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Odious Debt, Corporate Social Responsibility, Jurisprudence, Corporate Liability, Human Rights


The doctrine of odious debts came into its full in the eighteenth and early nineteenth century to deal with the financial injustices of colonialism and its stalking horse, despotism. The basic rule, as articulated by Alexander Sack in 1927, is that debts incurred by an illegitimate regime that neither benefit nor have the consent of the people of a territory are personal to the regime and are subject to unilateral recision by a successor government. While the traditional doctrine focused on the nature and circumstances of individual debts, it has been expanded in recent years, moving the focus from the details of particular debts and placing the weight of the doctrine on an assessment of the regime itself. The consequence of this move is to allow successor regimes to void all debts incurred by predecessors who indulged in autocratic rule, corruption, and violations of basic human rights. This shift is not without controversy. The contest stems, in part, from the fact that the structural and behavioral characteristics of regimes that might be regarded as odious are diverse, as are the relationships between these regimes and their subjects. Even a cursory survey of these differences presents a more complicated taxonomy of odious debts than is suggested either by Sack's version of the doctrine or by voiding wholesale all debts incurred by regimes that do bad things. This article exposes this complexity and, in broad Linnean strokes, proposes a rough classification of odious regimes and their debts. It then connects odious debt debates to broader issues relevant to transitional justice. In particular, the article focuses on odious regimes characterized by systematic and institutional human rights abuses and argues that fundamental goals of transitional justice warrant against successors' voiding unilaterally debts incurred by their predecessors. Failing to disclaim duties to repay does necessarily leave transitional regimes on the hook for debts incurred by their predecessors. Businesses, banks, and nations that invest in abusive regimes must assume the burdens of their own responsibility for past abuses. The article contends that debts incurred by abusive regimes mark duties of repair owed by those who invested in the past regime. So, while successors to merely corrupt regimes may not have a duty to repay under traditional odious debt rules, in the case of a truly abusive regime, the sword swings the other way, imposing a duty on lenders to compensate those victimized by their past engagements. The article recognizes that this approach to the debts of odious regimes presents potential problems and concerns for investors and the citizens of marginal states, but concludes that through a robust practice of corporate social responsibility corporations and financial institutions can safely invest in marginal regimes while also helping to advance our international human rights culture.


Business Organizations Law | Human Rights Law | Jurisprudence