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Argentina seized 51% YPF stake in 2012

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Judge rejects immunity, comity concerns

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Argentina not immediately available for comment

(Rewrites first paragraph; adds details from decision, stock

prices, attempts to obtain comment, byline)

By Jonathan Stempel

NEW YORK, June 30 (Reuters) - A U.S. judge on Monday

ordered Argentina to give up its 51% stake in oil and gas

company YPF to partially satisfy a $16.1 billion

court judgment, handing a defeat to the cash-strapped country.

U.S. District Judge Loretta Preska in Manhattan said

Argentina must transfer its YPF shares within 14 days to BNY

Mellon, and instruct it to transfer the shares within one

business day to the plaintiffs.

The case arose from Argentina's 2012 seizure of the 51%

YPF stake held by Spain's Repsol, without tendering for

shares held by minority investors.

Argentina has been appealing Preska's September 2023

decision to award the $16.1 billion to Petersen Energia

Inversora and Eton Park Capital Management, which are

represented by litigation funder Burford Capital.

Burford has said it expected to receive 35% and 73% of

Petersen's and Eton Park's respective damages.

Shares of Burford traded as much as 21.2% higher in New

York after Monday's decision, while YPF fell as much as 5.5%.

Neither Argentina nor its lawyers immediately responded

to requests for comment. Burford and its lawyers did not

immediately respond to similar requests.

Preska's decision is a blow to Argentina's President

Javier Milei, whose government must urgently build up foreign

currency reserves to pay its debts while fighting inflation.

The country in April

obtained

a $20 billion loan program from the International Monetary

Fund.

Preska ruled on the same day that Argentina asked

London's High Court to block enforcement of the judgment, which

Petersen and Eton Park had sought last year.

COMITY 'NOT A ONE-WAY STREET'

Argentina argued that the YPF shares were immune from

turnover under the federal Foreign Sovereign Immunities Act

(FSIA), while Burford said a commercial activity exception and

Argentina's "many years" of evasion

justified

a turnover.

In her 33-page decision, Preska said Argentina's control

over YPF triggered the exception, and the shares could be

transferred despite being located outside the United States.

She also rejected Argentina's suggestion that comity, or

the respect that countries afford each other by limiting how far

their laws reach, weighed against her getting involved.

"Comity is not a one-way street," Preska wrote.

"The United States has a strong interest in enforcing

its judgments," she added. "Foreign governments cannot simply

override the exceptions to the FSIA by invoking its own law to

shield its assets from execution in the United States."

Argentina previously sought to limit overall damages to

about $4.9 billion. The U.S. Department of Justice sided with

Argentina in opposing a turnover.