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Senate passes measure reviving champerty defense for some sovereign-debt suits after heated debate
Summary
The New York State Senate passed legislation restoring a champerty-style defense that lets courts bar suits brought by investors who bought sovereign debt chiefly to litigate. Sponsors said the change deters predatory litigation; opponents warned it risks driving business and revenue out of New York.
The New York State Senate on Wednesday approved legislation (Senate print 14 77, calendar 14 74) that revives a champerty-style defense in New York courts for certain suits over sovereign debt, clearing the bill by a 36-22 vote.
Supporters said the change aims to stop a handful of investors who buy distressed sovereign debt primarily to pursue litigation and profits in New York courts rather than to recover a legitimate investment. "Since we changed our law and got rid of the Champerty law, we have seen only a small number of companies, but significant companies, bringing court cases in New York state to basically get back underwater investments that they made knowing they were underwater," Sponsor Senator Krueger said on the floor.
The debate turned sharply partisan and technical. The bill’s sponsor…
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