By Jonathan Stempel
NEW YORK, March 27 (Reuters) – A divided U.S. appeals court on Friday struck down a $16.1 billion judgment against Argentina for seizing control of state-owned oil company YPF in 2012, a victory for Argentine President Javier Milei as he tries to stabilize the country’s long-strained economy.
In a 2-1 vote, the 2nd U.S. Circuit Court of Appeals in Manhattan said the plaintiffs’ breach of contract claims failed as a matter of Argentine law, justifying a reversal.
Argentina had been seeking to overturn the damages awarded in September 2023 by a lower court judge to former YPF shareholders Petersen Energia Inversora and Eton Park Capital Management for alleged losses tied to YPF’s nationalization.
The $16.1 billion judgment represented 45% of Argentina’s total budget in 2024, and the country has said it could cripple its economy, which has long struggled with debt and high inflation.
Argentina had also been appealing a June 2025 order that it turn over its YPF shares to partially satisfy the judgment. Because the judgment was voided, the 2nd Circuit vacated the turnover order.
Friday’s decision is a major defeat for Burford Capital, a UK-based litigation finance company that has funded the litigation and would have collected much of the judgment. The award had grown to $18 billion with interest by the time the appeal was argued last October.
Burford shares sank 47% in U.S. trading, closing down $3.69 at $4.14.
In a statement, Burford said it expects Petersen and Eton Park to appeal, perhaps eventually to the U.S. Supreme Court, and said they will likely consider arbitration.
Burford also expects a non-cash writedown in its first-quarter results, and said a material writedown could limit its ability to issue new debt and make various investments.
“The Second Circuit decision is obviously very disappointing,” Chief Executive Christopher Bogart said. “Unless plaintiffs can overturn this regrettable panel decision, investment treaty arbitration remains an entirely viable prospect.”
Burford’s lawyers did not immediately respond to requests for comment.
MILEI EXULTS OVER DECISION
The appeal concerned Argentina’s decision to expropriate 51% of YPF’s shares from Spain’s Repsol for $5 billion without making a tender offer to Petersen and Eton Park, YPF’s second- and third-largest investors.
YPF had been private since 1993. Cristina Fernandez de Kirchner, Argentina’s president in 2012, said at the time that YPF should be re-nationalized because it failed to produce enough oil and natural gas to satisfy local demand.
In a post on X, Milei called the decision “the best possible” outcome.
“WE WON THE YPF LAWSUIT,” he wrote. “It’s historic, unthinkable, the greatest legal achievement in national history.”
Robert Giuffra, a lawyer for Argentina, said the decision “entirely vindicates Argentina’s position that the district court misapplied governing Argentine law.”
He also said Burford paid just 15 million euros ($17.3 million) for the right to sue and collect on a judgment, and had been “seeking to turn the U.S. courts into a casino by using its own made-up interpretation of Argentine law.”
Roberto Geretto, an economist at Argentine financial consultancy firm Adcap, said: “It is an extremely positive ruling because it not only implies a significant saving of money for the Argentine state, but it also clears up doubts about the control of [YPF].”
ARGENTINA SOUGHT TO MITIGATE POTENTIAL FALLOUT, COURT SAYS
In September 2023, U.S. District Judge Loretta Preska in Manhattan found that Argentina breached its obligations to Petersen and Eton Park and must pay them $14.39 billion and $1.71 billion, respectively.
Those sums included $8.43 billion of damages, plus $7.67 billion of interest at an 8% rate.
Writing for the appeals court majority, Circuit Judge Denny Chin said YPF’s bylaws did not obligate Argentina to tender to shareholders such as Petersen and Eton Park.
He also said Argentine expropriation law precluded third-party lawsuits, and was likely intended to “mitigate the fallout” from the claims in this case.
“These cases – which functionally seek to extract payment for the Republic’s seizure of Repsol’s shares to the tune of $16.1 billion – have undoubtedly interfered with the act of expropriation, even if they did not actually prevent its completion,” Chin wrote.
The appeals court did not rule on two issues that had been central to the case.
These were whether the plaintiffs deserved to sue in the United States given that the underlying activity occurred in Argentina and involved alleged violations of Argentine law, and whether foreign relations concerns meant Argentina shouldn’t be found liable in a U.S. court.
Circuit Judge Jose Cabranes dissented. He said the appeals court owed “special consideration and respect” to Preska’s findings, given her close evaluation of the decade-old case, even as he praised the “otherwise outstanding majority opinion.”
(Reporting by Jonathan Stempel in New York; Additoinal reporting by Walter Bianchi, Leila Miller and Sarah Morland in Buenos Aires; Editing by Rod Nickel, Andrea Ricci and Matthew Lewis)
