New York Judge Loretta Preska ordered Argentina to hand over shares of oil and gas giant YPF as a partial payment to plaintiffs, who won a US$16.1 billion lawsuit over the company’s 2012 nationalization. In a Monday ruling, Preska gave Argentina two weeks to transfer its Class D shares to a global custody account at the Bank of New York Mellon.

The plaintiff, hedge fund Burford Capital, had asked Preska to order the country to give its YPF shares in April 2024, and the country opposed, arguing that the shares are immune from turnover under U.S.’s Foreign Sovereign Immunities Act (FSIA) and that giving them would require the country to change or violate its own laws.

The United States government also opposed in November last year, when an attorney representing the North American administration sent a letter to Preska saying that forcing Argentina to hand over the shares could endanger U.S. interests because it could prompt foreign governments to attempt similar moves against Washington.

Argentina will appeal the ruling, the country’s president, Javier Milei, confirmed in an X post.

The case could be traced 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.

Three years later, Burford Capital bought the trial rights from three companies that owned part of the remaining shares — Petersen Energia Inversora, Petersen Energía, and Eton Park. Burford took Argentina to court, claiming the country had failed to make a tender offer to buy their YPF shares when it nationalized the company, incurring significant losses for them as a result. 

In September 2023, Preska ordered Argentina to pay the plaintiffs US$16.1 billion for breach of contract during the nationalization — the expropriation case is on appeal. The U.S. Court of Appeals for the Second Circuit must now rule on the case, and it could ultimately land in the U.S. Supreme Court. 

Argentina, represented by the Sullivan & Cromwell LLP law firm, had said that the turnover would violate the FSIA, which establishes criteria for whether a foreign state is immune from the jurisdiction of U.S. courts, namely requiring that the shares to either be in the United States or used for a commercial activity there. Argentina said the shares exist in book-entry form in the custody of Caja de Valores S.A., a privately owned securities depositary. But Preska argued that what matters is not where the shares were used, but where the resulting commercial activity takes place.

Argentina also argued in a memorandum that it would violate the YPF Expropriation Law if the country delivered its 51% stake to the plaintiffs. The law prohibits the “future transfer” of the shares unless the decision is approved in Congress by two thirds of legislators.

However, according to Preska, “there is no unavoidable conflict between Argentine law and Plaintiffs’ requested relief.” 

“The Republic has several choices it can legally pursue: (1) receive the permission of the National Congress by two-thirds vote, (2) take action to change the law, or (3) satisfy the judgment through a separate agreement with Plaintiffs,” she added.

Milei’s post blamed Buenos Aires province governor Axel Kicillof, who was in charge of the YPF takeover as deputy economy minister in 2012. “A ruling against Kicillof,” the president wrote in all caps, calling him a “useless soviet” and an “asshole.”

“Regardless of the imbecility of Kicillof and all those who governed us before, all Argentines should know that we will appeal this ruling in all the appropriate instances to defend the national interests,” Milei added.