A US appeals court on Friday overturned a ruling ordering Argentina to pay US$16.1 billion in compensation over the 2012 expropriation of oil company YPF.
The ruling was issued by the 2nd US Circuit Court of Appeals in New York, which found that the lower court had wrongly ruled in favour of former shareholders who claimed they were harmed by the nationalisation.
The suit had been backed by Britain-based Burford Capital, a company that provides financing for other firms' lawsuits.
However, the parties still have a final avenue of appeal before the Supreme Court of the United States.
The legal process, which began in 2015, resulted in a first-instance ruling against Argentina in 2023.
US District Judge Loretta Preska ordered the country to pay more than US$16 billion after finding that the nationalisation violated YPF’s bylaws requiring a tender offer to minority shareholders.
But on Friday, the New York appeals court ruled that Preska had misinterpreted Argentine law.
President Javier Milei celebrated the decision on social media, writing: “We won in the YPF lawsuit... !!! The Court of Appeals has just completely overturned the ruling against Argentina: the best possible scenario.”
He then went on the attack, criticising Buenos Aires Province Governor Axel Kicillof – a former economy minister who oversaw the YPF nationalisation and a potential opposition presidential candidate in the future – for his handling of the case.
Argentina expropriated 51 percent of YPF shares, which had been partially controlled by Spanish energy giant Repsol, in 2012.
Two years later, the Spanish oil company was awarded US$5 billion in damages but smaller shareholders like Petersen Energía Inversora and Eton Park Capital Management, which together controlled a 25.4 percent stake, got nothing and sued in 2015.
In 2015, the firms filed a lawsuit alleging that the country had not launched a public tender offer for shares to these two companies, which were YPF's second and third largest investors, as required under the company’s bylaws.
Argentina has long argued that having to pay the settlement – US$18 billion with interest, it says – would cause severe harm to the finances of the country. It said the settlement would have amounted to a large chunk of its foreign currency reserves.
YPF, an iconic national firm, was founded in the early 20th century as a state-owned entity. It was privatised in 1993 under then-president Carlos Menem and eventually came under the control of Repsol.
Then-president Cristina Fernández de Kirchner re-nationalised YPF in 2012, arguing that it did not produce enough oil and gas to satisfy national demand.
If the US$16.1 billion judgment had been upheld, much of the money would have gone to Burford Capital.
– TIMES/NA/AFP
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