Argentina Asks US Appeals Court to Delay YPF Turnover Order

Argentina asked a US appeals court for an emergency delay of an order requiring it to hand over by a Monday deadline its controlling stake in energy company YPF SA to help satisfy a $16 billion judgment.

The government of Argentine President Javier Milei requested the delay Thursday afternoon, hours after filing notice it was appealing the June 30 handover order by US District Judge Loretta Preska in New York. The South American nation likened Preska’s order to a foreign court directing the US government to “pack up the gold stored at Fort Knox and ship it abroad.”

Argentina wants the federal appeals court in New York to put the order on hold while it considers the country’s arguments to overturn Preska’s decision, a process that could take months.

Preska, who ruled in 2023 that Argentina owed billions to shareholders affected by a 2012 nationalization of YPF, found last month that the country’s 51 percent stake wasn’t shielded by foreign sovereign immunity. Preska ordered Argentina to turn over the shares within 14 days to a group led by Burford Capital, a litigation funding firm that acquired the interests of original YPF shareholders. 

An Argentine law passed at the time of the nationalization bars Milei’s government from transferring the government’s YPF stake without a two-thirds vote of the national Congress. Without a delay, Argentina on Monday faces a choice among “changing its own domestic laws, violating those laws, or disregarding a US court’s order,” the country said in a court filing.

The June 30 ruling came as a major blow to Milei, who inherited the case when he took office about 18 months ago promising to turn around Argentina’s flailing economy. Argentina’s sovereign bonds and YPF shares both dropped after the ruling, while the country’s parallel exchange rate weakened. 

Milei vowed to appeal Preska’s YPF decision in a June 30 post on X in which he also blamed his predecessors for mishandling the case.

Argentina’s federal government owns 26 percent of YPF and has custody over provincial governments’ 25 percent stake. The combined stake covered by Preska’s order is worth about $6 billion.

Preska ruled in 2023 that the nationalization violated YPF bylaws that required the company to make a tender offer to all shareholders and ordered the government to pay $16 billion in compensation and interest. But Burford, which would receive the largest share, has so far had no luck trying to collect the judgment.

The judge noted that in her most recent judgment, in which she rejected Argentina’s arguments that ordering it to turn over YPF shares would violate the principle of international comity – respect for another country’s laws and official acts.

“While the Republic demands that this court extend comity, it simultaneously refuses to make any effort to honor the court’s unstayed judgment,” Preska said. “Comity is not a one-way street.”

Her ruling went against the position of the US government as well as Argentina’s. In November, the Biden administration urged Preska not to order Argentina to hand over the shares, saying such a ruling “would violate well-established laws of sovereign immunity.” The US government also expressed concern that such a ruling could lead to “reciprocal adverse treatment of the United States” in foreign courts.

The case is Petersen Energia Inversora SAU v. Argentine Republic, 15-cv-02739, US District Court, Southern District of New York (Manhattan).