¹ Carmen M. Reinhart & Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly xxx, 99 (2009).

² Id. at 34.

³ Udaibir S. Das, Michael G. Papaioannou & Christoph Trebesch, Sovereign Debt Restructurings 1950–2010: Literature Survey, Data, and Stylized Facts, at 30. (IMF Working Paper WP/12/03, Aug. 2012).

⁴ Id. at 33.

⁵ See e.g., Carmen M. Reinhart and Kenneth Rogoff, The Coronavirus Debt Threat, Wall Street J. (Mar. 26, 2020), at https://www.wsj.com/articles/the-coronavirus-debt-threat-11585262515 (the “unprecedented” economic stop, increase in health expenditures, and the “halt” of private financing mean that debt restructuring will be “inevitable” “in many corners of the global economy”); Colby Smith & Robin Wigglesworth, Why the Coming Emerging Market Debt Crisis Will Be Messy, Fin. Times (May 11, 2020), at https://www.ft.com/content/f7157356-e773-47c4-b05d-8624a5ccfd03?shareType=nongift.

⁶ Patrick Bolton, Lee Buchheit, Pierre-Olivier Gourinchas, Mitu Gulati, Chang-Tai Hsieh, Ugo Panizza & Beatrice Weder di Mauro, Born Out of Necessity: A Debt Standstill for COVID-19, Policy Insight No. 103, Ctr. Econ. Pol'y Res. (Apr. 2020), available at https://cepr.org/sites/default/files/policy_insights/PolicyInsight103.pdf.

⁷ Which Emerging Markets Are in Most Financial Peril?, Economist (May 2, 2020), at https://www.economist.com/briefing/2020/05/02/which-emerging-markets-are-in-most-financial-peril.

⁸ See Katie Linsell, Lebanon Debt Swaps Set to Pay $215 Million After Default, Bloomberg News (Apr. 23, 2020), at https://www.bloomberg.com/news/articles/2020-04-23/lebanon-debt-swaps-set-to-pay-traders-210-million-after-default; Gideon Long & Colby Smith, Ecuador Reaches Deal to Postpone Debt Repayments Until August, Fin. Times (Apr. 17, 2020), at https://www.ft.com/content/e1622284-102c-48f0-b45d-dadb81579d9d; Eliana Raszewski & Walter Bianchi, Argentina Misses Payment, Decides to Use Grace Period, Bond Prices Fall, Reuters (Apr. 22, 2020), at https://www.reuters.com/article/us-argentina-debt/argentina-misses-debt-payment-decides-to-use-grace-period-bond-prices-fall-idUSKCN22439Y.

⁹ See Colby Smith, IMF Calls for Urgent Action to Prevent Debt Crisis in Emerging Economies, Fin. Times (Oct. 1, 2020), at https://www.ft.com/content/b61c8dea-58bc-476d-ae9f-c2de104808de (quoting IMF Managing Director, Kristalina Georgieva).

¹⁰ Angola, Argentina, Ecuador, Gabon, Lebanon, Sri Lanka, Suriname, and Tajikistan are facing “debt distress,” with Zambia expected to immediately default. See Economist, supra note 7. Credit rating agencies have downgraded the credit of thirty countries, including Argentina, Mexico, and South Africa. Id.

¹¹ See UN Conf. Trade & Dev., International Investment Agreements Navigator, at https://investmentpolicy.unctad.org/international-investment-agreements.

¹² Nigel Blackaby & Constantine Partasides (with Alan Redfern and Martin Hunter), Redfern and Hunter on International Arbitration, paras. 8.58, 8.59, 8.75, 8.79 (2009) [hereinafter Redfern and Hunter].

¹³ Abaclat and Others v. Argentine Republic, ICSID Case No. ARB/07/5, Decision on Jurisdiction and Admissibility, para. 1 (Aug. 4, 2011) [hereinafter Abaclat Jurisdictional Decision] (180,000 creditors); Ambiente Ufficio S.P.A. and Others v. Argentine Republic, ICSID Case No. ARB/08/9, Decision on Jurisdiction and Admissibility, para. 93 (Feb. 8, 2013) [hereinafter Ambiente Ufficio Jurisdictional Decision] (sixty-four creditors); Giovanni Alemanni and Others v. Argentine Republic, ICSID Case No. ARB/07/8, Decision on Jurisdiction and Admissibility, para. 1 (Nov. 17, 2014) [hereinafter Alemanni Jurisdictional Decision] (initially 183 creditors).

¹⁴ Poštová Banka A.S. and Istrokapital S.E. v. Hellenic Republic, ICSID Case. No. ARB/13/8, Award, para. 1 (Apr. 19, 2015) [hereinafter Poštová Banka Jurisdictional Award].

¹⁵ Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, Mar. 18, 1965, 17 UST 1270, 575 UNTS 159 (entered into force Oct. 14, 1966) [hereinafter ICSID Convention]. Under prevailing practice in ICSID arbitration, investors must show that their investments satisfy both the definition of investment in the applicable BIT, as well as under the ICSID Convention. However, tribunals and commentators have nevertheless imposed their own definitions as to what constitutes an “investment” under that Convention. See Pahis, Stratos, Investment Misconceived: The Investment-Commerce Distinction in International Investment Law, 45 Yale J. Int'l L. 69, 81–85 (2020)Google Scholar.

¹⁶ See Poštová Banka Jurisdictional Award, supra note 14, at 26–37; Abaclat Jurisdictional Decision, supra note 13, at 123–47, 183–95; Ambiente Ufficio Jurisdictional Decision, supra note 13, at 29–34, 116–23; Alemanni Jurisdictional Decision, supra note 13, at 116–62,

¹⁷ See, e.g., Waibel, Michael, Opening Pandora's Box: Sovereign Bonds in International Arbitration, 101 AJIL 711, 717 (2007)CrossRefGoogle Scholar; Ostřanský, Josef, Sovereign Default Disputes in Investment Treaty Arbitration: Jurisdictional Considerations and Policy Implications, 3 Groningen J. Int'l L. 27, 44 (2015)Google Scholar.

¹⁸ See, Pahis, supra note 15, at 104.

¹⁹ Abaclat Jurisdictional Decision (diss. op., Abi-Saab, J.), supra note 13; Ambiente Ufficio Jurisdictional Decision (diss. op., Torres Bernardez, J.), supra note 13.

²⁰ See Sykes, Alan O., The Economic Structure of International Investment Agreements with Implications for Treaty Interpretation and Design, 113 AJIL 482, 491 (2019)CrossRefGoogle Scholar.

²¹ See, e.g., IMF, Sovereign Debt Restructuring—Recent Developments and Implications for the Fund's Legal and Policy Framework, at 1 (Apr. 26, 2013) [hereinafter IMF, Sovereign Debt Restructuring]; Lee C. Buchheit, Anna Gelpern, Mitu Gulati, Ugo Panizza, Beatrice Weder de Mauro & Jeromin Zettelmeyer, Revisiting Sovereign Bankruptcy 2 (2013) [hereinafter Revisiting Sovereign Bankruptcy].

²² See Global Sovereign Debt to Jump to $50 Trillion – S&P Global, Reuters (Feb. 21, 2019), at https://www.reuters.com/article/us-global-debt-s-p/global-sovereign-debt-to-jump-to-50-trillion-sp-global-idUSKCN1QA1L0.

