Monday, July 16, 2018

Judge rejects Civil Rights Commission petition for human rights approach to Puerto Rico debt restructuring

By on July 11, 2018

SAN JUAN – The U.S. District Court rejected a friend of the court brief submitted by the Civil Rights Commission of Puerto Rico requesting a human rights approach to the restructuring of Puerto Rico’s debt.

In the brief, the commission stressed the need for a debt restructuring that can guarantee Puerto Ricans dignified living conditions by ensuring essential services are maintained.

“Concerned about the lack of discussion on human rights and international human rights law standards within Puerto Rico’s public debt affairs, with the best interest to promote adjudication practices aware of the human rights impact of debt restructuring, and with the express mandate of the majority of its Commissioners, this entity respectfully moves this Court for leave to participate as amicus curiae in this case,” the commission wrote.

Judge Laura Taylor Swain denied the request, saying the amicus brief does not reference or is tied to specific issues raised in any pending motion or adversary proceeding.
“No debt restructuring plan is currently before the Court, and the Court does not have unilateral power to propose a debt restructuring plan given that the Oversight Board has the sole authority to propose such a plan,” Judge Swain wrote.

The commission, an entity within the legislative branch that was created in 1965, said it is vested with the responsibility to educate, investigate and seek redress for human and civil rights violations against people in Puerto Rico. It can seek to intervene in judicial processes after the approval of a majority of the commissioners, to educate on fundamental rights.

As has been the case with debt crises at other jurisdictions, human rights bodies have come forward to “illuminate decision-makers on the basic human rights guarantees,” by developing standards and criteria to assess debt restructuring, adjustment and management, the commission said.

“Debt restructuring analysis and adjudication cannot be carried out in purely financial terms. Just as the rights of creditors are to be protected, the consequences of unsustainable public debt and repayment policies on the living conditions of those affected by austerity measures must be prioritized,” the group added.

On several occasions, the island’s Financial Oversight and Management Board has requested that the Puerto Rico government define essential services. In the government’s March 2017 fiscal plan, five areas of “critical services” were listed: health, education, public safety, JusticeDepartment and public infrastructure.

“Yet, the Puerto Rico government has failed to define essential services in the ‘Fiscal Plan Compliance Law’ adopted on April 26, 2017. Similarly, the 2018 Fiscal Plan, titled ‘New Fiscal Plan for Puerto Rico’ which is still being subjected to revisions, does not contain language referring to essential or critical services. It repeatedly enumerates changes which will generate decreases in funding in areas such as education, health, family services, public safety and housing,” the Commission stressed.

Under Title III of the financial oversight law for Puerto Rico, Promesa, the commission said the court needs to ensure that the adjustment plans “are feasible and in the best interests of creditors, which shall require the court to consider whether available remedies under the non-bankruptcy laws and Constitution of the territory would result in a greater recovery for the creditors than is provided by such plan.”

As it has been noted by the Center for a New Economy and others, one of the elements used to define whether an adjustment plan is “feasible” is its relationship to the provision of essential services.

Given that the concept of “essential services” has a strong relationship to the protection of human rights, the commission said, “we sustain that a feasibility analysis cannot be strictly financial or mathematic. Thus, when considering whether an adjustment plan is ‘feasible’ this Court should take into account the human rights dimensions that are present when guaranteeing that essential services are provided for.”

The commission specifically requested that the rights to be considered include housing, food, education, health, work and social security.

“Acknowledging the urgency of bringing a human rights-based approach to debt restructuring, we propose defining essential services in the light of human rights standards and core rights recognized under the Constitution and statutes of Puerto Rico and international human rights law,” it stated.

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