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US Supreme Court agrees to consider Argentina litigation case with hedge funds

Saturday, January 11th 2014 - 06:57 UTC
Full article 18 comments

The US Supreme Court agreed on Friday to consider a dispute over subpoenas in a case stemming from long-running litigation over Argentina's obligations to bond investors in the wake of its default on 100 billion dollars in sovereign debt in 2002. Read full article

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  • Conqueror

    Should be straightfoward. Argieland gave up its sovereign immunity in order to push its criminal con-trick.

    Jan 11th, 2014 - 10:44 am - Link - Report abuse 0
  • yankeeboy

    Argentina certainly giving the courts a lot of new legal ground. It will be interesting to see how long the arm of the courts actually reach after this verdict.
    The U$ millions they've spent holding this up in court when everyone knows that in the end ( this year) they'll have to pay, the debt plus interest plus the other sides legal bills is shameful.

    Rgs re crooks to the very core of their being.

    Jan 11th, 2014 - 12:22 pm - Link - Report abuse 0
  • bushpilot

    I don't know. If it is so straight forward why did they agree to hear it?

    It is mostly a liberal bench these days I think. They rule based on what they believe in, not on what is written down and agreed upon.

    They'll be prejudiced against the ones with money and think they shouldn't win.

    Also, they rule in favor of the Federal Govt. vs. State Govt.

    So they might come up with something like the holdouts are interfering with U.S. foreign policy which is the Executive's prerogative so it is contrary to the U.S. Constitution.

    I'm just offering an unqualified opinion, but I can't see them taking this on to just say you have to pay all that money back. I'd be happy if they told Argentina “you can't snake your way out of debt, you conniving thieves”

    Jan 11th, 2014 - 01:32 pm - Link - Report abuse 0
  • Condorito

    @3 bushpilot
    I agree with your “unqualified opinion”. I have said since this started that the SC would take the case up because of its special political dimension.

    (http://en.mercopress.com/2013/06/25/argentina-appeals-to-us-supreme-court-its-legal-battle-with-holdout-creditors)

    As previously stated, I think we are slowly heading towards the right outcome:

    “...restructured bond holders continue to get paid in USD and NML gets naught.”

    Jan 11th, 2014 - 03:45 pm - Link - Report abuse 0
  • yankeeboy

    4. So what you are saying is that SCOTUS will rule that 200=yrs of NY contract law as invalid?
    Never going to happen.

    Jan 11th, 2014 - 04:18 pm - Link - Report abuse 0
  • ChrisR

    @ 5 yankeeboy

    I would agree with your assertion if it were not for the times that the SCOTUS has “misinterpreted” (some state clarified to the modern world) what your Constitution says in writing.

    If ever they do agree with the crooks (Argentina that is) it will be a VERY bad decision for ANY US based contract. How could you believe what is written in them will not be overturned?

    And don’t forget the Obuma factor where his “government” have already indicated they think this is wrong: but only because they don’t understand WTF they are on about with “restricted Sovereign Debt”.

    I never thought they would even hear this crap.

    Jan 11th, 2014 - 04:39 pm - Link - Report abuse 0
  • St.John

    @ 3 bushpilot who wrote

    “If it is so straight forward why did they agree to hear it?”

    If what is so straight forward?

    This very specific case is about whether a hedge fund can subpoena two named banks for information about Argentina's non-US assets. That is not straight forward.

    Jan 11th, 2014 - 08:00 pm - Link - Report abuse 0
  • Condorito

    @7
    I think that is exactly bushpilot's point. It is not straight forward.

    @yankee
    “So what you are saying is that SCOTUS will rule that 200=yrs of NY contract law as invalid”

    It is a strong possibility. Precedents set in lower courts are over turned by higher courts.

    Jan 11th, 2014 - 09:07 pm - Link - Report abuse 0
  • ChrisR

    @ 8 Condorito
    “It is a strong possibility. Precedents set in lower courts are over turned by higher courts.”

    Of course they are, but usually because they do NOT comply with the fundament law the interpretation of which is solely the province of the SCOTUS.

