Overview

This bill aims to protect developing countries from aggressive debt recovery practices by restricting the amount creditors can recover in UK courts and requiring court consent for such actions. It establishes a maximum recovery amount and mandates transparency in the recovery process.

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 prior recoveries. This maximum recovery amount needs court approval before proceedings can begin in the UK.

Court Approval and Transparency

Creditors must seek court consent before pursuing recovery in the UK, providing extensive documentation including loan agreements, assignment details, and the identities of all parties receiving over 1% of the recovered amount. The diplomatic agent of the debtor country and the Secretary of State must also receive copies of the application. The court can discontinue proceedings if the requirements of the act aren't met.

Enforcement of Foreign Judgments

Even if a creditor obtains a judgment in a foreign court, enforcement in the UK is still limited to the maximum recovery amount. If a British citizen or UK-based business receives payments exceeding this limit, the debtor country can seek repayment through a UK court.

Government Spending

The bill is not expected to have a significant direct impact on UK government spending. The main cost would be related to administrative processing of applications by the Secretary of State.

Groups Affected

• Developing Countries: Potentially benefits from reduced pressure to repay debts beyond what is considered fair.
• Creditors of Sovereign Debt: Faces restrictions on debt recovery, potentially impacting their profits.
• UK Courts: Will have an increased workload related to assessing applications for court consent and enforcing the bill’s provisions.
• Secretary of State: Responsible for receiving copies of consent applications, potentially requiring additional administrative resources.
• British Citizens and UK Businesses: Those involved in excessive debt recovery may face legal action.

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