²³ See text at notes 1–4 supra.

²⁴ See UN Conf. Trade & Dev., Sovereign Debt Restructuring and International Investment Agreements, 2 Int'l Invest. Arb. Issues, at 2 (July 2011) [hereinafter UNCTAD Sovereign Debt Restructuring]. A proposal was made by the IMF in the early 2000s to establish such a regime, but it went nowhere. See Anne O. Krueger, A New Approach to Sovereign Debt Restructuring (2002). See also Mitu Gulati & Robert E. Scott, The Three and a Half Minute Contract: Boilerplate and the Limits of Contract Design 19 (2013).

²⁵ See International Law Association (ILA), Sovereign Insolvency Study Group, Philip Wood, QC, Brian Hunt & Michael Waibel, Report: State Insolvency: Options for the Way Forward (Aug. 2010).

²⁶ See Mauro Megliani, Sovereign Debt: Genesis – Restructuring – Litigation 205 (2015).

²⁷ Reinhart & Rogoff, supra note 1, at 103. See also Sophia Chen, Paola Ganum, Lucy Qian Liu, Leonardo Martinez & Maria Soledad Martinez Peria, Debt Maturty and the Use of Short-Term Debt 13 (2019); Das, Papaioannou & Trebesch, supra note 3, at 41–42.

²⁸ In contrast to economic definitions, I define domestic and foreign debt by virtue of its governing law, not the currency it is issued in or the residency of its holder. Thus, while most domestic debt (debt subject to local law) is issued in local currency and held by local residents, it need not be. See Reinhart & Rogoff, supra note 1, at 13. Likewise, according to the definition used herein, external debt is not necessarily issued in foreign currency or held by foreign residents.

²⁹ Reinhart & Rogoff, supra note 1, at 10, 13; Das, Papaioannou & Trebesch, supra note 3, at 41; Gulati & Scott, supra note 24, at 28; Megliani, supra note 26, at 225, 523. See also Rodrigo Olivares-Caminal, Litigation Aspects of Sovereign Debt, in Debt Restructuring 389, 391 (Olivares-Caminal, et al. eds., 2011).

³⁰ Sadie Blanchard, Courts as Information Intermediaries: A Case Study of Sovereign Debt Disputes, 3 B.Y.U. L. Rev. 497, 506 (2018); Julian Schumacher, Christoph Trebesch & Henrik Enderlein, What Explains Sovereign Debt Litigation? 58 J. L. & Econ. 585, 591 (2015).

³¹ Olivares-Caminal, supra note 29, at 392. See also Phillip Wood, Project Finance, Subordinated Debt and State Loans 99 (1995) (noting that states can change their laws to favor themselves in the case of default); Hayk Kupelyants, Sovereign Defaults Before Domestic Courts 142 (2018) (“The lesson to be learned from the Greek debt restructuring of 2012 is that in cases when the law of the borrowing State governs sovereign bonds, the State may seek to amend its law in a unilateral and retrospective fashion.”).

³² Olivares-Caminal, supra note 29, at 389, 391.

³³ Schumacher, Trebesch & Enderlein, supra note 30, at 591.

³⁴ Olivares-Caminal, supra note 29, at 392.

³⁵ Blanchard, supra note 30, at 506; Olivares-Caminal, supra note 29, at 392; Das, Papaioannou & Trebesch, supra note 3, at 50.

³⁶ Olivares-Caminal, supra note 29, at 392.

³⁷ Gulati & Scott, supra note 24, at 45; see also Blanchard, supra note 30, at 508.

³⁸ Das, Papaioannou & Trebesch, supra note 3, at 34.

³⁹ Jeromin Zettelmeyer, Christoph Trebesch & Mitu Gulati, Greek Debt Restructuring: An Autopsy, Econ. Pol'y 513, 527 (July 2013) (comparing the Greek restructuring, in which change to domestic law retroactively imposed a collective action clause that bound all creditors to a restructuring agreement, with the Argentine restructuring, which involved external debt without binding collective action clauses).

⁴⁰ See IMF, Sovereign Debt Restructuring, supra note 21, at 22.

⁴¹ Mehmet Caner, Thomas Grennes & Fritzi Koehler-Geib, Finding the Tipping Point – When Sovereign Debt Turns Bad (Policy Research Working Paper WPS5391, July 1, 2010) (carrying large public debt has significant costs in terms of GDP); IMF, Sovereign Debt Restructuring, supra note 21, at 20.

⁴² Nouriel Roubini, Debt Sustainability: How to Assess Whether a Country Is Insolvent 17 (Dec. 20, 2001), available at http://people.stern.nyu.edu/nroubini/papers/debtsustainability.pdf. As the ratio of debt-to-GDP rises, the cost of borrowing for the state will rise to price in the increased risk of default, thus further increasing the debt-to-GDP ratio, further increasing the risk of default, and further increasing the cost of servicing debt. As Roubini explains: “Such an increase in spread may trigger a perverse debt dynamics in which, if the country tries to service its debt in full at current high spreads, debt ratios grow even if the country/government is following policies that are sound. One may also end up in situations of ‘self-fulfilling solvency traps.’” Id.

⁴³ IMF, Sovereign Debt Restructuring, supra note 21, at 20.

⁴⁴ Id. at 12.

⁴⁵ Id. at 12, 20.

⁴⁶ See Rohan Pitchford & Mark L. J. Wright, Holdouts in Sovereign Debt Restructuring: A Theory of Negotiation in a Weak Contractual Environment, 79 Rev. Econ. Studies 812, 813 (2012); Anna Gelpern, Sovereign Debt: Now What?, 41 Yale J. Int'l L. 45, 57 (2016).

⁴⁷ Federico Sturzenegger & Jeromin Zettelmeyer, Debt Defaults and Lessons from a Decade of Crises 64 (2006).

⁴⁸ Lee C. Buchheit, G. Mitu Gulati & Ignacio Tirado, The Problem of Holdout Creditors in Eurozone Sovereign Debt Restructurings, at 6 (paper prepared for presentation at the European University of Cyprus (Nicosia), Jan. 22, 2013); Ran Bi, Marcos Chamon & Jeromin Zettelmeyer, The Problem that Wasn't: Coordination Failures in Sovereign Debt Restructurings, at 4 (IMF Working Paper WP/11/265, 2011).

⁴⁹ Buchheit, Gulati & Tirado, supra note 48, at 6.

⁵⁰ Das, Papaioannou & Trebesch, supra note 3, at 46, 47.

⁵¹ Id. at 43, 45.

⁵² Id. at 44.

⁵³ IMF Staff Report: Strengthening the Contractual Framework to Address Collective Action Problems in Sovereign Debt Restructuring, at 16 (Oct. 2014) [hereinafter IMF, Strengthening the Contractual Framework].

⁵⁴ As of June 2014, the IMF estimated that about 80% of the approximately US$ 900 billion in outstanding foreign law bonds contained CACs. IMF, Strengthening the Contractual Framework, supra note 53, at 17. Of the US$ 420 billion in foreign sovereign bonds governed by New York law, approximately 75% are estimated to include CACs. Id.

⁵⁵ IMF, Strengthening the Contractual Framework, supra note 53, at 18. The introduction of so-called aggregation clauses have recently been introduced to address the limitations of collective action clause. Aggregation clauses allow a supermajority of creditors across issuances to amend the payment terms of all such issuances. The use of such clauses, however, remains limited. Das, Papaioannou & Trebesch, supra note 3, at 48.

