UN Rights Expert Urges Jersey to Curb Vulture Funds’ Ability to Sue Poor Countries

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A United Nations human rights expert has urged Jersey to enact laws to restrict the ability of so-called “vulture funds” to use the British crown dependency’s courts to sue heavily indebted poor countries.

Cephas Lumina, the UN Independent Expert on foreign debt and human rights, issued a statement calling on the Government of Jersey – one of the Channel Islands between the British mainland and France – to introduce legislation similar to that adopted last year in the United Kingdom.

The UK laws made permanent a temporary law to restrict the actions of vulture
funds, which buy up defaulted debt of poor countries at heavily discounted
prices and then demand repayment of the debt’s full value, either through
litigation, the seizure of assets or political pressure.

But the laws do not apply to the UK’s crown dependencies and overseas
territories such as Jersey, Guernsey, the British Virgin Islands and Cayman
Islands.

The US vulture fund FG Capital Management, formerly known as FG Hemisphere, has
sued the Democratic Republic of the Congo (DRC) in Jersey’s courts for $100
million of debt obligations, with media reports indicating that the debt was
bought by the fund for about 3.3 per cent of its total value.

Mr. Lumina stressed that vulture funds “unfairly deprive poor countries of the
gains from international debt relief efforts meant for the improvement of
delivery of basic social services such as safe drinking water, health care,
education and housing.

“The international community must not accept this immoral and unfair deprivation
of scarce financial resources from the world’s poorest countries,” he added.

The Independent Expert said he welcomed the Jersey Government’s current
consultations on the issue and asked them to enact the laws “as a matter of
urgency.”

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