Last week we informed you about a commentary that Washington Legal Foundation’s Rich Samp had done for National Review Online’s Bench Memos. The commentary focused on a federal District Court opinion involving a foreign debt dispute between Grenada and a Chinese entity. Rich referenced NML Capital Ltd. v. Argentina and noted that a decision from the U.S. Court of Appeals for the Second Circuit was expected any day. WLF had filed an amicus brief in the case supporting the appellants.
That court ruled on Friday, August 23. The decision affirmed a federal District Court’s injunction against Argentina. The injunction dictated that whenever Argentina made payments on bonds or other financial obligations issued in 2005 and 2010, it had to make a “ratable payment” to the plaintiffs in NML Capital Ltd. The Second Circuit also stayed the injunction’s entrance until the U.S. Supreme Court acts on a petition for certiorari Argentina filed on June 24.
The federal courts overseeing this dispute have taken extraordinary care given the impact their decisions will have on the sovereign nation. Argentina, however, has not shown reciprocal respect for the authority of the U.S. courts. In its Friday opinion, the court noted “we invited Argentina to propose to the appellees an alternative payment formula and schedule for the outstanding bonds to which it was prepared to commit.” Argentina’s proposal ignored the outstanding bonds and instead offered to issue new bonds. The nation’s leaders have also repeatedly stated that Argentina will not abide by any U.S. court decision requiring it to pay the plaintiffs:
- “Argentina will pay on the Exchange Bonds but not one dollar to the ‘vulture funds’” – President Cristina Fernández de Kirchner
- “Argentina isn’t going to change its position of not paying vulture funds . . . . We will continue to follow that policy despite any ruling that could come out of any jurisdiction, in this case New York.” – Economy Minister Hernan Lorenzino
The parties will now have to wait until the U.S. Supreme Court acts on Argentina’s petition, which may not be until late September or early October.