Warwick-authored bill on foreign debt relief set for debate in UK Parliament

Legislation authored by experts from the University of Warwick to help resolve the debt crisis in developing countries has been scheduled for debate in Parliament.

Dr Stephen Connelly and Professor Celine Tan from Warwick Law School, along with Dr Karina Patrício Ferreira Lima from the University of Leeds’s School of Law, have drafted the proposed legislation, named the Debt Relief (Developing Countries) Bill.

The proposed laws put forward legal measures to limit recoverable bills that developing countries owe private creditors.

Such a move would support global efforts to eliminate the debt crisis in developing countries by allowing these nations to advance economically.

The bill, scheduled for a second reading in spring 2025, aims to address challenges surrounding the securing of private creditor participation in sovereign debt restructurings.

It also looks to ensure fair participation in multilateral debt relief initiatives, an example being the G20’s Common Framework, which provides debt treatments to low-income countries suffering from severe debt.

We strongly encourage MPs from across all parties to support this vital initiative

Dr Stephen Connelly and Professor Celine Tan, Warwick Law School

The bill builds on the 2010 Debt Relief (Developing Countries) Act, and also stems from the attempted passing of a similar debt relief bill drafted by New York state legislators in March.

The bill seeks to ensure that recoverable debt is capped to the amount a private creditor would have received had they participated in a multilateral effort such as the Common Framework, extending the Debt Relief Act’s principles to these types of debt treatments.

The UK is a global financial hub, in which a significant proportion of sovereign debt contract enforcement often occurs.

This means that the UK is advantageously positioned to contribute to strengthening multilateral efforts to address the debt crisis in developing countries through domestic legal measures.

Responding to the bill’s tabling, Dr Connelly and Professor Tan stated: “We are delighted to see our bill introduced in the UK Parliament.

“This legislative proposal is designed to foster more effective sovereign debt restructuring negotiations and support global initiatives aimed at achieving sustainable development goals by facilitating coordinated and equitable restructuring processes.

“We strongly encourage MPs from across all parties to support this vital initiative.”

The draft bill aligns with existing market-centred innovations in sovereign debt-management, such as majority-voting provisions for syndicated loans, and climate-resilient debt clauses in bilateral loans.