Argentina: US sued at Hague over default

The International Court of Justice (ICJ) in The Hague said on Aug. 7 that Argentina had asked it to take action against the US for what the South American country called "violations of Argentine sovereignty and immunities and other related violations as a result of judicial decisions adopted by US tribunals" that interfered with the payment of its debts. Financial services agencies declared Argentina in default on July 30 when it failed to arrive at a settlement with a small group of investors led by US hedge funds NML Capital and Aurelius Capital Management. A federal judge in New York, Thomas Griesa, had ruled that unless it had an arrangement with the hedge funds, Argentina couldn't make payments to the majority of its creditors, who had agreed to accept discounted exchange bonds.

The current dispute goes back to Argentina's 2002 default on some $100 billion dollars following a December 2001 economic collapse brought on by a decade of extreme neoliberal policies. The country settled most of the debt with exchange bonds, but NML and Aurelius Capital, firms of the type often called "vulture funds," held out against the settlement. The Argentina has run advertisements in US media saying it hasn't defaulted, on the grounds that it tried to make a required interest payment on one of its bonds. The country deposited $539 million in a New York bank in June to cover the payment, but Judge Griesa ruled that the bank would be in contempt of court if it paid the money out. At an Aug. 8 hearing Griesa told Argentina's lawyers, the firm of Cleary Gottlieb, that he would hold the country in contempt if it continued to say it had met its debt obligations.

The ICJ, better known as the "World Court," is the United Nations' highest court for disputes between nations. Court officials said Argentina's request for action had been sent to the US government but that the court wouldn't move ahead "unless and until" the US accepts the court's jurisdiction in the case. The US has sometimes recognized the court's jurisdiction in the past, but in at least one case, a 1984 suit over US funding and direction of attacks inside Nicaragua, the US government simply ignored the ICJ's 1986 ruling when it turned out to be in Nicaragua's favor. (The Guardian, UK, Aug. 7, from Reuters; La Jornada, Mexico, Aug. 9, from Reuters, Notimex)

In other news, on Aug. 7 Estela Barnes de Carlotto, the president of the Argentine human rights organization Grandmothers of the Plaza de Mayo, and other family members met for the first time with her grandson, who is one of the estimated 500 children that the 1976-1983 military dictatorship secretly placed in adoption after executing their parents during its "dirty war" against suspected leftists. The military abducted Barnes de Carlotto's pregnant daughter Laura Carlotto in November 1977 and executed her after she'd given birth. Oscar Montoya, the child's father, was also executed. Their son, Guido Montoya Carlotto, was placed with a farming family that apparently didn't know about his origins; he was reunited with his biological family through DNA testing. The organization Barnes de Carlotto heads is dedicated to locating the missing children of the military's victims. (Associated Press, Aug. 5; LJ, Aug. 8, from correspondent)

From Weekly News Update on the Americas, August 10.

  1. US judge declares Argentina in contempt of court

    Judge Thomas Griesa of the US District Court for the Southern District of New York declared Argentina in contempt of court Sept. 29 for the ongoing debt dispute after Buenos Aires refused to pay two US hedge funds and sought to sidestep his court order that forbids the government from paying only the bondholders it chooses. The dispute stems from Argentina's bond default in 2001. The US hedge funds—Paul Singer's Elliott Management and Aurelius Capital Management—did not participate in the country's debt restructuring following the 2001 default. Griesa's ruling blocked Buenos Aires from making payments to the majority of its bondholders unless it pays out in full to the hedge funds. He will decide next what sanctions to impose.

    Earlier this month Argentina signed into law a bill to continue making payments on foreign-held bonds outside of US jurisdiction, circumventing the US court ruling that prohibits Argentina from paying its bondholders until the dispute is resolved.

    From Jurist, Sept. 30. Used with permission