November 1, 2014
Griesa threatens contempt ruling
State Department says world court is ‘not an appropriate venue’ for dispute
US District Judge Thomas Griesa threatened a contempt-of-court order yesterday if the country continues issuing what he described as false statements about having made a required debt payment on restructured sovereign bonds, though he quickly added he most desires a peaceful negotiated end to the long-running debt dispute.
Later in the day, the US said it would not agree to grant the International Court of Justice (ICJ) jurisdiction on the case filed yesterday by Argentina for The Hague court to take action over the country’s sovereign debt dispute. A State Department spokesman said the UN tribunal would not be “the proper venue” for the dispute.
In his office in Manhattan, Griesa railed at Argentina’s lawyers from Cleary Gottlieb Steen & Hamilton following the publication of another so-called legal notice insisting the government has met its payment requirements and was therefore not in default.
Griesa said these notices were “regularly” and “systematically” omitting what he described as the country’s vital obligations. He held a newspaper copy of the notice as he threatened the contempt-of-court order.
Nevertheless, Griesa said he was not going to go further than a warning for now, but that may change. He reiterated that the two sides must continue negotiating with the help of mediator Daniel Pollack.
Argentina has published legal notices in recent weeks disparaging Griesa and Pollack, who got the two sides to meet face-to-face for the first time in nearly 13 years but could not get them to an agreement by a July 30 deadline. At the same time, the government said it has no pending obligations since it has already transferred the money into a trustee account to pay its creditors.
“We will continue to work tirelessly to defend Argentina’s rights,” Economy Minister Axel Kicillof said on public television yesterday, adding that at the hearing in New York yesterday “Judge Griesa did not resolve anything.”
Jonathan Blackman, Argentina’s lead lawyer, told Griesa his firm Cleary Gottlieb did not aid in preparing the government’s latest legal notices. He also complained of being attacked and lampooned by the lobby group American Task Force Argentina, which is funded by holdout investors.
Blackman said Argentina has “made it clear it does want to engage with all its creditors” and that talks need to continue “in some fashion.”
Last week, Blackman said a negotiated solution covering debt obligations to all bondholders was necessary because Argentina would owe over US$20 billion to various bondholders triggered by paying the US$1.5 billion owed to US hedge funds. Those hedge funds are led by New York billionaire Paul Singer’s NML Capital Ltd
The judge also pushed back against Argentina’s claim that it was not in default because it had made a required payment to bondholders on July 30, only to have the funds blocked by his orders.
“Payment must cover what is required under the law and under the rulings of the district court and the (2nd US Circuit) Court of Appeals,” Griesa said. “No such payment has been made.”
He added: “There must be negotiation of issues, and there must be a settlement, and there can be a settlement.”
After the hearing, Pollack said he has continued to work to find a resolution in the case and planned to “convene and conduct further negotiations until a solution is reached, however long that may take.”
Argentina missed a coupon payment after a grace period ended on July 30, pushing it into default on restructured debt from a previous default in 2002 on roughly US$100 billion in sovereign bonds. The country deposited US$539 million into the account of trustee Bank of New York Mellon to pay but Griesa blocked it, saying that the country must also pay the holdouts.
President Cristina Fernández de Kirchner’s government has insisted it is not in default.
Griesa has granted JPMorgan, Citibank, Euroclear and Eurostream a one-time permission to pay out interest to holders of restructured Argentine bonds, after ruling that the titles could not be included in his original judgement in favour of holdout investors against Argentina.
US cool to world court filing
Argentina’s attempt to sue the United States in the International Court of Justice, the UN’s highest court for disputes between nations, appears unlikely to get off the ground as a spokeswoman at the US State Department suggested Washington would not grant the necessary jurisdiction for the case to proceed.
The spokeswoman, who asked not to be identified in line with department policy, said the world court is “not an appropriate venue” for the matter and that Argentina should negotiate with its creditors.
The country said in its appeal to the court that the United States had “committed violations of Argentine sovereignty and immunities and other related violations as a result of judicial decisions adopted by US courts concerning the restructuring of the Argentine public debt.”
If the United States confirms its decision not to recognize the court’s jurisdiction, it will have to indicate an “alternative peaceful solution” to solve the conflict, according to a statement released by the office of Cabinet Chief Jorge Capitanich on Thursday.
Herald with Reuters, AP