A long-running legal battle between former investors of YPF, an energy company in Argentina, and the Argentine government has concluded with a significant ruling. A US federal judge has entered a judgment in favor of the former shareholders, who were backed by Burford Capital, the world’s largest litigation finance provider. The dispute stems from the government’s takeover of a majority stake in YPF back in 2012.
According to the ruling, the Argentine government has been ordered to pay $8.4 billion in damages and $7.6 billion in interest to two defunct investors in YPF, namely Petersen and Eton Park. This comes as a major blow to the Argentine government, which has referred to the decision as “unprecedented and erroneous” in a statement. They have also expressed their intention to appeal the ruling.
Burford Capital, a litigation finance powerhouse that played a crucial role in financing the plaintiffs’ claims, saw its shares soar by 28% in US trading following the publication of the judgment on Friday. The ruling has been seen as a significant victory for the former investors and further establishes the growing influence and success of litigation finance in high-stakes legal battles.
The Argentine government had taken control of 51% of YPF in 2012 after accusing its majority shareholder, Spanish company Repsol SA, of not investing sufficient resources in oil production. In a subsequent agreement reached in 2014, Repsol received compensation of $5 billion. Interestingly, Burford Capital later acquired the defunct companies that owned 25% of YPF shares prior to the nationalization.
Reacting to the judgment, an Argentine government spokeswoman, Gabriela Cerruti, stated that they would continue to defend energy sovereignty and their state company, YPF, against what they deemed as “vulture funds.” This highlights the government’s determination to protect its national interests and challenge what it considers to be unfair treatment in international legal proceedings.
The ruling has also raised questions about the jurisdiction of US courts in cases involving foreign companies and governments. The Argentine government has argued that the case should not have been tried in a US court but rather in accordance with the company’s bylaws and under the jurisdiction of the Argentine legal system. This issue of jurisdiction may become a key aspect of the appeal process.
The outcome of this case sets a precedent for future disputes involving investors and governments in the energy sector. It sends a clear message that governments can be held accountable for their actions, particularly if they are seen as infringing upon the rights of shareholders. As the legal landscape evolves, the role of litigation finance providers like Burford Capital is likely to continue growing, as they provide the financial resources necessary to pursue such complex and costly legal battles.
Overall, the ruling in favor of former shareholders of YPF represents a major setback for the Argentine government, which has been ordered to pay a substantial sum in damages and interest. The decision also highlights the increasing influence of litigation finance providers in transforming the dynamics of legal battles and affirms the accountability of governments in protecting the rights of shareholders. As the Argentine government plans to appeal the ruling, the jurisdictional aspects of the case will likely be further scrutinized.
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