⁵⁶ Poštová Banka Jurisdictional Award, supra note 14, paras. 51, 67.

⁵⁷ See Gary B. Born, International Arbitration: Law and Practice 129, 130 (2d ed. 2015).

⁵⁸ Though in what is, to date, an outlier decision, the tribunal in the Greek arbitration also refused to hear the claims. Poštová Banka Jurisdictional Award, supra note 14.

⁵⁹ See, e.g., Abaclat Jurisdictional Decision, supra note 13, para. 52.

⁶⁰ An agreement to arbitrate waives state immunity from adjudication, but does not generally waive immunity from execution of any eventual arbitral award. See Olga Gerlich, State Immunity from Execution in the Collection of Awards Rendered in International Investment Arbitration: The Achilles’ Heel of the Investor-State Arbitration System?, 26 Am. Rev. Int'l Arb. 47, 60, 67, 68 (2015) (noting that France and Switzerland are the exceptions to this general rule).

⁶¹ Born, supra note 57, at 9.

⁶² Most investment treaties provide investors the option to choose between ICSID arbitration and arbitration pursuant to the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL). See W. Michael Reisman & Anna Vinnik, What Constitutes an Investment and Who Decides?, in Contemporary Issues in International Arbitration and Mediation: The Fordham Papers 50, 70 (Arthur W. Rovine ed., 2010). Where the investor-claimant chooses an UNCITRAL arbitration, the enforcement of the resulting award is subject to the New York Convention or other similar regional conventions. Where the investor-claimant initiates an ICSID arbitration, the enforcement of the award is subject to the ICSID Convention.

⁶³ ICSID Convention, supra note 15, Art. 54(1).

⁶⁴ See, e.g., Int'l Trading & Indus. Inv. Co. v. Dyncorp Aerospace Tech., 763 F. Supp. 2d 12, 20 (D.D.C. 2011) (Because “the New York Convention provides only several narrow circumstances when a court may deny confirmation of an arbitral award, confirmation proceedings are generally summary in nature.”); Chevron Corp. v. Republic of Ecuador, 949 F. Supp. 2d 57, 64 (D.D.C. 2013) (“The party resisting confirmation bears the heavy burden of establishing that one of the grounds for denying confirmation in Article V applies.”).

⁶⁵ Born, supra note 57, at 9. See also Gary B. Born & Peter B. Rutledge, International Litigation in United States Courts 1074 (6th ed. 2018) (“There is no uniform practice among foreign states regarding the recognition of foreign judgments.”).

⁶⁶ Born, supra note 57, at 9–10; Born & Rutledge, supra note 65, at 1074. While the Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (Hague Judgements Convention) would increase the enforceability of foreign judgments, it has not yet entered into force and has only been signed by a limited number of states.

⁶⁷ Schumacher, Trebesch & Enderlein, supra note 30, at 595–96.

⁶⁸ Id.

⁶⁹ In general, tribunals have allowed investors to structure their investments for the purpose of obtaining future treaty protection by, for example, incorporating in a state that has a treaty with the host state. See, e.g., Tokios Tokelés v. Ukraine, ICSID Case No. ARB/02/18, Decision on Jurisdiction (Apr. 29, 2004). On the other hand, restructuring an investment for the purpose of obtaining treaty protection for a claim that has already arisen or that is anticipated is widely considered impermissible. See, e.g., Pac Rim Cayman LLC v. Republic of El Sal., ICSID Case ARB/09/12, Decision on the Respondent's Jurisdictional Objections, para. 2.99 (June 1, 2010). For a critical analysis of these questions, see Kathleen Claussen, The International Claims Trade, 41 Cardozo L. Rev. 1743 (2020).

⁷⁰ This security would run with the holder and not with the instrument.

⁷¹ See Ugo Panizza, Federico Sturzenegger & Jeromin Zettelmeyer, The Economics and Law of Sovereign Debt and Default, 47 J. Econ. Lit. 651, 671 (2009). Assuming states cannot discriminate between creditors in an exchange offer, avoiding litigation would require paying all creditors according to that last creditors’ demands. To the extent investment treaties increased the difference between that creditor's cost-benefit equation and the remaining creditors, the more it would cost the state to meet the last creditor's demands and avoid litigation, and the less likely they would be able to or choose to do so.

⁷² See Section II.A.3 supra.

⁷³ See Waibel, supra note 17, at 736.

⁷⁴ See Section IV.B.1 infra.

⁷⁵ See Jeffery Commission, The Duration Costs of ICSID and UNCITRAL Investment Treaty Arbitrations (Vannin Capital, Funding in Focus Content Series Report Three, Julcy 2016), available at https://www.lexology.com/library/detail.aspx?g=1cd4f7b6-204b-45bb-8728-e494d0d69082 (average costs for a claimant in an ICSID arbitration between 2011 and 2015 was approximately $USD 5.6 million and approximately $USD 5.5 million for respondents; average duration was 3.75 years). See also Christoph Schreuer, The ICSID Convention: A Commentary, Art. 59, at 1215. (2d ed. 2009) (obtaining awards in investor-state arbitration can cost several million dollars in legal fees). By contrast, foreign court judgments can sometimes be obtained “within a matter of months.” Buchheit, Gulati & Tirado supra note 48, at 6.

⁷⁶ See Fedax v. Republic of Venezuela, ICSID Case No. ARB/96/3, Decision of the Tribunal on Objections to Jurisdiction, para. 34 (July 11, 1997) (citing Antonio R. Parra: The Scope of New Investment Laws and International Instruments, in Economic Development, Foreign Investment and the Law 27, 35–36 (Robert Pritchard ed., 1996)).

⁷⁷ See Pahis, supra note 15, at 101–02.

⁷⁸ See, e.g., Agreement Between the Argentina Republic and Japan for the Promotion and Protection of Investment, Art. 1, Dec. 1, 2018 (not in force) [hereinafter Argentina-Japan BIT] (excluding sovereign debt); Agreement Between Australia and the Oriental Republic of Uruguay on the Promotion and Protection of Investments, Art. 1(a)(ii), Apr. 5, 2019 (not in force) (excluding sovereign debt). See also Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP, ch. 9 (Investment), Annex 9-G, Mar. 8, 2018, entered into force Dec. 30, 2018 (Canada, Australia, Japan, Mexico, New Zealand, and Singapore), Jan.14, 2019 (Vietnam) (limiting substantive and procedural protections for sovereign debt).

⁷⁹ According to the UNCTAD Investment Policy Hub, out of 2,575 treaties that provide for investor-state arbitration, at most 136 reference sovereign debt specifically. See Investment Policy Hub, at https://investmentpolicy.unctad.org/international-investment-agreements/iia-mapping.

⁸⁰ The U.S. and Netherlands Model BITs provide for prospective application for ten and fifteen years respectively. See 2012 U.S. Model Bilateral Investment Treaty, Art. 22; Netherlands Model Investment Agreement, Art. 26, Oct. 19, 2018.

⁸¹ See Waibel, supra note 17; Michael Waibel, Sovereign Defaults Before International Courts and Tribunals (2011).

⁸² Waibel, supra note 17, at 718, 736.

