Argentina: granting Burford’s request for YPF shares would ‘violate international law’

The financial firm had asked for the country’s equity stake as partial payment for the US$16.1 billion trial over the company’s expropriation

The Argentine government has asked U.S. Judge Loretta Preska to reject Burford Capital’s request to grant the company all the country’s shares in oil and gas company YPF, arguing that doing so would violate Argentine and international law. 

In September, Preska ordered Argentina to pay US$16.1 billion to Burford in a lawsuit over the country’s 2012 expropriation of most of YPF’s shares. The financial firm requested the shares in April as partial payment for the sum owed.

The expropriation case is on appeal. The Appeals Court must now rule on the case, and it could ultimately land in the U.S. Supreme Court.

Between the national and provincial governments, Argentina currently owns 51% of the company’s shares. Giving them to Burford would mean the country relinquishing its controlling stake in the nation’s largest energy company.

Argentina, represented by the Sullivan & Cromwell LLP law firm, argued in a memorandum filed on Thursday that the share turnover would violate international and Argentine law, as well as the New York Civil Practice Law and Rules. It also said the turnover would violate the Foreign Sovereign Immunities Act (FSIA), a U.S. law establishing criteria for whether a foreign state is immune from the jurisdiction of U.S. courts.

The YPF 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. 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 for their YPF shares. Preska ruled in their favor in September.

On Thursday, Argentina 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. 

The country’s lawyers added that, under the act-of-state doctrine, U.S. courts cannot declare an “official act of a foreign sovereign” to be invalid.

Argentina added that the FSIA would require the YPF shares to either be in the United States or used for a commercial activity there. “The YPF shares have never been in the United States and cannot be brought here,” Argentina argued. “Instead, the YPF Shares are uncertificated Argentine securities, which exist in book-entry form in the custody of Caja de Valores S.A., a privately owned securities depositary,” the memorandum read.

Moreover, Argentina argued that an order requiring the turnover of Argentina’s assets from its territory would violate international law. “A state may not exercise jurisdiction to enforce in the territory of another state without the consent of that other state,” the memorandum said.

When Burford’s ask was made public in April, Sebastián Maril, CEO of Latam Advisors LLC, who has been following the case closely, told the Herald that Burford is not interested in seizing YPF, but rather in forcing an out-of-court negotiation.

However, he noted that Preska could grant Burford’s request for the shares, since in November, she said the country’s 51% equity stake could be pledged as collateral for the debt. 


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