S1477

The New York State Senate passed legislation Tuesday to reinstate a champerty law restricting litigation against sovereign nations, with the bill advancing on a 36-22 vote. Senate Print 1477, sponsored by Sen. Liz Krueger, would prevent investors from purchasing sovereign debt with the primary intent of suing countries unable to repay, a practice Krueger said has resulted in disruptive litigation costing billions. The bill restores protections that existed until 2004, when New York eliminated its champerty law. Krueger argued the measure protects New York's status as the world's premier jurisdiction for sovereign debt and prevents predatory actors from exploiting vulnerable nations. However, opponents including Sen. Andrew Martins and Sen. Daphne Walczyk warned the bill threatens New York's financial dominance by introducing legal uncertainty and could drive business to competing states like Texas, which recently passed legislation positioning itself as an alternative venue for sovereign debt cases. Martins argued the bill could reduce the $20 billion in annual state revenue generated by the financial industry and ultimately harm the poorest countries by making credit more expensive. The bill leaves it to courts to determine whether creditors acted in bad faith, with legitimate lenders still able to recover debts. The measure takes effect immediately upon signing.