Did you hear the one about the IMF sending an amicus curiae brief to the highest court in the United States in favour of taking up the pari passu case of its infamous lost cause, Argentina?
Well here’s the punchline: US opposition has abruptly killed the plan.
Managing Director Christine Lagarde withdrew a call for the fund’s executive board to approve the Supreme Court brief “following the U.S. authorities’ decision to no longer support the filing at this stage”, an IMF spokesperson confirmed late on Tuesday:
The Managing Director’s recommendation was premised on U.S. support, as it would not be appropriate for the IMF to file this brief without that support. The Fund remains deeply concerned about the broad systemic implications that the lower court decision could have for the debt restructuring process in general.
The vote had been set for Wednesday — suggesting US attitudes changed quickly.
The IMF amicus plan’s sudden death is also especially surprising given that it was expected to be restricted to warnings about ‘policy’ if the case is upheld, not law, or even the meaning of the pari passu clause, and therefore far from a full-throated defence of Argentina.
It was not immediately clear what caused the US change of heart, but the government said last week that it would not make its own amicus filing to the Supreme Court in support of accepting Argentina’s petition. That, and the Republic’s holdout creditors, well-connected on Capitol Hill, have been staging a ferocious campaign to stop IMF intervention.
A final ruling also remains pending by the Second Circuit, on the form of payment the lower courts Argentina to make to its holdouts. If the Supreme Court looked like it might take up the case — and many deemed this pretty unlikely in any event, actually, even before the IMF retreat — Argentina could get a months-long stay on these payments.
But — while the US said it would not file of its own accord, the Supreme Court judges could still ‘invite’ the Solicitor General later on to weigh in on taking up what could be a complex foreign relations case. That’s pretty standard practice. (The court asked the US precisely for this in the other Argentine holdout case put before it.)
So it’s not clear why US failure to file should by itself limit the IMF. And that decision came on Friday. The US position on the IMF’s amicus brief (whispers of which first emerged earlier last week) appears to have changed more abruptly than that.
Now, Argentina’s petition has claimed that lower courts’ injunction on it to pay its holdouts ratably alongside restructured bondholders is “an unprecedented intrusion,” violating US law on foreign sovereign immunity, and stretching courts’ powers of equitable relief “to order payment of purely monetary claims”.
Which is some heavy law.
The US itself has already weighed in as amicus in lower courts regarding some of this stuff. (It even ventured into the meaning of pari passu, which not even Argentina is going to bother complaining about now.)
But this is not what the IMF’s amicus curiae brief was going to cover. It was expected to be about ‘policy implications’ of holdouts winning against Argentina in this case — fund code for warnings about the effectiveness of restructuring tools like collective action clauses. In fact it sounded like the brief would be taken almost verbatim from paragraphs 43 and 44 of the IMF’s May paper on reviewing sovereign restructuring policy. (Possibly even with the ‘woulds’ — as in “the decisions would increase the risk that holdouts will multiply” — being redrafted into weaker ‘coulds’).
Is that really so terribly outré?
The IMF’s brief wasn’t even going to refer to poor old Grenada’s recent, highly ‘policy’-related trouble with pari passu litigation, we heard. The original May paper was also clearly terrified of endorsing anything other than a “contractual” approach to sovereign debt — meaning no SDRM white-elephants that could cost the IMF the support of the US. Well how ironic.
So what really gives? Was the IMF seriously waylaid by US fastidiousness over Supreme Court procedure? What about the substance here?
After all , to close — if you look at the holdouts’ lawyers’ own letter to the IMF — theyseemed clearly very concerned about what the amicus brief might mean for IMF policy:
The IMF’s intervention in this case would flagrantly violate the IMF’s strict and long-standing duty of neutrality, threaten the IMF’s immunity, undermine mutual and fair settlement of sovereign debt disputes, and encourage Argentina to continue its violation of legal and international norms of conduct. Any attempt by the IMF to support Argentina’s petition—an attempt to undo previous court rulings in this litigation—should be abandoned.If the IMF abandons its long-standing legal duty of neutrality and supports Argentina’s position in its long-running litigation against its creditors, the consequences for both the Fund and the consensual system for resolution of sovereign debt could be substantial…Such a brief inescapably would support Argentina’s immediate objectives in its litigation against its creditors–relief from the Second Circuit’s ruling–which is unattainable unless the Supreme Court first grants Argentina’s petition that the Fund is being urged to support. To call such a brief “neutral” is simply disingenuous……Indeed, it is antithetical to the IMF’s core mission to lend legal support to a sovereign debtor that rejects dialogue with its creditors.
Keiner hat dich betrogen, du hast als Zocker mit Bedacht und im Wissen um die Situation nach dem Default gekauft .
AntwortenLöschenAlso spiel dich hier nicht als enteigneter armer Anleger auf.