Argentina’s long-simmering legal fights with many of its former investors are coming to a head, and the billions of dollars in damages at stake could complicate President Javier Milei’s attempts to fix the country’s struggling economy.
Lawsuits over decisions taken by previous governments, from expropriations to changes to bond payments, are winding their way through courts in the US and Europe, and plaintiffs are piling pressure on the government to negotiate.
While Milei says he will pay his country’s obligations, behind closed doors officials warn the government will fight to the bitter end to reduce them and protect Argentina’s scarce resources.
“Unfortunately for Milei, a tsunami of judgments that has been building for two decades is now breaking, with final rulings in all the [major] cases due in his four-year term,” said Sebastián Maril, a director at consultancy Latam Advisors.
Maril estimates that awards in ongoing cases against Argentina could total up to $31bn without interest, although government sources argued the figure was “highly speculative” as it includes more than $12bn in estimated awards for claims on which judges have not yet ruled.
By far the largest judgment is the $16bn that a New York court awarded last year to former minority shareholders of state-controlled energy firm YPF, which Argentina expropriated in 2012. Argentina is appealing, arguing that the New York court’s decision was flawed and the award “grossly inflated”.
The court is weighing up whether to compel Argentina to hand over the 26 per cent of YPF shares owned by Milei’s government as payment, while it awaits a ruling from the higher courts. The plaintiffs are largely financed by litigation funder Burford Capital.
Other claims are also quietly adding up. Last month the UK supreme court declined to hear Argentina’s appeal of a $1.5bn judgment over changes to the way the country calculates GDP, which reduced payouts on its growth-linked bonds. The government has until November 28 to pay bondholders or face enforcement action.
In August, a US court refused to throw out a $340mn arbitration award over the Argentine government’s 2008 expropriation of airline Aerolíneas Argentinas. Another US court ruled that a group of holdouts from Argentina’s 2001 sovereign default may recoup three-quarters of an earlier $417mn award by seizing some Argentine funds held in the US.
Milei’s administration has been deeply critical of the leftwing Peronist governments that made the disputed policy decisions and has pledged to shed Argentina’s reputation as a serial defaulter.
“Populist [governments’] ‘creative’ solutions have brought tragic economic consequences and discredited our country,” Milei’s cabinet chief Guillermo Francos said on X following the UK Supreme Court decision. “Our greatest commitment is to work each day to become a serious country in the eyes of the world again.”
But Argentina has no money to pay. The country’s central bank has negligible hard currency reserves, and it already faces questions about how it will make more than $14bn in sovereign debt repayments due to bondholders and multilateral lenders next year.
Jaime Reusche, vice-president and senior credit officer at Moody’s Investors Services, said the judgments were increasing pressure on Argentina’s limited capacity to make external payments — the main reason Moody’s has yet to upgrade the country’s bottom-of-the-barrel credit rating, despite macroeconomic improvements under Milei.
“There is a 50-50 chance that Argentina’s government can meet its commitments in the next two or three years,” he said. “The outlook is so sensitive that if a couple of variables change, they may need to [renegotiate] debt repayments, and these judgments are a very real contingent liability.”
Argentine officials say they will exhaust legal possibilities to protect the public purse. That goes both for cases without a final ruling and the nearly $2.4bn worth of judgments where the decision may no longer be appealed but enforcement can still be challenged.
“We will exercise our right to protect our assets like any sovereign would,” said one government official. “Nobody relishes keeping litigation open, but we have many demands on our resources, especially given the constraints on the fiscal sector, which the judgment creditors are well aware of.”
Critics of the government argued that statements by Milei, such as a recent post on X that referred to “the illegal expropriation of YPF”, were muddying the waters on that case and may hurt Argentina’s chances of prevailing on appeal.
Plaintiffs in the YPF case have attempted to get Argentina to negotiate a settlement, but the government has not engaged with those efforts.
Those who advocate for Argentina coming to the table say that a drawn-out battle would increase interest bills, while attempted asset seizures would embarrass Argentina, undermining Milei’s effort to attract badly needed foreign investment.
“Kicking the can down the road has never gone well for us, because we almost always lose in these cases,” said Maril, noting that Argentina had already paid out $17bn since 2000 to defaulted bondholders, expropriated shareholders and others.
Marcelo García, Americas director at intelligence firm Horizon Engage, said the litigation has weighed down on investors’ decisions by highlighting Argentina’s severe cash flow problem. But he added that it would be harder than in the past for plaintiffs “to turn Argentina into an international pariah” when Milei is making many reforms demanded by investors.
Claimants who are pushing to be paid quickly should expect a wait, the Argentina government official said.
“It is not always obvious for the private sector how a government deals with these claims. We can’t sacrifice equity in the short term like a corporation might, because a state can’t go into liquidation. We don’t have the same timelines,” they said. “But we do want problems solved, as expeditiously and efficiently as possible.”
Plaintiffs in many of the cases are searching for Argentine assets to seize in lieu of payment. Experts say that will be difficult, as the few assets held abroad, such as diplomatic properties or central bank holdings, are protected from seizure in most jurisdictions.
There are exceptions. During US hedge fund Elliott Management’s 15-year battle to collect on defaulted Argentine bonds, Dennis Hranitzky, currently head of sovereign litigation and global asset recovery practices at law firm Quinn Emanuel, successfully seized $70mn from Argentina. His team also briefly seized an Argentine naval vessel in port in Ghana in 2012, which embarrassed Buenos Aires — but it was soon released.
Hranitzky’s team also identified the $312mn of Argentine state funds held in New York that a US appeals court ruled in August must be turned over to the holdout bondholders.
“I’ve been doing this continuously for the last 22 years and can say from experience that while collecting from Argentina isn’t easy, it can be done,” Hranitzky said.
Additional reporting by Alistair Gray in London and Joe Miller in New York
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