A massive $16.1 billion judgment against Argentina for its 2012 nationalization of YPF, the country’s state energy giant, may not survive U.S. appeals court scrutiny. During a tense hearing in Manhattan, two of three appellate judges openly questioned whether the high-stakes battle should ever have landed on American soil.
Argentina is fighting to undo the ruling that ordered it to pay former YPF shareholders — Petersen Energía Inversora and Eton Park Capital Management — for losses stemming from the government’s takeover. The stakes are immense: with interest, the potential payout has ballooned to nearly $18 billion, a sum Argentina says could devastate its fragile economy.
Circuit Judge Denny Chin summed up the court’s unease bluntly: “It does have a feel like this should have been in Argentina.” He wondered aloud why U.S. judges were parsing Argentine statutes for actions taken by a sovereign nation on its own territory. “If the tables were turned,” he asked, “would the United States want an Argentine court deciding cases under American law?”
That line of thinking rattled investors in Burford Capital, the U.K.-based litigation funder bankrolling the shareholders’ case — its stock tumbled up to 15% after the hearing.
The underlying dispute dates back to Argentina’s 2012 move to expropriate 51% of YPF from Spain’s Repsol without making a tender offer to other major investors. Then-President Cristina Fernández de Kirchner justified the takeover as a national necessity to fix declining oil and gas output. A U.S. judge later found Argentina in breach of its obligations and ordered the enormous payout.
But Argentina’s legal team warned that the penalty is “life-threatening” for a nation already drowning in debt and inflation. They argued the award amounts to nearly half of the country’s 2024 budget — the equivalent, they said, of ordering Washington to cough up over $2 trillion.
For President Javier Milei, who has built his reputation on slashing public spending and restoring economic discipline, the case could derail his reforms just as his government begins to show signs of stabilization. The libertarian leader, who has recently secured the backing of U.S. President Donald Trump and floated a potential $40 billion rescue package, has cast the judgment as an attack on national sovereignty.
Petersen’s lawyer countered that Argentina’s “checkered economic past and penchant for nationalism” justified bringing the case to the U.S., where investors could expect a fairer shake than in Buenos Aires.
The appeals court gave no timeline for its decision — though rulings in such complex, politically charged disputes often take months. For now, Argentina has won a temporary reprieve: the order requiring it to hand over YPF shares remains on hold.
The outcome could reshape not only Argentina’s fiscal future but also the limits of how far U.S. courts can reach into the affairs of foreign states.
