On March 29, as ordered by the Second Circuit, Argentina submitted its offer to its creditors who have been unwilling to exchange their securities for new securities Argentina issued after its default. I have to say that I don’t really understand the offer. As I read the document, Argentina is offering to exchange the old debt for its new, restructured debt on pretty much the same terms that plaintiffs such as NML Capital have already rejected. 1 Why would NML surrender now, when it seems to be doing well in the US courts? And isn’t there a risk that the Second Circuit will get its dander up on account Argentina’s new show of intransigence in the face of Judge Griesa’s injunction?
Tag Archives | Argentina
Worlds collide in today’s case of the day, NML Capital v. Republic of Argentina (N.D. Cal. 2013). NML Capital, Argentina’s bête noire, sought asset discovery about Argentina in aid of its judgment. Fair enough under FRCP 69. But the target of its subpoena? Chevron. How great is that?
In an earlier order, which I did not cover, the judge, following the Second Circuit’s decision in EM Ltd. v. Republic of Argentina, held that Argentina had no sovereign immunity from post-judgment discovery subpoenas aimed at third parties. In today’s case, the issue turned on the details of the information NML was seeking. NML sought information from Chevron concerning Yacimientos Petroliferos Fiscales S.A. and other entities supposedly connected with Argentina. YPF was Chevron’s joint venture partner in Argentina, and readers may recall discussion about whether Chevron had or would leverage the threat of withdrawing from doing business in Argentina to try to encourage the Argentine government to lift the asset freeze its courts had imposed on Chevron on account of the Lago Agrio judgment.
The judge held, however, that NML had not made a sufficient showing that YPF was an alter ego of the Argentine state:
Here, NML’s allegations regarding YPF’s relationship to the Republic are insufficient as a matter of law to overcome the presumption that YPF is a separate juridicial entity for purposes of asset discovery on an alter-ego theory. Duly-created instrumentalities of a foreign state are to be accorded a presumption of independent status. The presumption against breaching the corporate independence of government instrumentalities should not be easily defeated. The facts advanced by NML consist of general allegations that YPF has been recently privatized by the Argentine government and is now controlled by the Republic, as a majority shareholder, for the purpose of developing natural gas resources for the Argentine people, pursuant to Argentine government policy. However, these allegations are insufficient to overcome the presumption that YPF is a separate juridicial entity for purposes of asset discovery on an alter-ego theory. Majority stock ownership, appointment of directors, and control of a board’s membership are all insufficient to overcome the presumption of separateness …
If I were the Lago Agrio plaintiffs, I would now be looking carefully at any pending § 1782 actions brought by Chevron to see if there is an opportunity for offensive non-mutual collateral estoppel!
According to Enrique Bruchou, a lawyer for the Lago Agrio plaintiffs quoted by Reuters, an Argentine appellate court has upheld a lower court’s order freezing the assets of Chevron affiliates in Argentina. As I reported in November, a judge in Buenos Aires, acting under the Inter-American Convention on Execution of Preventive Measures, had issued an order freezing most of Chevron’s assets in Argentina pending the outcome of the action for recognition and enforcement of the Ecuadoran judgment. More information when it becomes available!