Buenos Aires (Argentina) (AFP) – A US appeals court on Friday overturned a $16.1 billion judgment against Argentina for nationalizing the oil company YPF in 2012. The ruling was a big victory for President Javier Milei as he tries to boost Argentina’s troubled economy.
“We won the YPF trial,” Milei wrote in capital letters on the social media platform X, calling the 2-1 ruling by the 2nd US Circuit Court of Appeals in New York the “best possible outcome.” The court struck down a 2023 ruling from Judge Loretta Preska of the US District Court for the Southern District of New York that ordered Argentina to pay $16.1 billion to minority shareholder companies she said were harmed by the nationalization of YPF.
The appeals court said Friday that breach of contract claims made by these companies were not recognizable under Argentine law. The case was heard in the United States rather than Argentina mainly because YPF is listed on the New York Stock Exchange. Jurisdiction was consistently an issue, as Argentina argued the case should be argued back home, but in the end, the US courts kept it in New York.
In the expropriation, the Argentine state took over 51 percent of YPF, which at the time was partially controlled by the Spanish energy giant Repsol. Two years later, Repsol was awarded $5 billion in damages, but smaller shareholders like Petersen Energia Inversora and Eton Park Capital Management, which together controlled a 25.4 percent stake, got nothing and sued in 2015. They argued that the government had not made a tender offer, as mandated by Argentine law, to these two companies, which were YPF’s second- and third-largest investors.
Argentina has argued that having to pay the settlement—$18 billion including interest, it says—would cause severe harm to the finances of a country with persistent debt and inflation problems. It said the settlement would have amounted to a large chunk of its foreign currency reserves.
YPF is an emblematic Argentine company founded in the early 20th century as a state-owned entity, but it was privatized in 1993 and eventually came under the control of Repsol. Then-president Cristina Kirchner re-nationalized YPF in 2012, arguing that it did not produce enough oil and gas to satisfy Argentine demand. If the $16.1 billion judgment had been upheld, much of the money would have gone to Britain-based Burford Capital, a company that provides financing for other firms’ lawsuits.
© 2024 AFP
