It is normal to think that the indebtedness of Democratic Republic of
Congo [DRC] and potential threats such Vulture
Fund activity increase the cost of doing business in some countries such as the
DRC.
In fact, the DRC has started thinking how
to protect investors against such practices as Vulture Funds not only litigate
against debtor countries, they also pursue solvent companies that have
contracted to do business with the countries. In order to protect themselves from
Vulture fund litigation, most trading partners of countries targeted by Vulture
Funds adjust the price of their contracts to insure against expensive litigation,
and the competing claims of Vulture Funds. We should say however that some countries,
such as China, provide complete protection against Vulture Fund litigation. For
example, when a Vulture Fund attempted to seize a payment from a Chinese
company to the DRC in 2008, the government of China intervened in the case and
took the position that under Chinese law, the assets of a foreign sovereign are
absolutely immune. A Hong Kong court thereafter dismissed the Vulture Fund’s
case. [FG Hemisphere Associates, LLC v. Democratic Republic of Congo, et al.
HCMP 928/2008 (High Court of Hong Hong, Dec. 12, 2008)] This protection against creditor
litigation enables China to successfully compete for natural resources around
the world and that route need to be followed by the DRC. There is also another threat. In fact, if the borrower is liable
vis-à-vis third party, all its assets must meet the obligations and liabilities
of the creditor. Including acquisitions and new financing good. Article 245 of
the Law “ Droit Foncier” states that: “ Debtor properties constitute the
general pledge of all its creditors”.
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