The International Monetary Fund no longer plans to ask the U.S. Supreme Court to review Argentina's case in its decade-old legal battle with holdout creditors due to a lack of support from the U.S. government, the IMF said on Tuesday.
IMF Managing Director Christine Lagarde had planned to recommend that the IMF board approve a friend-of-court brief in support of the case by the end of this week, but decided not to. The brief would have been the first the IMF filed with the highest court in the United States.
The Washington-based global lender, has said it was worried a ruling against Argentina would make it more difficult for other countries to restructure their debt and put financial calamity behind them.
The board discussed Lagarde's recommendation on Tuesday. But the United States, the IMF largest and most influential member, no longer supported the Fund's planned filing to the Supreme Court, known as an amicus curiae brief.
The United States said it too was concerned a ruling in favour of holdouts could make sovereign debt restructurings less predictable and orderly, and had serious concerns about lower court decisions.
But the United States did not believe it was the right time to file a brief in support of the case, while litigation was still pending in lower courts, an official at the U.S. Treasury said.
The Managing Director's recommendation was premised on U.S. support, as it would not be appropriate for the IMF to file this brief without that support, an IMF spokesman said.
The Fund remains deeply concerned about the broad systemic implications that the lower court decision could have for the debt restructuring process in general”.
A Fund official said it would have been inappropriate to file a brief on behalf of Argentina in a U.S. court without the support of the U.S. government, as it could pitch the IMF into a dispute between two of its members and violate its neutrality as an international organization.
The U.S. government had filed prior briefs to lower courts agreeing with the IMF sentiments. But the United States on Friday said it will not file a brief asking the Supreme Court to review the case.
The U.S. Justice Department almost never files friend-of-the-court briefs before the Supreme Court has decided to hear a case, unless the justices ask it to.
The United States will continue to consider whether and when to participate in this litigation, the U.S. Treasury official said in an email.
This includes a possible opportunity for the United States to express its views if the Supreme Court invites the United States to do so.”
The Supreme Court is on its summer break and won't decide whether to hear the Argentina case until the fall. The Supreme Court decides to hear less than 1% of the thousands of petitions that are filed each year. But some investors believed the IMF participation could have increased the chances the case is reviewed.