Investment firms Petersen Energia and Eton Park have asked the U.S. Supreme Court to revive a $16.1 billion judgment against Argentina arising from the country’s takeover of energy company YPF.
The petition challenges a March ruling by the U.S. Court of Appeals for the Second Circuit, which set aside the massive award and concluded that the investors’ claims should be dealt with under Argentine law and in Argentine courts.
The investors argue that the appeals court went too far by allowing Argentina to rely on its domestic legal framework to avoid facing the claims in the United States. They are seeking to restore a judgment that followed more than a decade of litigation.
Dispute dates back to YPF nationalisation
The case stems from Argentina’s 2012 decision to nationalise a 51% controlling stake in YPF, which had previously been held by Spain’s Repsol.
Petersen Energia and Eton Park contend that Argentina breached YPF’s corporate bylaws when it took control without making a mandatory tender offer to the company’s other shareholders.
Those bylaws had been amended before YPF’s 1993 listing on the New York Stock Exchange. Under the provisions, a government acquisition of majority control would trigger an obligation to make an offer to the remaining shareholders.
A U.S. district court eventually awarded the investors $16.1 billion following a three-day trial focused on damages. The amount was described in the Supreme Court petition as the largest commercial judgment in U.S. history.
Investors challenge appeals court ruling
The new Supreme Court petition raises broader questions about disputes involving foreign governments and the limits of domestic sovereign laws in U.S. litigation.
The investors are asking whether a foreign government can invoke its own laws to force claims into its domestic courts even when U.S. jurisdiction exists under the Foreign Sovereign Immunities Act.
They also question whether American courts should accept a foreign government’s interpretation of its own laws when that interpretation was raised for the first time during an appeal.
Former U.S. Solicitor General Paul Clement filed the petition on behalf of the investors. Their filing argues that the Second Circuit’s decision conflicts with Supreme Court precedent and is inconsistent with rulings from other federal appeals courts.
Argentina’s Treasury Solicitor’s Office said the filing was an expected procedural step and that the government was already preparing its response.
The Supreme Court will now decide whether to take up the investors’ challenge and potentially reopen one of the largest commercial disputes ever to reach the U.S. courts.
