ATFA Denounces Christine Lagarde's Effort to Immerse the IMF in a U.S. Court Case Between Argentina and Its U.S. Creditors

ATFA Denounces Christine Lagarde's Effort to Immerse the IMF in a U.S. Court Case Between Argentina and Its U.S. Creditors
WASHINGTON, July 17, 2013 –Yesterday, IMF Chief Christine Lagarde disclosed her determination for the IMF to file an amicus curiae brief with the U.S. Supreme Court in a case based exclusively on the interpretation of U.S. federal law. In addition to improperly inserting the IMF into a domestic legal matter, Lagarde's decision effectively asks all member countries of the IMF to actively support the Republic of Argentina in court.
Argentina, in default on more than 100 court judgments and recently sanctioned by the IMF for falsifying economic statistics, has appealed to the Supreme Court despite recently announcing in court that it "does not have to cooperate" with the judgments of any U.S. court.
"Were the IMF's Board to approve this request, informed IMF watchers assure me that it would represent an unprecedented power grab by the Fund – an attempt to end-run around the government of the United States in a domestic legal matter," said ATFA Executive Director Robert Raben. "This is a New York case involving New York law bonds, exclusively subject to U.S. Courts.
"Furthermore, the only legal issue that could be reviewed by the Supreme Court is the interpretation of a U.S. federal statute; the issue of sovereign debts or the restructuring of debts is not under review," Raben added. "It is hard to imagine any other country tolerating the IMF's interference in a dispute about its court system's ability to do its job."
Members of Congress from both political parties have strongly condemned Argentina's "contempt for the U.S. legal system" and "open defiance of international norms."
Lagarde's move comes after a recent IMF report incorrectly stated that "creditors have long pursued Argentina for payment on the full amount of defaulted bonds."
In fact, creditors have reached out numerous times – including several occasions in the last six months – to conduct good-faith negotiations with Argentina. Argentina has refused every single gesture.
IMF support for Argentina in this matter would appear to violate the IMF's own principles of debt resolution and would make it less likely that Argentina ever engages in a negotiation over its unpaid debts.
Given Argentina's poor track record in paying its debts to numerous IMF member countries, and given the harsh comments by officials of several IMF member countries regarding Argentina's failure to resolve its debts, ATFA urged the IMF not to prolong Argentina's refusal to engage with its creditors.
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