Who is the Sovereign in Sovereign Debt?: Reinterpreting a Rule-of-Law Framework from the Early Twentieth Century

Combining legal interpretation with political science analysis, this Article highlights the competing statist and popular conceptions of sovereignty at stake in sovereign debt issues. It argues that these two dominant approaches do not exhaust the offerings of intellectual history and considers an alternative approach that emerged in the early twentieth century and may be of relevance again today. The Article contends that U.S. Chief Justice Taft\u27s foundational 1923 Tinoco decision, which grounds the current approach to sovereign governmental recognition, has been misinterpreted to support a purely statist or absolutist conception of sovereignty. It argues that a proper interpretation presents an intermediate or rule of law framework that coincides with Taft\u27s domestic jurisprudence and provides an alternate conception of sovereignty for the current lending system. In emphasizing the historical and theoretical contingency of the current sovereign debt regime, this Article problematizes the assumption in mainstream international finance that only a narrow conception of sovereignty and a strict practice of debt repayment are consistent with a functioning sovereign credit market. Considering the economic and geopolitical context of Taft\u27s decision, the Article also suggests that the changing nature of creditor competition may partially account for variations in the concept of sovereignty underlying sovereign debt