Overview

This bill aims to protect developing countries from aggressive debt collection practices by restricting the amount creditors can recover in UK courts for defaulted sovereign debt. It introduces a maximum recovery amount, requires court consent before recovery proceedings, and mandates transparency regarding the debt and the creditor's actions.

Description

The bill defines "defaulted sovereign debt" and "Low or Middle Income country" based on World Bank classifications. It limits the amount a creditor can recover to the original purchase price plus simple interest, less any previous recoveries. Before initiating proceedings in a UK court, creditors must obtain court consent. This application requires extensive disclosure, including loan agreements, chain of title documentation, beneficial ownership information, and a declaration of no bribery. The court can discontinue proceedings if the Act's requirements aren't met. Even if a creditor has obtained a judgment in a foreign court, UK enforcement is limited to the maximum recovery amount. If a British citizen or UK-based business receives excessive payment, the debtor country can seek repayment through UK courts.

Government Spending

The bill doesn't directly allocate government funds. However, it may indirectly affect government spending if the government needs to intervene in specific cases, which is not estimated.

Groups Affected

• Developing Countries (Debtor Countries): Potentially benefit from stronger protections against aggressive debt collection.
• Creditors: Face restrictions on debt recovery, requiring more transparency and court approval.
• UK Courts: Assume a greater role in overseeing debt recovery processes.
• British Citizens and UK Businesses: Subject to potential repayment obligations if they receive excessive payments.
• Secretary of State: Receives copies of consent applications, enabling monitoring of proceedings.

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