MercoPress. South Atlantic News Agency

Country and organizations support for Argentina's litigation with hedge funds increases

The US Supreme Court could make Argentina's a lead case

Argentina underlined the support from Brazil, France, Mexico, (even the IMF), among other institutions in the country's long exhausting litigation with hedge funds, an issue which is “crucial for Argentina and the whole international financial system”.

 These countries and institutions have publicly expressed their support for the US Supreme Court to take the case and rule in favor of Argentina. The Argentine government is convinced that an adverse ruling could become a dangerous precedent for international sovereign debt restructuring processes and could be even extended to the private sector, which “would imperil the whole international financial system”.

Since 2005 countries such as Belize, Greece, Seychelles and Ecuador among others have restructured defaulted liabilities and are closely monitoring the Argentine lead case.

If these debt restructurings were to fall, the countries involved would most probably drop back into default and would create a serious risk for international payment flows plus eliminating any possibility of future restructuring of sovereign debts.

Likewise if the US justice system forces Argentina to pay the full 100% capital and interests accrued to the holdout hedge funds, a new chapter of litigations would take off from the creditors that accepted the restructuring of Argentine debt in 2005 and 2010.

Given the shock waves that a favorable ruling for the litigating funds, from the US Supreme Court could generate, countries such as Brazil, France and Mexico have expressed their intention of an 'amicus curiae' (friendly support), in the judicial process.

Argentina has also received the support from the holders of restructured bonds, the financial organization Puente and the American-Argentine Chamber of Commerce which brings together the US companies with business interests in Argentina. The Euroclear compensation chamber which operates in Belgium has also expressed support.

And most recently a group of 78 organizations joined the Jubilee USA Network, a coalition that defines itself as 'religious' and committed 'to combat poverty', which also presented an 'amicus curiae' before the US Supreme Court.

A Monday release in Washington from the group states that it supports Argentina against the NML Capital hedge fund “because the case would establish a dangerous impact precedent for predatory conducts against vulnerable populations”.

Jubilee argues that if the Argentine case flounders, “there will be a negative impact for the poor; for US debt policy, supported by both political parties, plus global financial stability”.