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The Supreme Court decided a complex but important case on June 16, 2014, Republic of Argentina v. NML Capital, Limited. The Republic of Argentina issued bonds to American investors, correspondingly waiving its sovereign immunity and consenting to jurisdiction in New York State. Argentina subsequently defaulted on those bonds. Plaintiff bondholder NML did not participate in a renegotiation of the bonds and sued to prevent Argentina from paying other bondholders that agreed to settle their claims.
At issue were whether NML Capital could bring suit against Argentina under the Foreign Sovereign Immunities Act (FSIA) and the extent of discovery to which plaintiffs are entitled. In court, the United States sided with Argentina. Argentina asserted it should be able to block third party disclosure of its assets, since some assets might be sensitive diplomatic or military assets. The Supreme Court ruled, 7-1, that Argentina is subject to the FSIA, and thus liable to suit pursuant to it, and that American banks can be ordered to disclose Argentina’s assets in the U.S. as part of discovery in the default lawsuit. This decision has potential ramifications for government debt restructuring around the world. Our experts examined these and other possible effects of the decision.
- Prof. Michael D. Ramsey, Hugh and Hazel Darling Foundation Professor of Law, Director, International & Comparative Law Programs, University of San Diego School of Law
- Prof. Thomas H. Lee, Leitner Family Professor of International Law, Director Graduate and International Studies, Fordham University School of Law