Ecuador’s Tools to Challenge Debt Limited

A debt auditor said Ecuador would find challenging its foreign debt in U.S. courts difficult because the country signed away its legal rights in bond agreements over a 20-year period, Bloomberg reported. Halting debt payments without the support of a court decision would be a “catastrophe” for the nation, said Alejandro Olmos, a member of a committee appointed by President Rafael Correa to review the debt. Bondholders could seize Ecuador’s assets, including those of state-owned oil company PetroEcuador, he said. Ecuador on Nov. 15 didn’t make a scheduled bond payment, invoking a 30-day grace period even though it has the money to meet the obligation. In several contracts reviewed by the commission, Ecuadorean officials signed away all rights to a legal action, including a trial by jury, weakening its position under U.S. law, Olmos said. Read more.