A New York appeals court has temporarily suspended Judge Loretta Preska’s order to Argentina to hand over its YPF energy company shares to the Burford Capital hedge fund. The court also authorized the United States government, which has shown itself sympathetic towards Argentina’s position, to participate in the original expropriation lawsuit as “amicus curiae.”

The U.S. Court of Appeals for the Second Circuit issued its decision on Friday, meaning the stay on the order will be in place until Argentina’s appeal against Preska’s ruling to grant the shares is resolved.

On June 30, Preska ordered Argentina to hand over 51% of its YPF shares as a partial payment to plaintiffs who in 2023 won a US$16.1 billion lawsuit over the company’s 2012 nationalization. In early July, Argentina appealed the order and requested a stay of the handover until the appeal was resolved. After Preska rejected the petition, the case moved to a higher court, which granted Argentina an administrative stay on July 15. 

The appeals court’s ruling on Friday means that the stay is now firm until the dispute over the shares has been finalized.

The appeals court also granted the United States’ motions to file amicus briefs. The U.S. government has shown interest in the case since September 2024, when its Department of Justice sent a letter to Preska. In July this year, it officially backed Argentina by filing a motion stating that the share handover could have “significant ramifications” for Washington’s foreign relations, potentially triggering “reciprocal treatment” of the United States and its property in other countries.

The motion went on to say that, while the U.S. Foreign Sovereign Immunities Act admits some exceptions to the legal principle that property of other states is “immune from execution,” they specifically refer 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 were successful.

The stay, however, does not affect Preska’s ruling against Argentina issued in September 2023. A press release issued Friday by Argentina’s Treasury Prosecution Office said that the ruling “is a direct consequence of decades of statism and interventionist policies that seriously harmed the nation.”

The YPF case

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 right to litigate in the name of Petersen Energia Inversora and Petersen Energía, two companies belonging to the local Ezkenazi family that owned part of the remaining shares. Burford and Eton Park, a defunct U.S. investment firm that was also a minority shareholder, took Argentina to court in 2015 and 2016, 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, which could ultimately land in the U.S. Supreme Court.