Argentina Defaults (Again) and Issues a Frivolous Threat to Sue the U.S. For Causing the Default

Argentina Defaults (Again) and Issues a Frivolous Threat to Sue the U.S. For Causing the Default

According to Standard & Poor’s, Argentina has defaulted on at least some of its sovereign bonds, after last minute negotiations failed to reach a deal with its holdout bondholders, who had won a series of victories in U.S. court.  Although there are reports that some U.S. banks representing the rest of the bondholders are exploring ways to buy out the holdout bondholders on Argentina’s behalf (no doubt by having Argentina borrow even more money to do so), Argentina seems ready to go to the mattresses, so to speak. Or, at least in this case, to take the U.S. to the ICJ:

[Argentina Cabinet Chief] Capitanich said Argentina would denounce the “vulture funds” before the International Court of Justice at The Hague and the United Nations General Assembly.

Argentina has been going all out to try to convince other countries and the international community to support its cause including full page ads in major US newspapers, a diplomatic offensive at the recent Organization of American States meeting, and finally this threat to sue the U.S. government for failing to reign in its courts in the holdout creditor litigation against Argentina.

As far as the ICJ goes, this is a pretty idle threat. The ICJ would not have compulsory jurisdiction over the U.S. in this matter, so at best the ICJ would be asked to issue an advisory opinion.  But even in that case, what exactly is Argentina’s claim? That the U.S. has violated international law by blocking some of Argentina’s debt payments?  What international law obligation is being violated? Until someone explains what the legal theory is, I will classify this part of Argentina’s campaign to justify its latest default as just more hot air.

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Adriana Crocker
Adriana Crocker

I do not think you understand the legal basis for this. United States courts should not have jurisdiction to decide on matters that pertain to its sovereign debt. This issue should be brought at both the Argentine Supreme Court and the Court in the Hague. The decision of any Judge in the US should be rendered null and vacated.

Ian Hurd

Setting aside the merits and politics of the case, it is interesting how the ICJ gets invoked so often in political/legal declarations by governments, in circumstances where it obviously has no jurisdiction. The desire on the part of governments to have access to an international judicial body far exceeds their desire to actually create or empower one. (And of course, even the path of ‘advisory opinion’ would not be open to Argentina as these can only be requested by certain UN agencies, not states.)

Lara
Lara

Julian, this well known writer and journalist from Argentina answered to your question 2 weeks ago…
http://www.pagina12.com.ar/diario/elpais/1-250165-2014-07-06.html

Lara
Lara

No, the article says that country A cannot prevent country B from paying its debt outside country A, and even within country B, as the judge ordered.
Sorry, but it is not very serious that you say that the Arg. proposal is just “frivolous” but you do not read Spanish. This information is produced not only in English but also, mainly in Buenos Aires.

Lara
Lara

Julian, Griesa ordered European banks under British law not to pay Belgian bondholders in Europe. And this news has ben published in English.

Alexander Panayotov
Alexander Panayotov

Julian is correct in pointing out that 1) Argentina waived its sovereign immunity and 2) the US courts have jurisdiction. Whether the US courts should have jurisdiction is a normative question. Moreover, the governing law in the case is the law of New York. Similar choice of law provision govern most of the bonds issued in New York. Apparently, no one disputes that. What is disputed, it seems, is the interpretation of the pari passu clause. Opinio Juris already published an excellent article about the murky origins of the clause: http://opiniojuris.org/2014/05/08/pari-passu-clauses-alternative-interpretation/. The Argentinian government dislikes the judicial interpretation of the clause. But by accepting both the choice of law and forum, the Argentinian government assumed the risk of an unfavorable interpretation of the law.

I am perplexed by the threat that the US government failed to reign in its courts. I see no obligation under international law that compels the US government to “reign in its courts” and violate several of its Constitutional provisions in the process. Comity, even in the most generous interpretation, cannot support any legal theory to that effect.

Lara
Lara

Alexander, the executive branch represents and responds for the the state in international law, even for judicial actions. So it i not like the gov. should interfere in any judicial case, it is just internationally responsible for what its state does.
What is discussed now it is not the pari passu clause but whether the judge has jurisdiction over Argentinean bonds to be paid in Europe under European bonds.

[oh, well]
[oh, well]

The phrase:

“The ICJ would not have compulsory jurisdiction over the U.S. in this matter, so at best the ICJ would be asked to issue an advisory opinion.”

betrays a macroscopic ignorance of the basic modes of establishing contentious jurisdiction before the International Court of Justice. Djibouti v. France anyone?

As one of the leading blogs in international law out there, Opinio Juris should really know better.

Andrew
Andrew

Arg. has just sued the US in The Hague:
http://www.theguardian.com/world/2014/aug/07/argentina-icj-the-hague-united-states-debt-default
Saying this is just a frivolous threat without any substantive or close attention to the facts under discussion does not really contribute to the discussion promoted by this blog