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JP Morgan requests 'clarification' from Judge Griesa to pay Japanese bondholders

Friday, July 11th 2014 - 06:19 UTC
Full article 49 comments

JP Morgan bank, the entity responsible for the payment to Argentina's Japanese bondholders has sent a letter to US Federal Judge Thomas Griesa, requesting “a clarification” in order to deliver the funds to the nation's creditors. Read full article

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  • HansNiesund

    > The Kirchner-sponsored bill established that “foreign Central Banks or other foreign monetary authorities are immune to the jurisdiction of Argentine tribunals.”

    Whatever happened to sovereignity? Has anybody told Nostril?

    Jul 11th, 2014 - 07:29 am - Link - Report abuse 0
  • Welsh Wizard

    BCRA is back spending c. $100m per day on keeping the peso where it is...can't keep that up for long. Good luck Argentina on Sunday. Can't say you've played the best football or that Messi has really performed on the world stage but it would be wonderful to see you win.

    Jul 11th, 2014 - 08:43 am - Link - Report abuse 0
  • british bomber

    The Japanese should do what we are doing in Europe. Sue the trustees. The Argies have paid now the trustees must pay up. They must not let the robber baron Wall St banker singer steal the money.

    Jul 11th, 2014 - 10:43 am - Link - Report abuse 0
  • yankeeboy

    3. The banks are under court order not to pay. It won't do any good to sue them.
    Griesa is on firm legal ground and doesn't care anything about foreign grievances over his rulings.
    This Rg law regarding Central Bank immunity is odd. I wonder what the end game is? I am pretty sure CA will find that BCRA ENARSA entities are acting as part of CFK's govt and the funds can be seized. We should know shortly on that too.
    I said a long while ago when this goes it will be fun to watch.

    The economy in Arg is seriously bad, all the chickens are coming home to roost. Whether or not they work out something with the holdouts by eom they won't have enough U$ to get them through the eoy. Unless someone will willing to lend to them.
    It is exhausting watching all of these moving parts.
    Thank goodness I don't live there.

    Jul 11th, 2014 - 10:53 am - Link - Report abuse 0
  • british bomber

    @4
    Guess is an American judge. His rulings mean nothing in Europe. BNY and Euroclear are being sued in Europe. Keep up.

    Jul 11th, 2014 - 11:40 am - Link - Report abuse 0
  • yankeeboy

    Comment removed by the editor.

    Jul 11th, 2014 - 11:44 am - Link - Report abuse 0
  • darragh

    @5

    hmmm....you really think so? In that case why did BNP and Barclays accept whacking great fines - simples, they want to go on trading in NY.......

    Jul 11th, 2014 - 11:49 am - Link - Report abuse 0
  • british bomber

    @6
    The trustees will pay when ordered to.

    Jul 11th, 2014 - 12:59 pm - Link - Report abuse 0
  • yankeeboy

    8. Correct, when Griesa releases the hold. It was illegal for Argentina to send the payments. Some K should be in jail over creating this mess.

    Jul 11th, 2014 - 01:04 pm - Link - Report abuse 0
  • british bomber

    @9
    Griesa is an American judge. American law means nothing in Europe. S European court will order. Nothing to do with America. Wall St robber baron singer is doing illegal in Europe. We are not ruled by America.

    Jul 11th, 2014 - 01:24 pm - Link - Report abuse 0
  • Z-ville

    Is this the same Senate that passed a law saying that foreign banks ARE subject to Argentine jurisdiction if they invest or support in FI oil and gas drilling?

    The clue meter is reading zero here...

    Jul 11th, 2014 - 01:28 pm - Link - Report abuse 0
  • The_TroLLing_Stone

    HAHAHAHA, I told you this would become a colossal MESS involving all the nations of the world, many court systems, many judges, tons of banks, plenty of international organizations, NGOs, politics, ideology, etc...

    It will be almost as impossible to sort out as the sub-prime crisis which Americans and Brits have done absolutely NOTHING to punish the perpetrators or get the money back.

    This is exactly like those cartoons where you see how one characters starts to draw all others and it eventually becomes a huge fight that raises a cloud of dust... and at the end the one that started the whole thing just quietly slips away while everyone keeps at it in the cloud of dust.

    hahahahah..

