Gov’t drafts appeal to the ICJ in The Hague
Economic cabinet insists on the removal of Pollack as mediator
Legal and Technical Secretary to the Presidency Carlos Zannini is overseeing a group of experts in international law as they draft the suit the government will file against US Judge Thomas Griesa’s ruling on full repayment to holdout bondholders at International Court of Justice in the Hague, according to Noticias Argentinas, a news agency. The government will reportedly emphasize its rights as a member of the UN, the International Monetary Fund and the Organization of American States.
With international legal action in the works, deputy Economy Minister Emmanuel Álvarez Agis said yesterday that the government will insist on the removal of lawyer Daniel Pollack as mediator in the lingering dispute with the holdouts. Kicillof and Agis argue the mediator has acted subserviently to the interests of the plaintiffs.
“We are going to make the formal request and we will see what the judge responds,” the official told Nacional Rock radio.
He reiterated that “more than being a mediator, Pollack has put on the vultures’ shirt, because he’s not demanding anything from them.”
The government’s lawyers on Friday requested that Pollack be removed, but the motion was denied. Argentina will nonetheless present a written request.
The government will thus refuse to accept Griesa’s ruling as the final instance of legal recourse, and will challenge his pari passu ruling imminently in the Hague.
International law dictates that if a sentence by a country’s judicial system affects another state, the dispute can be brought before the international tribunal in the Netherlands.
69th UN session
Fernández de Kirchner could use her allocated speaking time at the 69th Session of the UN General Assembly to announce the plan with Obama present in the audience.
But taking the case beyond challenging only NML Capital and Aurelius Management to formally locking horns with the US Judiciary — with the unavoidable implication of questioning the North American country’s permeability as a whole to the workings of controversial interest groups — would be ambitious.
US approval required
Taking the case before the International Court of Justice wouldn’t be straightforward.
“The states concerned must also have access to the court and have accepted its jurisdiction, in other words they must consent to the court’s considering the dispute in question. This is a fundamental principle governing the settlement of international disputes, states being sovereign and free to choose the methods of resolving their disputes,” the tribunal’s website reads.
The Barack Obama administration would therefore have to accept subordinating a decision by the US Supreme Court to the international jurisdiction of The Hague, a move that pundits consider unlikely considering the United States did not file an amicus brief and maintained a relatively neutral position during the pari passu court battle.
A further drawback is that credit rating agencies would extend the duration of their vetting of Argentine securities under the label of “selective default.”
This would delay the return to international credit markets the government had seemingly sought in resolving pending issues such as compensating Repsol for the expropriation of its majority stake in YPF.
The CNV securities commission was on Friday ordered to ask its US counterpart, the Security and Exchange Commission (SEC), for “precise information about CDS transactions to investigate if the vulture funds earned a huge profit by not reaching an agreement, either directly or via third parties.”
The request came the same day the International Swaps and Derivatives Association (ISDA) decided to declare Argentina in default, which triggered credit default swaps worth a total US$1 billion. ISDA’s determinations committee, which Elliot Management is a member of, voted unanimously 15-0 that a “failure to pay” event occurred on July 30, when Argentina missed a coupon payment on some restructured foreign-law bonds.
This issue could also be included as part of the Argentine appeal before the ICJ.
in the works
Economy Minister Axel Kicillof had maintained immediately after the last and ultimately unsuccessful negotiations with court mediator Daniel Pollack: “We are going to take every measure so that this unprecedented and unjust situation is not perpetrated,” Kicillof said, adding the country would “seek a just solution for 100 percent of its creditors.”
“This is probably going to push us into a technical default,” Kicillof anticipated on July 3, speaking at the UN. “Whichever way you look at it, this ruling is forcing Argentina toward the risk of economic crisis.”
Many countries have expressed explicit support for the country in the struggle against the “vulture funds,” both at summits and special meetings, but also in the shape of amicus briefs by Brazil, Mexico and France before the US Supreme Court. The government will seek to capitalize on such sympathy and demand for a reform to the international financial system in terms of dealing with state bankruptcy and debt restructuring.