US Court rejects Argentina's sovereign-immunity argument

A US Federal Appeals Court in New York rejected Argentina’s argument that its sovereign immunity was affected by a lower-court ruling compelling compliance with subpoenas sought by NML Capital Ltd. for collection of five money judgments.

The US Court of Appeals backed a September 2011 ruling by US District Judge Thomas Griesa in Manhattan, ordering non-parties Bank of America Corp. and state-owned Banco de la Nación Argentina to comply with the subpoenas, rejecting Argentina’s argument that its sovereign immunity was affected.

The judgment stems from Argentina’s 2001 default on $80 billion owed to foreign creditors.

Beginning in 2003, NML filed 11 actions in federal court seeking to collect on its defaulted Argentine bonds. NML has won five money judgments in its favour totalling $1.6 billion. Griesa has also granted summary judgment to NML in six other actions in which it claims total more than $900 million, the appeals court said.

NML, an Elliott Management Corp. affiliate, has sought “discovery” or evidence about Argentina’s property and served subpoenas, seeking to gain an understanding of how Argentina moves its assets. After Griesa granted the request, Argentina appealed, saying that by compelling disclosure about Argentinian assets abroad, the order violates the Foreign Sovereign Immunities Act.