well here the next case peterson and her nerd versus argentine republic i got my phone winter some want we're going to do is just keep track of the time on my phone on t v all morning and you are going to argue for four minutes and then you're saving two minutes for a bottle and then we're going to hear from mr pascoe four minutes principle of sovereign immunity that attaches to a state's exercise of its power of expropriation in this case the court applied the commercial activity exception by looking around  core cause of the injury at the effects of the expropriation and that was directly contrary to this court's decision in garb the poland as well as the supreme court's recent decision in o b b versus sachs which instructs that the threshold question for the application of the commercial their argument is they're not challenging appropriation thing are despite how they've drafted it and the supreme court warns against an artful re characterization of the pleading in order to fall within the commercial activity exception as does this court in the garvey poland case what we are to look at is the core of the claim the foundation of the claim and let me take to quote the supreme court in o b b this court is required to quote zero in on the core of the suit the sovereign acts that actually entered the plane what is they admit triggers their alleged breach and which is dealt with separately under this court's in the supreme court's precedents from time immemorial originally are you say that the group creation and more than in the broad bank aamer case the supposin breach of the cd obligations could be severed from the mexican government's exchange act regulations which were public acts the issue here is what powers acts do they involve public power or or is it is a correct that the bylaws where these particular pylorus were passed to protect private and pastors against  your answer to that has to be yes but so what it is this is not a mere repudiation of a contract this is a formal act of its proper relation conducted pursuant to law for the public interest of argentina its experts a by issuing a legislative decree that is inconsistent with the application of the bylaw if one think it's a state in several ways your honor it's inconsistent in only requiring acquisition of fifty one percent the government to exercise all rights of those shares under the bylaws that couldn't occur unless the the government launched a tender offer so by definition the legislative action instructed the government to mediately both those shares  over it said it had the immediate rights that under the bylaws couldn't be enjoyed in last there were a tender offer so by definition re investment ok he would explain that to me yes because as judge winter to require the government to acquire only fifty one percent leaving the company a public company by definition if they did a tender offer it would have to take one hundred percent of the shares can would have privatized  only it says under argentine law and explore creation order must identify the exact property to be acquired that's according to peterson's experts and they identified fifty one percent and they judge judge winter they also stated specifically in the act that the company was to remain public that is antithetical to a tender offer of the government has to buy that other shares that mean crikey because you're saying it might be quickly why is very inconsistent with making a tender all for as a private party for rest of it that is really have to take over by excruciation fifty one percent but does that mea party make an offer for b over for the no it does because there is no way they could have accepted which they would be required to do the remaining shares and have remained a public company at that point the state would own one hundred percent of the shares and that is specifically precluded by the express law so it is not the fact that they specifically mentioned fifty one percent but it is this statement that they would remain a suggest both those but certainly the requirement to remain a public company which is on the face of the law is directly inconsistent with the tender offer whereby it would become a wholly owned state company in addition the law is dou ble your time ok i'd like you sure about off you want to move on just one other point there is no there is no provision in the agreement that requires a back and tender offer in fact once the government morning or honors michael paskin for why p f i don't want to repeat the ground there was plowed a little bit by argentina's council so i want to focus on a few things that are specific to the allegations of the claim against  honor that y p f will remain a public company it directs that y p f is going to expropriate fifty one percent of the shares also the intervention orders you know the timeline here there is a two year period between under the laws between when y p f y excuse me when argentina announces the expropriation and passes the do the temporary decrees in the laws and when it actually becomes a shareholder so during the entire time period that the plaintiffs are complaining about here your honor why p f is not actually acting is is not the majority shareholder they are using their temporary government powers through  expropriation to act as if they were sitting in the shoes of repsol as if they were the shareholder and i think the key test which is which is both in the wealth over case the supreme court case of well to over also in the d c circuit the wrong case which i think is is squarely on point the question is is in examining the gravel meant of the of the claim and whether or not it it implicates the commercial activity exception is did the actions that are that are alleged here they are the actions that issue things that a private actor could have done in a private actors commercial conduct so had carl icahn or someone else come in and decided that they wanted to take control of why p f could they have done what argentina did could they have gone about it the same way and the answer here is absolutely not had carl icahn come in and said i'm going to take control of this company he wouldn't have been able to do anything he wouldn't have been able to vote to share exercise any role at all until two thousand and fourteen two years later when they finally closed the transaction so i think that's a very important distinction here because it goes to the question of you know is this commercial activity is it activity that that an ordinary private commercial party could have engaged in or is it activity that only the government could have encaged engaged in in its sovereign capacity that there is a two y period in which which is crucial to this making tender offer which a private party would not have been involved in is that your point that's correct your honor that's correct well i think one point your honor is that is that peterson has admitted in a separate proceeding pursuant to the bilateral treaty between argentina and spain that the conduct all relates to the expropriation that they were harmed by the acts of expropriation that's their admission in another proceeding that in this proceeding they try to walk away from and all of the issue because of course they were harmed by the age procreation