Here Comes That Frivolous Argentina ICJ Claim! Oh, And They Have No Jurisdiction Either!

by Julian Ku

As I noted last week, Argentina has been making threats to take the US government to the International Court of Justice over the results of US litigation over their 2002 sovereign debt default.  And so today, Argentina has made good on its threat by filing an application to the ICJ contending that “that the United States of America has committed violations of Argentine sovereignty and immunities and other related violations as a result of judicial decisions adopted by US tribunals concerning the restructuring of the Argentine public debt.”

As the ICJ’s press release notes, Argentina is seeking to found jurisdiction upon the U.S. deciding to grant consent to the case. But the U.S. has no obligation to give such consent, nor does it have any incentive to do so. Nor does Argentina (I suspect) really expect the U.S. to grant consent.  This is almost certainly a way to show its people and the world that it has a grievance, without actually ever having to test that grievance in a judicial proceeding.

And the fact that this lawsuit has no chance of getting to a court is probably a good strategy for Argentina. The actual specific claims are not yet available, but I have a hard time imagining they are anything but frivolous.  The only claim I am aware of that was raised by a commenter to my post last week is that Judge Griesa exceeded his jurisdiction by ordering third-party banks not to pay out moneys on bonds issued under foreign law.  This is an interesting argument, and even if it were plausible, I don’t understand why Argentina has not raised that argument directly to the U.S. courts. And this would still not impact the bonds issued under New York law.

Bottom line: there is no chance that Argentina gets the U.S. to accept jurisdiction before the ICJ. Expect more grandstanding from the Argentine government as it tries to use the ICJ as an international public relations platform.

10 Responses

  1. This is some truly inspired, substantiated and sound legal analysis – nothing like Argentina’s imagined frivolous claims and arguments.

    Your bias would be somewhat less evident if you actually did at least try to think a little bit more carefully about the issues – even if Argentina ends up being wrong about them – instead of just imagining.

    Assuming this is grandstanding from Argentina and has no chance to actually win the case: a) would it not be interesting from an IL/IR perspective to think about the strategic use of the Court by Argentina?; b) would it not be in the US best interest to actually consent and win the case?; c) is there really nothing of substance to be gained by Argentina, in crafting arguments and strengthening its position for the future, if the US does not consent?

    You see? It was not that hard …

  2. a) Funny, I thought this post was all about “the strategic use of the Court by Argentina[.]”

    b) I don’t see that the US would have much to gain by consenting to jurisdiction; at least, not enough to outweigh the time and expense, the risk of a adverse judgment (or, even if the court found in favor of the US, some unwelcome development in the law that might constrain the US in the future). This is interesting to think about, however.

    c) I suppose Boccuzzi and Blackman would love the opportunity to rack up billable hours crafting new legal arguments, but it would seem they should’ve done so earlier.

  3. I just found today the information that Argentina has initiate proceedings at the ICJ agains the US.

    I do not think that the US will accept the jurisdiction, however this can have the opposite effect to them and give Argentina good PR under the international community.

    However, if the US does not accept the jurisdiction of the main international court, then why does Argentina has to comply with the ICSID arbitral awards that the US is always complaining and trying to enforce ( by suspending GPS and other trade measures )?.

  4. I see no frivolity in the violation of a State sovereign immunity of jurisdiction and execution that every State has upon its public funds (and the State right to apply them to its sovereign activity).
    Further, the lack of jurisdiction is still not decided; you should probably know that in International Law this is called “forum prorrogatum” and it is not the first time a State use this tool before the ICJ. In fact, Congo and Djibouti invoked it against France, and France accepted the ICJ jurisdiction. Probably a research should be done before writing a biased post which lacks argumentation.

