Indiana Jones, Contracts Originalist

The process of drafting a contract can be routine, almost automated. Over a long enough time, lawyers may stop paying attention to contract language or even forget why it is there. The problem is acute with standard-form contracts and perhaps especially so when the contract is itself a commodity, as with securities. How should courts interpret a clause when neither the parties, nor their lawyers, nor any other relevant player in the market can credibly explain what it does? This essay addresses this question in the context of one of the most contested interpretive questions in modern international finance: the meaning of the pari passu clause in sovereign bonds. In "Santa Anna and His Black Eagle," Ben Chabot and Mitu Gulati document the first (known) use of the clause in connection with a sovereign bond issue - by Mexico in 1843 - and invite speculation as to whether this origin story might inform the modern interpretation of the clause. In this essay, I consider this proposal - essentially an originalist approach to contract interpretation - both in general and in the context of the debate over the meaning of the pari passu clause