YPF investors ask US Supreme Court to review Argentine legal win

Former investors in Argentina's state oil company YPF SA have asked the US Supreme Court to review an “egregiously wrong” lower-court ruling that overturned a US$16-billion judgment in their favour.

A federal appeals court in March said the judge who ordered the Argentine government to pay the biggest commercial judgment in US legal history misinterpreted the South American country’s law in allowing the case to proceed. The former shareholders claimed they were harmed by the 2012 nationalisation of YPF.

That decision was hailed as a major victory by President Javier Milei, who had refused to negotiate with litigation funder Burford Capital Ltd.

Burford acquired the interests of former overseas shareholders in YPF, directed the litigation and would have taken a large share of the award. 

Burford’s US shares plummeted on the news of the March ruling and currently sit at less than a quarter of their 2023 high.

The former shareholders on Wednesday asked the Supreme court to take up the case, calling the US Second Circuit Court of Appeals’ ruling “egregiously wrong, wholly unprecedented, and extremely consequential,” according to a copy of the petition reviewed by Bloomberg News that was dated September 30. It wasn’t immediately visible on the high court’s public docket. 

“Litigation funder Burford Capital spent a fruitless decade dragging the Argentine Republic through the US courts only to lose in the Second Circuit, whose ruling rests on a thorough and accurate analysis of governing Argentine law,” Argentina said in a statement. “The Republic will continue to defend its interests resolutely and has every confidence in the strength of its position.”

According to the plaintiffs, the Second Circuit majority departed from previous Supreme Court precedent in crediting a self-serving Argentine court decision and allowing it to outweigh overseas investors’ interest in resolving disputes in the United States. They claimed Argentina, with its history of defaults, consented to US court jurisdiction in order to attract foreign investment.

“By allowing Argentina to make explicit investor-protecting promises to raise massive amounts of capital in US markets, only to repudiate those promises without consequence, the panel majority’s decision will have severe ramifications for foreign investment in the United States,” the former YPF investors said. 

US District Judge Loretta Preska issued the award in 2023, after finding the nationalization violated YPF’s by-laws requiring a tender offer to shareholders.