UN General Assembly resolution on basic principles on debt restructuring processes: a first step towards a global state bankruptcy regime?

In what was hailed as a ‘historic’ move, the United Nations General Assembly (“GA”) adopted its resolution concerning Basic Principles on Sovereign Debt Restructuring Processes on 10th September 2015 (“resolution”), despite persistent opposition from several member countries, including heavyweights such as the United States and European Union. The GA resolution essentially builds on its previous commitment made a year ago towards the adoption of a multilateral framework on sovereign debt restructuring. Although, the present resolution does not go as far as proposing for a definitive legal multilateral framework, it is nonetheless unflinching in its stance and comprehensive in its assessment. The resolution expounds on a set of nine basic principles, which arguably represent some of the most contentious issues in the realm of sovereign debt restructuring and continues to confound both creditors and sovereign debtors alike. In the backdrop of increasing anxiety and concern with respect to the debt vulnerabilities of both developing and developed countries, this piece argues that there is an urgent need to reconsider a statutory approach in addressing the question of debt unsustainability and consequent restructuring. In this regard, the resolution and the principles stated therein can provide for a perfect launch pad in igniting both debate and action at the international level, currently marked with skepticism and dissonance.