The Uphill Battle of Argentina: YPF Trial Updates and Implications in Judge Loretta Preska’s Court

2024-03-05 23:44:06
American judge Loretta Preska (Reuters)

It is a long and very uphill trial for Argentina. While it appeals in the courts of New York the ruling by which it was sentenced to pay USD 16,000 million for improperly expropriating YPF in 2012, the government of Javier Milei sees how the interests run while the case progresses on the bench of Judge Loretta Preska and also in the Court of Appeals for the Second Circuit in New York, where the country will try to overturn the multimillion-dollar sentence.

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And the interests run strong: according to the specialist in this trial Sebastián Maril, CEO of Latin Advisor, since the confirmation of the amount of the sentence, in September 2023, more than 400 million dollars have already been accumulated, at a rate of USD 2, 5 million per day.

The figure is astronomical and much more so in the midst of the strong economic crisis that the country is going through. The case does not seem to be a priority, at least according to what is said publicly, but it appears to be a crucial issue for the Government. “The ruling of a New York judge has become a problem for the new administration of Argentine President Javier Milei,” the influential Financial Times noted yesterday.

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“It is very irresponsible and risky to maintain such a liability and hope that some judge in some court will support us. History does not favor us,” Maril summarized.

Milei already spoke of “willing to pay”, something that none of his predecessors had done during the eight years that the lawsuit has been going on, and he even proposed creating a tax in perpetuity to pay the lawsuit. She said it might be called the “Kicillof rate.” The current Buenos Aires governor was one of the promoters and visible faces of the expropriation, 14 years ago, when he was vice minister of Economy.

Rodolfo Barra is the Treasury Attorney and, as such, head of the lawyers of the Argentine state (NA)

In any case, Infobae estimated that the country might end up paying triple what the company is worth, regarding USD 9 billion today, according to the value of its shares on Wall Street. USD 5,000 million have already been paid to Repsol, which was controlling of YPF at the time of the expropriation, plus some 4,500 million in interest on the bonds that were given to the Spanish oil company. To that figure must be added costs still in progress: the judgment of USD 16,000 million plus interest, which already totals USD 400 million, as explained, and which this year might be almost USD 900 million; and regarding USD 300 million in legal fees.

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More than USD 26 billion, triple the company’s current value.

In the midst of this gloomy outlook that continues to worsen, the country might be on the verge of receiving embargoes. It is an arduous and not so simple process, but Preska has already given the go-ahead so that Burford, the English studio that is the main beneficiary of the ruling, can request them. That stage was reached because the country did not present guarantees to show that it might pay the ruling while the appeal is underway, a process that will take at least a year.

In that sense, today there was something new: the judge called the parties to a telephone call on March 18. There she hopes to clear up some doubts regarding what is going to happen with the embargoes. In recent days there have been cross-presentations in this regard.

The English law firm – which bought the right to litigate from minority shareholders of YPF who claim to have been harmed by the expropriation – appeared before the court saying that Argentina was withholding information regarding its assets. They requested data on the expropriated YPF shares, other YPF shares in the hands of the State, accounts, assets, debts and transactions valued at USD 1 million or more, the currency swap with China, concessions for the exploration of natural resources and data on Aerolíneas Argentinas, Arsat, Enarsa, Banco Nación and others.

Argentina responded by saying that Burford does not have the right to request information regarding diplomatic assets and sovereign issues linked to the BCRA. Now, in the call, the judge will decide who she listens to: Argentina, which does not present data on those assets, or Burford, who wants to have more data on what might be seized. Then, eventually, the magistrate will decide whether this or that asset mentioned by the plaintiff is seizable or not. Diplomatic properties are not and to seize assets in the country Burford would have to get a local judge, with Preska’s ruling as a reference, to grant the request. It doesn’t seem like such an easy thing.

The closest precedent in this sense is the confiscation of the Frigate Libertad, in Ghana, in 2012. In the midst of the discussion with the holdouts, creditors of the debt, a Ghanaian judge authorized it at the request of the NML Capital fund and with a ruling previous in the US by Thomas Griesa, the late judge whom Preska replaced.

In recent days, Argentina has also received the support of Brazil, Uruguay, Chile and Ecuador, which presented themselves as “amicus curiae” in the appeal, concerned regarding the interference that the US might have in a sovereign country and its impact on trade. and bilateral relations.

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