Argentina on Thursday appealed the ruling ordering it to pay US$16.1 billion for the expropriation of state-owned oil and gas company YPF, a lawsuit the country lost in September.

“[The] plaintiffs’ claims should never have seen the inside of a New York courtroom,” said the 94-page appeal Argentina filed before the U.S. Court of Appeals for the Second Circuit. This is the first major presentation in the case under President Javier Milei’s government, which opted to keep U.S. lawyer Robert J. Giuffra, Jr.’s law firm as its representative.

U.S. Judge Loretta Preska ruled in favor of hedge fund Burford Capital, determining that the country had failed to make a tender offer for YPF’s shares when it nationalized the company. In January, Preska authorized Burford Capital to request the seizure of Argentine assets, although observers said the complex seizure process did not appear to be the plaintiff’s ultimate goal.

In 2012, Argentina expropriated 51% of the shares of YPF from Spanish multinational Repsol, the majority shareholder at the time. Three years later, Burford Capital bought the trial rights from the companies Petersen Energia Inversora and Petersen Energía, which belong to Argentina’s Eskenazi family, and Eton Park.

The country argued that Preska’s court mistakenly adjudicated claims that should be judged in Argentina under Argentine law, and not in the United States. 

“The Petersen plaintiffs, who sued first and account for 89% of the combined judgments, were Spanish shell companies controlled by Argentine nationals,” the appeal document said. “The follow-on Eton Park plaintiffs had offices in New York, but that connection was not sufficient to overcome the other factors supporting dismissal.”

The appeal also contended that Preska’s court had “grossly inflated plaintiffs’

damages” by converting them using the exchange rate from the day of the country’s alleged breach in 2012, rather than the date of the judgment on September 15, 2023. The peso was devalued by 99% between those dates.

Finally, the appeal argued that Preska’s court applied the wrong breach date and prejudgment interest rate under Argentine law, which inflated plaintiffs’ damages by billions of dollars.

Preska agreed with the plaintiffs’ argument that the state took control of YPF on April 16, 2012, when then-President Cristina Fernández de Kirchner submitted a bill to Congress to authorize the expropriation of YPF shares owned by Repsol. 

However, Argentina’s position is that the start date of the takeover was May 7, when Congress approved the bill. The takeover date is used to calculate the applied interest rate, which would be 3% by Argentina’s logic and 8% by Preska’s. Moreover, the appeal argues, Argentine courts would have applied an interest rate of approximately 0.76%.

The US$16.1 ruling comes as Argentina’s net international reserves are negative US$6 billion, according to private calculations.

“If the Second Circuit Court’s current timelines hold, there will be no ruling until September-October 2024,” Sebastián Maril, CEO of Latam Advisors LLC, who has been following the case closely, posted on X.

“This court reverses only 9.4% of the rulings issued by courts in the Southern District of New York, where Judge Preska sits,” he added.