    That is NOT what Yankeeboy and I are saying. US and NY Contract Law is not by custom and practice, it is enacted firstly at the Federal level by the Uniform Commercial Code, mainly for public contracts but used as a model for the state level contract law, which, as long as it does not infringe any federal constitutional rights forms the law for most citizens (as I understand it).

    Being State Law it can vary from one state to another. That is another reason why I was surprised that the SCOTUS has, seemingly, become embroiled in this witches brew create by The Dark Country who, I would imagine, are laughing at how they have “put one over the Yankees”.

    But we will see who puts one over whom by June, won’t we?

    Jan 11th, 2014 - 09:55 pm - Link - Report abuse 0
  • Condorito

    @Chris
    This appeal isn't about contract law, it is really about the jurisdiction of federal courts. Specifically it is about whether two banks can be subpoenaed to hand over details of Argentine non-US assets.

    In Argentina's favor, you have:

    1) US law: U.S. Foreign Sovereign Immunities Act which impedes bondholders from seizing overseas assets.

    2) SC precedent: the SC has previously ruled that Ferderal courts don't have jurisdiction on overseas' assets.

    3) The case was urged on the SC bu the solicitor general who has stated: that the subpoenas “are improper insofar as they are directed to assets located outside the United States”.

    So there is law, precedent and political leaning on Argentina's side.
    The federal court overstepped their mark and I can't see on what grounds the SC won't rule on the side of Argentina on this one.

    Jan 12th, 2014 - 01:12 am - Link - Report abuse 0
  • yankeeboy

    U.S. Foreign Sovereign Immunities Act

    Not relevant

    Jan 12th, 2014 - 08:45 am - Link - Report abuse 0
  • ChrisR

    @ 10 Condorito

    I just don't have the time for the next week or so to do the necessary research to prove or disprove your claim but to me the use by Argentina of NY Contract Law was a clear ploy to assure the lenders that they would not be robbed of their money by this most disreputable of countries.

    That was the intent when they waived their immunity and they should be held to it, otherwise WTF bother with NY Contract Law?

    Times have moved on anyway with what the States sees as sovereign or how else can they INSIST that ALL the banks in the world MUST report any American Citizen who hold s a bank account with them to the Federal Authorities in order for the assets to be seized if the US so wishes?

    Or is it one law when they want and another when they don’t want, which does seem to be an established character flaw of the Islamist in the Whitehouse.

    Jan 12th, 2014 - 10:37 am - Link - Report abuse 0
  • Conqueror

    @4 Have you read the article? This is about whether NML can enforce subpoenas. It is NOT about whether argieland wins or loses. And if you think that the “right outcome” includes NML getting “naught”, there is little hope for your sense of justice. Let's be clear. Argieland set out to perpetrate a massive fraud. In doing so, it targetted many “ordinary” people. It was willing to do anything to get its thieving hands on money. Figuring that it could bamboozle courts into accepting its lies. But now try reality. If argieland has acted honestly throughout, why is it objecting? Why is it using legal technicalities? Don't the records exonerate it? The likelihood is that the records display argieland's criminality.
    Everyone knows that argieland is CRIMINAL. The more important fact is that any latin american, latin american state, south american, south american state that defends/supports argieland is equally criminal. Which is more important? Argieland “getting away with it”? Or truth and justice?

    Jan 12th, 2014 - 02:42 pm - Link - Report abuse 0
  • Condorito

    @Conq
    Have you read my post?

    I say : “ Specifically it is about whether two banks can be subpoenaed to hand over details of Argentine non-US assets.”

    As for justice, well any entity can default on it's debt obligations: a person, a business, a country. There is nothing illegal about defaulting. Countries have rules for people and businesses, but there are no rules for sovereign defaults, hence no rules have been broken.

    As I have pointed out several times, the restructured holders got a better deal than those in other recent major defaults. Argentina had made every repayment the restructureds on time. In that sense they have done everything right.

    If you are actually interested in the “ordinary” people receiving anything then Argentina must be allowed to continue to repay them. It is the action brought by NML et al that is jeopardizing the payments to the “ordinary” people.

