I’ve Thought About It Some More: And I Still Think Argentina’s World Court Lawsuit Against the U.S. is Bogus
Reasonable people can disagree about the legal merits of U.S. court judgments against Argentina requiring it to pay holdout creditor hedge funds. But I can’t say the same about Argentina’s recently announced claim against the United States at the International Court of Justice. Based on Argentina’s own description of its legal arguments, I stand by my earlier assessment: Argentina’s international law claim against the United States is frivolous and would have almost no chance of succeeding, even if Argentina somehow convinced the U.S. to accept ICJ jurisdiction.
Although Argentina’s complaint to the ICJ has not been publicly released, it is likely that Argentina will accuse the U.S. of allowing its court system to violate Argentina’s immunity rights as a nation-state and to interfere in Argentina’s ability to pay its non-holdout creditors through U.S. banks.
What makes this claim ridiculous is that Argentina chose to grant the U.S. judicial system a wide-ranging jurisdiction over bonds it sold to private investors. When issuing those bonds, Argentina promised that it had “irrevocably agreed not to claim and has irrevocably waived” immunity “to the fullest extent permitted by the laws of the U.S. and New York. Argentina also agreed to allow “any of its revenues, assets or properties” to be subject to judicial execution and enforcement to whatever degree permitted by U.S. law.
The power of a country to give up its sovereign immunity rights is well-established under international law. As Article 19 of the 2004 Convention on Jurisdictional Immunities states, sovereign assets will be immune from judicial measures unless that sovereign “has expressly consented to the taking of such measures as indicated by…a written contract.” In other words, nations can waive judicial seizure of sovereign assets, and there is no doubt Argentina did so here. U.S. courts have the final say on what level of immunity can be waived under U.S. law. Argentina’s claim would have to be that the U.S. courts exceeded the limits on waiver that might exist under international law, for instance, on seizure of diplomatic or military or central bank assets. But the U.S. courts have specifically rejected any attempts to reach those assets and have continued to protect those assets from the holdout creditors.
Moreover, having granted jurisdiction to U.S. courts, there is little evidence that those courts treated Argentina in a discriminatory or unfair manner. Argentina was represented by one of the world’s premier law firms, Cleary Gottlieb, and the U.S. government repeatedly filed statements to the court supporting Argentina’s positions. US courts ruled in favor of Argentina in key cases shielding Argentina’s central bank assets from creditors. Nothing in this record supports Argentina’s attempt to smear the U.S. judicial system by filing an ICJ lawsuit.
I suspect that Argentina’s international lawyers know that their ICJ claim has no merit. As Argentina’s lawyers know, the International Court of Justice does not have the power to hear cases unless governments in a dispute give their consent. The U.S. government (like many other countries) has not given its consent to be sued in general, and has specifically rejected jurisdiction in this case. The ICJ has no power to hear Argentina’s case, and Argentina knows this.
It is likely that Argentina is hoping to highlight the U.S. government’s refusal to consent to ICJ jurisdiction to score more propaganda points in the court of world public opinion. Indeed, Argentina’s President has said she will present her claim directly to President Obama and perhaps the General Assembly during next month’s U.N. General Assembly meetings. Even though the ICJ will likely never hear this case, the reference to a pending case that the U.S. will not allow to be litigated in the ICJ will be a useful talking point.
At the end of the day, Argentina has no case under international law against the United States, and it probably knows it has no case. Which is why this legally meritless case should be understood as just another public relations ploy in Argentina’s continuing battle with its holdout bondholders.