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US Supreme Court ruling clears path for suit over YPF nationalisation
ARGENTINA’S national oil company (NOC) YPF has su ered a serious setback in its e ort to fend o a legal challenge from a former share- holder opposed to the nationalisation of the company in 2012.
YPF has been trying to prevent Madrid- based Petersen Energia Inversora SAU, which held 25% of its shares prior to nationalisation, from moving forward with a lawsuit led in a US federal court.
Petersen claims that that the Argentinian government breached the contractual prom- ise spelled out in YPF’s bylaws when it failed to make a tender o er for the stake. In July 2018, the Second US Circuit Court of Appeals ruled in its favour.
Since then, Buenos Aires and YPF have been seeking to derail the suit by arguing that the US Foreign Sovereign Immunities Act barred Petersen from pleading its case in the Southern District Court in Manhattan. ey asserted that the administration of former President Cristina Kirchner had not exceeded the bounds of its authority by renationalising the company.
Additionally, they noted that Argentina’s parliament had passed legislation approving this move, which involved the expropria- tion of 51% of YPF’s shares from the Spanish company Repsol. Buenos Aires took this step
without trying to buy out the NOC’s minority shareholders.
On June 24, the US Supreme Court rejected the Argentinian side’s arguments. Instead, it cited FSIA’s provisions that make exceptions for commercial activities and ruled that Bue- nos Aires should have proceeded with the ten- der o er prescribed in its bylaws. Since YPF was listed in the US, the court wrote, its sharehold- ers were entitled to assert their rights in the fed- eral court system.
e Supreme Court’s ruling clears the way for Petersen to continue legal action against the Argentinian company. e Madrid-based company has said it is not trying to reverse the renationalisation of YPF but rather to protest Argentinian authorities’ failure to follow rules governing shareholder protection.
e NOC has vowed to continue defend- ing its position in court. On June 24, it said in a statement submitted to the Buenos Aires Stock Exchange that it would “utilise all the legal recoursesnecessarytodefenditsinterests.”
Meanwhile, Burford Capital Ltd, which is nancing Petersen’s court case against YPF and Argentina, revealed on June 24 that it had sold another 10% of equity in the claim against Bue- nos Aires for $100m. is would put the total value of the claim at $1bn. ™
MercoPress
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Week 25 26•June•2019