A U.S. judge has ordered Argentina to give up its 51% stake in the oil company YPF following a $16.1 billion judgment against the country.
Why it matters: The ruling marks a significant blow for Argentina, which has been struggling with severe economic challenges, including soaring inflation expected to reach 200% this year.
The details:
- In 2012, Argentina seized a 51% stake in YPF from Spanish multinational Repsol.
- Hedge fund Burford Capital bought the trial rights from three companies that owned part of the remaining shares and took Argentina to court.
- U.S. District Judge Loretta Preska ruled against Argentina’s claims of sovereign immunity and concerns over international comity, rejecting the country’s defense.
- Preska gave Argentina two weeks to transfer its Class D shares to a global custody account at the Bank of New York Mellon.
The United States government opposed the transfer, stating that forcing Argentina to hand over the shares could jeopardize U.S. interests by setting a precedent that might encourage foreign governments to attempt similar actions against Washington.
What they’re saying:
- “With this judgment, Preska is saying that Argentina has been ignoring all of this court’s decisions and now it’s time to pay up. This issue has been building for years and is now breaking over Argentina.” – Sebastian Maril, director at consultancy Latam Advisors
- Argentine President Javier Milei announced plans to appeal the decision, strongly defending Argentina’s position and pledging to appeal the ruling at every level to protect national interests.
The other side: Argentina argues that the shares are protected under the U.S. Foreign Sovereign Immunities Act (FSIA), and surrendering them would require Argentina to alter or violate its own laws.
What’s next: The U.S. Court of Appeals for the Second Circuit must next rule on the case, which could ultimately reach the U.S. Supreme Court.
