Argentina moves to appeal US judge’s order to cede YPF stake

Argentina filed notice that it is appealing a US judge’s ruling requiring the South American nation to hand over its controlling stake in energy company YPF SA by next week to help satisfy a US$16-billion judgement.

The government of President Javier Milei is challenging a June 30 order by US District Judge Loretta Preska in New York. The judge, who ruled in 2023 that Argentina owed billions to shareholders affected by a 2012 nationalisation of YPF, found last month that the country’s 51 percent stake wasn’t shielded by foreign sovereign immunity.

The notice that Argentina was taking the case to the US Court of Appeals for the Second Circuit did not contain any arguments. Those will be included in a brief to be filed later.

Preska ordered Argentina to turn over the shares within 14 days to a group led by Burford Capital, a litigation funding firm that acquired the interests of original YPF shareholders.

The ruling came as a major blow to Milei, who inherited the case when he took office about 18 months ago promising to turn around Argentina’s flailing economy. Argentina’s sovereign bonds and YPF shares both dropped after the June 30 ruling, while the country’s parallel exchange rate weakened.

Milei vowed to appeal Preska’s YPF decision in a June 30 post on X in which he also blamed his predecessors for mishandling the case.

Argentina’s federal government owns 26 percent of YPF and has custody over provincial governments’ 25 percent stake. The combined stake covered by Preska’s order is worth about US$6 billion.

Preska ruled in 2023 that the nationalisation violated YPF bylaws that required the company to make a tender offer to all shareholders and ordered the government to pay US$16 billion in compensation and interest. But Burford, which would receive the largest share, has so far had no luck trying to collect the judgment.

The judge noted that in her most recent judgement, in which she rejected Argentina’s arguments that ordering it to turn over YPF shares would violate the principle of international comity – respect for another country’s laws and official acts.

“While the Republic demands that this court extend comity, it simultaneously refuses to make any effort to honour the court’s unstayed judgement,” Preska said. “Comity is not a one-way street.”

Her ruling went against the position of the US government as well as Argentina’s. In November, the Biden administration urged Preska not to order Argentina to hand over the shares, saying such a ruling “would violate well-established laws of sovereign immunity.”

The US government also expressed concern that such a ruling could lead to “reciprocal adverse treatment of the United States” in foreign courts.

The case is Petersen Energia Inversora SAU v. Argentine Republic, 15-cv-02739, US District Court, Southern District of New York (Manhattan).