360° Coverage : Argentina May Get Supreme Court Review For Its First Debt Case,...

2 Updates
Argentina May Get Supreme Court Review For Its First Debt Case, But Not The Second
Photo Credit: Forbes Business

Argentina May Get Supreme Court Review For Its First Debt Case, But Not The Second

Jan 6 2014, 12:59pm CST | by

Originally posted at WLF’s Legal Pulse blog On the day that it returns from its holiday break on January 10, the chances are good that the U.S. Supreme Court will agree to review a dispute between...

Filed under: news

 
 
 

37 weeks ago

Argentina May Get Supreme Court Review For Its First Debt Case, But Not The Second

Jan 6 2014, 12:59pm CST | by

Originally posted at WLF’s Legal Pulse blog

On the day that it returns from its holiday break on January 10, the chances are good that the U.S. Supreme Court will agree to review a dispute between Argentina and a creditor that is owed substantial sums on defaulted bondsRepublic of Argentina v. NML Capital, Ltd ., Case No. 12-842.  That dispute is not the one that has been making big headlines for the past year, however.  The high-profile case—in which the federal appeals court in New York (the U.S. Court of Appeals for the Second Circuit) last August upheld an order barring Argentina from treating “holdout” bondholders such as NML less favorably than other bondholders—has not yet reached the Supreme Court.  Moreover, major differences exist between the two cases such that even if the Court decides this week to review the first case, there is no reason to view that decision as an indication that the Court is likely to grant review in the second, higher profile case.  Indeed, there is good reason to conclude that the Court will not agree to hear the second case, which would preserve the bondholder’s victory.

The petition for review that the High Court will consider on January 10 arises from NML’s efforts to collect on court judgments against Argentina totaling $1.6 billion.  NML obtained the judgments after Argentina defaulted on bonds held by NML, which the nation has refused to voluntarily pay.  When judgment creditors are faced with a recalcitrant debtor, the law permits them to subpoena records for the purpose of attempting to pinpoint the location of the debtor’s assets; if they locate “nonexempt” assets, they are entitled to seize the assets in satisfaction of their court judgments.  NML has been attempting to engage in just such document discovery.  In particular, in 2010 it served document subpoenas on two banks located in New York in an effort to learn more about how Argentina moves assets through New York and around the world.  Over Argentina’s objection, the lower federal courts upheld the subpoenas.  Early in 2013, Argentina filed a petition asking the Supreme Court to review those decisions; Argentina asserted that the subpoenas violated its rights under the Foreign Sovereign Immunities Act (FSIA).

Although the Supreme Court grants no more than a tiny fraction of the thousands of petitions for review it receives each year, there is reason to conclude that the Court is giving serious consideration to granting Argentina’s petition.  First, the Court issued an order last April directing the Solicitor General to file a brief expressing the views of the United States about the case.  The Court issues no more than a handful of such orders each year; an order directing the Solicitor General to file a brief is generally viewed as an indication that the Court is actively mulling the petition in question.  The Solicitor General’s brief, filed earlier this month, recommended that the Court grant Argentina’s petition.  As studies have shown, such a recommendation substantially increases the chances of the Court’s granting a petition.

Nonetheless, a certiorari grant in the pending Argentina petition should not be viewed as a signal that the Court will also grant the yet-to-be-filed “pari passu” petition from the Second Circuit decision.  Argentina argues in both cases that the lower court orders violated the FSIA, but the similarity between the two cases ends there.  In particular, the reasons why the Court may be leaning in the direction of granting Argentina’s pending petition are largely inapplicable to the impending second petition.

The principal factor supporting Supreme Court review is the resolution of conflicting interpretations of law by two or more federal appeals courts.  In the case pending before the High Court, the Second Circuit has adopted an interpretation of the FSIA that directly conflicts with an interpretation of the FSIA adopted by the Seventh Circuit.  A 2011 Seventh Circuit decision held that the FSIA severely limits the scope of post-judgment discovery directed at a foreign sovereign’s assets.  Noting that the FSIA permits attachment of only a very limited category of assets belonging to a foreign sovereign, the Seventh Circuit held that any post-judgment discovery must be limited to assets that are both located within the United States and subject to attachment under the FSIA.  In contrast, the Second Circuit has held for many years that the FSIA imposes no such limitations on discovery.  In particular, it held in this case that the FSIA did not bar NML from engaging in discovery from non-party banks regarding Argentine assets located throughout the world.  While recognizing that U.S. courts cannot order attachment of Argentine assets located outside the U.S., the Second Circuit held that NML could use information gleaned from its document discovery to ask foreign courts to attach those assets.  Given that two federal appeals courts have adopted directly conflicting interpretations of the FSIA as applied to document discovery, it would not be surprising if the Court—in accord with the recommendation of the Solicitor General—grants the pending certiorari petition.

In contrast, the pari passu case does not involve any FSIA issue over which the federal appeals courts disagree.  Argentina argues that district court injunctions—which bar Argentina from making payments to holders of 2005 Exchange Bonds unless it makes equivalent payments to holdout bondholders—violate the FSIA because they amount to an attachment of Argentina’s assets.  The Second Circuit brushed that argument aside in its August 2013 decision upholding the district court injunctions, explaining, “The injunctions allow Argentina to pay its [bond] debts with whatever resources it likes.”  Importantly, no other federal appeals court has issued a conflicting interpretation of what constitutes an “attachment” for purposes of the FSIA.  There is little reason to believe that the Supreme Court will agree to review the Second Circuit’s pari passu decision in the absence of such a conflict.

