Former Argentine President Fernando de la Rua sits in a courtroom in Buenos Aires August 14, 2012. (Photo : REUTERS/Bernardo Montoya)
Argentina lost a bid on Monday to prevent bondholders from obtaining documents from two banks about the country's assets outside the United States.
A three judge panel of the 2nd U.S. Circuit Court of Appeals in New York said in an opinion that the Argentine government could not prevent a lower court's order forcing the banks to produce the documents.
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The case stems from Argentina's roughly $100 billion default in 2002 and its ultimate outcome could affect how easily countries might fend off angry creditors in bids to extricate themselves from sovereign debt crises.
"Because the district court ordered only discovery, not the attachment of sovereign property, and because that discovery is directed at third-party banks, Argentina's sovereign immunity is not affected," the written opinion said.
Argentina remains embroiled in U.S. litigation with hedge funds and other creditors that have spurned restructurings and demanded full repayment. The litigation has been a major impediment to Argentina's return to global credit markets.
Monday's opinion, by appeals judges John Walker, Joseph McLaughlin and Jose Cabranes, comes out of a challenge by Argentina of subpoenas by NML Capital Ltd, an affiliate of the investment firm Elliott Management Corp, first served in 2010 on Bank of America (BAC.N) and Banco de la Nación Argentina.
The subpoenas sought documents relating to accounts or assets Argentina might have at the two banks.
Argentina had argued that because the underlying assets were protected by a U.S. law, the Foreign Sovereign Immunities Act of 1976, the subpoenas were not valid.
"Argentina maintains that its property abroad is categorically immune from attachment, and that the district court cannot order discovery into those assets," the opinion said.
The opinion, however, said that forcing the banks to produce the documents was well within a U.S. judge's power and had nothing to do with attaching any of the country's assets.
An Elliott Management spokesman declined to comment. Jonathan Blackman, a lawyer for Argentina, could not immediately be reached to comment.