A United States government attorney has told New York Judge Loretta Preska that she should not order Argentina to hand over shares of oil and gas giant YPF to plaintiffs suing over the company’s 2012 nationalization. 

Damian Williams, the attorney for the Southern District of New York representing the U.S. government, argued to Preska in a Statement of Interest letter that she should not force Argentina to turn over its shares because they are the property of a foreign government, and therefore immune from such requests.

Williams warned that such a move could endanger U.S. interests because it could prompt foreign governments to attempt similar moves against Washington.

In September, the U.S. government told Preska in a letter that it is legally authorized to send officers from the Department of Justice to lawsuits pertaining to the country’s interests, and that it was evaluating sending a Statement of Interest, which it did on Wednesday.

In 2012, 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, New York judge Loretta Preska ordered Argentina to pay the plaintiffs US$16.1 billion for breach of contract during the nationalization. In April 2024, the financial firm asked to be handed the country’s majority stake 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.

“The plaintiffs’ requested injunction and order requiring Argentina to turn over its sovereign property located in its own territory would violate well-established laws of sovereign immunity and should not be granted by the Court,” Williams’s letter read.

It argued that the U.S. Foreign Sovereign Immunity Act (FSIA) does not allow foreign sovereign property to be seized unless it is located in the United States.

“Simply put, the FSIA’s exceptions to execution immunity do not apply to assets outside of the United States,” the letter said. 

Burford had argued that under New York laws applying to property being held by a third party without authorization, foreign assets could be brought to the United States before determining whether they are subject to such immunity.

However, the letter said that if that were the case, the act’s prerequisite that foreign sovereign property be located “in the United States” to allow its execution would be null.

“There is a high likelihood of conflict with the laws of foreign sovereigns if the turnover statute is interpreted to apply to foreign sovereign property in that sovereign’s own territory,” it added. 

The letter also said that granting Burford the YPF shares could “put U.S. property at risk, given the potential for reciprocal adverse treatment of the United States in foreign courts.”