⁸³ Ostřanský, supra note 17, at 55. See also UNCTAD Sovereign Debt Restructuring, supra note 24; Alison Wirtz, Bilateral Investment Treaties, Holdout Investors, and Their Impact on Grenada's Sovereign Debt Crisis, 16 Chi. J. Int'l L. 249 (2015) (discussing the holdout problem).

⁸⁴ Multiple empirical studies have analyzed the question of whether BITs increase foreign direct investment generally, and “on balance, although the evidence is not conclusive, one may say that the more recent of these studies tend to show a positive correlation” between BITs and foreign investment flows. See Jeswald W. Salacuse, Of Handcuffs and Signals: Investment Treaties and Capital Flows to Developing Countries, 58 Harv. Int'l L.J. 127, 132 (2017).

⁸⁵ See Sergio Puig & Gregory Shaffer, Imperfect Alternatives: Institutional Choice and the Reform of Investment Law, 112 AJIL 361, 362 (2018) (the normative goals of international investment law are conventionally described as fairness, efficiency, and peace).

⁸⁶ Sykes, supra note 20, at 491; Salacuse, supra note 84, at 130.

⁸⁷ See Stephan W. Schill, Enabling Private Ordering: Function, Scope and Effect of Umbrella Clauses in International Investment Treaties, 18 Minn. J. Int'l L. 1, 18–19 (2009).

⁸⁸ Sykes, supra note 20, at 498. Investors would be particularly vulnerable with respect to investments that entail large sunk costs, such as those associated with infrastructure or extraction projects, that cannot be extricated easily from the country once made. Id. at 497.

⁸⁹ Id. at 498; Henrick Horn & Pehr-Johan Norback, A Non-technical Introduction to Economic Aspects of International Investment Agreements, at 5-6 (Research Inst. Industrial Econ. IFN Working Paper No. 1250, 2018), available at https://www.ifn.se/wfiles/wp/wp1250.pdf.

⁹⁰ Horn & Norback supra note 89, at 5–6; Sykes, supra note 20, at 497–98 (describing this as a “time-inconsistency” problem).

⁹¹ See Anne van Aaken, International Investment Law Between Commitment and Flexibility: A Contract Theory Analysis, 12 J. Int'l Econ. L. 507 (2009); Schill, supra note 87, at 18–19.

⁹² See, e.g., Andrew T. Guzman, A Compliance-Based Theory of International Law, 90 Cal. L. Rev. 1823 (2002); Michael Tomz, Reputation and International Cooperation: Sovereign Debt Across Three Centuries (2007). See also Robert Cooter & Thomas Ulen, Law and Economics 185, 275–78, 291–92, 293–96 (3d ed. 2000).

⁹³ Sykes, supra note 20, at 493.

⁹⁴ Id.

⁹⁵ See, e.g., Alan M. Jacobs, Governing for the Long Term: Democracy and the Politics of Investment (2011).

⁹⁶ Sykes, supra note 20, at 494–95.

⁹⁷ See Salacuse, supra note 84, 140–41.

⁹⁸ Notably, investment treaties can only be expected to increase overall social welfare by correcting the market imperfections that lead to inefficient action. Otherwise, the benefits of additional investment are simply offset by the compensation paid to investors. See Sykes, supra note 20, at 495; Horn & Norback supra note 89, at 14.

⁹⁹ IMF, Sovereign Debt Restructuring, supra note 21, at 15.

¹⁰⁰ Id. at 20.

¹⁰¹ Id. at 15, 23.

¹⁰² See e.g., Eduardo Borensztein & Ugo Panizza, The Costs of Sovereign Default, at 23 (IMF Working Paper, WP/08/238, Oct. 2008) (finding states tend to sub-optimally postpone defaults until the economy is weak and defaults are widely anticipated); Eduardo Levy Yeyati & Ugo Panizza, The Elusive Costs of Sovereign Defaults, 94 J. Dev. Econ. 95 (2011) (states postpone default until the costs of default have already accrued).

¹⁰³ Mark Kruger & Miguel Messmacher, Sovereign Debt Defaults and Financing Needs, at 3 (IMF Working Paper WP/04/53, Mar. 2004).

¹⁰⁴ Gulati & Scott, supra note 24, at 167.

¹⁰⁵ Jerome Roos, Why Not Default? 22 (2019).

¹⁰⁶ Revisiting Sovereign Bankruptcy, supra note 21, at 2 (“The consensus seems to have shifted away from the fear that countries might restructure opportunistically to the fear that they might restructure too late, and these restructurings might not be deep enough.”). See also Too Little, Too Late: The Quest to Resolve Sovereign Debt Crises (Martin Guzman, José Antonio Ocampo & Joseph E. Stiglitz eds., 2016).

¹⁰⁷ IMF, Sovereign Debt Restructuring, supra note 21, at 1.

¹⁰⁸ Id. at 8.

¹⁰⁹ Id. at 20.

¹¹⁰ While it is possible that international investment law is already influencing state behavior in a way that is reflected in the studies below, it is reasonable to assume that any impact has been minimal. There have only been four investment arbitrations for sovereign debt involving two states, the first jurisdictional decision was issued in 2011, and a later decision contradicted it. Moreover, no arbitration reached a final award or provided clarity as to how investment treaties may apply on the merits. See text at notes 13–19 supra.

¹¹¹ Das, Papaioannou & Trebesch, supra note 3, at 61 (noting studies show an average of 2–5% declines in GDP lasting up to ten years); Davide Furceri & Aleksandra Zdzienicka, How Costly Are Debt Crises? (IMF Working Paper WP/11/280, Dec. 2011) (finding declines of 10% after eight years).

¹¹² Das, Papaioannou & Trebesch, supra note 3, at 64 (noting study showing 2% reduction in FDI flows).

¹¹³ Id. at 65 (noting studies show 20% to 40% drop in external borrowing by private firms). Moreover, financial and legal fees associated with restructuring have been between .25% and 2.25% of the amount restructured. Id.

¹¹⁴ Andrew K. Rose, One Reason Countries Pay Their Debts: Renegotiation and International Trade, 77 J. Dev. Econ. 189 (2005).

¹¹⁵ See Bianca De Paoli, Glenn Hoggarth & Victoria Saporta, Output Costs of Sovereign Crises: Some Empirical Estimates (Bank of England Working Paper No. 362, 2009).

¹¹⁶ G. Gelos, Ratna Sahay & Guido Sandleris, Sovereign Borrowing by Developing Countries: What Determines Market Access?, 83 J. Int'l Econ. 243 (2011).

¹¹⁷ Borensztein & Panizza, supra note 102, at 14 (four hundred basis points on average the year following default).

¹¹⁸ See id. at 1 (“There is a broad consensus in the economic literature that the presence of costly sovereign defaults is the mechanism that makes sovereign debt possible.”).

¹¹⁹ Panizza, Sturzenegger & Zettelmeyer, supra note 71, at 675.

¹²⁰ Id. at 677; Borensztein & Panizza, supra note 102, at 14; but see Das, Papaioannou & Trebesch, supra note 3, at 61 (noting that studies have shown increases in borrowing costs six to seven years after default and impacts on trade last about fifteen years).

¹²¹ Das, Papaioannou & Trebesch, supra note 3, at 38; Levy Yeyati & Panizza, supra note 102, at 95–105.

