MercoPress. South Atlantic News Agency

Argentina plays down latest ruling from NY Appeals Court on investment funds’ litigation

Secretary Consentino “a merely administrative order in the case pari passu, which does not impact in the workings of the appeal”

The order handed down on Tuesday by the Appeals Court of New York's Second Cirtcuit “does not affect the appeal” that the Argentine government is pursuing in the case against the investment funds (‘vulture funds’), according to the Argentine Economy Ministry.

The portfolio led by Hernán Lorenzino came out against the version of events that has circulated regarding the supposed judgement of the Court against Argentina's appeal, about which no final ruling currently exists.

Argentine Finance secretary Adrián Consentino underlined that the NY Appeals Court released “a merely administrative order in the case pari passu, which does not impact in the workings of the appeal.”

The Argentine economy ministry, through a statement made on Tuesday, reminded that “throughout the process, Judge Thomas Griesa passed orders establishing that Argentina violated the pari passu clause, and then put in place the order with an injunction.”

Both decisions were appealed by Argentina, “but for procedural reasons, the second appeal - against the injunction - adding to the first against the judgement.“

”Following the instructions imparted by the Second Circuit in their sentence on October 26 2012, now the judge has simply dismissed the first round of appeals (against the judgement) which has no effect on the appeal against Griesa's injunction,“ Economy signalled.

In that sense, Consentino reiterated that Tuesday’s order is simply an administrative act that has no substantial impact on the case.”

Although some analysts predicted at the end of June that the Appeals Court of New York could arrive at a decision in the first weeks of July, at the present time there have been no updates on the subject.

“Following the audience of February 27 2012 in the court, in March the Argentine government presented a payment proposal for the defaulted debt, with conditions identical to those of 2010's debt swap, to avoid offering terms that differ from those given to other creditors to those who did not accept at the time.

 

The proposal was put in place after the Court requested a payment plan to the ‘vulture funds’ who hold a ruling that, orders the return of 1.3bn dollars emitted by judge Griesa.

Basically the latest order states that the court rejects appeals made against the judgement of October 26 2012 which had obliged Argentina to pay 100% of their debts to creditors.

The Appeals Court used the Latin phrase ”nunc pro tunc“, a retroactive rejection, which means the original ruling of October 26 is reinstated. Finally, the Court indicated that they would send a judicial order breaking down the latest sentence.

The next steps, regarding the green light Griesa could have to decide the method of debt payment, the existing motions suspending the ruling, and Argentina's possible appeal to the Supreme Court, will now have to be determined by the relevant parties.

It is worth recalling that Argentina's case had focused solely on two aspects of the Court's ruling, which confirmed the judgements of Judge Thomas Griesa and, in the country's view, affected ”federal questions that only the Supreme Court can analyse.“

For the first, the statement held that ”if a court violates the Law of Sovereign Immunity, upon making monetary demands against a country through the issuing of orders that restrict the use of assets not just in the US but outside its territories, this appears to go outside the reach of what the Law dictates.

The second point affirmed that “If a Federal Court can issue injunctions that predate the sentence, forcing a country to pay a purely monetary demand, it goes against the jurisprudence of the Supreme Court, since traditional, just solutions do not include orders designed to force either payments agreed contractually or the specific compliance with monetary obligations.”

The funds that are pressing Argentina for 1.33bn in sovereign bonds held in their investment portfolios are led by NML Capital and Aurelius Capital Management, in a group that includes minority holders.