This content is from: Local Insights

Payment suspension of public external debt

Fermín Castro MaderoRoberto Silva

On March 2 2010, in Claren Corporation c/ Estado Nacional (Artículos 517/518 CPCC Exequátur) s/ Varios, judge Pablo G Cayssials of the National Court in Federal Administrative Matters (Juzgado Nacional de Primera Instancia en lo Contencioso Administrativo Federal) No. 9 rejected the exequatur filed by Claren Corporation to obtain the recognition and enforceability of the judgment of the New York Southern District Court, US that ordered the Republic of Argentina to pay a given amount of money to the plaintiff due to the default of external global bonds 2017.

The claim before the US court had been based on the grounds that the agreements concerning the issue of such bonds have appointed the law of the State of New York as the governing law and the jurisdiction of the New York courts. Both the foreign law and foreign jurisdiction had been approved by Argentine law. In addition, the execution of the pertinent agreements and the issue of the bonds were private acts of the Republic of Argentina (iure gestionis) rather than governmental acts (iure imperii); consequently, neither the Republic of Argentina nor its assets were immunity protected.

The Republic of Argentina, on the other hand, alleged that the acts suspending payment of its external debt and restructuring due to the Public Emergency and Foreign Exchange Reform Law No. 25,561 (the Emergency Law) were public acts (iure imperii) and therefore did have immunity protection.

This ruling is a first instance judgment so the exequatur is still waiting for a final resolution of the Federal Court of Appeals in Administrative Matters (Cámara Nacional de Apelaciones en lo Contencioso Administrativo Federal) or of the Argentine Supreme Court (Corte Suprema de Justicia de la Nación). It is an important precedent, especially in times of the public-external-debt-exchange proceeding that the Argentine government has recently launched.

Instant access to all of our content. Membership Options | One Week Trial