JURIST - Paper Chase: Second Circuit rejects Argentina sovereign immunity argument, upholds judgments

[JURIST] The US Court of Appeals for the Second Circuit [official website] on Monday rejected [opinion, PDF] Argentina's attempt to prevent bondholders from acquiring bank documents regarding the country's assets outside US territory. To no avail, Argentina asserted [Reuters report] that its sovereign immunity was affected by a September 2011 ruling [opinion, PDF] by the US District Court for the Southern District of New York [official website] forcing the country to comply with subpoenas sought by NML Capital Ltd. [corporate website], a global equity investment company, for the collection of five money judgments totaling about $1.6 billion. The subpoenas were served in 2010 on Bank of America [corporate website] and Banco de la Nacion Argentina [corporate website, in Spanish], and sought documents relating to accounts or assets that Argentina might have at the banks. While Argentina twice argued that the subpoenas were invalid because its assets were protected by the Foreign Sovereign Immunities Act of 1976 [text], the Second Circuit affirmed that "[b]ecause the district court ordered only discovery, not the attachment of sovereign property, and because that discovery is directed at third-party banks, Argentina's sovereign immunity is not infringed." Both parties have yet to provide official statements on the outcome of the case.

NML Capital has filed several actions [Bloomberg report] against Argentina in the US District Court for the Southern District of New York since 2003. In addition to the five money judgments upheld by the Second Circuit, NML has also been granted summary judgment in six other actions totaling more than $900 million. The eleven actions stem from Argentina's 2001 economic collapse [Time report] under the interim government of Adolfo Rodriguez Saa [official website, in Spanish] and the country's ensuing default on over $80 billion owed to foreign creditors.