A/HRC/41/51 Capital contended that the country was not granting the same treatment to the creditors that did not participate in the exchange because it had agreed only to pay its debt to the exchange bondholders.23 23. In February 2016, with a newly elected Government in office in Argentina, the United States court set a number of conditions for effectively lifting the injunction and allowing Argentina to service its restructured debts. Events accelerated from then on and in April 2016, ceding to massive financial pressure, Argentina abruptly reversed its previous policy regarding the claims and agreed in an out-of-court settlement to pay $6.5 billion dollars to the “hold-outs”. 24. That settlement represented a further setback in the process aimed at setting up international sovereign debt restructuring mechanism based on the equal treatment creditors. Paying vulture funds much more than was paid to cooperative creditors previous debt restructuring is a disturbing outcome. Rewarding those who refuse participate in debt restructuring efforts sends the wrong message. 24 an of in to 25. From a human rights perspective, that kind of settlement raises important concerns. In the short term, putting an end to more than a decade of judicial disputes contributes to restoring a country’s credibility, opening its access to financial markets. However, in order to pay the “hold-outs”, the Government was forced to increase its debt burden, a fact that, in the long run, may hinder the ability of the State to comply with its commitments in the area of economic and social rights, exacerbating inequality and financial instability. 26. In any event, the long judicial dispute highlights the pressing need to regulate speculative investment practices in order to bring them into line with human rights approaches and requirements. Furthermore, it has prompted a process aimed at establishing a multilateral mechanism with a mandate to resolve sovereign debt litigation in an independent and impartial manner. 27. Although the legal consequences of this case should not be underestimated, its final outcome must be read in the light of the particular circumstances that surrounded the dispute and the evident political implications involved. There is no doubt, however, that the United States rulings will certainly incentivize vulture funds to pursue such strategies in the future.25 IV. Disruptive litigation: a growing trend 28. The case of Argentina is not an exception, but forms part of a more general trend. Increasingly, non-cooperative creditors are reaping extraordinary profits owing to settlements reached or judgments obtained after disruptive litigation. Not only do investors’ expectations of obtaining high returns by suing countries asphyxiated by onerous financial terms benefit from the lack of a global mechanism on debt restructuring, but they may also be at the origin of this state of affairs. 29. In fact, statistics show that lawsuits and attempted attachments are increasingly becoming a common way of solving sovereign debt disputes, entailing costly and protracted judicial processes for the defaulting State. 26 In the period from 1976 to 2010, there were about 158 lawsuits against 34 defaulting countries in the United States and the United 23 24 25 26 Instead, the clause is broadly interpreted as providing factual preference to “hold-out” creditors over those acting in good faith. See John Muse-Fisher, “Starving the vultures: NML Capital v. Republic of Argentina and solutions to the problem of distressed-debt funds”, California Law Review, vol. 102, No. 6 (2014). See www.ohchr.org/_layouts/15/WopiFrame.aspx?sourcedoc=/Documents/Issues/IntOrder/ Info_Note_Argentinian_VultureFunds_EN.pdf&action=default&DefaultItemOpen=1. Debt and Development Coalition Ireland, “Stop debt vultures: implications of the vulture attack on Argentina” (1 September 2014), p. 4. See Schumacher, Trebesch and Enderlein, “Sovereign defaults in court”, p. 12. 7