Argentina awaits the Supreme Court after the YPF case is closed at first instance

New York federal judge Loretta Preska has vacated her 2023 judgment ordering Argentina to pay more than US$16 billion over the expropriation of oil company YPF and formally closed the case at first instance. Its future now depends on whether the US Supreme Court agrees to review it, as litigation funder Burford Capital requested in early October.

Preska’s order incorporates the ruling by the Second Circuit Court of Appeals, which overturned the judgment on March 27. Sources at Argentina’s Treasury Attorney’s Office told the newspaper Infobae that it was a “merely procedural” step the government had expected. In their decision, judges Denny Chin and Beth Robinson, with José Cabranes dissenting, held that Argentine expropriation law precludes claims such as the plaintiffs’ and that a company’s bylaws do not constitute a contract giving rise to such damages. They also vacated the order requiring Argentina to hand over its YPF shares. In June, the full court declined to rehear the case.

Burford, which funds the litigation and acquired the rights of former minority shareholders Petersen and Eton Park, described the appeals ruling as “gravely mistaken, wholly unprecedented and of exceptional importance”. The Supreme Court is not obliged to take the case: it receives between 7,000 and 8,000 petitions per term and usually accepts about 80, and has no deadline to decide. Burford has also brought proceedings before the World Bank’s International Centre for Settlement of Investment Disputes.

Preska’s judgment, which exceeded US$18 billion with interest, was the largest ever imposed on a state by a US court. The litigation stems from the expropriation of 51% of YPF in 2012 under the government of Cristina Fernández de Kirchner. “We will continue to defend the interests of the State,” official sources said.