The scales may have tipped in Argentina’s favor in the lawsuit over the expropriation of oil and gas giant YPF after a Wednesday appeals court hearing, according to government sources and market interpretation.
For more than a decade, Argentina has been fighting a legal battle over the expropriation in courts in the United States. In 2023, Judge Loretta Preska ruled that the country had breached its contract and ordered it to pay US$16.1 billion, a judgement Argentina’s lawyers appealed.
Wednesday’s appeals court hearing addressed the Argentine legal team’s argument that it would have been more appropriate for the case to be handled in Argentina.
The plaintiff, UK-based hedge fund Burford Capital, said that the hearing “marked a good day” for their case, which has been closely watched by markets — however, the fund’s stocks plummeted by 9.45% once the hearing was over.
The case dates back to 2012, when Argentina’s Congress expropriated 51% of YPF shares from Spanish multinational Repsol, which was the majority shareholder at the time, giving the state majority control of the company.
In 2015, UK-based hedge fund Burford Capital took Argentina to the District Court for the Southern District of New York after buying the right to litigate in the name of Petersen Energia Inversora and Petersen Energía, two companies belonging to the local Ezkenazi family, which owned part of the remaining shares. They are financing the lawsuit for Armando Bentacor Álamo, the insolvency administrator of the Petersen companies.
In 2023, Judge Loretta Preska ruled against the country for breach of contract. That year, Argentina appealed the case in the U.S. Court of Appeals for the Second Circuit.
A statement by the Argentine Treasury Attorney’s Office after the hearing said that Preska’s ruling “sought to apply Argentine law” but “reached conclusions that no Argentine court has ever reached or would ever reach.”
The government’s statement argued that Burford is using U.S. courts to “obtain an extraordinary profit of US$16.1 billion (now amounting to some US$18 billion with post-judgment interest) from a purely domestic dispute governed by Argentine law that should have been heard in the Argentine courts.”
The judges in the hearing were José Cabranes, Denny Chin, and Beth Robinson.
Sebastián Soler, lawyer and former deputy attorney of the Treasury during Alberto Fernández’s presidency, said that Chin, during a question to Burford’s lawyer, said that he thought that “this case should perhaps have been tried in Argentina.” However, he added that “the outcome cannot be predicted based on the questions asked by the judges.”
Mike Fragoso, partner at Torridon Group and counsel for the plaintiffs, said in a statement that the hearing “marked a good day” and that “the district court’s ruling in this case is sound.” Fragoso, who previously served as chief counsel to U.S. Republican Senator Mitch McConnell, said that “the plaintiffs’ legal team presented a compelling case for the restitution owed to the investors.”
“As in other hearings, the defendants did not present any new information that could change the course of the case,” Fragoso added.
The Appeals Court could take months to rule. After that, if either of the parties is unsatisfied with the ruling, they can first ask Preska or the Appeals Court to hear the case again. Both requests would have to be evaluated before being accepted. The case would then go to the U.S. Supreme Court as a last resort.
