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Jersey Legislates To Block 'Vulture Funds'

by Jason Gorringe, Tax-News.com, London

08 October 2012


Jersey has drafted new legislation which would bar so-called 'vulture funds' from pursuing inequitable payments from developing nations through Jersey's courts.

The Draft Debt Relief (Developing Countries) (Jersey) Law 201- was forwarded by the island's Chief Minister, Ian Gorst, to the island's legislative assembly, the States, on October 1, 2012. Once in force, the law would stop creditors, including vulture funds, from pursuing inequitable payments through Jersey’s courts.

Vulture funds purchase the debts of heavily indebted poor countries (HIPCs) for a fraction of their price only then to pursue these impoverished debtors for their full value plus interest.

The government said the legislation had been drafted to demonstrate Jersey's support for international debt relief efforts. Gorst commented: “This law will send a clear and positive message that Jersey is committed to supporting international debt relief efforts, and that ours is a well-regulated, co-operative and transparent jurisdiction.”

To date, the United Kingdom is the only country in the world to have enacted a law to limit practices that could undermine international debt relief, although similar legislation is also under consideration in the Isle of Man.

The United Kingdom introduced the UK Debt Relief (Developing Countries) Act 2010 in response to a joint initiative between the International Monetary Fund and the World Bank to provide debt relief to HIPCs which qualify for cancellation of most debts to the World Bank, IMF and the governments of rich countries.

TAGS: court | tax | interest | law | international financial centres (IFC) | Jersey | offshore | legislation

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