Commercial actors are becoming increasingly concerned about the effect that various types of political risk, including the risk of sovereign default, has on their investments. This Essay considers the problem of rogue debtors (i.e., states that intentionally ignore their legal and financial obligations) as a type of unanticipated risk and analyzes how well various responses, including domestic litigation, interstate negotiation and investment arbitration, address investors’ needs. In particular, the discussion focuses on how effective investment arbitration is in overcoming a number of difficulties traditionally associated with rogue debtors and the various means by which states are attempting to bypass the threat of investment arbitration, including the use of exclusionary treaty provisions, contractual waivers of investment arbitration and collective action clauses.
S.I. Strong, Rogue Debtors and Unanticipated Risk, 35 U. Pa. J. Int'l L. 1139 (2014)