As debtors attempt to use U.S. courts to collect on Argentina, the verdict is mixed but mostly negative. Good luck with that ship thing.
The biggest blow occured on March 1, 2010, when the U.S. Supreme Court ruled that Argentine pension funds in the United States could not be attached. Actually, there was no ruling as laymen understand it, but the Court denied an appeal, and so that was that. The next day the Argentine pension agency repatriated $200 million. (The actual chain of events was an attachment order by Judge Griesa in New York, that the Second Circuit Court of Appeals tossed out in October 2009.) Soon afterwards, on March 8, Griesa ruled that billions in pension assets were “immune from attachment, restraint and execution.” A second attack on $105 million in Argentine central bank assets failed in June of this year for different reasons: central bank reserves are immune under the Foreign Sovereign Immunity Act of 1976 (FSIA).
Thing is, all hope is not lost. The Second Circuit tossed the decision not on the grounds that pensions are an essential state function and not commercial activity, but because the Argentine government had not had a chance to use the recently-nationalized funds for any purpose at all. (Really, it makes sense: read the decision.)
Still, it looks grim for creditors. The Second Circuit declined to interfere with Argentina’s payments to creditors who accepted its restructuring deal: so much for the court orders I referred to in the last post. And that ship in Ghana? Argentina is gonna get it back.
In other words, the creditors are gonna keep going around the world hassling Argentina but it amounts to a hill of beans ... unless two things happen. One, Argentina suddenly needs to borrow on world markets again. Two, ICSID rules against Argentina. It is weird for ICSID to take on a debt case, but it seems to have done so ...
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