A/HRC/14/21 32. Nevertheless, the voluntary nature of the two international debt relief schemes discussed above creates opportunities for individual creditors to refuse to participate and then attempt to recover — through litigation, seizure of assets or political pressure — the full value of their debt.36 In particular, this has enabled vulture funds to purchase defaulted debts and to litigate for the full face value at the expense of the debtor country and of other creditors. 33. Vulture fund litigation prevents heavily indebted poor countries from using resources freed up by debt relief for their development and poverty reduction programmes, and therefore diminishes the capacity of these countries to create the conditions necessary for the realization of human rights for their people. Money that is earmarked for poverty reduction and basic social services, such as health and education, is diverted to settling the substantial claims of vulture funds. In short, vulture funds erode the gains from debt relief for poor countries and jeopardize the fulfilment of these countries’ human rights obligations. 34. It has been estimated that the average potential impact of vulture fund litigation against HIPCs amounts to 18 per cent of spending on health care and education, 59 per cent of debt repayments, and 5 per cent of budget revenue. A 2007 study by Debt Relief International found that lawsuit costs amount to 52 per cent of health and education in the Niger and 98 per cent of revenue in Cameroon. In 2008, the World Bank and IMF estimated that the potential impact of court awards varied from less than 0.5 per cent of the debtor country’s GDP to 49 per cent in the case of Liberia.37 35. Vulture fund litigation can also be lengthy and costly for HIPC countries, thereby diverting much needed resources and attention from pressing development, social and human rights issues. According to AfDB, vulture funds “grind down poor countries in cycles of litigation” and many lawsuits typically take 3 to 10 years to settle.38 36. It is noteworthy that the World Bank and IMF have recognized that litigation by commercial creditors has been “an impediment to the delivery of full debt relief to HIPCs”.39 Similarly, the European Commission has acknowledged that cases of aggressive litigation by commercial creditors have diluted some of the benefits of debt relief initiatives. In 2007, the Paris Club acknowledged that litigation against HIPCs “is a cause of concern for the international community”.40 IV. Official initiatives to tackle vulture funds 37. A number of initiatives have been adopted or are being considered at the international and national levels to tackle vulture funds. In this section, the independent expert sketches these initiatives and briefly addresses some of the key concerns raised in relation to the potential adverse consequences of proposed national legislative measures on the development prospects of the intended beneficiaries – HIPCs. 36 37 38 39 40 12 Thus, even when a country reaches the completion point, creditors retain their legal rights to enforce claims against the country concerned. IDA and IMF, “HIPC Initiative” (2008) (see footnote 5), para. 38. AfDB, “Vulture funds” (see footnote 1). IDA and IMF, “HIPC Initiative” (2009) (see sect. III, footnote 7), para. 24. See www.clubdeparis.org/sections/types-traitement/reechelonnement/initiative-ppte/sujets-relatifsaux/sujets-relatifs-aux. GE.10-13156