YPF Process: What are the three conditions that must be met for Argentina to be seized

After days of waiting, Argentina suffered a defeat new setback. US judge Loretta Preska has allowed the plaintiffs in the YPF expropriation trial to launch the embargo against the country from now on. Something that had already happened, in 2012, with the Libertad Frigate in 2012 and with the debt payments withheld in New York in 2014 by order of Judge Thomas Griesa.

The judge of the Southern District Court of New York opened this door by denying for the second time the Government’s request to extend the deadline for submitting collateral. In this way creditors can request the seizure of assets.

The question that arises from now on is Whether the asset seizure process is simple or not. The fact is that to seize an asset there are at least three conditions that must be met, as defined by US legislation (Foreign Sovereign Immunities Act).

To do this, the first step is to determine whether the country has resigned or not. to his immunity from execution, for example, as happened in 2001 with defaulted bonds). But In the case of the YPF, Argentina never waived that immunity.

In this sense, the lawyer Sebastián Soler – who until last December was deputy attorney general of the Treasury of Alberto Fernández’s government – assured that “the appellants’ ability to seize is limited by the United States Sovereign Immunity Act“, as published in his

In this regard, Soler stressed that since Argentina has not waived such immunity, in order for assets to be seized, three conditions should be met simultaneously:

• that the State is the owner.
• that the property is used for a business in the United States
• that the property that is intended to be seized “is or was”. used for the business on which the request is based”.

“These are the relevant requirements that would limit embargo attempts in the United States,” Soler added.

For his part, Sebastián Maril, CEO of Latam Advisor and specialist on the subject, agrees with Soler: “Seizing sovereign assets is very complex”but clarifies that in the event that a seizure of state assets could occur, these “it will not be put as collateralbut they will be the property of the beneficiaries of the judgment who will take them as a form of payment for 16.1 billion dollars.”

According to the specialist, the impact of the measure will depend on when the period of seizure of assets by the state will begin. something that can last months or years, unless the litigant finds a seizureable asset outside Argentina that does not require the approval of Congress (YPF shares) or local justice (Aerolíneas Argentinas oil and aircraft royalties).

Other embargo requests

Argentina is faced with another request for an embargo in the US which has been challenged and on which a resolution is awaited. These are vulture or rescue funds that refused debt restructurings between 2014 and 2016 and decided to advance on Argentine assets, but have not yet managed to seize them. The first hearing in New York court will take place on February 2nd.

SN