A wave of litigation against emerging market sovereigns is expected in the wake of the controversial US ruling against Argentina that led the country to default at the end of July.
Already Import-Export Bank of Taiwan is suing the Caribbean island of Grenada using the same legal argument used against Argentina. And many more cases could be on the way as the ruling serves as a precedent on litigation involving New York law-governed bonds. According to the International Monetary Fund (IMF), there is currently $900bn-worth of sovereign bonds governed by legislation other than that of the issuing countries. Just under half of this is governed by New York law.