This is not the latest Malbec-themed eco-lodge in Mendoza. The Supreme Court, led by Justice Scalia, determined in a 7-1 decision that Argentina’s hold-out creditors can use US courts to obtain information about the government’s assets all around the world. The case is called Republic of Argentina v. NML Capital (“NML”). NML was requesting information on the global transactions made for Argentina by Bank of America and Banco de la Nacion, including with individuals, defense ministries, subfederal governments, and more.
This information would be used to eventually attempt to ask courts (in the US and elsewhere) to attach Argentina’s assets to make up for what the creditors feel they are owed. In short, the Supreme Court’s authorized a global fishing expedition to find Argentine assets. This is an interesting contrast with the sharp limitations put on tax authorities using similar techniques to find laundered and tax-evaded income (see page 52 of this report, for instance).
NML is the latest in a long saga of investor and bondholder complaints related to steps that Argentina took following its 2001-02 financial crisis.
The case shows how US courts are becoming increasingly embroiled in sensitive foreign affairs issues. It comes on the heels of a March Supreme Court decision (BG Group PLC v. Republic of Argentina) that found that US courts will defer to investment arbitrators’ awards against sovereign states, even when (as Argentina and the Obama administration suggested in their losing argument) that the investor complainant hadn’t complied with the terms of the underlying investment treaty. Chief Justice Roberts, in a dissent, wrote that the majority “trivializes the significance to a sovereign nation of subjecting itself to arbitration anywhere in the world, solely at the option of private parties…”
The present case is a bit different.
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