US backs Argentina’s fight against asset seizures in $16bn court case

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The US government has come to the aid of Argentina by urging a New York court to block the seizure of the country’s assets as partial fulfilment of a $16bn legal judgment, for fear of reprisals against American interests in foreign territories.

Claimants in the case, former minority shareholders of state-controlled energy firm YPF, which Argentina expropriated in 2012, had asked a judge to order the handover of the country’s remaining multibillion-dollar stake in the company.

Argentina, which is appealing against the original judgment, has fought against the request, arguing it goes against “long-recognised considerations of international comity governing the enforcement of judgments against foreign sovereigns”.

In a letter to the court on Wednesday, the US government, which is not directly involved in the civil matter, seemed to strongly support that position, stating an “injunction and order requiring Argentina to turn over its sovereign property located in its own territory would violate well-established laws of sovereign immunity”.

It added that to force the administration of Argentina’s President Javier Milei to relinquish the shares would implicate “important foreign policy interests of the United States with respect to reciprocity”.

“Such an order could in turn put US property at risk, given the potential for reciprocal adverse treatment of the United States in foreign courts,” the letter added.

Earlier this year, Brazil, Chile and other large South American economies asked a US appeals court to overturn the $16bn judgment in its entirety, claiming that allowing the decision to stand would amount to interference in other sovereign states’ legal affairs.

Officials in Milei’s government have privately vowed to fight to the bitter end to reduce the country’s legal liabilities and protect Argentina’s scarce resources.

The cash-strapped South American nation has also sought to protect its assets from seizure by withdrawing them from foreign jurisdictions, as it faces other judgments, and looming deadlines to pay up.

Last month the UK supreme court declined to hear Argentina’s appeal of a $1.5bn judgment over changes to the way the country calculates GDP, which reduced payouts on its growth-linked bonds. The government has until November 28 to pay bondholders or face enforcement action.

A lawyer representing Argentina in the YPF matter declined to comment. Burford Capital, a litigation finance firm that largely funded the lawsuit, did not immediately respond to a request for comment.