The Justice Department maintains that U.S. courts cannot order the seizure of foreign sovereign property located outside the United States.
The U.S. government has sided with Argentina in urging a federal judge not to force the country to give up its 51 percent stake in oil and gas company YPF to partially satisfy a $16.1 billion court judgment.
In a letter sent Wednesday night to U.S. District Judge Loretta Preska in Manhattan, the Justice Department said it has long held that U.S. courts cannot order the seizure of foreign sovereign property located outside the United States.
He also said requiring Argentina to hand over the shares to two investors represented by litigation fund Burford Capital would violate sovereign immunity, and that allowing such a handover could interfere with U.S. foreign policy.
Argentina is appealing Preska's September 2023 decision to award the $16.1 billion to Petersen Energia Inversora and Eton Park Capital Management. Burford has said it expected to receive 35% and 73% of their respective awards.
Burford's lawyers did not immediately respond to requests for comment. Robert Giuffra, a lawyer for Argentina, declined to comment.
Led by libertarian President Javier Milei, Argentina has slashed public spending to reduce inflation, which has fallen but remains above 200% annualized, though its measures have deepened a recession and contributed to poverty rates above 50%.
But Milei's ties to U.S. President-elect Donald Trump could help with Argentina's $44 billion loan program with the International Monetary Fund, which could be reviewed next year.
The $16.1 billion ruling came after Argentina acquired 51% of YPF from Spain's Repsol in 2012 without holding a tender for the shares held by minority investors.
Burford has said that "many years of structuring Argentina's assets to avoid enforcement" justified the surrender of the YPF stake, and that a commercial activity exception to the federal Foreign Sovereign Immunities Act permitted the surrender.
In Wednesday's letter, the Justice Department said Congress did not intend to eliminate immunity for foreign sovereign assets, such as YPF shares.
He said ending immunity would create an anomaly in which a foreign country's property within the United States would have greater protection than property within the country itself.
The Justice Department also said that for reasons of comity – that is, the respect that countries grant each other by limiting the scope of their laws – New York State's own statute did not require Argentina to give up its YPF shares.
A contrary conclusion could jeopardize American property, the department said, because foreign countries could grant the United States similar treatment in their own courts.
It is not clear when Preska will comment.
