THE Jubilee Debt Campaign has hailed new UN rules on so-called "vulture funds" as an "important step forward in fixing the broken global debt system".

The UN's General Assembly passed a resolution last week that called for a legal process for handling governments' debt to be set up, to prevent speculators' capitalising on financial crises in the developing world.

Vulture funds buy up the debt of countries that are struggling financially, and are about to default, for very low prices, and then sue the governments of these nations to be repaid the full amount.

Several such funds hit the headlines recently when they refused an offer from Argentina of 30-per-cent repayment of government bonds bought in 2002 in the depths of the country's worst ever economic crisis.

The repayment deal has been accepted by 93 per cent of Argentina's creditors, but a court ruling in the United States, instigated by the remaining "holdouts", is preventing Argentina's paying any of its creditors until it also pays back the vulture funds a much higher percentage.

There are currently no established international procedures for restructuring sovereign debt, but the Jubilee Debt Campaign is hoping that the UN vote will lead to a system to protect developing countries that go into default from expensive and drawn-out debt crises.

The Campaign's director, Sarah-Jayne Clifton, said: "The resolution represents an important step forward in fixing the broken global debt system, and developing countries have shown fantastic leadership in pushing it through, despite the opposition of the UK and a handful of other rich-country governments."

The UK was one of only 11 nations to oppose the vote, together with the US, Australia, Canada, and Ireland, among others. Almost all developing countries were in favour, while most European nations abstained.

Ms Clifton also criticised the Chancellor, George Osborne, and his deputy, Danny Alexander, a Liberal Democrat. She accused them of favouring the interests of the financial sector over "economic stability and justice for people in countries in debt distress". She said that both the Coalition Agreement and the Lib Dem manifesto in 2010 supported taking action against vulture funds.

Last year, more than 100 MPs signed a parliamentary motion that called for "the creation of a fair, independent, and transparent arbitration mechanism for sovereign debt".