The U.S. Supreme Court has rejected Argentina’s final appeal to block an adverse ruling that allows investment funds to seize more than 310 million USD in sovereign assets. The decision marks a major defeat for Argentina in its long-running dispute with bondholders who hold defaulted Brady Bonds issued in the 1990s.
The assets – deposited in accounts of the Central Bank of Argentina (BCRA) at the Federal Reserve Bank of New York, and in other institutions in Germany and Switzerland – will now be subject to seizure once Judge Loretta Preska authorizes enforcement. Although creditors will recover roughly 310 million USD, the total amount owed approaches 450 million USD.
The dispute centers on Argentina’s argument that these funds belong to the BCRA, not the state itself, and are therefore immune under the U.S. Foreign Sovereign Immunities Act (FSIA). However, Judge Preska, whose ruling was upheld by the U.S. Court of Appeals and left intact by the Supreme Court, found that the reversion rights attached to the Brady Bonds belong to the Argentine State and had been used in prior commercial transactions, negating immunity claims.
This ruling represents Argentina’s second major judicial setback in three months, following the UK Supreme Court’s decision in October against Argentina in the GDP-linked warrant case. Collectively, these outcomes highlight the growing exposure of sovereign debtors to enforcement actions across jurisdictions.
For creditors, the message is clear: U.S. judgments can have immediate global consequences for sovereign debt recovery, particularly when assets are held in major financial centers like New York or Basel.
Thomas H. Curran Associates advises clients on navigating cross-border enforcement and sovereign debt disputes.
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