A/HRC/41/51 from 50 per cent to 333 per cent).7 As a consequence, the financial and reserve management capacities of the debtor State remain compromised for a long period. (e) “Chase” the country to enforce the judgment: once vulture funds have obtained a favourable judgment, they seek its enforcement before different courts through “forum shopping” practices, until they secure the enforcement action they desire. Figures show that attachment of a country’s assets abroad has become a particularly common legal strategy in past years. 8 Despite many unsuccessful attempts, such pressures have often helped vulture funds to achieve a favourable out-of-court settlement. Such outcomes reinforce the legal strategy pursued by vulture funds of chasing States before courts worldwide in the hope of eroding State immunity, which shields certain State properties and assets from seizure;9 (f) Obtain exorbitant profits: vulture funds have achieved, on average, recovery rates of some 3 to 20 times their investment, equivalent to returns of 300–2,000 per cent. In some cases, the claims of vulture funds constitute a significant portion (12–13 per cent) of a country’s gross domestic product (GDP);10 (g) Operate in jurisdictions where bank secrecy rules apply: most vulture funds are incorporated in tax havens, where there is no obligation to disclose information on benefits or ownership and it is feasible to hide gains to avoid or evade taxation. 11 Such jurisdictions facilitate the secretive manner in which vulture funds operate and the flight of much-needed capital, particularly from developing countries (A/HRC/14/21, paras. 13–14). III. Case studies 9. The predatory practices of vulture funds in relation to developing countries, particularly heavily indebted poor countries, have a long history. The countries most commonly targeted have unsustainable debt burdens and lack both the capacity and the resources needed to face such complex and protracted judicial processes. In recent years, vulture funds have aimed their profit expectations at middle-income countries, particularly Argentina. With more than 50 lawsuits filed by commercial investors after the default of 2001, the country accounts for a third of the total number of lawsuits brought by vulture funds.12 The analysis of the following examples will provide a clearer understanding of the human rights impact deriving from the activities of vulture funds. A. Donegal International Ltd. v. Zambia 10. By 1984, the Government of Zambia was unable to service a $30 million debt owed to Romania for the acquisition of agricultural equipment. In early 1997, the firm Debt Advisory International (which later incorporated Donegal International Ltd.) began to put 7 8 9 10 11 12 4 See African Development Bank Group, “Vulture funds in the sovereign debt context”. For example, a ruling of the High Court of the United Kingdom of Great Britain and Northern Ireland in 2005 allowed Kensington International Ltd. to intercept the proceeds of oil sales of the Republic of the Congo to recoup a $39 million debt. The profits realized by the Congo from the sale of oil can be seized until a claim of $90 million is repaid. See Schumacher, Trebesch and Enderlein, “Sovereign defaults in court”, pp. 5–9. For example, in Liberia in the 2000s, lawsuits amounted to an extraordinary 41.6 per cent of GDP, ibid., p. 15. See also African Development Bank Group, “Vulture funds in the sovereign debt context”. For example, Donegal International Ltd. is based in the British Virgin Islands, Kensington International Ltd. in the Cayman Islands and FG Hemisphere in Delaware, United States of America. The particularities of such jurisdictions are well known: opacity (bank secrecy or other mechanism such as trusts); low taxation or exemption from taxation for non-residents; regulations favourable to the establishment of front companies without real activity on the territory; lack of cooperation with the tax, customs and/or judicial authorities of other countries; and weak or non-existent financial regulation. See Renaud Vivien, “FG Hemisphere vulture fund’s latest victory against the Democratic Republic of Congo. What is Belgium doing?”, Committee for the Abolition of Illegitimate Debt, 2 January 2011. See Schumacher, Trebesch and Enderlein, “Sovereign defaults in court” p. 11.