After U.S. Judge Loretta Preska gave her final judgment on the YPF expropriation case, ordering Argentina to pay US$16.09 billion to the plaintiffs represented by Burford Capital, both sides started moving their chess pieces around the board.

On September 22, Burford Capital requested her to authorize the seizing of Argentine assets starting on October 15. United States federal statutory law does not give a specific timeframe for carrying out rulings regarding foreign states — it only says they are permitted after a “reasonable period of time has elapsed” since the court’s decision. Preska’s final ruling came on September 15. 

“Argentina’s refusal to pay judgments is well documented and widely recognized,” Burford wrote in a statement, quoting an interview in which former YPF’s director and Buenos Aires governor Axel Kicillof said Argentina “does not have to pay.” 

The following week, on September 27, Argentina, represented by the Sullivan & Cromwell law firm, sent a letter to Preska calling Burford’s motion “premature” as the decision is still subject to appeal. The letter, signed by attorney Robert Giuffra Jr., said that Argentina intends to appeal the judge’s decision without posting a bond. According to the text, the US$16.09 billion payment would be equivalent to “nearly 20% of the Republic’s 2023 federal budget.” 

“It would be an extraordinary breach of international comity to permit execution of the US$16.1 billion judgment in this case on an artificially constrained timeframe,” the three-page letter said.

Burford did not lose time and sent another letter on September 28 reiterating that Argentina does not want to pay “voluntarily.”

Next steps

Argentina is now gathering evidence concerning its ability to “immediately allocate funds for securing the judgment,” according to its letter. In the following days, the country’s lawyers are expected to present a formal request detailing the reasons for suspending the sentence during the appeal process — that’s it until the Appeals Court, and eventually, the Supreme Court, decide on Argentina’s situation.

In 2012, through its Congress, Argentina expropriated shares of oil and gas company YPF held by the Spanish multinational Repsol, at the time the majority shareholder. Three years later, Burford Capital bought the trial rights from two companies belonging to the Argentine Eskenazi family, Petersen Energia Inversora and Petersen Energía, and another company, Eton Park. They considered that Argentina failed to make a tender offer for their YPF shares in 2012.

The ball is now in Preska’s court. She could even make a decision before Argentina presents its arguments. If she ruled in favor of Burford, the stay on her ruling would be lifted and Burford would have the right to try to forcibly collect, if it managed to find any assets it could seize. Argentina would then appeal that ruling in an Appeals Chamber. If she ruled in favor of Argentina — which would be a first in this lawsuit — Burford wouldn’t be able to forcefully collect anything until the case had a final judgment of the Appeals Chamber, eventually with a decision of the Supreme Court.

Burford’s strategy is similar to that of Paul Singer, head of the NML hedge fund, in a protracted legal dispute with Argentina over sovereign debt payments. In 2012, NML famously attempted to seize the Argentine navy frigate “Libertad,” which was held in a Ghanaian port. The goal of the embargo was not to use the vessel as collateral, but to pressure the country into paying a total amount of US$10 billion. 

In a press release after Preska’s ruling, Burford said that the actual amount due is often “considerably less” than the “judgment rendered by the courts.” However, Argentina’s international reserves are at a record low, and on Tuesday they were strained further by a US$190 million payment to the Club of Paris.

Even if the amount is significantly reduced after negotiations take place, US$16.1 billion as a starting point does not constitute a realistic payment scenario for a country whose net reserves, according to the Ecolatina consulting firm, are negative US$5.1 billion.