The International Law of Compensation for Expropriation and International Debt: A Dangerous Uncertainty

The political and economic conditions existing in many heavily indebted less developed countries (LDC's) may be militating in favor of repudiation of international debts. This Note examines these political and economic factors in relation to international debt, as well as the role of the International Monetary Fund. The Note goes on to examine the current state of international law regarding state responsibility for injury to aliens, to ascertain what protection, if any, it may offer international lenders. The conclusion reached by this Note is that currently there is no generally accepted rule of international law governing the rights of aliens whose property has been expropriated.

Furthermore, the absence of a generally accepted rule presents opportunities to borrowers considering debt repudiation and concomitant dangers to lenders.