Argentina Petitions International Court of Justice Over Debt Default Dispute
The Argentine government filed a legal petition Thursday with the International Court of Justice, The Hague, asking them to hear a claiming that a U.S. court decision violated its sovereignty.
A statement issued by the ICJ, the United Nation's highest court for disputes between nations, said Argentina's request had been sent to the U.S. government, but "no action will be taken in the proceedings unless and until the United States of America consents to the Court's jurisdiction in the case."
Argentina defaulted last week when a federal court judge, Thomas P. Griesa, during a court hearing on July 30, in the case NML Capital Ltd. v. The Republic of Argentina, blocked interest payments of $539 million to some of Argentina's restructured bondholders. The judge ruled Argentina couldn't pay some bondholders and not others. That decision led to a default by credit agencies.
The case involves monies owed of $1.5 billion for bonds defaulted on by Argentina in 2001. NML Capital rejected debt restructuring offers of 30 cents on the dollar, agreed by other parities in two court cases in 2005 and 2010. Argentina has pay arrangement with 91 percent of its creditors, but the holdout investors refused to accept lower payments.
"This case illustrates that we need basic rules of responsible lending and borrowing in place in order to stop predators, said Eric LeCompte, Executive Director, Jubilee USA. "If we had an international bankruptcy process, countries from Argentina to Grenada never would default and predatory actors are forced to at the table."
Bloomberg reported Argentina was seeking information from the Securities and Exchange Commission into whether NML profited in credit default swaps at all from the block debt payment after the court decision.
Government and groups filed amicus briefs on behalf of Argentina in the past, Preet Bharara, the U.S. attorney general in New York filed a brief in appeals court in 2012 supporting Argentina, arguing against Griesa requirement that all bondholders be treated equally.
Greg Palast from the Guardian argued that President Obama could petition on behalf of Argentina under the "Separation of Powers" clause in which he could say the lawsuit interferes with his authority to conduct foreign policy. Palast said President George W. Bush used this power in stopping the same investor, Paul Singer, from seizing property in Congo-Brazzaville. The same investor was also involved in debt dispute with Greece.
"Argentina is the first victim in the court's ruling. It looks like Grenada and the Democratic Republic of Congo may be the next victims. Because of the precedent this case sets there are a lot of losers and a few winners. Legitimate investors and poor people lose the most," LeCompte said.