Argentina sued for US$320 million over expropriation of Aerolíneas Argentinas

RIO DE JANEIRO, BRAZIL – Titan Colotium investment fund brought a suit in New York courts against Argentina for US$320 million, based on the expropriation of Aerolíneas Argentinas, claiming that it failed to comply with payment of a ruling against the country ordered by the World Bank’s arbitration court, the International Centre for Settlement of Investment Disputes (ICSID).

In 2019, the claimant was granted a favorable ruling by ICSID, but Argentina never paid. As a result, and given that there are no more instances to appeal within ICSID, on Wednesday (25) it lodged a “judgement enforcement” claim before a U.S. Federal District Court.

“We all thought that at some point the government was going to settle the award. Today we found out that it did not and so Titan is filing with the District of Columbia, the Court with exclusive jurisdiction over any lawsuit related to ICSID rulings, when there are no more instances to follow in the World Bank court,” explained Sebastian Maril, director of Latam Advisors.

According to Maril, the government has 60 days to respond to the claim, although the judge may demand a quicker response. Furthermore, he considered that it is likely that seizure measures against Argentine assets will be taken, as was the case in the negotiations with the “vulture funds” for the public debt default.

THE CASE

The case reaching the New York courts has been dragging on for over a decade. In 2017, ICSID issued its first ruling against Argentina and in favor of Spanish group Marsans, since it considered that the government had not settled the corresponding amount for the national airline. Concurrently, the World Bank arbitration court reduced Marsans’ claim from US$1.6 billion to US$320 million.

At the time, Argentina petitioned for the ruling to be overturned. The lawsuit was in the hands of English fund Burford Capital (the same that litigates against Argentina for the expropriation of YPF). Subsequently, in 2018, with the award for US$320 million in its favor, Burford decided to sell it to Titan Consortium for US$107 million, given that it knew that Argentina would continue to appeal.

On this last point, according to Marli, should any appeal be favorable to Argentina, it could reverse the transaction.

In 2019, ICSID rejected the petition to overturn the ruling and ordered Argentina to pay US$320.7 million in compensation. “Argentina’s request for annulment was rejected. Argentina shall bear the full costs of the proceedings and pay the claimants the sum of US$1 million in legal costs; and all other claims are dismissed,” the ruling stated.

THREE LAWSUITS IN NEW YORK

Should this lawsuit proceed, it would be added to the other 3 filed against Argentina in New York courts.

These cases relate to the expropriation of 51% of YPF’s shares, which were in the hands of Repsol and for which Burford Capital bought the litigation rights; the PBI coupon case, in which a group of creditors is suing the country for changing the calculation base of the Gross Domestic Product, which in practice lowered the Argentine economy’s growth figures; and the case of the remaining holdouts that hold Argentina’s defaulted debt and never took part in the successive exchanges.