une 25, 2013 8:34 pm
Argentina asks US Supreme Court to hear defaulted creditors case
Argentina has filed an appeal to the US Supreme Court in its legal battle with hedge fund creditors led by Elliott Management, seeking to reverse a lower-court ruling last October that ordered it to pay defaulted creditors when it paid performing debt.
The filing, known as a writ of certiorari, was filed late on Monday ahead of a June 24 deadline for such appeals to be lodged. It comes as expectations mount that the Second Circuit Court of Appeals in New York will rule within weeks on the thorny case that could lead to another Argentine debt default.
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Lawyers have long doubted that the Supreme Court will hear the case, given that it turns down the vast majority of cases, and primarily concerns itself with constitutional matters, while Elliott’s case against Argentina is a civil matter.
Nonetheless, the potential international ramifications of the case for how countries default and restructure on their case could spur the Supreme Court to take an interest, some lawyers have said.
The Second Circuit will have to make a final ruling before the Supreme Court can hear the case, but Argentina is widely expected to suffer a resounding defeat. Argentine international bonds trade at a steep discount to their face value on the expectation that Buenos Aires would rather default on its debts again than obey the court’s order to pay creditors it calls “vultures”.
Argentine state news agency Télam quoted unnamed economy ministry sources as saying the petition argued that the lower court’s ruling violated the US Foreign Sovereign Immunities Act because it sought to restrict the use of assets outside the US.
In addition, it argued that a Federal court-ordered injunction ahead of a final ruling that forced a country to make a payment went against Supreme Court jurisprudence.
Argentina considers the Second Circuit ruling an “unprecedented intromission” into its sovereignty, and warns that an adverse ruling would imperil future government debt restructurings. The US court, on the other hand, has called Argentina “contumacious” in its disregard for unfavourable legal rulings over the past decade.
Argentina is keenly awaiting proceedings in a Belgian court by holders of euro-denominated Argentine bonds, who want to make sure that their English-law bonds will be paid.
Marcelo Etchebarne, an Argentine lawyer who has been following the case closely, said Argentina’s argument that federal courts cannot tell Argentina what to do in its own country “is probably a bit late”.
Mr Etchebarne said the European filing had probably delayed the Second Circuit’s decision, but he still expected a ruling within the first couple of weeks of July, before the three law clerks assigned for a year to each judge leave.
“It will be a nightmare to get new clerks to work on this massive case,” he said.
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