MercoPress. South Atlantic News Agency

US Supreme Court upholds lower court shareholder lawsuit against YPF

The justices left in place a lower court ruling that allowed privately held Petersen to sue after Argentina’s government refused to buy back the company’s shares.

The U.S. Supreme Court on Monday rejected Argentina’s bid to fend off a lawsuit by energy company Petersen Energía Inversora, S.A. seeking compensation for shares it owned in the now-nationalized YPF S.A. energy company.

The justices left in place a lower court ruling that allowed privately held Petersen to sue after Argentina’s government refused to buy back the company’s shares.

The New York-based 2nd U.S. Circuit Court of Appeals in July 2018 rejected arguments by Argentina and YPF that the suit should be dismissed because a U.S. law called the Foreign Sovereign Immunities Act deprives U.S. courts of jurisdiction over “sovereign acts of expropriation.” A unanimous three-judge 2nd Circuit panel ruled that the suit fell into the law’s exception for commercial activity.

The Madrid-based Petersen subsidiaries were not challenging the expropriation itself but said that the action had triggered shareholder protection provisions in YPF’s bylaws, which were added when YPF began trading on the New York Stock Exchange in 1993.

The appeals court upheld a 2016 ruling by U.S. District Judge Loretta Preska in Manhattan.

“The company will utilize all the legal recourses necessary to defend its interests,” YPF said in a statement to the Buenos Aires Stock Exchange.

YPF shares fell 1.08% to 772.85 pesos on the Buenos Aires Stock Exchange, and its American Depositary Receipts (ADRs) fell 0.22% to $18.18 on Monday afternoon after the court’s decision.