Andrea Boggio



Recent Developments in the Bondholders Litigation against the Republic of Argentina (May 7, 2007)

ABA Section of International Law | Latin American & Caribbean Committee
Newsletter Legal Developments in Latin America (March 2007)
Compiled and edited by the Latin American and Caribbean Law Committee

Since the 2001 decision of the Republic of Argentina to suspend the payment of interest and principal on its sovereign debt and to declare a general moratorium on any future payments of its sovereign debt, many bondholders have filed civil lawsuits against the Republic of Argentina to recover principal and interest. All of the lawsuits are being heard before Judge Thomas Griesa in the United States District Court for the Southern District of New York. Both individual and class actions have been filed.

Judge Griesa has routinely granted summary judgment on behalf of bondholders who have proven their ownership of certain bonds through account statements and who have met other requirements to establish their claims. To streamline the procedure for summary judgment motions, in February 2007 Judge Griesa released a memorandum that recognizes inter alia that "the Republic needs not object to proof the Republic considers insufficient, but which the Court has previously accepted as adequate. In such a situation, the Republic's non-objection does not act as a waiver of the issue and the Republic preserves such issue for all purposes, including appeal." The Republic has appealed to the U.S. Court of Appeals of the Second Circuit some of the orders granting bondholders' motions for summary judgments challenging the adequacy of the proof submitted by some plaintiffs. The year of 2007 is a critical year for bondholders because the statute of limitations may expire on claims for missed annual payments that are made five years after the default under the terms of a 'prescription' that applies to some Argentine bonds issued under the European Medium Term Note Programme. The New York State statute of limitations might forbid claims made after six years. NY CPLR para 213.

Bondholders with judgments are seeking ways to successfully attach and seize assets, with each plaintiff relying on his own proprietary methods for targeting Argentina's assets.

Recently, the Second Circuit ruled that neither money owned by Argentina's Central Bank (and held by the Federal Reserve Bank of New York) nor the funds for repayment of Republic's obligations to International Monetary Fund can be seized to satisfy a judgment issued in favor of a bondholder against Argentina (EM Ltd. v. Argentina, NML Capital Ltd. v. Argentina; NML Capital Ltd. v. Argentina; NML Capital Ltd. v. Argentina, Banco Central De La Republica Argentina, 06-0403, 06-0405, 06-0406, 2nd Cir.). The attorneys for the bondholders have filed a petition for writ of certiorari to the U.S. Supreme Court.

ABA (c) 2007

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