CONFLICT OF LAWS ASPECTS OF INTERNATIONAL BONDS TRANSACTIONS
Abstract. This article examines conflict of laws issues related to issue and circulation of international bonds at international capital markets. It covers characteristic features of international bonds as financial instruments used for raising capital from sophisticated investors which determine, in particular, peculiarities of solving conflict of laws issues. These issues include determination of the law applicable to the formal and essential validity of an international bond, the rights and liabilities as between the issuer and the holder of the international bonds, legal status of a holder of such bonds, the questions of whether a holder obtains full title from a transferor and how title is to be transferred, and whether the transferee obtains title subject to or free from any defects in title of the transferor. The author specifies possible solutions of this conflict of laws puzzle that may include different competing legal systems. He argues that in common law and some other jurisdictions the fundamental lex voluntatis principle may also be applicable to international bonds due to their contractual nature resulting in possibility to choose the governing law for the bonds. The conventional approach as to the proprietary issues of the bonds refers to the lex situs of these securities as the governing law for these issues. The conclusions formulated at the end of the article present the author’s personal attitude towards legal solution of the problems related to determination of the applicable law for international bonds.
Key words: international bonds, conflict of laws, issuer, governing law, lex voluntatis.