Argentina’s YPF Stake Turnover Halted

By Jonathan Stempel

NEW YORK (Reuters) – A U.S. appeals court on Friday granted Argentina’s request to temporarily pause a judge’s order to turnover its 51% stake in the oil and gas company YPF. This order will help satisfy a $16.1 billion judgment awarded to two investors.

The 2nd U.S. Circuit Court of Appeals in Manhattan issued a brief order staying U.S. District Judge Loretta Preska’s June 30 ruling while Argentina prepares to appeal.

This decision comes as a relief for Argentine President Javier Milei’s government, which expressed concerns about irreparable harm and economic instability if it were to surrender the stake in YPF, the nation’s largest energy firm.

Argentina is also appealing the $16.1 billion ruling that Preska issued in September 2023 to Petersen Energia Inversora and Eton Park Capital Management, with both firms represented by litigation funder Burford Capital, which will share in the damages.

As of now, lawyers for Petersen and Eton Park have not provided comments regarding the latest developments.

The order from Friday did not specify the reasons for the stay, which may last for several months, with Argentina’s subsequent legal filing concerning YPF due on September 25, according to court documents.

The conflict originated from Argentina’s 2012 decision to seize the YPF stake from Spain’s Repsol without a tender offer to minority shareholders. Argentina argued that the YPF shares should be exempt from turnover under the federal Foreign Sovereign Immunities Act.

The U.S. government supported Argentina’s position, suggesting that a resolution should proceed carefully to avoid disrupting international relations.

In contrast, the investors’ legal team argued that an exception to immunity for commercial activities, along with Argentina’s prolonged evasion, justified the turnover request.

In her previous June 30 ruling, Judge Preska stated that Argentina’s control over the YPF shares invoked the exception, meaning the country could not simply cite its own laws to block the turnover.

An Argentine government spokesperson expressed satisfaction with Friday’s order, optimistic about the chances of overturning the $16.1 billion damages award.