The Obama administration won’t file a brief next week urging the U.S. Supreme Court to hear Argentina’s appeal in a clash with implications for tens of billions of dollars in defaulted debt, according to a Justice Department spokesman.
The decision is a setback for Argentina, though it leaves open the possibility that the administration might recommend high court review at a later stage. The administration backed Argentina at a federal appeals court.
Argentina is appealing a lower court ruling that bars payments to the investors in restructured Argentine debt unless holders of the nation’s defaulted bonds, led by billionaire Paul Singer’s Elliott Management Corp. and its NML Capital Ltd. unit, are also paid.
The U.S. government usually waits for the justices to ask for a brief before taking a stand on requests for a Supreme Court hearing.
Brian Fallon, the Justice Department’s spokesman, said the administration won’t file an “uninvited” brief, which would be due by July 26. The decision, which came after U.S. officials met with lawyers on both sides of the case, was reported earlier by La Nacion and Clarin in Argentina.
The International Monetary Fund is considering backing Argentina’s bid for review. Under its normal schedule, the high court will act on the appeal in late September or early October.
Argentina contends a New York-based federal appeals court failed to properly apply the Foreign Sovereign Immunities Act, which limits suits against foreign governments. The country has said that forcing it to pay the defaulted bondholders immediately would expose it to $43 billion in additional claims it can’t pay and trigger a new default.
The Supreme Court case is Argentina v. NML Capital, 12-1494. The appeals court case is NML Capital Ltd. v. Republic of Argentina, 12-00105, U.S. Court of Appeals for the Second Circuit (New York).