A/HRC/41/51 I. Introduction 1. The present report is submitted in accordance with Human Rights Council resolution 27/30, by which the Council requested the Human Rights Council Advisory Committee to prepare a research-based report on the activities of vulture funds and their impact on human rights. 2. In the resolution, the Council reaffirmed that the activities of vulture funds highlighted some of the problems in the global financial system and were indicative of the unjust nature of the current system, which directly affected the enjoyment of human rights in debtor States. It called upon States to consider implementing legal frameworks to curtail the activities of predatory funds within their jurisdictions. 3. In preparing the present report, the Advisory Committee sought the views and inputs of Member States, United Nations agencies, relevant international and regional organizations, the Office of the United Nations High Commissioner for Human Rights (OHCHR) and relevant special procedures mandate holders, including the Independent Expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights, as well as national human rights institutions, non-governmental organizations and eminent academics. The report was prepared by the Rapporteur of the drafting group on the activities of vulture funds and the impact on human rights, Jean Ziegler. 1 4. The Advisory Committee would like to thank, in particular, the Governments of Argentina, Cuba, El Salvador, Kuwait, Mauritius, the Philippines and the Bolivarian Republic of Venezuela, the Ombudsman of Portugal, the National Commission for Human Rights of Greece, the Centre for Legal and Social Studies, the Centre Europe-Tiers Monde, the Committee for the Abolition of Illegitimate Debt and the Permanent Assembly for Human Rights (Asamblea Permanente por los Derechos Humanos) for the information provided in response to the questionnaires sent in March 2015 and February 2018. 5. In the report, the growing concerns raised by the strategies deployed by vulture funds are highlighted. It also includes an analysis of some of the most striking examples of the activities of vulture funds and national and international initiatives and efforts undertaken to face and mitigate the negative impact stemming from those activities on the enjoyment of economic, social and cultural rights and the right to development. II. What are vulture funds? 6. There is no international legal regime governing cases of State insolvency or bankruptcy. When a State defaults on its sovereign debt, it must initiate a process for restructuring the debt in order to obtain a reduction in the debt or an extension of the repayment terms. That implies undertaking complex and protracted negotiations with a very diverse range of creditors.2 Participation in such restructuring processes is voluntary and therefore even a small percentage of creditors may well decide to hold out with a view to obtaining a higher level of repayment in future. It is at this point that vulture funds come into play. 7. According to the former Independent Expert on foreign debt, vulture funds are “private commercial entities that acquire, either by purchase, assignment or some other form of transaction, defaulted or distressed debts, and sometimes actual court judgments, with the aim of achieving a high return. In the sovereign debt context, vulture funds (or ‘distressed debt funds’, as they often describe themselves) usually acquire the defaulted sovereign debt of poor countries (many of which are heavily indebted poor countries 1 2 2 The Rapporteur would like to thank Milena Costas Trascasas for her support in the elaboration of the present report. They might be international financial institutions, bilateral or multilateral lenders, private financial institutions or bondholders.