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Putting Your Faith in Good Faith: A Principled Strategy for Smoother Sovereign Debt Workouts

This paper explores the potential of good faith, a well-established general principle of law, to guide debt resolution negotiations. After reviewing the criteria for the establishment of a general principle, the paper argues that debtor states and creditors are under a good faith duty to enter into negotiations in case of a crisis, and that good faith further prevents the arbitrary exercise of voting rights, as well as abusive holdout litigation.