The United States government filed a legal motion on Thursday backing Argentina’s request for a stay in order to not transfer the 51% of YPF shares ordered by a New York court until their appeal is complete. 

The U.S. Department of Justice made the filing as an amicus curiae on behalf of Argentina before the Court of Appeals for the Second Circuit. The court had temporarily suspended the order made by Judge Loretta Preska to hand over the majority of YPF shares to hedge funds Burford Capital, Eton Park, and Bainbridge Fund in order to review the country’s appeal. The judge’s decision came after the funds won a US$16.099 billion lawsuit filed over the flagship oil company’s expropriation in 2012.

In their motion, the U.S. government justified its support by saying that the issues under review could have “significant ramifications” for Washington’s foreign relations, potentially triggering “reciprocal treatment” of the United States and its property in courts of other countries.

The filing went on to say that Argentina is “likely to prevail” in its appeal because Preska’s ruling goes against precedent. While U.S. law admits some exceptions to the legal principle that property of foreign states is “immune from execution,” the motion clarifies that those exceptions are specifically related to assets located within the United States. 

The document added that Argentina could be “irrevocably harmed” if a stay is not granted, given that the country could lose the ability to reclaim that property even if the appeal was successful. 

Argentina’s Treasury Prosecution Office, the state entity representing the country in the legal proceedings, celebrated the backing, calling it a “significant development” that “should not be taken lightly.” Sources from the prosecutor’s office recalled that the Argentine government made a similar request to the United States in 2019 but was unsuccessful. 

“[The presentation] is a reflection of the [government’s] coherent and clear foreign policy, oriented to the defense of national interest, while also showing the strength of the legal arguments the Argentine state has presented,” they concluded.

The situation of the YPF trial

On July 15, the United States Court of Appeals for the Second Circuit temporarily suspended New York Judge Loretta Preska’s order to Argentina to grant its shares of the YPF energy company to the Burford Capital hedge fund.

On June 30, Preska had ordered Argentina to hand over 51% of its shares of the company as a partial payment to plaintiffs who in 2023 won a US$16.1 billion lawsuit over the company’s 2012 nationalization. Argentina appealed the order, but Preska rejected the country’s request to stay the order while the appeal was resolved.

Last Tuesday, the Court of Appeals granted a temporary administrative stay, pending the resolution of Argentina’s appeal. Burford filed an opposition to the motion July 17, and Argentina must file an answer by July 22. A three-judge panel will then review the stay motion filed by Argentina.

Preska had extended an existing stay until July 17 to grant the parties more time to handle the case, but that deadline is no longer in place. 

“There is no more risk of [Argentina falling into] contempt of court — it is a major setback in the New York courts in favor of Argentine sovereignty,” a spokesperson in the Treasury Prosecution Office told the Herald at the time.

The New York judges will have to give a definitive response to the trial: either uphold the judge’s actions, partially modify the ruling, or reverse it.