¹²² In theory, investment arbitration could help correct for high discount rates by making the costs associated with breach accrue more immediately through an arbitration award.

¹²³ Borensztein & Panizza, supra note 102, at 21–22 (out of nineteen countries examined, ruling coalitions lost votes in eighteen countries following default, experiencing on average a sixteen-point decrease in electoral support).

¹²⁴ Id. (in half of the episodes examined, there was a change in the chief executive either in the year of default or the year following default, representing a two-fold increase in the probability of executive change over normal times).

¹²⁵ See Richard N. Cooper, Currency Devaluation in Developing Countries, 86 Essays in International Finance (1971); Jeffrey A. Frankel, Contractionary Currency Crashes in Developing Countries, 149–92 (52 IMF Staff Papers, 2005).

¹²⁶ Greece's restructuring negotiations opened in the spring of 2011 and concluded in March 2012, with a bond exchange that implemented an effective haircut of around 59–65% off the face value of Greece's debt. See Zettelmeyer, Trebesch & Gulati, supra note 39, at 516. Prime Minister George Papandreou resigned in November 2011. George Pandreou Resigns as Greece's Prime Minister, Telegraph (Nov. 9, 2011), at https://www.telegraph.co.uk/finance/financialcrisis/8879647/George-Papandreou-resigns-as-Greeces-prime-minister.html. The prime minister's party, PASOK, collapsed shortly thereafter. See Mark Lowen, How Greece's Once-Mighty PASOK Party Fell from Grace, BBC (Apr. 5, 2013), at https://www.bbc.com/news/world-europe-22025714. Argentina, on the other hand, had a total of five presidents in the period between December 19, 2001 and January 2, 2002, just preceding and following the announcement of its 2002 default. See Argentina Gets New President for a Day, CNN (Jan. 1, 2002), at http://edition.cnn.com/2001/WORLD/americas/12/31/argentina.resign/index.html.

¹²⁷ Revisiting Sovereign Bankruptcy, supra note 21, at 10.

¹²⁸ See IMF, Sovereign Debt Restructuring, supra note 21, at 20 (emphasis added).

¹²⁹ Investment arbitration can in theory help correct for this problem by concentrating the form and timing of the costs associated with investment-adverse actions, making them more immediate, identifiable and thus more easily attributable to the decision (and decision maker) than future investment losses. Cf. Weijia Rao, Domestic Politics and Settlement in Investor-State Arbitration (draft, June 19, 2019), available at https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=CELS2019&paper_id=264 (finding that state agents enter into fewer investor-state settlements prior to elections, presumably because of the political costs of doing so).

¹³⁰ Revisiting Sovereign Bankruptcy, supra note 21, at 10.

¹³¹ Panizza, Sturzenegger and Zettelmeyer, supra note 71, at 681; Federico Sturzenegger & Jeromin Zettelmeyer, Debt Defaults and Lessons from a Decade of Crises 105–07, 122–24 (2007) (discussing the less favorable treatment afforded to nonresidents in Russia's and Ukraine's restructurings).

¹³² Panizza, Sturzenegger, and Zettelmeyer, supra note 71, at 677.

¹³³ Id. at 23; see also Revisiting Sovereign Bankruptcy, supra note 21, at 11 (“[P]olicymakers who believe that ‘strategic’ defaults can have large reputational costs but that ‘unavoidable’ defaults carry limited costs in terms of reputation may decide to postpone a needed default in order to signal that the default is indeed unavoidable.”).

¹³⁴ Blanchard, supra note 30, at 503.

¹³⁵ Id. at 537.

¹³⁶ Born, supra note 57, at 194.

¹³⁷ ICSID only publishes awards with the consent of the parties; where the parties do not consent, ICSID limits its publication to excerpts of the award of the legal reasoning. ICSID, Confidentiality and Transparency – ICSID Convention Arbitration, at https://icsid.worldbank.org/services/arbitration/convention/process/confidentiality-transparency.

The UNCITRAL Rules on Transparency in Treaty-Based Investor State Arbitration require the publication of certain filings. However, unless otherwise agreed by the parties, those rules apply only to disputes arising from treaties concluded after April 1, 2014, and moreover do not apply to exhibits, nor necessarily to witness or expert testimony. UNCITRAL Rules on Transparency in Treaty-Based Investor State Arbitration, Arts. 1, 3. See also Emelie M. Hafner-Burton & David G. Victor, Secrecy in International Investment Arbitration: An Empirical Analysis, 7 J. Int'l Disp. Settlement 161 (2016) (showing transparency reform efforts are failing to increase transparency in practice).

¹³⁸ According to Blanchard, providing an objective third-party assessment of the state's behavior is one of the key roles that courts play. Blanchard, supra note 30.

¹³⁹ See, e.g., Susan D. Franck, The Legitimacy Crisis in Investment Treaty Arbitration: Privatizing Public International Law Through Inconsistent Decisions, 73 Fordham L. Rev. 1521 (2004–2005).

¹⁴⁰ See generally Guillermo Calvo, Emerging Capital Markets in Turmoil: Bad Luck or Bad Policy? (2005); Revisiting Sovereign Bankruptcy, supra note 21, at 9.

¹⁴¹ See Das, Papaioannou & Trebesch, supra note 3, at 33.

¹⁴² Reinhart & Rogoff, supra note 1, at 71.

¹⁴³ Revisiting Sovereign Bankruptcy, supra note 21, at 8.

¹⁴⁴ Reinhart and Rogoff, supra note 1, at 80.

¹⁴⁵ Panizza, Sturzenegger & Zettelmeyer, supra note 71, at 664.

¹⁴⁶ Revisiting Sovereign Bankruptcy, supra note 21, at 8.

¹⁴⁷ IMF, 113 World Econ. Outlook: Public Debt in Emerging Markets 124 (2003).

¹⁴⁸ Increasing ex post costs can of course be expected to increase the cost of capital ex ante and thus potentially reduce the absolute amount borrowed. But for any given price of debt, the market imperfections identified above can be expected to lead states to borrow beyond what is efficient. For the reasons discussed above, investment law is unlikely to affect those incentives.

¹⁴⁹ IMF, Sovereign Debt Restructuring, supra note 21, at 20.

¹⁵⁰ Neither lis pendens, res judicata, nor “fork-in-the-road” treaty provisions that require investors to irrevocably choose to between investor-state arbitration are likely to prevent parallel claims. Each of these doctrines requires an “identity of the parties, object and cause of action in the proceedings pending before both tribunals,” which will not exist between investor-state arbitration (in which the cause of action arises from a BIT) and national court litigation (in which the cause of action arises from national law). See Azurix Corp. v. Argentine Republic, ICSID Case No. ARB/01/12, Decision on Jurisdiction, para. 88 (Dec. 8, 2003); Katia Yannaca-Small, Parallel Proceedings, in The Oxford Handbook of International Investment Law 108, 113–15 (Peter Muchlinski, Federico Ortino & Christoph Schreuer eds., 2008); Redfern and Hunter, supra note 12, at paras. 8.57–8.61.

¹⁵¹ See Thomas H. Jackson, Bankruptcy, Non-bankruptcy Entitlements, and the Creditors’ Bargain, 91 Yale L.J. 857, 862 (1982).

¹⁵² See Reinhart & Rogoff, supra note 1, at 111.

