Heavily Indebted Poor Countries (Limitation on Debt Recovery) Act 2012

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AT 11 of 2012

HEAVILY INDEBTED POOR COUNTRIES

(LIMITATION ON DEBT RECOVERY) ACT

2012

Heavily Indebted Poor Countries (Limitation on Debt Recovery) Act 2012 Index


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HEAVILY INDEBTED POOR COUNTRIES

(LIMITATION ON DEBT RECOVERY) ACT 2012

Index Section Page

1 Short title .......................................................................................................................... 5
2 Purpose ............................................................................................................................. 5
3 Interpretation ................................................................................................................... 5
4 Meaning of “debt” .......................................................................................................... 6
5 Debts to which this Act applies .................................................................................... 7
6 Limitation on amount recoverable: general ................................................................ 8
7 Limitation on amount recoverable under judgment or award ................................ 8
8 Exception where debtor fails to make offer to pay recoverable amount ................ 9
9 Exception for overriding EU or international obligations ........................................ 9
10 Payments already made in satisfaction of debt ........................................................ 10
11 Disregard of future changes to HIPC Initiative ........................................................ 10

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HEAVILY INDEBTED POOR COUNTRIES

(LIMITATION ON DEBT RECOVERY) ACT 2012

Signed in Tynwald: 11 December 2012
Received Royal Assent: 11 December 2012
Announced to Tynwald: 11 December 2012
AN ACT
to limit the recovery of certain debts against certain poor countries
and territories; and for connected purposes.
BE IT ENACTED
by the Queen’s Most Excellent Majesty, by and with the advice and
consent of the Council and Keys in Tynwald assembled, and by the authority of the
same, as follows:—
1 Short title

The short title of this Act is the Heavily Indebted Poor Countries (Limitation on
Debt Recovery) Act 2012.
2 Purpose

The purpose of this Act is to support the enhanced Heavily Indebted Poor
Countries Initiative of the International Monetary Fund and the World Bank by
preventing the recovery of certain debts —
(a) existing, or treated by this Act as existing, prior to its coming into
operation;
(b) against countries and territories eligible or potentially eligible for
debt relief under the HIPC Initiative; and
(c) over and above the amount of debt that would remain if the
creditor had provided the level of relief expected under that
Initiative.
3 Interpretation

P2010/22/1(2)&(7),5(2)&(5)&6(3)
(1) In this Act —
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“decision point
” means the point at which the Executive Boards of the
International Monetary Fund and the World Bank formally decide on the
eligibility of a country or territory for debt relief;
“foreign judgment
” means a judgment (however described) of a court or
tribunal of a country or territory other than the Island and includes
anything (other than an arbitration award) that is enforceable as if it were
such a judgment;
“HIPC Initiative
” means the enhanced Heavily Indebted Poor Countries
Initiative of the International Monetary Fund and the World Bank;
“judgment
” includes an order;
“qualifying country
” means a country or territory to which the HIPC Initiative
applies or that —
(a) the International Monetary Fund and World Bank identify as potentially
eligible for debt relief under that Initiative; and
(b) in respect of which decision point has not been reached;
“relevant claim
” means a claim for or relating to a debt and a claim under an
agreement compromising a debt.
(2) Decision point is regarded as having been reached in respect of a country
or territory if it is so regarded for the purposes of the HIPC Initiative.
4 Meaning of “debt”

P2010/22/2(2)-(4)
(1) For the purposes of this Act “debt
” includes —
(a) a liability falling to be discharged otherwise than by the making of
a payment;
(b) an obligation to repurchase property that arises under an
agreement for the sale and repurchase of property (whether or not
the same property); and
(c) a liability of the lessee under a finance lease, other than a liability
relating to the operation or maintenance of property subject to the
lease.
(2) However, “debt
” does not include —
(a) a liability to pay for goods or services that arose on the delivery of
the goods or the provision of the services;
(b) a liability falling to be discharged within a year of its being
incurred, unless it was due to be discharged more than a year
before —
(i) the coming into operation of this Act; or
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(ii) where decision point has been reached in respect of the
qualifying country, more than a year before decision point;
or
(c) a liability incurred after the coming into operation of this Act that
replaces anything that was (at the time of replacement) within
paragraph (a) or paragraph (b).
5 Debts to which this Act applies

P2010/22/1(3)-(5), 2(5)-(10)
(1) This Act applies to any debt incurred before its coming into operation
that falls within the following provisions of this section.
(2) The debt must satisfy subsection (3) or subsection (4).
(3) The debt must be incurred —
(a) by a qualifying country or any part of it, whether defined by
geographical area, administrative boundary or otherwise;
(b) by the government of, or of any part of, the qualifying country, or
by any arm of such government;
(c) by any monetary authority of the qualifying country; or
(d) by an body corporate controlled either directly or indirectly by
anything within paragraphs (a), (b) or (c).
(4) The debt must —
(a) have been guaranteed, the guarantee being entered into before
this Act came into operation and, where decision point has been
reached in respect of the qualifying country, before it was
reached; and
(b) fall within subsection (3) if it had been incurred by the guarantor,
and if only part of the debt satisfied paragraphs (a) and (b), that part only
satisfies this subsection.
(5) The creditor of the debt must not be resident in the qualifying country —
(a) if decision point was reached in respect of the country before the
coming into operation of this Act, at the time it was reached; or
(b) otherwise, at the time this Act comes into operation,
and in any proceedings to which the creditor is a party, this subsection is
to be treated as satisfied unless the contrary be proved.
(6) For the purposes of this section a debt incurred after the coming into
operation of this Act or after decision point is treated as having been
incurred before it came into operation or before decision point (as the
case may be) if and to the extent that it replaces one incurred before its
coming into operation or decision point (as the case may be).
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6 Limitation on amount recoverable: general

