United States Court of Appeals
for the
Second Circuit
NML C
APITAL, LTD., AURELIUS CAPITAL MASTER, LTD.,
Plaintiffs-Appellees,
(continued on inside cover)
— v. —
R
EPUBLIC OF ARGENTINA,
Defendant-Appellant.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
BRIEF OF DEFENDANT-APPELLANT
THE REPUBLIC OF ARGENTINA
Of Counsel:
Jonathan I. Blackman
Carmine D. Boccuzzi
Sara A. Sanchez
Michael M. Brennan
C
LEARY GOTTLIEB STEEN & HAMILTON LLP
Attorneys for Defendant-Appellant
One Liberty Plaza
New York, New York 10006
(212) 225-2000
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ................................................................................... iii
PRELIMINARY STATEMENT ............................................................................... 1
JURISDICTIONAL STATEMENT .......................................................................... 5
ISSUES PRESENTED ............................................................................................... 6
STATEMENT OF THE CASE .................................................................................. 8
STATEMENT OF FACTS ........................................................................................ 9
A.
The Pari Passu Clause ................................................................. 9
B.
NML’s Previous Attempt To Create A New Meaning For
The Pari Passu Clause ............................................................... 12
C.
After Six-Year Delay, NML Moves For Injunctive Relief
Pursuant To The Pari Passu Clause .......................................... 16
D.
The District Court Enters The Permanent Injunctions
Requiring Full Payment To Plaintiffs And Purporting To
Restrain Payments To Other Bondholders ................................ 20
E.
The “Me Too” Plaintiffs ........................................................... 23
STANDARD OF REVIEW ..................................................................................... 24
SUMMARY OF ARGUMENT ............................................................................... 25
ARGUMENT ........................................................................................................... 29
I.
THE ORDERS BELOW MUST BE VACATED BECAUSE
NML’S READING OF THE PARI PASSU CLAUSE IS
WRONG .............................................................................................. 30
A.
The Pari Passu Clause Does Not Require Simultaneous “Pro
Rata” Payments Or Proportional Distribution Of Payment
Amounts .................................................................................... 31
1.
The Plain Meaning Of The Pari Passu Clause Deals
With The Formal Ranking Of Creditor Claims .............. 31
2.
The Impropriety Of NML’s Interpretation Of The
Pari Passu Clause Is Further Demonstrated By
Canons Of Contract Interpretation And The Fact That
It Leads To Absurd Results ............................................ 37
B.
The 2005 “Lock Law” And Law 26,547 Did Not Violate
The Pari Passu Clause ............................................................... 45
C.
The Remedy For Breach Of The Pari Passu Clause Is
Acceleration .............................................................................. 48
II.
THE PERMANENT INJUNCTIONS VIOLATE THE FSIA ............ 49
III.
THE PERMANENT INJUNCTIONS PURPORT TO RESTRAIN
PROPERTY IN WHICH NEITHER PLAINTIFFS NOR THE
REPUBLIC HAVE ANY INTEREST ................................................ 53
IV.
PLAINTIFFS HAVE NOT SUFFERED IRREPARABLE HARM ... 56
V.
THE PERMANENT INJUNCTIONS ARE CONTRARY TO
THE PUBLIC INTEREST AND THE BALANCE OF
HARDSHIPS MILITATES TOWARDS THEIR DENIAL ............... 60
VI.
PLAINTIFFS’ PARI PASSU CLAIMS ARE BARRED BY
LACHES ............................................................................................. 65
A.
Plaintiffs Knew Of The Alleged Pari Passu “Breach” Years
Before Bringing Their Claims, And Inexcusably Delayed In
Bringing Them .......................................................................... 65
B.
The Republic, Its Citizens And Third Party Creditors Will
Suffer Prejudice As A Result Of Plaintiffs’ Inexcusable
Delay ......................................................................................... 68
VII.
THE PRELIMINARY INJUNCTION MUST BE VACATED ......... 70
CONCLUSION ........................................................................................................
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