¹⁵³ All else being equal, we would expect covered investors to be willing to accept lower yields, such that covered investors would be willing to pay a higher price for the same instrument as noncovered investors, resulting in the concentration of debt in the hands of covered investors. Notably, as more debt found its way into covered investors hands, the relative benefits associated with being a covered investor would diminish for all holders until there was no relative benefit at all, as all creditors would be in the same relative position as they were in the absence of investment arbitration. This in turn could counteract some of investment law's exacerbation of the holdout problem.

¹⁵⁴ See text at note 139 supra.

¹⁵⁵ See Frank Knight, Risk, Uncertainty and Profit (1921) (on the costs of uncertainty and the difference between calculable risk and incalculable uncertainty).

¹⁵⁶ See e.g., Jill E. Fisch & Caroline M. Gentile, Vultures or Vanguards: The Role of Litigation in Sovereign Debt Restructurings, 53 Emory L.J. 1043, 1047 (2004) Andrei Shleifer, Will the Sovereign Debt Market Survive? 93 Am. Econ. Rev. 85, 87 (2003); Ostřanský, supra note 17, at 37 (holdout creditors may serve “as a control on opportunistic defaults and unreasonable workout terms”).

¹⁵⁷ As explained below, it also demonstrates some deficiencies in those reforms. See text at notes 240–244 infra.

¹⁵⁸ See Puig & Shaffer, supra note 85, at 361, 379 (“all institutional alternatives are highly imperfect”; “the key question is: compared to what?”).

¹⁵⁹ Abaclat v. Argentine Republic, ICSID Case No. ARB/07/5, Consent Award (Dec. 29, 2016) (discontinuing the arbitration in light of a settlement between the parties); Ambiente Ufficio v. Argentine Republic, ICSID Case No. ARB/08/9, Order of Discontinuance of the Proceeding (May 28, 2015) (discontinuing the arbitration for lack of payment); Giovanni Alemanni v. Argentine Republic, ICSID Case No. ARB/07/8, Order of the Tribunal Discontinuing the Proceeding (Dec. 14, 2015) (same). See also Poštová Banka Jurisdictional Award, supra note 14 (dismissing the claims against Greece on jurisdictional grounds).

¹⁶⁰ See Section III.B.2 supra.

¹⁶¹ See Section III.B.2.b supra.

¹⁶² Puig & Shaffer, supra note 85, at 407.

¹⁶³ Similar debt could be determined by maturities, currencies, or other factors. In the context of international investment law, differential treatment should not on its own be sufficient to violate nondiscrimination norms as long as there is a policy basis for any differences. For example, the differences between domestic debt and external debt—including in law, forum, currency, and relevance to the local economy—should reasonably justify the differential treatment of domestic and external bonds, as long as foreign and domestic nationals are accorded the same treatment. See Waibel, supra note 17, at 740.

¹⁶⁴ See Thomas W. Wälde & Borzu Sahabi, Compensation, Damages, and Valuation, in The Oxford Handbook of International Investment Law, supra note 150, at 1051, 1082–83 (noting the “little precedent and even less theoretical analysis” for calculating damages in discrimination claims, but arguing that the Chorzów Factory principles require “plac[ing] foreign investors in a financially equivalent position either as if they were treated as well as the best-treated domestic investors or as if the government's differentiation had gone as far as would be justified by legitimate reasons”).

¹⁶⁵ Waibel, supra note 17, at 754. In the words of the Maffezini and CMS tribunals: “Bilateral Investment Treaties are not insurance policies against bad business judgments.” Maffezini v. Argentina, ICSID ARB/97/7, Award on Merits, para. 64 ( Nov. 13, 2000); CMS Gas Transmission Co. v. Argentine Republic, ICSID Case No. Arb/01/8, Objections to Jurisdiction, para. 29 (July 17, 2003).

¹⁶⁶ See, e.g., Waste Management v. Mexico, ICSID Case No. ARB/AF/00/3, Award, para. 174 (Apr. 30, 2004) (“The mere non-performance of contractual obligation is not to be equated with a taking of property, nor (unless accompanied by other elements) is it tantamount to expropriation. Any private party can fail to perform its contracts, whereas nationalization and expropriation are inherently governmental acts… .”).

¹⁶⁷ Impregilo v. Pakistan, ICSID Case No. ARB/03/3, Jurisdiction, para. 278 (Apr. 22, 2005). See also Jalapa Railroad v. Mexico (U.S. v. Mex.) (American-Mexican Mixed Claims Comm'n 1976) (distinguishing between “an ordinary [breach of contract] involving no international responsibility” and a situation where a government “stepped out of the role of contracting party and sought to escape vital obligations under its contract by exercising its superior governmental power”); Waibel, supra note 81, at 279 (the question is whether a state “slip[s] into their commercial or sovereign shoes”). See also Odette Lieneau, Rethinking Sovereign Debt: Politics, Reputation, and Legitimacy in Modern Finance (2014).

¹⁶⁸ See Waibel, supra note 17, at 746; see also Waibel, supra note 81, at 278–87.

¹⁶⁹ Société Générale de Surveillance S.A. v. Republic of the Philippines, ICSID Case. No. ARB/02/6, Decision of the Tribunal on Objections to Jurisdiction, para. 161 (Jan. 29, 2004) [hereinafter SGS v. Philippines Jurisdictional Award].

¹⁷⁰ Pietrzak v. Poland, For. Claims Settlement Comm'n of U.S., Claim No. PO-1004, Decision No. PO-1 (Feb. 27, 1961). See also E.H. Feilchenfeld, Rights and Remedies of Holders of Foreign Bonds, in Bond and Bondholders: Rights and Remedies 170 (S.E. Quindry ed., 1934) (“[A]s international law stands to-day a debtor state commits an international delinquency by annihilating a debt entirely through repudiation, confiscation, or virtual destruction (interference with the substance of the debt), but international law has not yet reached the point where all acts causing defaults and damage to creditors give rise to legal protests based on international law.”); Olguin v. Paraguay, ICSID ARB/98/5, Award on Merits, para. 84 (July 26, 2001) (default on certain certificates of deposit did not amount to an expropriation, because “[e]xpropriation … requires a teleologically driven action for it to occur; omissions, however egregious they may be, are not sufficient for it to take place”).

¹⁷¹ 504 U.S. 607 (1992).

¹⁷² 504 U.S. at 614. But see Stephen Schwebel, On Whether Breach by a State of a Contract with an Alien Is a Breach of International Law, in Justice in International Law, Selected Writings of Stephen Schwebel 425, 434 (1994). (“A State is responsible under international law if it commits not any breach, but an arbitrary breach, of a contract between that State and an alien.” A breach is arbitrary if it is done “for governmental rather than commercial reasons.”).

¹⁷³ Weltover, Inc., 504 U.S. at 620.

¹⁷⁴ SGS v. Philippines Jurisdictional Award, supra note 169, para. 161 (“There has been no law or decree enacted by the Philippines attempting to expropriate or annul the debt, nor any action tantamount to an expropriation.”).

¹⁷⁵ See e.g., Feilchenfeld, supra note 170, at 205 (“As long as the debt is omitted from the budget, [virtual destruction is] not treated differently from complete repudiation.”); Waibel, supra note 81, at 290 (“Postponing payment indefinitely, such as a declaration or legislation never to service a particular series of bonds in the future, could constitute expropriation.”).