    Jul 11th, 2014 - 02:03 pm - Link - Report abuse 0
  • owl61

    In 1976 the US Congress codified existing common law re the legal immunity of foreign sovereigns by enacting FSIA - the Foreign Sovereign Immunity Act. Now Argentina's legislators appears to be doing something similar. The proposed legislation should soon be signed into law.
    According to an article in today's BA Herald the law was drawn up at the urging of China whose president and central bank president are soon to arrive in Arg. It may be inferred that the proposed law giving immunity to assets of foreign central banks held in Arg is a step towards achieving reciprocal immunity with foreign sovereigns - in particular, China. Such machinations indicate that a Chinese bank may be substituted in for BNY as paying agent if the injunction on BNY preventing payment to substitutes bondholders is upheld.
    The original bonds expressly incorporate NY and FSIA law so FSIA determines NML's rights to levy upon Arg assets. The law expressly prohibits seizure of the accounts of foreign central banks located in the US. Though such funds may not be subject to seizure, there is an issue whether the banks may nevertheless be enjoined from transferring those funds as was done in this NML case. I believe that issue is (or will be) the subject of a writ of cert to the US Sup Ct. Arg argues that a judgment creditor should not be able to tie up central bank assets indirectly when it could not do so directly by levying upon them. In the event that Arg loses on that issue, it will seek to substitute out BNY as paying agent for the substitute bonds.
    While FSIA, interpreted by the US Sup Ct, defines the rights of US judgment creditors to seize foreign assets or perhaps enjoin banks from transferring them, the law of other countries, e.g., China, may be different - they may not honor US law if it conflicts with their own. For a discussion of the issues see: http://www.internationaltraderelations.com/Trade%20Relations%20(Spring%202014)%20(Wed.).Jessica%20Terry.Essay.pdf

    Jul 11th, 2014 - 02:22 pm - Link - Report abuse 0
  • yankeeboy

    13. That is true when the Central Bank is clearly a separate legal entity. In Arg case it is not.
    CFK has been using its assets as her the Gov't checkbook.
    I think the CA will say ENARSA and BCRA fund are attachable.

    Jul 11th, 2014 - 02:33 pm - Link - Report abuse 0
  • Welsh Wizard

    @8 - don't you understand? They have already taken legal advice on this and been told not to pay. Trustees don't do anything unless they have been told to by external counsel.

    Jul 11th, 2014 - 02:39 pm - Link - Report abuse 0
  • yankeeboy

    12. Its a mess for Argentina not for anyone else. Nobody else cares.

    Jul 11th, 2014 - 02:48 pm - Link - Report abuse 0
  • The Voice

    European Courts will exercise general personal jurisdiction over American financial institutions that have a local base in Europe....
    It will be irrelevant what an American judge has ordered these institutions to do...
    If they want to sue and if this is allowable in European law, they will.....I would imagine to be in Europe they have to abide by European law...not a damn thing the Yanks can do about it!

    Jul 11th, 2014 - 03:10 pm - Link - Report abuse 0
  • yankeeboy

    17. Every bank that has a branch in the USA is subject to USA laws regardless of where they are located.
    Watch and learn.

    Jul 11th, 2014 - 03:14 pm - Link - Report abuse 0
  • The Voice

    The same will go for banks in Europe....

    American law was limited over foreign companies ...look at the German company Daimler in January...no jurisdiction over them.
    I haven't heard that Europe has limited their jurisdiction....

    Jul 11th, 2014 - 03:20 pm - Link - Report abuse 0
  • yankeeboy

    Banks are different, watch and learn.

    Jul 11th, 2014 - 03:23 pm - Link - Report abuse 0
  • Z-ville

    @4

    From what I understand most of the BCRA dollar reserves are already spoken for through various commitments. So is it safe to presume that their end game will be some drastic last-minute panic measure to preserve $$ ?

    @12
    Your Whacky leadership created this mess, with its irresponsible shenanigans on the world markets. Don't blame the banks or the courts. They're left trying to clean up your mess, not the other way around...

    And as I have already told you, the root cause of the subprime mess was politicians passing laws and regulations that forced banks to lend mortgages to people who couldn't afford them...the banks were just forced to comply, and then had to trade those subprime mortgages to recover what otherwise would have been huge losses..

    Jul 11th, 2014 - 03:55 pm - Link - Report abuse 0
  • Conqueror

    @3. Here it is NML. An argie asset. Seize it!
    @5. Money's in an American bank. Unless BNY has already sent it back to argieland. Do keep up.
    @8. When the judge says they can. AFTER the holdouts have been paid.
    @10. Actually, American law means quite a lot in Europe. Especially as American law derives from English law. Do let us know if grandma gets her money. Don't forget to tell her that argieland is holding back “her” money by failing to comply with a court order.
    @12. It's not a mess. The court's judgement is clear. Now, which judicial system is going to set aside another court's judgement? Unless it wants to see all ITS judgements overridden.
    @13. Argieland gave up sovereign immunity. Legislation cannot be made retroactive.
    @17. In that case, i do hope these European banks have lots of spare money. Because the American head offices won't be sending any. I expect a lot of European chairpersons of branches of American banks will be looking for new jobs. Assuming their “customers” don't rip them apart for spending “their” money.

