This case is about a rogue sovereign debtor whose "uniquely recalcitrant" behavior has injured investors and threatens all future sovereign restructurings. Argentina came to the United States, waived its sovereign immunities, and promised that it would not discriminate against one set of payment obligations under its bonds in favor of another

BRIEF IN OPPOSITION
FOR THE VARELA RESPONDENTS

Respondents Pablo Alberto Varela, Lila Ines
Burgueno, Mirta Susana Dieguez, Maria Evangelina
Carballo, Leandro Daniel Pomilio, Susana Aquerreta,
Maria Elena Corral, Teresa Munoz De Corral,
Norma Elsa Lavorata, Carmen Irma Lavorata, Cesar
Ruben Vazquez, Norma Haydee Gines, and Marta
Azucena Vazquez (collectively, the ''Varela Respondents")
1 respectfully submit that the petition for a writ
of certiorari should be denied.

STATEMENT

This case is about a rogue sovereign debtor
whose "uniquely recalcitrant" behavior has injured
investors and threatens all future sovereign restructurings.
Argentina came to the United States,
waived its sovereign immunities, and promised that
it would not discriminate against one set of payment
obligations under its bonds in favor of another. Yet
here we are. Argentina ignored international norms
for sovereign-debt restructurings that call for goodfaith
negotiations between a sovereign debtor and its
creditors, presented creditors with a paltry restructuring
offer, and said "take it or leave it." Argentina
then delivered on its threats never to negotiate with
or pay creditors who rejected the offer, while continually
paying those who bowed to its ultimatum. The
nation codified these threats in the infamous Lock
Law, on which the Argentine courts have relied to
refuse to recognize these creditors' valid claims. The
courts below properly recognized that this conduct
breached the terms of Argentina's bond contracts,
and that the only way to remedy Argentina's breach
was through specific performance.
The Varela Respondents, as Argentine citizens,
are painfully familiar with their country's behavior.
They are among the respondents whose claims for
specific performance were vindicated in the lower
courts. They are middle-class investors who bought
their country's bonds in relatively small amounts
(between $25,000 and $90,000) for their retirement
and general savings, and did so before the bonds
went into default in late December 2001. For them,
this lawsuit is not about reaping any "windfall." It
simply seeks to hold Argentina to its contractual
prom1ses.
The reasons for denying Argentina's petition are
readily apparent, as the briefs in opposition submitted
by other respondents demonstrate. The Varela
Respondents will not restate those points in this
brief.
Instead, the Varela Respondents submit this
brief to address several distinct contentions made by
Argentina and its amici.
First is Argentina's shameful effort to pitch this
litigation as a struggle between a sovereign nation
and a so-called "vulture fund." This ad hominem attack
is utterly irrelevant, as Argentina's bond covenants
apply to all bondholders. It is also grossly inaccurate,
especially as applied to the Varela Respondents.
They are individual Argentine citizens
who purchased relatively small lots of bonds, and did
so before Argentina defaulted in 2001. In other
words, the decision below gives relief not only to
what Argentina self-servingly calls "vulture funds,"
but also to aggrieved individuals.
The second erroneous contention-and most crucial
from a public policy perspective-is the notion
that the decision below will harm sovereign debt restructurings
by encouraging creditors to embrace a
"holdout" strategy of spurning restructuring offers in
search of a higher payout. Putting aside the fact
that 99% of New York law sovereign bonds have Collective
Action Clauses designed to compel all holders
to accept the terms of an offer when the offer is acceptable
to a certain threshold number of holders,
this argument ignores three important facts about
sovereign restructurings: that there have always
been holdout creditors, that sovereigns have found
ways to resolve the claims of holdout creditors, and
that all creditors of sovereigns know that there has
always been a significant chance that the sovereign
debtor would give holdout creditors a different or
better deal. These facts are widely known and have
not impeded other sovereign debt restructurings, before
or after Argentina's. The decision below introduced
no new incentives into the world of sovereign
debt restructuring and should pose no obstacle to
any sovereign that negotiates in good faith with its
creditors. Indeed, if the decision below is overturned,
it would create a powerful new incentive for sovereign
debtors to emulate Argentina's coercive behavior
and threaten the future of voluntary sovereign
debt restructurings.
Third, contrary to the protests of Argentina and
its amici, the disputed Injunction does not infringe
on Argentina's sovereignty. Argentina waived its
sovereign immunities and consented to be sued in
U.S. courts. That Argentina now regrets this decision
is no reason not to hold Argentina to the terms
of its contract.
Finally, as the Second Circuit explained, the Injunction
enjoins only Argentina. This fact alone defeats
the third parties' due process contentions. These
entities are "bound" only in the sense that the
Federal Rules of Civil Procedure prohibit anyone
from knowingly assisting an injunction's target to
violate that same injunction.

http://www.shearman.com/~/media/Files/Services/Argentine-Sovereign-Debt/2014/Arg-13990-Opposition-Brief-of-Varela-Respondents20140507.pdf