US judge declares Argentina in contempt of court News
US judge declares Argentina in contempt of court

[JURIST] Judge Thomas Griesa of the US District Court for the Southern District of New York [official website] declared Argentina in contempt of court Monday for the ongoing debt dispute after Buenos Aires refused to pay two US hedge funds and sought to sidestep his court order that forbids the government from paying only the bondholders it chooses. The dispute stems from Argentina’s bond default in 2001. The US hedge funds—Paul Singer’s Elliott Management and Aurelius Capital Management—did not participate in the country’s debt restructuring following the 2001 default. Griesa’s ruling blocked Buenos Aires from making payments to the majority of its bondholders unless it pays out in full to the hedge funds. He will decide next what sanctions to impose.

Earlier this month Argentina signed into law [JURIST report] a bill to continue making payments on foreign-held bonds outside of US jurisdiction, circumventing the US court ruling [JURIST report] that prohibits Argentina from paying its bondholders until the dispute is resolved. In August Argentina initiated legal proceedings against the US in the International Court of Justice [official website] over US interference in the restructuring of Argentina’s foreign debt [JURIST report]. Argentina contends that the US violated its sovereignty and immunities as a result of judicial decisions adopted by US tribunals concerning the restructuring of the Argentine public debt. In June Argentina appealed to the US Supreme Court [official website], but the court refused to hear its appeals, denying certiorari [JURIST report] in two cases: Republic of Argentina v. NML Capital, Ltd. [docket; cert. petition, PDF] and Exchange Bondholder Group v. NML Capital, Ltd. [docket; cert. petition, PDF]. That same day the court ruled in a related case, also named Republic of Argentina v. NML Capital, Ltd. [SCOTUSblog backgrounder; JURIST report], that a hedge fund can subpoena banks for information about Argentina’s non-US assets. In an opinion by Justice Antonin Scalia, the court held that no provision in the Foreign Sovereign Immunities Act [text, PDF] immunizes a foreign-sovereign judgment debtor from post-judgment discovery of information concerning its extraterritorial assets.