NML Capital V. Republic of Argentina : A Law and Economics Analysis of the Pari Passu Clause

This article examines, from a law and economics perspective, the interpretation of the pari passu clause by the U.S. Circuit Court in NML Capital v. Republic of Argentina. In its controversial ruling, the Circuit Court held that the pari passu clause contained in Argentina's 1994 Financial Agency Agreement bars the Republic from paying its exchange bondholders without also paying the holdout bondholders. Relying upon rational choice theory as the underlying theoretical framework, this article seeks to answer the question of whether this line of interpretation is in the public interest