MercoPress. South Atlantic News Agency

Argentina granted a stay by NY court in YPF case

Tuesday's decision follows rulings against Argentina by Judge Loretta Preska

The Second Circuit Court of Appeals in New York Tuesday granted Argentina a temporary administrative stay on a ruling that ordered the country to hand over 51% of its shares in the state oil company YPF to various plaintiff funds.

This ruling provides Argentina with a temporary reprieve in the ongoing legal battle stemming from the 2012 expropriation of YPF from Spanish oil company Repsol, where Argentina was found liable for not extending a tender offer to other shareholders.

“The respondents have indicated their opposition to the request for a stay pending appeal, but do not oppose the filing of a temporary administrative stay to allow for an orderly filing and consideration of the request for a stay,” the Court said in its rationale.

The “Turnover Order”, issued on June 30, was temporarily halted to allow for an “orderly presentation and consideration” of arguments from both sides. The plaintiffs have until July 17 to submit their opposition to a longer suspension, and Argentina has until July 22 to respond. After these submissions, a panel of three judges will decide whether to grant a prolonged stay of the ruling for the duration of the appeal process.

This decision is seen as a “major victory” for Argentina, at least for now, as it temporarily delays the obligation to divest its assets in YPF. The news has positively impacted the markets, with YPF's ADRs and Argentine bonds showing gains.

Argentina is appealing both the US$16.1 billion compensation ruling and the order to transfer the YPF shares, arguing that the transfer would violate fundamental principles of US and international law and its own domestic laws.

Tuesday's decision follows rulings against Argentina by Judge Loretta Preska and in favor of Burford Capital, Eton Park funds, and Bainbridge fund. (See also: Judge Preska insists Argentina must pay for YPF expropriation)