The case of the day is Petersen Energía Inversora v. Argentine Republic (2d Cir. 2026). This was the appeal from the $16 billion dollar judgment in favor of minority shareholders of YPF, who sought damages after Argentina nationalized the company in 2012. Although there were two consolidated cases, I’m going to focus just on one, brought by Petersen.¹ Petersen sued in New York, bringing claims for breach of contract under Argentine law. Their claim was that Argentina was liable because it had failed to make a tender offer before expropriating the shares of the majority owner, Respol, as YPF’s bylaws required. Petersen had pledged its shares to secure loans it had taken to buy them, and it planned to use YPF dividends to pay the lender. But when Argentina expropriated Repsol’s shares, the company stopped paying dividends, so Petersen could not pay its debts. It sought bankruptcy protection in Spain, and in the bankruptcy, it sold a majority interest in its claim against YPF to a subsidiary of Burford Capital, a publicly traded litigation finance firm. In 2018, the Second Circuit denied Argentina’s motion to dismiss on foreign sovereign immunity grounds. Petersen Energía v. Argentine Republic, 895 F.3d 194 (2d Cir. 2018). Usually at Letters Blogatory the FSIA decision is the main event. But this case went the distance and ended with a summary judgment in favor of Petersen on the breach of contract claim, and then a trial on damages. Petersen’s judgment was for $7.5 billion, plus $6.9 billion in prejudgment interest. Burford stood to recover 70% of that, or about $10 billion.

Everyone agreed that the merits were governed by Argentine law, and I don’t have a lot to say about the substance of the Second Circuit’s discussion of the merits, except to say that to this American lawyer, it seems odd to claim that when one shareholder causes a corporation to violate its bylaws, it is therefore liable for breach of contract to another shareholder for damages flowing from the violation. As the court’s opinion observes, the obvious remedy in a case like that is a corporate law remedy. That would mean suing in the courts of Argentina, which for obvious reasons Petersen was not keen on doing.² But isn’t the answer to that just to shrug your shoulders and say that if investing in Argentina is just too risky, perhaps you should do something else with your money?³

A lot of the coverage has been about the implications for Burford in losing its risky bet, and about the implications for big-time litigation finance generally. Given the Second Circuit’s en banc practice and the unlikelihoods that the Supreme Court would grant cert. in a case that turns on Argentine contract law, the panel decision is almost certainly the end of the road, which doesn’t mean that we won’t see an petition for rehearing en banc and a cert. petition, given the amount at stake. Burford has said as much in its press release. I’m sure there will also be coverage about increased borrowing costs for countries like Argentina. But there is one point about how to frame the decision that I’d like to note. Burford characterized the decision as “a remarkable abdication of the Second Circuit’s role as a guardian of the rights of NYSE investors.” I really don’t understand that at all. There can be no question that the forum provided a fair hearing to both sides. But everyone agreed that Argentine domestic law governed the outcome, and while it’s possible that the Second Circuit got the law of Argentina wrong, I don’t see why it makes sense for a US court to interpret the law of Argentina with the goal of protecting US investors. The US does a good job of protecting investors by providing fair tribunals and by having stable and investor-friendly corporate and securities laws that the courts interpret in a consistent way. Burford didn’t purchase its stake in Petersen’s claim against Argentina under any naive illusion that it wasn’t taking a very large legal risk (including a collection risk that I don’t discuss here), and I assume that Petersen didn’t invest in the company under the illusion that it was investing in a Delaware corporation.

1. And I’m going to ignore some of the technical stuff about ADRs and the like. ↩︎
2. I don’t know if it would have been possible to include an agreement to arbitrate in an Argentine corporation’s bylaws. ↩︎
3. That problem is the reason why we have investment treaties, but this is not a treaty case. Burford’s press release suggests that an investment treaty arbitration is coming. ↩︎