise and rebellious”. We must also recall that the following Caribbean States remain outside the ICSID jurisdiction: Antigua and Barbuda, Belize, Dominica (Commonwealth of) and Suriname. In South America, Brazil has not ratified (or even signed) the ICSID convention and the 6^th most powerful world economy seems to show no special interest in doing so.

In the case of Costa Rica, access to ICSID system is extremely interesting: Costa Rica signed the ICSID Convention in September, 1981 but didn’t ratify it until 12 years later, in 1993. We read in a memorandum of GCAB (Global Committee of Argentina Bondholders) that Costa Rica`s decision resulted from direct United States pressure due to the Santa Elena expropriation case, which was decided in 2000 :
"In the 1990s, following the expropriation of property owned allegedly by an American investor, Costa Rica refused to submit the dispute to ICSID arbitration. The American investor invoked the Helms Amendment and delayed a $ 175 million loan from the Inter-American Development Bank to Costa Rica. Costa Rica consented to the ICSID proceedings, and the American investor ultimately recovered U.S. $ 16 million”.

https://icsid.worldbank.org/apps/ICSIDWEB/Pages/default.aspx tribunal in the LG&E case has followed this view in finding that economic and financial interests can also be considered as essential interests. [14] In this respect, the tribunal pointed out several socio-economic indicia which allowed Argentina to lawfully invoke a state of necessity [15]. These included:

• Unemployment rate of 25%;
• Almost half of the Argentine population living below the poverty line;
• “Health care Care Le concept de « care work » (travail de soin) fait référence à un ensemble de pratiques matérielles et psychologiques destinées à apporter une réponse concrète aux besoins des autres et d’une communauté (dont des écosystèmes). On préfère le concept de care à celui de travail « domestique » ou de « reproduction » car il intègre les dimensions émotionnelles et psychologiques (charge mentale, affection, soutien), et il ne se limite pas aux aspects « privés » et gratuit en englobant également les activités rémunérées nécessaires à la reproduction de la vie humaine. system teetered on the brink of collapse”;
• Government forced to decrease its per capita spending on social services by 74%.

In the Continental case, an ICSID tribunal shared this view and also set out a set of concrete factors:

“It is impossible to deny, in the Tribunal’s view, that a crisis that brought about the sudden and chaotic abandonment of the cardinal tenet of the country’s economic life, such as:

• the near collapse of the domestic economy;
• the social hardships bringing down more than half of the population below the poverty line; the immediate threats to the health of young children, the sick and the most vulnerable members of the population….that all this taken together does not qualify as a situation where the maintenance of public order and the protection of essential security interest of Argentina as a state and as a country was vitally at stake” [16].

As it has been demonstrated in chapters 5, 6 and 7 of the present report, it is clear that essential interests of Greece are equally under imminent peril.

b) The measure must be the only way to safeguard the essential interest in question

It is clear from the ILC Articles commentary that the state can take several measures, and thus the expression “only way” shall not be construed literally. In the LG&E case the tribunal stated that a state may have several responses at its disposal to maintain public order or protect its essential security interests. As these austerity measures have directly culminated in serious and flagrant human rights violations and have, as such, jeopardized essential interests of Greece, it is evident that the suspension of that part of the debt which is odious, illegal or illegitimate is now the only solution for Greece in order to safeguard the interests at stake. As has been well demonstrated, the violation of human rights is closely linked to the economic and social environment, which is the result of a debt crisis.

During the past five years, measures implemented were seen by most of the international economic actors as the only way to prevent Greece from defaulting, and this continues to be the case. This means that in the eyes of Greece’s creditors there exist merely two options: implementing austerity measures or defaulting. A default would have harmed the banks’ inerests.

c) The measure shall not impair an essential interest of the State or states towards which the obligation exists, or of the international community as a whole

This condition means that the interest of the other states threatened by the non-fulfillment of the obligation has to be inferior to the essential interest of the first state. In the case of Greece, as we have shown in the present report, the consequences to be borne by the creditors of Greece are substantially low, and cannot, in any case, be seen as essential interests.

d) The state shall not have contributed to the situation of necessity and the international obligation in question shall not exclude the possibility of invoking necessity

The commentary to Article 25 makes it clear that the contribution to the situation of necessity must be “sufficiently substantial and not merely incidental or peripheral” [17]. In the case of Greece, it is clear that the Troika Troika Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty.

