US Supreme Court to hear Argentina case
- 12 January 2014
- From the section Business
The US Supreme Court has agreed to rule on whether Argentina's assets are protected from hedge funds seeking to be paid back.
The long-running legal saga started after Argentina's record debt default more than 11 years ago.
The country objected to a lower court ruling that gave creditors the power to pursue its non-US assets.
Argentina's petition to the highest US court also has the support of the US government.
In 2002, Argentina defaulted on some $100bn (worth £60.7bn in 2014) of debts and has since restructured its debt twice, cancelling around 75% of the nominal value of the bonds.
About 92% of the country's bondholders agreed to write off most of the amount owed to them.
But hedge funds NML Capital and Aurelius are demanding 100% repayment of the $1.3bn, plus interest.
Argentina refuses to pay anything to investors who declined to participate in a previous debt reduction deals involving most of the nation's lenders.
The investors were so determined to get their money that they went to court to have an Argentine ship, the Libertad, impounded in Ghana last year. After several weeks, the ship returned home.
Numerous US courts have said that Argentina must pay back the money - most recently in August 2013.
But the appeals court held off forcing Argentina to pay, pending an appeal to the Supreme Court, which is considered unlikely to hear the full case.
In this instance, the Supreme Court will decide whether the US Foreign Sovereign Immunities Act (FSIA) protects Argentina's property from being seized.
The US Justice Department is taking the side of Argentina in this case. It urged the top court to hear the case and strike it down, arguing that the FSIA protects foreign governments' property "unless the property is used for a commercial activity in the United States".