The text says verbatim: “This case is exceptional, with apparently little impact on transactions that could be held in the future. Our decision does not control the interpretation of all pari passu clauses or the obligations of other debtors under pari passu clauses in other contracts

Clarin

U.S. court already removed international impact from the case

The Court of Appeals narrowed the situation to Argentina, without affecting other debtors  

 

Thursday, September 05, 2013

 

by Ana Baron

 

Washington Correspondent – In its ruling of August 23, the U.S. Court of Appeals made it clear that the case of Argentina vs. the vulture funds is a unique case that will not affect future restructurings; that means that it will have no international impact that many fear.  This is one of the reasons by which the U.S. could have opposed the issue of the debt and the funds being included in the final declaration at the G-20 summit that starts today in St. Petersburg, as President Cristina Kirchner said.

 

When questioned by Clarin, the Department of State and the Treasury of the U.S. kept silent yesterday.  They didn’t confirm nor deny Cristina’s statements.  But the ruling from the Court of Appeals made clear that the issue of the vulture funds is not setting a global precedent as even the Treasury itself fears.  And if it doesn’t set an international precedent, why would it be included in an international declaration?

 

In the two amicus curiae briefs filed by the United States in favor of Argentina, the Justice Department explained that if the interpretation of the pari passu clause that was established by Judge Thomas Griesa in his lower court rules about the same case were to be upheld, it could discourage future new voluntary debt restructurings.  In its ruling, the Court of Appeals upheld that interpretation from Greisa, but in a very narrow manner.  And does not leave it to be turned into an international precedent.  

 

The text says verbatim: “This case is exceptional, with apparently little impact on transactions that could be held in the future.  Our decision does not control the interpretation of all pari passu clauses or the obligations of other debtors under pari passu clauses in other contracts … As we have explicitly said in our last decision, we have not affirmed that a sovereign debtor is violating the pari passu clause every time it pays one creditor and not the other, or even every time it adopts a law that disparately affects the rights of creditors.  What we simply reaffirm is the conclusion of the Griesa court that Argentina’s extraordinary behavior is a violation of the pari passu clause included in the FAA” (the contracts signed to place the bonds).

 

More still, in its ruling the court includes “evidence” of Argentina’s exceptional behavior reproducing statements from Cristina Kirchner and Minister Hernan Lorenzino, in which they said that they will not pay one dollar to the vulture funds and that they will not obey any ruling that orders that the vulture funds be paid more than the holders of restructured bonds.

 

All attention is centered on the Supreme Court about the possibility that the U.S. government’s opinion will be requested before it decides if it will take the case.  Nobody knows what that eventual opinion will say, but without a doubt it will take into account the Court of Appeals ruling.