Moreover, the FSIA provision that caused the Solicitor General to question the Second Circuit’s document discovery decision is not applicable to the pari passu case.  The Solicitor General asserted that because a FSIA provision bars attachment of foreign sovereign assets located outside the U.S., that provision should also be interpreted as barring discovery regarding non-U.S. assets—because such discovery could only be seen as a precursor to an effort to attach assets over which U.S. courts lack any jurisdiction.  The Solicitor General’s assertion has no relevance to the pari passu case; the sole purpose of the injunctions issued in that case is to assure that holdout bondholders like NML receive “equal treatment,” not to permit the later attachment of any Argentine assets.

Argentina is scheduled to file its Supreme Court certiorari petition in the pari passu case sometime between February and April 2014.  The probability that the Court will agree to hear the case is extremely low given the absence of any decisions that conflict with the Second Circuit’s interpretation of the FSIA provisions at issue in that case.  That probability is reduced further still by Argentina’s repeated statements that it will not comply with an adverse decision; the Supreme Court is highly unlikely to devote its limited resources to hearing a petition from a party that does not consent to be bound by the Court’s decision on the merits.  For all the reasons outlined above, a decision by the Court this month to grant review in Argentina’s document discovery dispute should not be interpreted as a signal that the Court is likely to grant review in the pari passu case as well.

Source: Forbes Business

 
Update
2

4 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of 2 ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

4 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 and MH17" hits ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

India open minded, wants change, Modi tells top US executives
New York, Sep 29 (IANS) India is open-minded and wants change, Prime Minister Narendra Modi told top executives of American companies, including Google and Citigroup, during a high-powered breakfast meeting here Monday.
 
 
World hunger falls but 805 mn still chronically under-nourished: FAO
Abu Dhabi, Sep 29 (IANS/WAM) Despite the overall progress made in global hunger reduction, 805 million people are estimated to be chronically undernourished in 2012-14, down more than 100 million over the last decade, and 209 million lower than in 1990-92, the UN's Food and Agriculture Organisation (FAO) said Monday.
 
 
Reliance Capital to launch more India funds abroad
New York, Sep 29 (IANS) Anil Ambani-led Reliance Group's financial services arm Reliance Capital Asset Management Company (RCAM) Monday said it will consider launching more India-focused funds in foreign markets.
 
 
China warns of dengue risk during National Day holidays
Beijing, Sep 29 (IANS) The Chinese Center for Disease Control and Prevention (CDC) Monday warned public to stay alert about dengue exposure during the week-long National Day holiday beginning Oct 1.
 
 
 

Latest from the Network

Black Friday Schedule 2014 Released
Black Friday 2014 is in 60 days, but the first Black Friday sales will already start in 1 month. Over the last couple of years, Black Friday has become a month-long sales event with multiple special events. I4U News has...
Read more on Black Friday Countdown
 
Asian Games: Discus thrower Seema Punia wins gold
Incheon, Sep 29 (IANS) India's discus thrower Seema Punia won the gold medal while her compatriot Krishna Poonia finished fourth in the 17th Asian Games at the Incheon Asiad Main Stadium here Monday. Chinese Xiaoxin...
Read more on Sport Balla
 
Brad Pitt believes in institution of marriage
Los Angeles, Sep 29 (IANS) Actor Brad Pitt, who exchanged vows with his long-term partner and actress Angelina Jolie in August, says marriage is more than just a title. The 50-year-old actor shared his views on...
Read more on Celebrity Balla
 
Clooney, Alamuddin to make things official Monday
Rome, Sep 29 (IANS) Newly married couple George Clooney and British human rights lawyer Amal Alamuddin will officialise their marriage in Venice today. The couple, who wed Saturday at a private star-studded ceremony,...
Read more on Celebrity Balla
 
China warns of dengue risk during National Day holidays
Beijing, Sep 29 (IANS) The Chinese Center for Disease Control and Prevention (CDC) Monday warned public to stay alert about dengue exposure during the week-long National Day holiday beginning Oct 1. A total of 12,...
Read more on Business Balla
 
Robot to figure out if Thai cuisine is genuine or not
Bangkok, Sep 29 (IANS) The Thai government is set to unveil a robotic taster that will determine if the food you have ordered anywhere in the world at a Thai restaurant is genuine or not. The "e-delicious" machine...
Read more on Politics Balla
 
Asian Games: Bajrang wins silver, Narsingh bronze
Incheon, Sep 29 (IANS) Indian wrestler Bajrang had to remain content with the silver medal after losing his final bout while his compatriot Narsingh Pancham Yadav clinched the bronze in the 17th Asian Games at the...
Read more on Sport Balla
 
Modi US visit: Three Indian cities to be named for smart cities project
Washington/New Delhi, Sep 29 (IANS) Three Indian cities are in line to be adopted for the government's "smart cities" project by way of technology and infrastructure upgrade during Indian Prime Minister Narendra Modi's...
Read more on Politics Balla
 
Play after school makes the minds of kids sharper
New York, Sep 29 (IANS) If your child cannot wait to play after school, better not to restrict him, a study suggests. Moderate-to-vigorous physical activity for at least 60 minutes a day after school saw substantial...
Read more on Celebrity Balla
 
14 percent Britons have partners they have never met!
London, Sep 29 (IANS) In an indication of how much the virtual world has become part of our real lives, a survey has found that one in seven people in Britain has relationship with people he/she has only interacted...
Read more on Celebrity Balla