A vulture fund can broadly be defined as an entity that buys securities in distressed investments, such as high-yield bonds or loans in or near default.

The activities of vulture funds operating in Africa has attracted a great deal of publicity. In 2002, former British Prime Minister Gordon Brown (then Chancellor of the Exchequer) told the United Nations that it was "morally outrageous and perverse" that vulture funds made vast profits by buying up the debts of poor countries cheaply and then sued for ten or a hundred times what they paid for them.

Recent successes for vulture funds have added to the pressure to act on the issue. The case of Donegal International against the Republic of Zambia in 2007 focused these concerns. Donegal bought an old Zambian debt from the 1970s for $3 million and sued for $55 million in the British courts. Donegal was ultimately awarded $15 million.

A case against Liberia in 2009 further highlighted the issue with President Ellen Johnson Sirleaf appealing to the British government to act.

The political pressure culminated in the Debt Relief (Developing Countries) Act 2010 (Act). The Act places a cap on the amount that creditors may recover on the historically-incurred debt of the 40 countries qualifying for the World Bank and IMF Highly Indebted Poor Countries Initiative (HIPC).

African institutions have also been instrumental in fighting vulture fund litigation. The African Legal Support Facility (ALSF) was established following calls from African Finance Ministers in 2003 for the establishment of a technical facility to help HIPC countries. The Commission for Africa further added to these calls in 2005. ALSF now assists African countries in defence of vulture fund litigation and negotiation of complex commercial contracts. The ALSF has already made a significant contribution in redressing the balance between African governments and their counterparties.

Clyde & Co recently won judgment for Generales des Carrieres et des Mines ( Gécamines'), a Democratic Republic of the Congo (DRC) parastatal against a vulture fund - FG Hemisphere Associates LLC (Hemisphere) - before the Privy Council. The Privy Council overturned a previous Court of Appeal of Jersey decision which had gone in favour of Hemisphere.

Hemisphere had purchased the assignment of two International Chamber of Commerce arbitration awards against the DRC. The awards arose from supply and financing contracts entered into by the DRC during the era of President Mobutu with the then Yugoslavian hydroelectric company, Energoinvest DD.

Hemisphere claimed to enforce those awards against assets of Gécamines.

The assets consisted of:

a. Gécamines'' shareholding in a Jersey joint venture company called Groupement pour le traitment du Terril de Lumumbashi Ltd (GTL) and,

b. the income flow due from GTL to Gécamines under a Slag Sales Contract.

By a judgment given in the Royal Court of Jersey on 27 October 2010, Hemisphere's claim was upheld, on the basis that Gécamines' was at all material times an organ of and so to be equated with the DRC. On appeal, on 14 July 2011, the Court of Appeal of Jersey affirmed this judgment.

The decision was overturned in July 2012 by the Privy Council.

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