P2010/22/3&4
(1) The amount recoverable in respect of a debt, or any cause of action
relating to it, is limited to —
(a) if the debt relates to a country or territory to which the HIPC
Initiative applies, the amount that the debt would be if it were
reduced in accordance with that Initiative; and
(b) if the debt relates to any other qualifying country, 33% of the
amount that would be recoverable but for this Act.
(2) Subsection (3) applies if —
(a) an agreement has been made that compromises a claim in respect
of a debt or cause of action mentioned in subsection (1); or
(b) an agreement has been made —
(i) that changes the terms for repayment of a debt so as to
reduce its net present value; or
(ii) by virtue of which that original debt is replaced by a new
debt, the present net value of which is less than the original
debt.
(3) Where this subsection applies —
(a) subsection (1) does not apply; but
(b) the amount recoverable is limited to the amount that would have
been recoverable under that subsection if no agreement
mentioned in subsection (2) had been made and subsection (1) did
apply.
(4) However, subsection (3) does not apply if the effect of so applying it
would be to increase the amount that would otherwise be recoverable.
(5) References in this section to the amount recoverable include the amount
recoverable on the enforcement of any security.
(6) This section applies whether or not the law applicable to any claim,
agreement or security mentioned in this section is the law of the Island.
7 Limitation on amount recoverable under judgment or award

P2010/22/5
(1) This section applies to —
(a) a judgment on a relevant claim given by any court in the Island;
(b) a foreign judgment on a relevant claim (whenever given); and
(c) an award made (at any time) on a relevant claim in an arbitration
(whether conducted under the law of the Island or that of any
other country or territory).
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(2) The amount of the judgment or award is to be the same as it would be if
the court, tribunal or arbitrator had applied section 6 in relation to the
relevant claim or, if the judgment or award gives effect to a compromise
of a relevant claim, the same as it would be if the relevant claim had not
been compromised and section 6 had been so applied.
(3) However, subsection (2) does not apply if the effect of so applying it
would be to increase the amount of the judgment or award.
8 Exception where debtor fails to make offer to pay recoverable amount

P2010/22/6
(1) This Act does not apply to a relevant claim or a judgment or award
mentioned in section 7 if —
(a) proceedings are brought in respect of the claim, judgment or
award; and
(b) before the relevant time the debtor does not make an offer in
accordance with which the net present value of payments to be
made is greater than or equal to the net present value of the
payment required to satisfy the claim, judgment or award
(reduced in accordance with this Act).
(2) This section applies whenever the proceedings were brought, except
where the relevant time occurred before the coming into operation of this
Act.
(3) In this section —
“proceedings” means proceedings in the Island, including proceedings for —
(a) the registration of a foreign judgment or arbitration award; or
(b) permission to enforce an arbitration award in the same manner as a
judgment of the court,
but does not include proceedings for the enforcement of a judgment or award;
“relevant time” means the earliest of the following —
(a) the time when a court first gives judgment on the relevant claim;
(b) the time when the foreign judgment or arbitration award is registered; or
(as the case may be);
(c) the time when permission is given to enforce the arbitration award in the
same manner as a judgment of the court.
9 Exception for overriding EU or international obligations

P2010/22/7
(1) Nothing in this Act applies to a foreign judgment or an arbitration award
that is required to be enforced in full by —
(a) European Union law; or
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(b) an international obligation,
that applies to the Island, even in cases where such enforcement is
contrary to the public policy of the Island.
(2) Accordingly, this Act does not apply to an award to which section 1 of
the Arbitration (International Investment Disputes) Act 19831 applies
(awards made under the Convention on the settlement of investment
disputes between States and nationals of other States).
10 Payments already made in satisfaction of debt

P2010/22/8
(1) Nothing in this Act enables a person to recover anything paid in total or
partial satisfaction of any liability, whether arising under an agreement,
judgment, order, award or otherwise.
(2) But anything paid in the circumstances mentioned in subsection (1) is
still to be taken into account in assessing the amount recoverable under
section 6(1).
11 Disregard of future changes to HIPC Initiative

P2010/22/1(11)&(12)
For the purposes of this Act any changes made to the terms of the HIPC
Initiative after the coming into operation of this Act so as to affect a condition as
to —
(a) the level of a qualifying country’s income or debt; or
(b) the size of its economy,
are to be disregarded.

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