Bank of New York Mellon Corp. and YPF SA won dismissal of Repsol SA (REP)’s lawsuit accusing the bank of failing to carrying out its voting instructions for the Argentine oil company’s board election.
Argentina seized 51 percent of YPF in April 2012 from Repsol, Spain’s largest oil producer, as President Cristina Fernandez de Kirchner’s government sought to halt declining oil output and stem fuel imports. YPF two months later appointed a 17-member board, with Repsol representative Luis Garcia del Rio as the sole minority-stakeholder member.
Repsol alleged that BNY Mellon, as depositary of YPF’s American depositary shares, refused to carry out the voting instructions because they were received after the bank’s deadline, preventing the Madrid-based company from exercising its right to appoint directors to the board.
New York State Supreme Court Justice Eileen Bransten dismissed the suit in a ruling made public yesterday, saying that Repsol didn’t have voting rights on the shares, which were bought from the company in 2008 and 2011 by Petersen Energia SA.
Repsol contends it had all the rights of a registered owner when Petersen defaulted, and all that was needed was the “ministerial act” of changing the name of the owner on BNY Mellon’s depositary’s books, which it did on Nov. 8, 2012, according to Bransten’s ruling.
“That ministerial act was performed too late,” the judge said, using abbreviations for BNY Mellon and the depositary shares. “Repsol cannot retroactively impose obligations on YPF and BNYM by registering Petersen’s ADS in its own name five months after bringing suit based on the alleged breach.”
Bransten allowed Repsol to file an amended complaint re-pleading a claim of breach of seller agreements, saying that while the suit alleges the New York-based bank acted in a “grossly negligent” manner, it doesn’t specify how.
BNY Mellon is pleased with the ruling, spokesman Kevin Heine said in a phone interview.
Kristian Rix, a Repsol spokesman, didn’t immediately comment on the ruling.
YPF said in a regulatory filing that “once the decision of the court is firm, Repsol can’t present another demand against YPF” for the claims.
Fernandez’s government reached a preliminary agreement with Repsol on Nov. 25 to compensate the company for the 51 percent stake it held in YPF. The two sides are negotiating a final resolution of the dispute, which prompted Repsol to sue potential joint-venture partners including Chevron Corp. and file an arbitration claim for as much as $10.5 billion.
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