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US sides with Argentina in conflict over $16 billion YPF judgment

The U.S. federal government sided with Argentina in urging a federal judge not to force the cashstrapped nation to quit its 51% stake in oil and gas business YPF to partially satisfy a $16.1 billion court judgment.

In a Wednesday night letter, called a declaration of interest, to U.S. District Judge Loretta Preska in Manhattan, the Department of Justice said it has actually long argued that U.S. courts can not order the seizure of foreign sovereign home situated outside the United States.

It also stated it would break sovereign immunity to need Argentina to turn over the shares to 2 financiers represented by lawsuits funder Burford Capital, which allowing such a turnover could hinder U.S. foreign policy.

Argentina is appealing Preska's September 2023 choice to award the $16.1 billion to Petersen Energia Inversora and Eton Park Capital Management. Burford has said it expected to get 35% and 73% of their respective damages.

In a declaration on Thursday, Burford stated the letter resolved a narrow concern of law, and did not reflect the Justice Department taking a wider position in the case.

Robert Giuffra, an attorney for Argentina, decreased to comment.

Led by libertarian President Javier Milei, Argentina has slashed public spending to lower inflation, which has fallen however stays above 200% annualized, though its procedures have deepened an economic downturn and contributed to hardship rates increasing above 50%.

However Milei's ties with U.S. President-elect Donald Trump could aid with Argentina's $44 billion loan program with the International Monetary Fund, which could be reviewed next year.

The $16.1 billion judgment occurred from Argentina's 2012 seizure of the 51% YPF stake held by Spain's Repsol, without tendering for shares held by minority financiers.

Burford has actually said Argentina's many years of structuring its possessions to avoid enforcement justified turning over the YPF stake, and that a commercial activity exception to the federal Foreign Sovereign Immunities Act enabled a turnover.

In Wednesday's letter, the Justice Department said Congress did not mean when passing that law to get rid of resistance for foreign sovereign residential or commercial property such as the YPF shares.

It said ending resistance would create an abnormality where a. foreign nation's residential or commercial property inside the United States would have. greater security than property inside the country itself.

The Justice Department likewise said that for factors of comity,. meaning the regard that nations afford each other by restricting. the reach of their laws, New york city state's own turnover statute. did not require Argentina to quit the YPF shares.

A contrary conclusion might put U.S. residential or commercial property at threat, the. department stated, since foreign nations might manage the. United States comparable treatment in their own courts.

It is uncertain when Preska will rule.

(source: Reuters)