¹⁷⁶ Abaclat Jurisdictional Decision, supra note 13, paras. 321–23. See also Feilchenfeld, supra note 170, at 170.

¹⁷⁷ See Zettelmeyer, Trebesch & Gulati, supra note 39, at 537.

¹⁷⁸ See Weltover, 504 U.S. at 614.

¹⁷⁹ But see Waibel, supra note 17, at 747 (the repudiation of or indefinite postponing of bonds could constitute an expropriation).

¹⁸⁰ Abaclat Jurisdictional Decision, supra note 13, at paras. 321–23. See also Ambiente Ufficio Jurisdictional Decision, supra note 13, at para. 485 (“Respondent submits that the risk assumed by the Claimants of not being paid is not different from that involved in any commercial contract between a creditor and a debtor and that such ordinary commercial contracts cannot be considered an investment. However, given the risk of the host State's sovereign intervention, a risk that became manifest in Argentina's very default and restructuring, what is at stake is not an ordinary commercial risk.”).

¹⁸¹ The U.S. Constitution, for example, vests the power “to borrow Money on the credit of the United States” in the United States Congress. U.S. Const., Art. I, § 8. The Greek debt restructuring was likewise undertaken by way of an act of Parliament. See Poštová Banka Jurisdictional Award, supra note 14, para. 67.

¹⁸² See note 168 supra. The standard articulated by the Abaclat tribunal harkens back to the “absolute” theory of sovereign immunity that did not distinguish between commercial and sovereign acts taken by a state. That view prevailed through the first-half of the twentieth century in the United States until the issuance of the “Tate Letter” by the U.S. Department of State. That letter marked the adoption of the “restrictive” view of sovereign immunity, which distinguished between sovereign and commercial acts and was later codified by the Foreign Sovereign Immunities Act of 1976. See Curtis A. Bradley & Laurence R. Helfer, International Law and the U.S. Common Law of Foreign Official Immunity, 2010 Sup. Ct. Rev. 213, 219; W. Mark C. Weidemaier, Sovereign Immunity and Sovereign Debt, 2014 U. Ill. L. Rev. 67, 77. Of course, in that context, the absolute theory served to limit sovereign's from liability in U.S. courts. An expansive view of what constitutes a sovereign act in the context of international investment law, however, would serve to expand sovereign liability by expanding the type of acts that violate treaty terms.

¹⁸³ See Weltover, 504 U.S. at 614.

¹⁸⁴ Rudolf Dolzer & Christoph Schreuer, Principles of International Investment Law 296–97 (2012). See Julian Arato, The Logic of Contract in the World of Investment Treaties, 58 Wm. & Mary L. Rev. 351, 388 (2016); Wälde & Sahabi, supra note 164, at 1070 (“There is largely an agreement that the ‘going concern’ as ‘fair market value’ should be the principal objective of valuing expropriated assets.”).

¹⁸⁵ Dolzer & Schreuer, supra note 184, at 297.

¹⁸⁶ Where no competitive market exists—a situation that is common for many for the assets subject to expropriation—FMV may be calculated by way of the net present value of discounted cash flow that measures the net present value of expected income produced by the asset. These measures of value should be similar in well-functioning markets. See Wälde & Sahabi, supra note 164, at 1075; Dolzer & Schreuer, supra note 184, at 297.

¹⁸⁷ These two values should be the same, at least as long as the exchange remains open to the creditor. See Sturzenegger & Zettelmeyer, supra note 47, at 89.

¹⁸⁸ Wälde and Sahabi, supra note 164, at 1081.

¹⁸⁹ Id. at 1065.

¹⁹⁰ Legal Framework for the Treatment of Foreign Investment, Vol. II, Report to the Development Committee and Guidelines on the Treatment of Foreign Direct Investment, 41 (1992).The Argentina-U.S. BIT is likewise typical in requiring compensation “equivalent to the fair market value of the expropriated investment immediately before the expropriatory action was taken or became known, whichever is earlier.” Treaty Between the United States of America and the Argentine Republic Concerning the Reciprocal Encouragement and Protection of Investment, Art. IV(1), Nov. 14, 1991, entered into force Oct. 20, 1994. While this approach offers a practical way to disaggregate commercial risk and sovereign risk, it is imperfect. Even before an expropriation occurs or is known, the risk of such an event will be factored into the market price (though the assessment of that risk will obviously rise once it is known to be imminent or after the event occurs).

¹⁹¹ See Section III.B.1 supra.

¹⁹² This contrasts with Waibel's proposal for calculating FMV. Waibel proposes to calculate the FMV of bonds in default by discounting their face value by the yield implicit in new exchange bonds. See Waibel, supra note 17, at 756–57. That method does not exclude compensation for default risk, because the default risk associated with newly issued bonds will be lower than the default risk associated with the old bonds (which will already be in default). By allowing creditor-claimants to benefit from that lower default risk, his proposal allows claimants to obtain compensation for the higher risk of default of the bonds they actually own. Id. at 757, 758 (citing Sturzenegger & Zettelmeyer, supra note 47, at 88–90).

¹⁹³ See Arato, supra note 184, at 372 (umbrella clauses are “relatively uncommon”); but see Judith Gill, Matthew Gearing & Gemma Birt, Contractual Claims and Bilateral Investment Treaties: A Comparative Review of the SGS Cases, 21 J. Int'l Arb. 397, 403 n. 31 (2004) (approximately 40% of a sample of BITs contained umbrella clauses).

¹⁹⁴ See Katia Yannaca-Small, Parallel Proceedings, in The Oxford Handbook of International Investment Law, supra note 150, at 108, 1030 (noting different formulations of umbrella clauses, including promises by the state to “observe any obligation it may have entered to,” “constantly guarantee the observance of the commitments it has entered into,” and “observe any obligation it has assumed” with respect to investments.).

¹⁹⁵ See, e.g., Jarrod Wong, Umbrella Clauses in Bilateral Investment Treaties: Of Breaches of Contract, Treaty Violations, and the Divide Between Developing and Developed Countries in Foreign Investment Disputes, 14 Geo. Mason L. Rev. 137 (2006).

¹⁹⁶ See Christoph Schreuer, Travelling the BIT Route: Of Waiting Period, Umbrella Clauses and Forks in the Road, 5 J. World Inv. & Trade 231, 249–55 (2004); Schill, supra note 87, at 1.

¹⁹⁷ See Megliani, supra note 26, at 523; see also Olivares-Caminal, supra note 29, at 391.

¹⁹⁸ SGS Société Générale de Surveillance S.A v. The Republic of Paraguay, ICSID Case No. ARB/07/29, Decision on Jurisdiction, paras. 131, 138–42 (Feb. 12, 2010) [hereinafter SGS v. Paraguay Decision on Jurisdiction].

¹⁹⁹ SGS v. Philippines Jurisdictional Award, supra note 169, para. 128.

²⁰⁰ Id., para. 177. See also James Crawford, Treaty and Contract in Investment Arbitration, 24 Arb. Int'l 351, 370 (2008) (arguing in favor of an “integrationist” approach).

²⁰¹ See Arato, supra note 184, at 375–78.

²⁰² But see Gulati & Scott, supra note 24, at 29 (discussing the stickiness of existing sovereign bond terms).