    Jul 11th, 2014 - 04:13 pm - Link - Report abuse 0
  • owl61

    I stand corrected. The US Sup Ct has already denied Arg's request for a writ of cert seeking to undo the injunction prohibiting BNY to pay the substitutes unless it pays the holdouts. It did so on June 16 without written opinion.
    At the same time the Sup Ct did issue an opinion on the companion case involving the breadth of post judgment discovery sought by NML via subpoenas on some US banks. I wrongly presumed the Sup Ct had not reached the injunction issue as there was no mention of it other than the denial.
    One the 16th the Court upheld the validity of the subpoenas seeking the discovery of records of US banks pertaining to all of Arg assets wherever located. See http://www.scotusblog.com/2014/06/no-relief-for-argentina-on-debt/
    If Pollack can't achieve a successful settlement with the holdouts, don't be surprised if the central bank of China becomes the vehicle through which the substitute bonds will be paid.

    Jul 11th, 2014 - 04:14 pm - Link - Report abuse 0
  • yankeeboy

    I don't see why the Chinese would help Argentina and possibly pissing off their largest trading partner.
    That makes no political sense at all.

    Jul 11th, 2014 - 05:33 pm - Link - Report abuse 0
  • Leiard

    ”Argentina’s legal notice (July 9) and economy minister Axel Kicillof’s letter (July 10) show a basic misunderstanding of the legal nature of a bond........”

    http://www.ft.com/cms/s/0/ebcdc0b6-020f-11e4-ab5b-00144feab7de.html#axzz37BSu6wMW

    Jul 11th, 2014 - 06:04 pm - Link - Report abuse 0
  • Vestige

    Time to track down each individual bond and pay the 92% under new contract terms.

    Jul 11th, 2014 - 06:10 pm - Link - Report abuse 0
  • owl61

    @ a lot of the above who don't have much legal knowledge, but purport to...

    FSIA expressly exempts from execution/seizure to pay a judgment the bank accounts of a foreign sovereign in a US situated bank. Arg did not waive the FSIA protection. FSIA applicability is expressly incorporated into the terms of the original bonds ergo the enforcement of the defaulted bonds is subject to FSIA.
    FSIA by its terms applies to foreign sovereign property within the US only (that's why J. Ginsburg dissented in the recent case enforcing the NML subpoenas served on US banks which sought discovery of Arg property around the world). The laws of other nations/bodies will determine whether property of Arg located within its boundaries is subject to seizure. So, for example, the military vessel seized in Ghana had to be released because the seizure there violated some international convention.
    China would not piss off its largest trading partner by helping Arg out of this legal morass inasmuch as the US Solicitor General office has filed two amicus briefs siding with Arg positions in the various appellate cases (though you wouldn't know that given the vitriolic language about the USA that the Arg politicos have spewed). I don't know the law of China as it relates to the seizure of foreign assets located within its jurisdiction (nor the law of any other nations besides the US), but I'd be willing to bet that China would not permit an entity like NML to seize the property in its jurisdiction, much less money in a bank, to satisfy a judgment.
    The bottom line is that NML and similarly situated plaintiffs will have a hard time satisfying the judgment. The pressure that the US courts have exerted to precipitate a default by enjoining BNY is the strongest thing the plaintiff has in its favor. It's not the likelihood of an easy collection, but the negative result that a default would have that can motivate Arg to make a deal.

    Jul 11th, 2014 - 06:39 pm - Link - Report abuse 0
  • yankeeboy

    I think you are forgetting why Loustou was fired. The corporate veil on BCRA has been pierced it is just a matter of time before they go after the assets at BIS.

    Jul 11th, 2014 - 06:43 pm - Link - Report abuse 0
  • owl61

    Corporate veil, Loustou firing, BIS....I'm afraid you lost me. Can you explain?

    Jul 11th, 2014 - 06:52 pm - Link - Report abuse 0
  • yankeeboy

    Lousteau was the head of BCRA in 2008 he was fire because he refused to make x-fers to pay bond interest payments directly from BCRA accounts. CFK fired him, barred him from the building and put someone else in there that would do what she wanted even though it was against best practices and the bank charter.
    BIS is where the BCRA funds are on deposit.
    I think there's a case going right now, maybe in California, I really can't remember where NML is proving that BCRA and ENARSA are arms of the Arg Gov't and their funds should be attachable.
    They will win.

