In fact, both the demand through which NML asked for the detention of the Frigate as well as the decision with which Judge Adjei Frimpong established that the detention is legal, they say that Argentina surrendered its sovereign immunity and accepted the jurisdiction of the courts of New York and other foreign courts in 1994 by signing a fiscal accord “with the Bankers Trust Company of New York under which the bonds were purchased by the public.”

 Clarin

Cristina’s discourse hits against the official position

Friday, October 19, 2012

By Ana Baron

The letter that the attorney from NML, the vulture fund that asked for the detention of the Frigate Libertad in Ghana, sent to Argentina’s attorney proves that the government is not ready to pay the bail nor negotiate the logistical aspects of the ship, at least for the last four days.

This is coherent with the critical position that the government has had toward the vulture funds and also with the statement from the Foreign Ministry that announced that Argentina will exhaust all legal options in Ghana.

What is not well understood is why then Cristina Kirchner admitted in public that NML is right when in the lawsuit it filed against Argentina in the courts of Ghana by saying that the Frigate Libertad has no immunity because our country signed treaties of renunciation of that protection.

If effect, Cristina said Wednesday that in the judgment of the funds “they rely on immunities that were renounced by previous governments.”  “International treaties of renouncing immunity were not signed by this government, nor were they approved by the Parliament of the year 2003,” she completed.

In fact, both the demand through which NML asked for the detention of the Frigate as well as the decision with which Judge Adjei Frimpong established that the detention is legal, they say that Argentina surrendered its sovereign immunity and accepted the jurisdiction of the courts of New York and other foreign courts in 1994 by signing a fiscal accord “with the Bankers Trust Company of New York under which the bonds were purchased by the public.”

Putting the blame on the government of Menem for having signed those treaties could have political benefits at the domestic level, but at the international level it could not only be a bad strategy but also only show that there is no state policy, not even within the same political party.

According to sources consulted via telephone in Ghana, if Argentine is trying to overcome this problem politically, it will be very difficult.

The government of Ghana has already come out in favor of the release of the Frigate, but the judge declared that the detention is legal.  In the middle of an election campaign, which will culminate in December with the election of a new president, it doesn’t seem likely that the government of Ghana wants to expose itself to those accusing it of not respecting the separation of powers established by the Constitution.

La Nacion

The lesson of the Frigate Libertad

Friday, October 19, 2012

By Federico Sturzenegger

The detention of the Frigate Libertad in Ghana is, apparently, a spectacular blow from the vulture funds that are trying to recover part of the losses suffered by the Argentine default of 2002.  I imagine that the Frigate Libertad is worth several million dollars and is priceless as sentimental patrimony of the Argentine people.  This latter factor is the transcendent one of this situation and what makes it relevant.  In reality, the strategy doesn’t have quantitative weight considering the millions that Argentina has not paid, nor does it have the better chance of legal success.  Be it as it may, the power of the vulture funds is very limited.

The case has no chance of being successful because legislation on sovereign immunity is clear around what should happen with a country’s military assets.  Sovereign immunity refers to the legal principle that strategic assets of countries are not subject to attachment.  This principle includes limiting military assets within this umbrella.

It’s by this legal weakness that in the past the vulture funds sought another way to get repaid.  One of the most famous cases was Elliott v. Banco Nacion of Peru, where the fund got a preliminary order on the payment of coupons on Brady bonds in Belgium.  The case was never resolved, but Peru decided to throw in the towel, to not be complicated by the payment of the Brady bonds, and settled.  The Belgians, careful of their business of being a financial clearinghouse, later passed legislation protecting payments on bonds in Euroclear of this kind of action.  Elliott had other success when it attached the funds of a national telecommunications firm from Panama, which was close to being privatized.  That case was also not closed, but Panama also threw in the towel and settled with the fund.  Of the 35 known cases of litigation of this kind in the last 20 years, only six have gotten paid at 100%, 15 received nothing, six got less than a third of what was owed, and the rest had no information on the agreement reached.

Africa has been the scene of very particular cases.  It is worth mentioning the case of Transroad Ltd. (an English fund) vs. Uganda, in which a local judge ruled in favor of the international plaintiff.  However, a posteriori, the judge protested in the media because his “compensation” had been defaulted on by the international company.

I don’t believe that there are weighty reasons for this attachment to be sustained, at least that, as in the case of Transroad, there were other interests at play.  But his fact, for the media there was, doesn’t change the conclusion that the vulture funds have little capacity to hurt a country that has defaulted.

If a sovereign debt cannot be executed, how does it even exist?  The best response to this question was given by Argentine economist Guido Sandleris: a country pays not because the contract can be executed, but because paying means sending a minimum level of confidence in the government as an institution.  Payment is made not for fear of international judges but to gain respect and confidence of the internal audience (businessmen, workers, etc.).  In other words, one could learn that you can leave a fight unharmed, but that’s not why one seeks conflict. 

When the Frigate Libertad sails we could conclude that the lesson is that we’ve won another round of the fight, justifying the attitude of the conflict.  To me, I’d like the lesson to be that Argentina and its government has a lot more to win by leaving the ring, working in cooperation with the rest of the world, and being respectful of all its commitments (including to tell the truth).