²⁰³ Azurix, supra note 150, para. 88 (quoting Benvenuti and Bonfant SRL v. The Government of the People's Republic of the Congo, Award, 1 ICSID Rep. 330, 340, para. 1.14 (Aug. 8, 1980)).

²⁰⁴ See note 148 supra.

²⁰⁵ Wälde & Sahabi, supra note 164, at 1090.

²⁰⁶ See Section IV.B.2 supra.

²⁰⁷ Id.

²⁰⁸ Wälde & Sahabi, supra note 164, at 1091.

²⁰⁹ SGS v. Paraguay Decision on Jurisdiction, supra note 198, paras. 131, 138–42.

²¹⁰ See Section IV.B.2 supra.

²¹¹ See, e.g., IMF, Greece: Ex Post Evaluation of Exceptional ACCESS Under the 2010 Stand-by Arrangement, IMF Country Report No. 13/156, at 2, 17, 21, 22, 26 (May 20, 2013) (acknowledging its projections regarding Greece's economy and capacity to pay were overly optimistic in hindsight).

²¹² But see Waibel, supra note 17, at 758, 759 (arguing that while tribunal's ability to determine states’ capacity to pay is “tenuous” tribunals could adjudicate such disputes).

²¹³ See Puig & Shaffer, supra note 85, at 407.

²¹⁴ In return for regular premium payments, investors can purchase credit defaults swaps (CDS) that pay out in the event of a default. The CDS market for sovereign debt grown to such an extent that the concern has shifted away from creditor exposure to the “empty creditor” problem, in which creditors, fully insured against default, face less incentive to agree to restructuring. Das, Papaioannou & Trebesch, supra note 3, at 59; see also IMF, Sovereign Debt Restructuring, supra note 21, at 32.

²¹⁵ See Puig & Shaffer, supra note 85, at 362.

²¹⁶ Buchheit, Gulati & Tirado, supra note 48, at 6–7. As Weidemaier and McCarl observe, “judges cannot simply declare sovereign loans unenforceable; their role and training require them to issue a recognizably ‘legal’ opinion that recognizes sovereign loans as binding legal obligation.” W. Mark C. Weidemaier & Ryan McCarl, Creditors’ Remedies, in Sovereign Debt Management 139, 150 (Rosa M. Lastra & Lee Buchheit eds., 2014). Moreover, they have an interest in preserving their respective forums’ reputations as “jurisdiction[s] where contract rights are protected.” Gulati & Scott, supra note 24, at 176.

²¹⁷ See, e.g., Panizza, Sturzenegger & Zettelmeyer, supra note 71, at 657–59 (describing recent evolutions in national law that have exacerbated the holdout problem).

²¹⁸ See Gulati & Scott, supra note 24, at 29.

²¹⁹ See Vienna Convention on the Law of Treaties, Art. 31(1), May 23, 1969, 1155 UNTS 331 [hereinafter VCLT]. According to Article 31(2), “[t]he context for the purpose of the interpretation of a treaty shall comprise, [inter alia] the text, including its preamble and annexes.”

²²⁰ See Arato, supra note 184, at 360.

²²¹ See Cooter & Ulen, supra note 92, at 178.

²²² See Arato, supra note 184, at 360.

²²³ Id. at 372.

²²⁴ Horn & Norback, supra note 89, at 5–6.

²²⁵ See Arato, supra note 184, at 405. In effect, investment treaties force investors to purchase insurance whether they want to or not.

²²⁶ See Pahis, supra note 15, at 140.

²²⁷ See Julian Arato, A Private Law Critique of International Investment Law, 113 AJIL 1, 3 (2019).

²²⁸ See, e.g., Robert E. Scott & George G. Triantis, Anticipating Litigation in Contract Design, 115 Yale L.J. 814, 856–60 (2006) (party autonomy with respect to procedure can lead to efficiencies); Kevin E. Davis & Helen Herschkoff, Contracting for Procedure, 53 Wm. & Mary L. Rev. 507 (2011) (acknowledging the efficiency case against mandatory procedural rules but arguing that the privatization of procedure has other negative effects).

²²⁹ See, e.g., Campbell McLachlan, Lawrence Shore & Matthew Weiniger, International Investment Arbitration: Substantive Principles 226–47 (2d. ed. 2017) (noting the various applications of the FET standard).

²³⁰ See e.g., Santiago Montt, State Liability in Investment Treaty Interpretation: Global Constitutional and Administrative Law in the BIT Generation 231–91 (2009) (observing the divergences in the interpretation of what constitutes an indirect expropriation are so great as to create a sense of “disarray”).

²³¹ See Argentina-Japan BIT, supra note 78, Art. 1.

²³² See CPTPP, supra note 78, ch. (Investment), Annex 9-G.

²³³ Id., paras. 2–3.

²³⁴ CPTPP, supra note 78, ch. 9 (Investment), Art. 9.1 (“negotiated restructuring means the restructuring or rescheduling of a debt instrument that has been effected through (a) a modification or amendment of that debt instrument, as provided for under its terms, or (b) a comprehensive debt exchange or other similar process in which the holders of no less than 75 per cent of the aggregate principal amount of the outstanding debt under that debt instrument have consented to the debt exchange or other process”) (emphasis in original).

²³⁵ While an aggregate collective action clause could address this problem, imposing one via treaty would present obvious complications, such as requiring that all creditors—including creditors not covered by the treaty—participate in an aggregate vote that conflicts with or has no basis in their contracts.

²³⁶ CPTPP, supra note 78, ch. 9 (Investment), Annex 9-G, para. 1. The CPTPP attempts to discourage such claims by imposing a 270-day waiting period, but it allows them nonetheless. Id. at 3.

²³⁷ See Roberts, Anthea, State-to-State Investment Treaty Arbitration: A Hybrid Theory of Interdependent Rights and Shared Interpretive Authority, 55 Harv. Int'l L.J. 1, 53 (2014)Google Scholar (“disagreement exists over whether an ‘authentic’ interpretation by the treaty parties is binding or simply highly persuasive”); Roberts, Anthea, Clash of Paradigms: Actors and Analogies Shaping the Investment Treaty System, 107 AJIL 45, 59 (2013)CrossRefGoogle Scholar (noting that tribunals have given different weight to such statements depending on whether they operated under a private or public international law paradigm).

²³⁸ See Crystallex Int'l Corp. v. Bolivarian Republic of Venez., ICSID Case No. ARB(AF)/11/2, Award, paras. 481–82 (Apr. 4, 2016) (holding that a waiver of investment arbitration would have to be explicit to be effective, and that an exclusive forum selection clause that merely omits reference to investment arbitration does not waive an investor's rights under the applicable treaty).

²³⁹ The new Argentina-Japan BIT both evidences this coordination problem and provides a potential solution to it. While that agreement excludes sovereign debt from its coverage, it calls for revisiting that exclusion in the event Argentina signs a new BIT that covers sovereign debt. See Argentina-Japan BIT, supra note 78, Art. 31(a). That solution, however, is only partial as it allows for the possibility that old BITs may continue to provide coverage even after the new Japan-Argentina BIT applies.

²⁴⁰ See Guzman, Andrew T., Why LDCs Sign Treaties That Hurt Them: Explaining the Popularity of Bilateral Investment Treaties, 38 Va. J. Int'l L. 639 (1998)Google Scholar.