US judge orders Argentina to transfer YPF oil stake to former shareholders

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A US district judge has ordered Argentina to transfer its controlling stake in state-run energy company YPF to former shareholders, escalating pressure on the country to pay a $16bn judgment stemming from its 2012 nationalisation of the group.

Judge Loretta Preska of the Southern District of New York on Monday gave Argentina 14 days to transfer its shares to a global custody account at BNY as partial payment for the judgment, which was a record sum for the court at the time of Preska’s original 2023 ruling.

Preska had found Argentina liable for the $16bn in damages, ruling that the nation had violated the rights of minority shareholders when it expropriated a 51 per cent stake in the company but failed to make a tender offer for their shares.

The plaintiffs are largely financed by litigation funder Burford Capital, whose New York-listed shares rose more than 20 per cent after Monday’s decision.

Argentina’s libertarian president Javier Milei pledged to appeal against the decision in a post on X and blamed the situation on Axel Kicillof, the left-wing former economy minister who presided over the YPF expropriation and is now a political rival.

“Regardless of the stupidity of Kicillof and all those who governed us before, Argentines should know that we will appeal this ruling in all appropriate instances to defend our national interests,” he said. “P. S. I told you the Soviet was an idiot!”

Milei’s administration has argued that Argentina, which is emerging from a severe economic crisis, has no way to pay the judgment. Argentina did not post collateral pending appeal and Milei’s officials have declined to enter negotiations with the judgment creditors.

“With this judgment Preska is saying that Argentina has been ignoring all of this court’s decisions and now it’s time to pay up,” said Sebastian Maril, a director at consultancy Latam Advisors who has closely followed the case. “This is a wave that has been building for years and is now breaking over Milei.”

The US justice department under former president Joe Biden filed a statement of interest in November asking Preska not to grant the plaintiffs’ request for Argentina to transfer the shares, arguing it would violate Argentina’s sovereign immunity.

Argentina’s lawyers had argued that the principle of international comity — the respect one country gives to another’s legal and government decisions — required Preska to reject the plaintiffs’ request.

Rejecting that argument, Preska wrote: “While the Republic demands that this court extend comity, it simultaneously refuses to make any effort to honour the court’s unstayed judgment . . . Comity is not a one-way street.”

Analysts said it would be politically damaging and logistically tricky for Milei to transfer the shares in YPF, which is a cornerstone of Argentina’s economy.

Sebastian Soler, a former ***istant attorney-general in the previous left-leaning Peronist government, called Preska’s decision “unprecedented” and pointed out that Argentine law “bans the government from transferring the expropriated shares without previous approval from congress.”

YPF shares traded on the NYSE have more than tripled in price since Milei won 2023’s presidential election and embarked on a series of free market reforms. The shares fell more than 7 per cent after Monday’s ruling before paring some losses.