Dr Karina Patricio Ferreira Lima discusses the Debt Relief (Developing Countries) Bill at the Financial Markets Law Committee
On Monday 3 March 2025 Dr Karina Patricio Ferreira Lima delivered a presentation at one of the most senior forums in the United Kingdom for the discussion of sovereign debt.
Dr Karina Patrício Ferreira Lima’s presentation focused on the evolving sovereign debt landscape for low-income countries (LICs), highlighting the growing debt vulnerabilities exacerbated by recent global shocks. Against this backdrop, Dr Patrício Ferreira Lima contextualised the development of her co-authored Debt Relief (Developing Countries) Bill, which seeks to strengthen the UK’s legal framework to support international sovereign debt workouts.
A harmonised approach to sovereign debt restructuring
In her remarks, Dr Patrício Ferreira Lima emphasised the critical role domestic law can play in facilitating a harmonised approach to sovereign debt restructuring. Drawing on the example of financial regulatory reforms introduced by the G20 in the aftermath of the 2008 Global Financial Crisis, she explained how the Bill aims to operationalise G20 Common Framework standards within UK law through a ‘safe harbour’ mechanism. This approach would enhance legal certainty and ensure equitable treatment across creditor groups by limiting holdout litigation in UK courts and embedding the principle of comparability of treatment into domestic law.
The two central limbs of the Bill
Dr Patrício Ferreira Lima also provided a detailed section-by-section analysis of the Bill. She explained its two central limbs: an anti-holdout provision, which caps creditor recoveries to prevent litigation that undermines international debt relief initiatives, and a standstill mechanism, designed to pause creditor enforcement during restructuring negotiations, thereby creating the necessary space for an orderly resolution of sovereign debt workouts.
The session was chaired by Philip Wood CBE, KC and generated a lively discussion on the future of sovereign debt restructuring and the potential of the UK legal system to support multilateral debt relief initiatives.
The Debt Relief (Developing Countries) Bill is scheduled for debate in the House of Commons on 14 March 2025.
Dr Patrício Ferreira Lima is a member of Centre for Business Law and Practice. For further information about Dr Patrício Ferreira Lima’s research on sovereign debt and financial law, please contact her at k.patricio@leeds.ac.uk.