  5. What triggered the comments is the adjective “frivolous” referred to the claim. I believe that, if the U.S. will accept the jurisdiction of the ICJ (which is unlikely) Argentina doesn’t have a strong case. Some of the ingredients of the case already surfaced in the Ara Libertad case and in some of the Joint and separate opinions of the judges. Two of them, while asserting that the issue should be resolved under US laws in US courts nevertheless quote the ICJ: “the immunity from enforcement enjoyed by States in regard to their property situated on foreign territory goes further than the jurisdictional immunity enjoyed by those same States before foreign courts” (Jurisdictional immunities of the State (Germany v. Italy: Greece intervening), Judgment, para. 113). I am not aware of all details of the case and I am in no way an expert in the subject matter, but it seems to me that the subjection of Argentina to U.S. Jurisdiction under the FAA between Argentina and the Banker Trust Company (under which the Bond are governed by the law of NY and subject to the jurisdiction of NY) doesn’t leave much room for arguing. In the agreement there is a clause under which Argentina has waived its right to claim immunity to the widest extend, under any other jurisdiction for the enforcement of the judgment and related judgment. This should also include orders directed to third parties and to those who would otherwise be in contempt. The limits of the said waiver has already been discussed in the courts of England, where the matter of contention became, beside the subjection to the English jurisdiction upon the FAA if the issue was related to commercial transactions.

  6. Julian, since you keep writing about Argentina’s frivolous intentions, let me just remind you that Argentina only agreed to US courts’ jurisdiction in relation to bonds governed by NY law. It did NOT do so with regards to bonds governed by European or local law.

    So, supposing Judge Griesa might have jurisdiction to come up with a very odd interpretation of the pari passi clause (actually, Griesa himself recognized back in 2004 that NML’s proposed interpretation of the clause was a very odd one) and later stop BNY from paying the bondholders whose bonds’ payment process passes through the US.
    He does NOT, however, have jurisdiction to enjoin BNY Brussels and other thrid party intitutions with NO link to the US whatsoever from transfering the funds to bonholders whose bonds’ payment process does NOT pass through the US or to prevent bondholders whose bonds are NOT governed by US law to get their money. Plus, by doing so judge Griesa is not only exceeding his jurisdiction but he is also impeeding Argentina to carry out a sovereign decision (the reestructuring of its sovereign debt) it has not submitted to US jurisdiciton.

    Of course, it is highly unlikely that the US will accept the jurisdiction of the ICJ, however, to talk about frivolity is quite a different thing. Customary international law on state immunities provides some very good arguments for Argentina to maintain its position. And, recall the ICJ has consistently asserted that exceptions to state immunity are to be read narrowly (Germany v. Italy, anyone?).

  7. I´m not so sure the US doesn´t have an interest in accepting ICJ jurisdiction. The actual decision of Griesa, as it stands, jeopardize a negotiating process that may affect negatively many other (american) creditors of Argentina bounds.

    Also, I don´t think it would be so awkward for the US – at least the executive branch – to accept the jurisdiction as a means to force its judiciary to eventually reverse the decisions. The risks of economic instability in the southern cone would surely outweight the interest of few vulture creditors.

    Well, it remais to be seen. But I would be more careful with this kind of analysis. The claims are not so absurd and international law may have something to say about those kind of attacks in sovereign debt restructuring.

  8. While I largely agree with Julian, I think some of the commenters have a point regarding the likelihood that the US would grant jurisdiction.

    Singer and the current administration aren’t precisely the best of friends, and although relations with Argentina aren’t exactly vital to US interests, they are necessarily involved in our foreign policy.

  9. So it’s frivolous for a country to stand for its sovereignty and for its widely succesful sovereing debt reestructure to avoid condemning part of your population to poverty…

    The US must answer for the actions of its judiciary. And Thomas Griesa’s ruling ignores Argentina’s sovereign decision to reestructure its public debt, and Argentina’s sovereign immunity from jurisdiction and from execution over funds intended for use in sovereign activities. Griesa’s decision is also biased and thus violates the basic right to an impartial judge and due process. Both Griesa and the mediator Pollack have constantly publicly trashed Argentina’s current and past governments. Pollack even announced Argentina’s default through a press realease! All this is unacceptable not only to Argentina as a sovereign country but rather to any individual subject to a legal process.

    It is true that the US won’t accept the jurisdiction of the ICJ and thus the ICJ has no jurisdiction in this case. But the US behaviour is outrageous and so is this post.

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