Argentina Default Case Gets High Court Hearing
(CN) - The U.S. Supreme Court will settle a court split over the scope of discovery orders aimed at enforcing judgments against foreign states.
The high court agreed to hear Argentina v. NML Capital, an appeal stemming from Argentina's default on its government debt in 2001.
One of the country's bondholders, NML Capital, filed 11 federal lawsuits in Manhattan to collect on its defaulted Argentinian bonds. The Cayman Island hedge fund has since won judgments totaling about $2.5 billion with interest.
The 2nd Circuit in New York upheld a federal judge's order forcing two banks to release information about assets Argentina owns outside the United States, as part of NML's effort to enforce the judgments.
But this ruling put the 2nd Circuit at odds with three of its sister circuits, which have limited post-judgment discovery to assets in the United States, which could be subject to the Foreign Sovereign Immunities Act.
In its petition for a Supreme Court hearing, Argentina argued that the 5th, 7th and 9th Circuits rulings are correct, and said the U.S. government agrees: "in the past six years, the United States has filed at least six briefs as amicus curiae in which it has presented its view that the FSIA restricts post-judgment discovery of property of a foreign sovereign and that failing to recognize the FSIA's limitations on such discovery could cause grave harm to the foreign relations of the United States and the treatment of the United States in litigation abroad."
The hedge fund insisted the 2nd Circuit got it right, adding in its reply brief that the banks "are not foreign states, and therefore have no immunity."
The Supreme Court will likely hear arguments in April.