Sri Lanka's New MFC Clause — Have "Contorts" Arrived in Sovereign Debt?

The doctrine of tortious interference with contracts is one of several that sits at the intersection of tort and contract law. These "contorts" confuse law students — lawyers and law professors too! — but can be important in practice. If not anticipated, they can create problems for unsuspecting parties and lawyers. Has Sri Lanka’s novel Most Favored Creditor clause created problems for creditors who participated in the country's restructuring? The MFC clause is confusing in places. It simultaneously seems to contemplate Sri Lanka striking a deal with holdouts (after litigation ends) and to quite aggressively try to prevent such a deal from happening. We discuss whether this creates risks for restructuring creditors and wonder why such an aggressive clause was viewed as necessary.

Producer: Leanna Doty

"Shades of Spring" Kevin MacLeod (incompetech.com)

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