THE ROLE OF THE LAWYER IN THE INTERNATIONAL DEBT OPERATIONS OF DEVELOPING COUNTRIES [1]
by Professor Daniel D. Bradlow
(Article Reference: Document No.6, July 1999)

Summary

1. Introduction
   
   
2. The Lawyer's Function in Debt Management
   
   
3. The Stages of a Debt Transaction and the Role of the Lawyer
   
   
   • Identification
   • Preparation
   • Appraisal
   • Negotiation and Approval
   • Implementation
     
     
4. Conclusion
   

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I. Introduction

The purpose of this paper is to describe the role that lawyers can play in the international debt operations of developing country borrowers. The central point that the paper seeks to make is that lawyers can make a significant contribution to both the borrower's debt management and the negotiating and structuring of its debt transactions. Borrowers who include lawyers, with an understanding of international financial law, in their debt management teams are likely to find that their debt planning is improved because they have an enhanced understanding of:

1. the regulatory and legal environment applicable to the debtor;

2. the legal and regulatory environment applicable to each of its creditors;

3. a more detailed understanding of the contractual terms of each of their debt obligations and the implications thereof for their operations.

In addition, borrowers who include lawyers as active participants in the process of negotiating and structuring their debt transactions can, over time, obtain more satisfactory debt contracts.

In order to establish this proposition, the paper will first briefly discuss the role lawyers can play in debt management. Thereafter, it will break a loan transaction down into five different stages and discuss the role that the lawyer can play at each of these stages. For the purposes of this paper, we will assume that the borrower is either the sovereign itself or a public sector entity from a developing country which engages in regular and ongoing external debt operations. It is important to note that the description of the role of the lawyer in debt transactions would not change significantly for a lawyer advising a private sector borrower with large ongoing debt operations.

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[1] This article has been written by Daniel D. Bradlow (Professor and Director, International Legal Studies Program, American University, Washington College of Law, Washington D.C.) for UNITAR following his participation as a resource person in a joint UNrTAR/WAIFEM Sub-Regional Workshop on the Mechanics of Loan Agreements for West African Nations (Banjul - The Gambia, 3 to 7 May 1999).

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