The Role of the U.S. Courts in the Transnational Flow of Funds

This Article discusses the so-called "debt crisis" from the perspective of two litigators. They normally advise participants in these matters to stay away from the courts if at all possible. The authors' experience in large-scale international financial tangles reveals that litigation can be both a disruptive and a ponderous process, ill-suited to achieve effective solutions for these problems.The authors suggest that a guiding principle in both asset and liability cases should be the enforcement of the reasonable expectations of the parties. Decisions that give effect to payment restrictions imposed by foreign countries on foreign branch deposits are consistent with decisions enforcing debt claims for loans expressly payable outside the borrower's country, because such decisions reflect the expectations of the parties. One need not engage in metaphysical dissertations about the situs of a debt to find a common ground for such decisions. They reflect no more and no less than execution of the parties' bargain which is the proper role of the U.S. courts in the transnational flow of funds