    Jul 11th, 2014 - 06:57 pm - Link - Report abuse 0
  • The_TroLLing_Stone

    @22

    The court systems of all other countries are ALWAYS overridden by the USA. I don't think they really are concerned about that the USA respects no one else anyway.

    Jul 11th, 2014 - 09:06 pm - Link - Report abuse 0
  • yankeeboy

    Except they don't.

    Jul 11th, 2014 - 09:36 pm - Link - Report abuse 0
  • The_TroLLing_Stone

    Did you finish elementary school? I think not since you missed the class where they teach you a sentence cannot be completed without a verb.

    Jul 11th, 2014 - 09:47 pm - Link - Report abuse 0
  • owl61

    @30. Thank you for your reply to my inquiry. I am reminded of the sign I used to hang above my desk at Wells Fargo Bank when I managed the Litigation Section of the Legal Dept.
    “We have not answered all your questions and the answers we have provided have only served to raise a whole new set of questions. In some ways we are still uncertain and confused, but we are uncertain and confused on a higher level and about more important things.”
    p.s. If BCRA stands for Banco Central de la Republica Argentina, it's deposits in the US are absolutely exempt from seizure.
    p.p.s. I still don't get the relevance of the BIS (I suppose that is a bank) or Lousteau's conduct to the matters at hand.

    Jul 11th, 2014 - 10:12 pm - Link - Report abuse 0
  • The Voice

    ”p.p.s. I still don't get the relevance of the BIS (I suppose that is a bank) ”
    (I suppose you read the article)...?

    ”Tokyo’s JP Morgan received a transaction by the Argentine government through the Bank for International Settlements International Bank (BIS) account.”

    Jul 11th, 2014 - 10:57 pm - Link - Report abuse 0
  • HansNiesund

    @33

    Never heard of ellipsis? It's rather common in English, a language of which I believe you claim a certain grasp. Don't you?

    Jul 11th, 2014 - 11:00 pm - Link - Report abuse 0
  • yankeeboy

    34. Wait and see. Bcra funds are not immune.

    Jul 11th, 2014 - 11:45 pm - Link - Report abuse 0
  • Joe Bloggs

    Can NML attempt to seize Argentina's World Cup winning?

    Jul 12th, 2014 - 12:51 am - Link - Report abuse 0
  • Heisenbergcontext

    @31

    Toby, there are exceptions, sometimes very high profile. For instance there have been a number of extradition cases where U.S. prosecutors have had to take the death penalty off the table because countries like Canada, Australia and nations within the EU which don't have the death penalty refuse to extradite alleged criminals who may be executed in another jurisdiction.

    And then there's that whole Roman Polanski saga...

    Jul 12th, 2014 - 03:14 am - Link - Report abuse 0
  • Z-ville

    @38

    NML can attempt to seize anything they want. The question is whether they can get the court to order the seizure and whether that court order can be upheld in the jurisdiction where the asset is located...

    Jul 12th, 2014 - 05:34 am - Link - Report abuse 0
  • yankeeboy

    U.S. District Judge Thomas Griesa in Manhattan rejected a motion by Banco Central de la República Argentina (BCRA) to dismiss a lawsuit by two bondholders seeking to have the central bank declared the “alter ego” of the South American country.

    Griesa did not rule on the case's merits, and said a finding that Argentina and the central bank were legally the same “could really have effects or implications beyond what I would intend.”

    But citing “irregularities” in Argentina's behavior, Griesa said at a court hearing that “there could be some account or some assets of the BCRA that could be legitimately attached or executed on to satisfy the judgment debts here.”
    http://www.reuters.com/article/2013/09/25/usa-court-argentina-idUSL2N0HL2G520130925

    I think this is still pending somewhere. Argentina will lose.

    Jul 12th, 2014 - 11:46 am - Link - Report abuse 0
  • british bomber

    @15
    Don't you understand. When a European court order the trustees to pay they either do or they don't. If they don't then they will cease to be trustees an the Argies will bypass. They have already written to bond holders that they are planning. Remember the American order is illegal in Europe.

    Jul 12th, 2014 - 01:48 pm - Link - Report abuse 0
  • yankeeboy

    BONY asked Griesa for a trial to decide what to do with Arg's U$ AFTER the default day.
    Bahahahaha

    42. They'd have to find a large bank capable of making the payments that does no business with the USA. That's nearly impossible. Plus it would take longer than 3 weeks to set it up. AND even if ARG could find a bank to possibly be in contempt of court they'd also be in contempt of court for making the payments. I imagine it will prove to be politically and economically too costly for Arg or a EU bank to move ahead with the payment.

