U.N. agency: U.S. ruling on Argentina debt doesn't comply with U.S. law
By Tom Miles
GENEVA (Reuters) - The United Nations trade agency UNCTAD said on Wednesday that the recent U.S. court ruling on Argentina's debt erodes sovereign immunity and does not comply with the country's own U.S. Foreign Sovereign Immunities Act.
Buenos Aires has been stuck in a battle with a pair of hedge funds that chose not to take part in two past debt restructurings following Argentina's 2001-2002 default and held out instead for full repayment.
It has suffered a series of setbacks as U.S. courts have ordered Buenos Aires to pay the so-called holdouts along with its other creditors.
But those rulings "set legal precedents which could have profound consequences for the international financial system", UNCTAD said in an unusual online commentary here
"The rulings could open floodgates to other similar cases depending on interpretations given by courts under New York law, British law or other laws," UNCTAD said.
"Copycats will abound."
Argentine President Cristina Fernandez argues that paying the hedge funds in full could potentially trigger demands of up to $15 billion from others who did not participate in previous debt exchanges following the 2002 default on $100 billion.
The country is due to make a bond coupon payment on June 30 to holders of restructured debt. But the 2nd U.S. Circuit Court of Appeals ruled last week that Argentina cannot do so unless it also pays $1.33 billion to the holdouts. Continued...