Argentina’s embattled Libertad gunship has been freed from its three-month imprisonment in a Ghanian port, but the lawsuits from angry American creditors continue. Fortunately for its wounded national pride, Argentina has a new ally in its U.S. court battles: the U.S. attorney general’s office. The Wall Street Journal reports that the AG’s office filed a brief on Friday backing up Argentina’s legal claims against angry American creditors:
“By unduly restricting the immunity afforded to foreign state property, the decision not only contradicts this Court’s precedent, but could adversely affect U.S. foreign relations and threaten U.S. government assets,” the U.S. Attorney General’s office said in a friend-of-the-court brief filed with the Second Circuit court of appeals in New York Friday.“While the United States does not condone Argentina’s actions in the international financial arena, Argentina’s petition for rehearing en banc presents a ‘question of exceptional importance,’ and rehearing is needed to secure the uniformity of the court’s decisions.Accordingly, the petition should be granted,” the Attorney General’s office said in the brief.
It’s not hard to see why the administration would do this. Washington may have little love for Argentina’s recent decisions on finance or foreign policy, but no sovereign government is likely to be receptive to the precedent that state assets can be seized by private companies when a state reneges on its debt.But while Argentina now has some legal backup, this saga is far from over. Even the support of the attorney general is no guarantee of success in the U.S. legal system, and creditors like Elliott Management Corp. have made it clear that they intend to fight this case as aggressively as possible. Creditors and rogue sovereigns both have rights, and the way this dispute is decided will affect financial markets around th world. This court battle should be interesting to watch.