Argentina has asked the International Court of Justice to
hear a lawsuit it wants to bring against the U.S. in a high-stakes legal battle
between the South American nation and some of its creditors over unpaid debts. Argentina's
petition says that decisions by U.S. courts in the dispute have violated its
sovereignty. However, the U.S. would have to accept the International Court of
Justice's jurisdiction for a lawsuit to move forward, something that has
happened in only 22 cases since the tribunal began working in 1946. The Obama
administration is unlikely to grant the request in the absence of a bi-lateral
treaty that would require the U.S. to accept the court as a venue to hear
disputes with Argentina.
The International Court of Justice-- a United Nations
tribunal that handles disputes between countries --has transmitted Argentina's
request to the U.S. government. The U.S. State Department didn't respond to
requests for comment.
Argentina defaulted on some of its restructured debt
July 30 after marathon talks with hedge funds suing to collect on bonds the
country stopped paying in 2001 ended without a deal. Argentina had deposited
the money with the bond trustee bank, but U.S. District Judge Thomas Griesa
blocked its distribution to investors because Argentina ignored his ruling to
also pay the hedge funds. The default could eventually affect almost $29
billion in Argentine debt.
Argentine officials say the country isn't in default because
it paid on time, and that bondholders should pressure trustee Bank of New
York Mellon to deposit their money. The Kirchner administration probably knows
the U.S. will decline its invitation to be sued at The Hague, but hopes this
strategy might open the door to some sort of diplomatic solution down the road.
Argentine President Cristina Kirchner's government has
adopted a more aggressive legal strategy following last week's default. The
Kirchner administration made good on its pledge to seek multi-lateral judicial
aid with Thursday's petition to the International Court of Justice. Her
ministers have also accused Judge Griesa of bias and demanded he replace
Daniel Pollack.
Argentina's latest default dates back to its decision to
repudiate about $100 billion in debt during a deep economic crisis in 2001.
After years of confrontation with creditors, investors exchanged almost 93% of
their defaulted bonds for new securities in heavily discounted restructurings
in 2005 and 2010 that gave them just 33 cents on the dollar. But some investors
refused to take the new bonds, with many suing in U.S. courts for full
repayment.
Argentine officials have questioned the integrity of the
U.S. courts and government in a case that is being closely watched by
investors, academics and activists because of the precedents it might set for
future sovereign debt restructurings.
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