    Jul 12th, 2014 - 03:30 pm - Link - Report abuse 0
  • owl61

    @42. Wrong. There are many countries whose banks would be willing to be a vehicle to avoid the US Ct's dictates. Many of spoken in support of Arg. Such new banks would not be in contempt as US Ct has no jurisdiction over them and has issued no ruling with respect to other than BNY. Observance by a country for the legal decisions of another country - comity - is not a given. Often one country will refuse to follow the legal dictates of another if by so doing it would violate that country's own laws or merely be against its public policies.
    And what does it mean to hold a sovereign nation in contempt of court? How would Griesa punish such contempt? Would he have the US Congress issue a declaration of war?
    I haven't seen the any info on the BNY request for a trial. I would imagine BNY has or will interplead the $ (deposit into the control of court and ask to be absolved of any liability with respect thereto - hardly a trial involving BNY though other claimants may ask for hearing on how to distribute the funds).

    I agree it may take longer than 3 weeks for an alternative to BNY to be established which is why Kicillof is desperate for an extension of the stay.
    p.s. I could not find any status of the case you linked after googling it which makes me think it no longer is pending. I am not clear on what it is that such alter ego accusations would have on NML's rights to seize BCRA foreign accounts, but the fact remains that a foreign sovereign's central bank deposits are absolutely exempt from seizure in the US.

    Jul 12th, 2014 - 04:17 pm - Link - Report abuse 0
  • yankeeboy

    44. You post like you know what you are talking about but you have no idea.
    The BCRA NML case is still pending. There's also a case with ENARSA as an alter ego too.
    If they don't have a deal by July 30th you'll hear about it.

    Greisa said last week he would hold whomever ordered the payment in contempt. He also can fine Argentina.

    I would be very surprised if they could find a bank that would get involved in this mess. What is the upside for the bank? A small fee against the possibility of being named in a major lawsuit?

    You're not thinking things through are you sure you are a lawyer? It sounds more like you are part of the Arg Econ Ministry and have no idea how things work in a civilized country more hoping and wishing than relying on facts.

    Jul 12th, 2014 - 05:02 pm - Link - Report abuse 0
  • The_TroLLing_Stone

    I think Yankeeboy is upset that for all his protestations, tiny insignificant Argentina with this case WILL affect how the rest of the world deals with the New York financial plaza.

    They will demand VERY favorable terms from the lenders that go beyond immunity, and if not they will make deals elsewhere.

    In effect they will lose this case because Argentina won't pay them, and they have painted themselves into a corner by having now legal predecent that the lender must always get their money + interest back.

    I don't think many borrowers will be malleable to agree to such terms long term given how there are increasing many other financial centers.

    Jul 13th, 2014 - 03:12 pm - Link - Report abuse 0
  • yankeeboy

    46. Wow you're dumb. You've obviously been brainwashed by a corrupted system.
    The Sovereign bond market is in full swing in NYC. So don't worry yourself about it. If it was going to slow down it would have done it already.
    The ruling made contract law stronger.
    You sign, you pay.
    Simple.

    Whether they pay by eom July or not is irrelevant. I kinda hope they don't pay. I really want to see the O/G seizures and maybe a few Rg being thrown out of their non-embassy properties by the Secret Service.
    I will laugh and laugh.

    Jul 13th, 2014 - 03:31 pm - Link - Report abuse 0
  • ilsen

    @46
    Why shouldn't the lender get THEIR money plus interest back?

    Surely that is normal business? You say there are plenty of other financial centres to get money from if you refuse to pay your debt.
    Ok, two things you really, really need to understand

    1) they all talk to each other and use ratings systems to decide who to lend to, and how much it will cost, especially if you have a record of non payment.
    So, it will be more expensive to borrow money. Who pays for this extra cost? Your mother and millions of ordinary people who pay tax. That's who pays for the price of your sulking.

    2) if everyone in the world took the Argentine attitude, then very quickly the would not be any financial centres, anywhere. Because no one paid their debt there no money to lend.

    I can't make it any more simple for you, I really can't.

    So hopefully you now understand that if the whole world followed the Argentine model, then very soon global trade would collapse, the lights would go out and civilisation would fall back about 500 years.

    Think about it.

    Jul 13th, 2014 - 04:14 pm - Link - Report abuse 0
  • yankeeboy

    A little about USA influence in the World wide banking institutions:
    http://www.cnbc.com/id/101832225

    Financiers may grumble that the United States is acting like an imperial power in punishing foreign banks for dealings far beyond U.S. territory, but in the end they are more likely to bow to Washington than kick against its dollar muscle.

    Sometimes I wonder who's reading my posts.

    Jul 14th, 2014 - 12:59 pm - Link - Report abuse 0

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