    In my sense of justice those who purchased distressed bonds are on the lowest moral grounds and I hope they get nothing.

    You ask:

    1) “Why is it using legal technicalities? ”

    All the legal actions have been brought by hedge funds, NOT by Argentina.

    2) “Don't the records exonerate it? ”

    Yes, I believe they do. As sovereign defaults go they have acted as can be expected.

    3) “Which is more important? Argieland “getting away with it”? Or truth and justice?”

    They are not getting away with it. They have paid and are paying the price of having defaulted. Almost no one will lend to them, no one will invest there and any credit they get will be at a painful interest rate.

    Truth and justice? The truth is that it is much more important to the world that countries be able default than the likes of NML win in court. Hence if the justice is done and the common good is served Argie will be allowed to continue to pay and NML will go home with naught.

    Jan 12th, 2014 - 04:04 pm - Link - Report abuse 0
  • Stoker

    Argentina think they are above the law....they are not.

    They issued the bonds in New York under US Court jurisdiction. Eventually they will have to pay the “vultures” their money plus interest plus their legal costs too.

    When it's all over I suggest the new national anthem of the Argentine Republic should be “I fought the law and the law won” by The Clash.

    Jan 13th, 2014 - 12:25 am - Link - Report abuse 0
  • Captain Poppy

    I don't think they think they are above the law, but I think the feel they can do what all American lawyers do.....milk a case endlessly until the pockets collapse or they capitulate. Any one every involved in a civil action here knows that the suit in the case is like a tree's taproot. Unfortunately the taproot grows feeder branches and these are all the never ending appeals that can happen and that is what they are doing.
    I don't think there was ever any issue of this case basically being a contractual issue of NY State, however....side issues like this appeal is. Quite frankly, to those that think FSIA applies here it does not because of the exception clause and Banco de la Nacion Argentina is carrying on commercial activity in the USA....Miami branch. The other bank in question....BoA, I don’t see how these banks will be exempted from the enforcement of a subpoena.
    FSIA merely provides immunity to foreign states from lawsuits with very specific exceptions to which they can be sued. Most importantly is also the fact that Argentina waived it’s right to sovereign immunity claims. Asslips is milking this until she escapes

    Jan 13th, 2014 - 05:28 pm - Link - Report abuse 0
  • Stoker

    Horacio Vázquez, an Argentine bondholder living in Buenos Aires, wrote the following:
    After being urged to invest in our country after it’s historic 2001 default (which was restructured in 2005) we were told that our investments were worth pennies on the dollar, and that the government would no longer honor its contracts and commitments.

    Many in the inner-circle, political cronies and powerful elites, received a generous payout that was more than fair. But investments held by thousands of ordinary bondholders such as myself, were no longer worth the paper they were written on.

    We petitioned the Argentine courts, spoke with reporters and newscasters and staged protests—all to no avail. We were powerless in the face of our government. It seems we could do nothing to make these officials, whom we foolishly trusted with our savings, to listen.

    In the face of a Goliath that has been supported by the “BIG GUYS,” (such as the World Bank and other international credit banks, where common people are not represented), we turn to the US legal system. We continue to have faith in the reliability and independence of the U.S. courts to support the “little guy” and to uphold the Rule of Law. After all, your courts are our last recourse for recovering our savings.

    About a year ago, eleven holdouts, including myself, traveled to New York to hold a press conference to tell our story. That story was amplified by powerful global media. Since then, the US Court of Appeals for the Second Circuit has affirmed its position that investors’ rights, business contracts, and the Rule of the Law will not be trampled on.

    Now, as we enter the final phase of the legal battles, and as my government prepares its appeal, we hope that justice will prevail.

    I hope the SCOTUS will show my government that lying does not pay and that supporting the Rule of Law will provide far better opportunities for us all.

    Let David beat Goliath, as the story says.

    Jan 13th, 2014 - 06:44 pm - Link - Report abuse 0
  • Captain Poppy

    He's not the only Argentine that got screwed. Many had their pensions stolen as well with nothing in return.....my wife was one of them.

    Jan 13th, 2014 - 08:34 pm - Link - Report abuse 0

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