By Jonathan Stempel
NEW YORK (Reuters) – The U.S. authorities sided with Argentina in urging a federal decide to not drive the cash-strapped nation to surrender its 51% stake in oil and fuel firm YPF to partially fulfill a $16.1 billion court docket judgment.
In a Wednesday night time letter to U.S. District Choose Loretta Preska in Manhattan, the Division of Justice stated it has lengthy argued that U.S. courts can not order the seizure of overseas sovereign property positioned outdoors the USA.
It additionally stated it might violate sovereign immunity to require Argentina to show over the shares to 2 traders represented by litigation funder Burford Capital, and that permitting such a turnover may intervene with U.S. overseas coverage.
Argentina is interesting Preska’s September 2023 choice to award the $16.1 billion to Petersen Energia Inversora and Eton Park Capital Administration. Burford has stated it anticipated to obtain 35% and 73% of their respective damages.
Attorneys for Burford didn’t instantly reply to requests for remark. Robert Giuffra, a lawyer for Argentina, declined to remark.
Led by libertarian President Javier Milei, Argentina has slashed public spending to cut back inflation, which has fallen however stays above 200% annualized, although its measures have deepened a recession and contributed to poverty charges rising above 50%.
However Milei’s ties with U.S. President-elect Donald Trump may assist with Argentina’s $44 billion mortgage program with the Worldwide Financial Fund, which might be revisited subsequent yr.
The $16.1 billion judgment arose from Argentina’s 2012 seizure of the 51% YPF stake held by Spain’s Repsol (OTC:), with out tendering for shares held by minority traders.
Burford has stated Argentina’s “a few years of structuring its belongings to keep away from enforcement” justified turning over the YPF stake, and {that a} business exercise exception to the federal International Sovereign Immunities Act allowed a turnover.
In Wednesday’s letter, the Justice Division stated Congress didn’t intend when passing that legislation to get rid of immunity for overseas sovereign property such because the YPF shares.
It stated ending immunity would create an anomaly the place a overseas nation’s property inside the USA would have larger safety than property contained in the nation itself.
The Justice Division additionally stated that for causes of comity, which means the respect that international locations afford one another by limiting the attain of their legal guidelines, New York state’s personal turnover statute didn’t require Argentina to surrender the YPF shares.
A opposite conclusion may put U.S. property in danger, the division stated, as a result of overseas international locations may afford the USA comparable remedy in their very own courts.
It’s unclear when Preska will rule.
