DLA Piper brings vulture fund down to earth with Zambian debt reduction

DLA Piper has scored a substantial reduction in the damages a so-called vulture fund was seeking to retrieve from the Zambian government.

Mr Justice Smith ruled in the High Court (24 April) that the claim should be limited to $15.5m (£7.73m), as opposed to the $55m (£27.44m) sought by the vulture fund.

US company Donegal International purchased some Zambian debt from Romania in 1999 for $3.2m (£1.6m). It then pursued Zambia for the face value of the debt, but agreed with the impoverished African nation in 2003 to accept $16m (£7.98m).

Zambia defaulted on payment, which under the terms of the deal meant the whole debt plus back interest would be payable - a figure of $55m.

Smith J repeatedly criticised Donegal owner Michael Sheehan for dishonesty.

DLA Piper partner Janet Legrand, acting for Zambia, instructed William Blair QC of 3 Verulam Buildings, with Michael Sullivan of One Essex Court as junior lead.

Donegal was represented by Allen & Overy partner Peter Watson, who instructed Maitland Chambers' Anthony Trace QC, with Benjamin John of Maitland as junior lead.