New York district judge Thomas Griesa declared on Monday Argentina in contempt of court, due to the country's actions in attempting to change debt jurisdictions as a result of the ongoing judicial conflict with holdout investors presided over by the US magistrate.
The justice, however, deferred the imposition of financial penalties, as requested by hedge fund NML Capital in its petition to the court, for a later date.
Griesa ruled that Argentina had not followed the court's orders following the passing of a law which seeks to remove the Bank of New York Mellon as Argentina's financial intermediary to pay bondholders, currently unable to receive funds for debt servicing.
He went ahead with the contempt ruling despite warnings from the Argentine government to US Secretary of State John Kerry that it could constitute interference in Argentina's sovereign affairs.
Earlier in the day the Argentine government released a copy of the letter ahead of a new hearing with US Judge Thomas Griesa, in which it argued that such sanction would be illegal under international law.
Foreign Minister Héctor Timerman stressed that the US government “cannot excuse itself from the decisions taken by US Judiciary.”
In a brief press conference, Timerman said a contempt of court order against a foreign country would be “inconceivable” and described it as a “desperate action against Argentina from (holdouts) vulture funds.” Ahead of Griesa’s decision, the minister pointed out that the US government cannot ignore the actions of US Judiciary.
“The US cannot in any way excuse itself from the action of its Judiciary, since a state is responsible for the acts and omissions of any of its organs,” Timerman said.
“A declaration of contempt of court would entail an unprecedented escalation, one even worse than the decision to prevent payment to restructured bondholders,” he added giving no further details.
The official said that “decisions taken by the US could affect Argentina’s debt restructuring process, violating the sovereignty of the Argentine Republic as a result.”
“A state cannot be subjected to monetary or contempt sanctions by judiciary authorities of another country,” he added.
The official pointed out that Buenos Aires has taken the ongoing legal dispute to the International Court of Justice with no response from the US government