The parliaments of Jersey, Guernsey and the Isle of Man are all discussing legislation to prevent vulture funds suing Heavily Indebted Poor Countries for inflated claims on old debts. Laws are expected to come into force in 2013. One vulture fund, FG Hemisphere, tried to claim $100 million from the Democratic Republic of Congo via a mining company registered in Jersey. In July 2012 the UK Privy Council, Jersey’s highest court of appeal, ruled against the vulture fund, saying the assets owed to Gecamines, Jersey’s state mining company, could not be used to pay a government debt.
On 1 October a bill was lodged with the States of Jersey on vulture funds. The proposed law is a replica of the UK Debt Relief (Developing Countries) Act, first passed in 2010, and made permanent in 2011. The Jersey bill is expected to be passed later in autumn 2012, and come into force a few months later after receiving Royal Assent. The process of gaining Royal Assent takes longer in Crown Dependencies than it does in the UK, because the UK government reviews the legislation.
On 28 November, the State of Guernsey will discuss passing the same legislation as the UK Act. If there is agreement, as expected, it will be passed shortly after and come into force once it has received Royal Assent.
The Isle of Man Tynwald has already begun the process of passing legislation. It has passed the House of Keys, the Tynwald’s lower house, and is currently being discussed by the Legislative Council, the upper house. The bill is expected to be passed in 2012, coming into effect in 2013 following Royal Assent.
The UK vulture fund act is unique in forcing private creditors to comply with internationally agreed debt relief.