The Court of Appeals of the Second Circuit of New York took a new step in consolidating its ruling in favor of Argentina in the trial for the expropriation of YPF: He suspended all pending appeals linked to the case and canceled the hearing he had scheduled for this Thursday.in which those resources were going to be treated. The decision is the consequence of ruling at the end of Marchthat overturned the US$16.1 billion sentence imposed by trial judge Loretta Preskaand aims to order the process while that pronouncement does not become final.
Among the appeals that are suspended is the one presented by the Argentina against Preska’s order that required it to deliver YPF shares as collateral. By freezing this and other derived resources, the court avoids advancing on issues that could become abstract if the ruling is finally confirmed.
The ruling will only become final once the deadlines for trying to the two remedies that the law allows the plaintiff funds, Burford Capital and Eton Park, to file. The first is the request for review, a mechanism by which not only the three-judge panel that issued the ruling, but all the judges of the Second Circuit Chamber would analyze the case.
The second way is a resource of certiorari before the Supreme Court of the United States, which receives between 7,000 and 8,000 requests per year and agrees to review only about a hundredgenerally linked to federal law issues with broad implications for the legal system. A litigation focused on the interpretation of Argentine private and public law is unlikely to meet that threshold.
The specialists who closely follow the file agree that the chances of reversing what was resolved are low in both cases.. The markets had already anticipated this diagnosis: when the ruling was known at the end of March, Burford’s shares plummeted 40% on Wall Street and 46% in London.
The ruling that changed the map of litigation
At the end of March, the Second Circuit Chamber revoked, with two votes in favor of Argentina and one in dissent, the first instance ruling. This had ordered the Argentine State to pay more than US$16.1 billion more interests for not having respected the rights of minority shareholders of YPF during the nationalization of 2012. The court also confirmed that YPF was exempt from all responsibility in the process.
Judges Denny Chin and Beth Robinson determined that Preska had misinterpreted Argentine law: lThe bylaws of a company do not generate bilateral obligations between shareholders that enable a claim for damages. contractual agreements before a US court, and the Argentine Expropriation law expressly prohibits legal actions by third parties that interfere with an expropriation. Judge José Cabranes voted in dissent, endorsing Preska’s original position.
The ruling was not a moral absolution for Argentina. The court itself recognized that the State violated the statutes of YPF and that its refusal to fulfill promises made to foreign investors during privatization in the 1990s damages the country’s credibility as an investment destination. But he separated that assessment from the central legal question: the legal remedy chosen by the plaintiffs simply does not exist under the Argentine law applicable to the case.
Burford, which had acquired the litigation rights of the Petersen companies for €15.1 million and which, if it had collected, would have kept 70% of the compensation, keeps open the possibility of continuing fighting.
