Jersey law to stop 'vulture funds' comes into force
- 1 March 2013
- From the section Jersey
A law to stop so-called vulture funds from using Jersey courts to sue poor nations has come into force.
The new legislation will limit the practices that Jersey's Chief Minister Senator Ian Gorst said could undermine debt relief efforts.
He said it showed Jersey's willingness to support global efforts to end debt, and brought Jersey in line with the UK.
Vulture fund holders buy debts of poor nations cheaply and then sue for up to 100 times of what they paid for them.
They pursue any companies which do business with their target country in courts around the world and try to force them to pay money to the fund instead of the country.
So far only the UK, the Isle of Man and now Jersey have brought in laws stopping the funds, which are also known as distressed debts.
Jersey has been linked to vulture funds when a state-owned African mining company in the Democratic Republic of Congo was being sued for $100m through Jersey's courts.
The company was ordered to pay by the Royal Court but that was overturned on appeal.
The publicity generated by the case prompted the States of Jersey to change the law.