On The Rules Of Collective Actions In Sovereign Debt Crisis Governance

Most studies of the sovereign debt crisis governance focus on sovereign debt restructuring, while ignoring the bail-out and the core issues of the governance:how to achieve collective actions. This article will attempt to answer the following questions: What are the collective action paradoxes existing in governance? How to solve these paradoxes? Is there any rules we can follow to achieve collective actions for now?The sovereign debt crisis governance includes bail-out and sovereign debt restructuring. In each aspect, the creditor, the debtor and the bail-out fund providers face with different collective action paradoxes.The "sovereign debt" means a government or its authorized representative owing, which guaranteed by its national credit. There are different categories of sovereign debt, say the domestic debt and the foreign debt, the official sovereign debt and the private sovereign debt, the sovereign loans and the sovereign bonds. In this paper, we focus on the official sovereign debt. For the fiscal, financial, political or other reasons, a state may be plunged into a sovereign debt crisis, due to its sovereign default continues for a period of time. Although some of the IMF’s functions have been spread by a growing number of regional international organizations, the IMF is still playing as the core of current sovereign debt crisis governance framework. The legal nexus of the sovereign debt crisis governance and the economic sovereignty of the country need to be taken into account to observe the current sovereign debt management. The theory of collective action will be used to analyze the rules to achieve collective actions.In the part of the bail-out, this article take the Greek sovereign debt crisis as an example. Greece has three options in managing the crisis:requiring the IMF lending or the assistance of EU, and acting as a free raider. Which increased its expectations to non-cooperation. In2009, the EU is faced with insurmountable legal difficulties, the IMF’s conditionality is threating the EU’s power in making their own fiscal policies. At last, the concept of the Ownership used in making conditionality by the IMF, along with the new EU legislation, the Greece’s bailout has been achieved through a "quadrilateral framework". In this process, the international community re-coordinate the relationship between the IMF and the EU. The EU make some specific rules for EU countries to bail-out. Which can be called as a mode of imperative law in setting the collective action rules, and these rules need to be tested in more practices and more discussions.In the part of the sovereign debt restructuring, the Paris Club and the CACs are two kinds of different ways to solve the collective action paradoxes. The Paris Club acts as a forum for economic cooperation, to solve the paradoxes through the establishment of customary rules. While the CACs itself is a collective action rules, which emphasizes the power of contract to constrain the behavior of the parties. Both methods have been tested in practice. These two rules can be summarized as soft law mode and contract mode to build the rules.Therefore, the collective action rules in bail-out are still uncertain, while the rules in the sovereign debt crisis restructuring are ready for the international community to choose from.