The last two decades have seen the economic prospects of many developing countries thwarted by debt crises. Creditors have responded with a series of piecemeal but ultimately unsatisfactory mechanisms. These initiatives have in most cases aggravated the problem and failed to resolve the fundamental factor underlying the debt crisis; the power imbalance that exists between debtors and creditors.
AFRODAD contends that arbitration offers an alternative that addresses or eliminates the power imbalance. Currently there is no platform/mechanism in the world that has jurisdiction over cases of debt disputes between sovereign states. New Instruments and Institutions that should bring about structure changes that will reshape global relations around the debt crisis are now required. A Fair and Transparent Arbitration Mechanism (FTAM) to specifically address the debt problem should be established under the United Nations system.
A Fair and Transparent Arbitration Mechanism that is broader in scope, more inclusive and participatory is required to bring about a permanent solution to the debt overhang largely responsible for abject poverty and economic doldrums in developing countries.
Arbitration agreements allow for settlement or final decisions to be made on grounds other than purely legal principles, such as considerations of justice, equity and human rights.
The Debt Arbitration will achieve the following;