|[August 23, 2013]
ATFA Welcomes Second Circuit Ruling in Argentina Debt Case
WASHINGTON --(Business Wire)--
The American Task Force Argentina (ATFA) welcomes a ruling from the U.S.
Court of Appeals for the Second Circuit that upholds the rule of law and
reinforces the principle that the law applies equally to all parties
that submit to the judgment of U.S. courts.
Regarding the Court's ruling, ATFA Executive Director Robert Raben made
the following statement:
"Today's unanimous, well-reasoned decision is a victory for the rule of
law and the enforcement of contracts in the United States."
"In order to raise billions of dollars at inexpensive rates in the U.S.
financial markets, Argentina promised in its bond contract to submit to
the jurisdiction of U.S. courts, adhere to New York law and waive its
sovereign immunity. Since defaulting on those bonds in 2001, Argentina
has ignored those promises, waged a vicious campaign against its
creditors, and resisted every attempt by creditors to engage in
good-faith negotiations. ATFA hopes that Argentina will see today's
ruling as motivation to resolve its financial obligations through
good-faith negotiations and discontinue its defiance of court judgments
and the rule of law."
The Second Circuit's decision directly addressed Argentina's uniquely
defiant and disorderly treatment of its unpaid creditors and U.S.
courts. The decision cited Argentina's threats to pay "not one dollar"
to its unpaid creditors and to "not voluntarily obey" the Court's
orders, despite being fully able to pay. "It is within this context that
we review the amended injunctions for abuse of discretion and, finding
none, we affirm," the Court wrote.
Importantly, the Court rejected Argentina's claims that upholding the
lower court's orders would force it to default on its current debt. The
Court cited the lower court's finding that Argentina "has the financial
wherewithal" to pay both holders of its current debt and holders of its
defaulted debt. The Court rightly decided that it was "unwilling to
permit Argentina's threats to punish [holders of its current debt] to
dictate the availability or terms of relief [available to holders of its
The Court also rejected Argentina's claims that upholding the lower
court's orders would have a negative impact on future sovereign
restructurings. The Court called these claims, "speculative, hyperbolic,
and almost entirely of the Republic's own making." The Court called this
case "an exceptional one with little apparent bearing on transactions
that can be expected in the future."
In fact, this ruling should serve to increase global economic stability
by discouraging sovereigns from attempting to follow what the ratings
agency Moody's called Argentina's "unique[ly] unilateral and coercive
approach to debt restructuring."
The Second Circuit appeared to agree, observing that "cases like this
one are unlikely to occur in the future because Argentina has been a
uniquely recalcitrant debtor," among other reasons.
Today, ATFA renews its calls for Argentina to sit down with its
creditors and reach a fair resolution of its defaulted debt.
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