All Argentine government assets in the U.S., other than diplomatic and military holdings, will be treated as commercial property, a judge said, opening the door for hedge fund NML Capital and other creditors to seek to seize it.
U.S. District Judge Thomas Griesa on Wednesday agreed with NML that the South American nation should be punished for failing to turn over evidence that the fund wants to use to discover assets. NML, seeking to recover on defaulted Argentine debt, is seeking property that isn’t protected by U.S. laws shielding holdings of foreign nations.
Griesa didn’t immediately rule on NML’s request that he rule that three Argentine entities, including the central bank, are so closely tied to the nation that creditors may pursue their property.
Robert Cohen, a lawyer for the hedge fund, said at a hearing in Manhattan federal court that Argentina has ignored orders for years and refused to negotiate. It’s unclear what property creditors will seek to seize.
“We have no choice but to continue to find assets,” Cohen said. “We’re not going to walk away.”
Argentina’s lawyer, Carmine Boccuzzi, called the sanctions request “unprecedented,” part of an illegal attempt to seize the assets of a sovereign nation.
Griesa’s ruling won’t have a practical effect on the nation, Argentina’s Economy Ministry said in a statement.
It isn’t the first time NML has gone after Argentina’s property. In 2012, creditors won a court order detaining an Argentine Navy training ship, the ARA Libertad, in Ghana. The vessel was allowed to leave after 76 days, following a ruling by the Hamburg-based International Tribunal for the Law of the Sea.
Hedge funds also tried unsuccessfully to seize Argentina’s rights to satellite-launch contracts and patent royalties.
In its sanctions bid, NML asked Griesa to issue an order barring Argentina from using the attorney-client privilege to shield records. Griesa didn’t immediately rule on the request.
The case is NML v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan).