Mass Sovereign Debt Litigation: A Computer-Assisted Analysis of the Argentina Bond Litigation in the U.S. Federal Courts 2002–2016

Gregory Makoff - Centre for International Governance Innovation
W. Mark C. Weidemaier - University of North Carolina School of Law
Vol. 56
February 2023
Page 1233

This Article presents a computer-assisted analysis of the first large-scale mass litigation of sovereign debt claims. Between 2002 and 2016, hundreds of lawsuits were filed against Argentina in the United States, virtually all in the Southern District of New York. Historically, litigation against a foreign government would have involved a few hedge funds that had invested in debt at distressed prices. Argentina faced thousands of investors, including small retail bondholders, in litigation that more closely resembled a mass tort or federal multidistrict litigation than any prior episode involving a sovereign’s debt default.

To study this sprawling litigation, this Article combines traditional analysis of court records with computer-assisted analysis of dockets and hearing transcripts using machine learning techniques. It provides the most comprehensive account of the Argentina bond litigation and advances the literature on legal enforcement in sovereign debt markets, demonstrating that a wide range of investment funds and even retail investors can finance and aggressively pursue litigation against a foreign state. The Article develops metrics to measure the intensity of litigation, shows that a relative handful of cases and litigants generated disproportionate activity, and reveals patterns in how groups of plaintiffs competed and coordinated. The findings suggest that, despite recent reforms designed to reduce litigation, sovereign debt litigation is here to stay.

View Full Article