MercoPress. South Atlantic News Agency

US District Judge rules in favor of Argentina against ‘vulture funds’

Judge Griesa said bonds are in Argentina and he has no jurisdiction

Argentina won a court decision that keeps so-called vulture funds with demands against the country from gaining possession of bonds held in a Buenos Aires government trust account.

U.S. District Judge Thomas Griesa in Manhattan ruled against Aurelius Capital Partners LP and Blue Angel Capital I LLC’s claim that the bonds in the trust were subject to U.S. law because of the trust’s controlling documents.

Griesa ruled July 23 that because the bonds are in Argentina he has no jurisdiction over them.

“Because the Trust Bonds are not property ‘in the United States’ of a foreign state, they are immune from attachment and execution” under the Foreign Sovereign Immunities Act, Griesa ruled.

The plaintiffs, who own defaulted Argentine bonds held out from a second re-structuring, last month, were seeking the securities to collect on judgments awarded by Griesa since the country’s debt default in December 2001.

The bonds in the account stemmed from a 42 billion US dollars exchange in November 2001. Bondholders turned over their securities in a swap for local Argentine loans, guaranteed by the government and to be paid from dedicated tax revenue. Griesa said Argentina has continued to meet its obligations under the terms of the swap.

In his opinion, Griesa said he will consider a request to lift injunctions the court issued in November 2009 preventing Argentina from transferring the bonds until his decision on the motion resolved in the July 23 opinion.