IMF : https://www.ecb.europa.eu/home/html/index.en.html is responsible for the economic and social dis-aster that has engulfed the country. As we have shown, the margin of appreciation at the disposal of Greece was very narrow and did not enable it to freely implement any meaningful economic and social programme.

We have shown that Greece was effectively forced to accept such conditionality through political and eco-nomic pressure, mainly undertaken by two of the more powerful countries in the EU (France and Germany). In this context, Greece cannot be seen as having substantially contributed to the situation.

2. The right to unilateral sovereign insolvency

There is no rule under international law that prevents states from becoming insolvent by unilateral means. This is especially true when a state becomes factually insolvent, whether because its debt is unsustainable, because it is unable to meet the fundamental needs of its people, or because of other circumstances. The practice of states that have actually defaulted constitutes some practice regarding the unilateral nature of such an entitlement. Sovereign insolvency has received minimal attention in international law and practice, although it is well documented and was in fact rather prevalent in the early part of the twentieth century [18]. This right to unilateral insolvency is further corroborated by the ILA’s Sovereign Insolvency Study Group whose 2010 report proposed four policy options for debt restructuring, one of which was in fact full bankruptcy. In 2013 two working groups were established, one of which analysed the possibility of treaty-based solutions to debt restructur-ing [19]. As a result, sovereign insolvency is a reality in international affairs that is acknowledged in both theory and practice, albeit fiercely resisted because the assets of insolvent states are protected by immunities and sovereign privileges against their creditors. Debt-restructuring, short of insolvency, therefore, is an artificial mechanism which effectively allows creditors to exploit the income-generating sources of states, namely taxes, customs/tariffs, natural resources royalties, forced privatisations and others. The idea that Greece could somehow become unilaterally insolvent was resisted by its creditors through unilateral coercive measures.

Even though it would have been beneficial for Greece to become insolvent, especially in the wake of the crisis, its creditors continued to sustain her unsustainable debt, effectively prolonging an unsustainable debt.

If a state then enjoys the right to become insolvent, it is clear that unilateral insolvency constitutes a circumstance precluding wrongfulness of the borrower’s international obligations, namely its borrowing obligations. This is clearly the case when a state of necessity may be demonstrated under Article 25 of the ILC’s

Articles on State Responsibility, as already explained. It would be inconceivable for a domestic court to compel a person to service his or her debt if his or her earnings did not suffice for the basic sustenance needs of his or her family. These observations are consistent with a recent award issue by an investment tribunal in Postova Banka AS and Istrokapital SE v Greece, where it noted that there is no guarantee for the repayment of sovereign debt Sovereign debt Government debts or debts guaranteed by the government. .

Chapters :
Chapter 1 : Debt before the Troika
Chapter 2 : Evolution of the Greek public debt during 2010-2015
Chapter 3 : Greek public debt by creditors in 2015
Chapter 4 : Debt mechanism in Greece
Chapter 5 : The conditionnalities against sustainability
Chapter 6 : The impact of the “bailout” programme on human rights
Chapter 7 : Legal issues surrounding the MoU and Loan Agreements
Chapter 8 : Assessment of the debt as regards illegitimacy, odiousness, illegality and unsustainability
Chapter 9 : Legal foundations for repudiation and suspension of Greek sovereign debt
Preliminary Report of the Truth Committee on Public Debt in PDF

Additional :
Eric Toussaint’s speech at the presentation of the preliminary report of the Truth Committee