in what way but i want to know why this two year period is crucial with respect to the tender offer or not well i think the two year period is crucial your honor because at some point if they were purely engaged in commercial activity and at some point they decided to take control whether it was by buying shares in the open market whether it was by agreeing with repsol that they were going to acquire their shares privately and then become a shareholder that way there is you know i believe the correct reading of both of the bylaws is there is a prior obligation to tender and all of the notice obligations and everything that trigger from the tender for it with with the tender go to this attempt through commercial activity to take control of the company but here the control of the company was already accomplished it was accomplished in the spring i guess in their fall of two thousand and twelve and it involved throwing out management throwing out the board occupying the company in a way that's really no different than if they had occupied it by surrounding the buildings with tax they the government took control of the of the company and through those powers they their so called takeover sort of  like the case was in the wrong case in the d c circuit the takeover of the company was accomplished in a manner that could only have been done by the sovereign and that is a critical distinction and the fact yes you would well say what you do well they're exposed prieta but they're also attempting to continue to run the company as a as a as a public company and i think the other thing that's important that shows the conflict between plaintiffs interpretation of the byelaws and the act of of assuming control by expropriation rather than by commercial activity is in section seven d the site believe it's the second full paragraph of seventy of the bylaws that says if the if you are already a controlling shareholder then you have no obligation to tender so if for example repsol who owned a majority stake in the company wanted to acquire more shares they had no obligation at the time to tender for the other shares because they were already a controlling party so the expropriation according to plaintiffs puts argentina in the place of of control if there are truly different argument that the by laws don't apply at all here but that's an argument isn't that an argument that goes to whether the contract was violated or not rather than a foreign sovereign immunity  prior holders and under of a contractual obligation that doesn't require a tender offer that sounds to me like a ordinary and probably valid perhaps valid  contractual different frankly your honor i believe it it involves both of course it could be a contractual defense if we were ever at that stage but it is also a sovereign immunity issue because i think that we can  as a matter of pleading or or crafting of their complaint or their arguments the plaintiff's notion that we're not challenging expropriation all we're challenging are these contractual overtime thank you thank you your own  deliberately of course because argent under argentine law if they had explode created either our forty nine percent shares or are buying the right to tender offer they would have had to pay for and they did not want to do that so they took only fifty one percent of the repsol shares and then they affirmed in each procreation law that all the by all rights were to remain in place now what this court he retains that commercial nature now there's no dispute that argentina and y p have entered the marketplace as commercial our actors when they conducted an i p o in the united states and made contractual commitments in the bylaws they specifically included section twenty eight in the bylaws because nobody would buy shares from argentina without assurances that that fund i want to come back to your first point you say that under argentine expropriation the amount they had to pay when they broke it was based on the taking over of fifty see whether it fleshes out in what they actually were ordered to pay though it does flush out because under argentine law they specifically have to designate what it is that they're taking and here they only designated the fifty one percent of reps will share the said why pay up would remain as a public company subject to the bylaws they said even that the administrators who took over by p f or on april sixteenth and took control of the company in there were triggered tender offer right the city even he was bound by the by laws has done any hearing or anything in which  itself specify the value of our tender offer rights they specifically say in section twenty eight if by any means direct or indirect argentina takes over the company i don't know argentina law causes you to pay for them i know perfectly well that explode creation laws of different countries are very different from american was when italy took over my great want to know when you tell me that that is because you know if we could see that that would be a tremendously powerful argument in your favor but you haven't given me any argentina indication that was going on just  formulaic price set forth in the bible so i understand that but you made an argument that this was obvious because of what happened in expropriation and so i'm asking you to show me if i were point to court section seven of the law of expropriation that specifies the property it says the fifty one percent shares held by reps or and then it goes on it says that they will be compensated pursu merits biggest arguments and that's absolutely correct under well tov or there is no further inquiry well to read involved a presidential decree to breach the contract and the court held that we were nonetheless entitle to bring our f s a claim for damages for that breach of contract it cannot be the case that had gone into the marketplace and made this solemn promise that they would respect  if they ever took over the company by any means that they can say well we did through express appreciation and we didn't really specify that express appreciation would apply even though we said by any means and therefore your tender offer rights just disappeared simply disappeared different question and that is if we were to view this as an act of state rather vand foreign sovereign immunity and there is a question to whether commercial exception applies justice stevens is concurring opinion raises doubt about  did and it may be intertwined so we you know exactly it's easily disposed of for two reasons first of all under this court's decision in ally bank there is an effect to the law in the united states performance of the tender up or requirement was to take place in the united states the shares were held in the united states under those circumstances the act of state doctrine does not apply second as judge chin pointed out beginning we are not challenging the express appreciation we are not challenging the executive decreed that suddenly took over the company those are the premises of our argument which preclude our right to seek damages for the breach of our contractual rights it simply cannot be that they say well because we rushed in on april sixteenth and didn't have time to do a tender offer before our tender offer up legation simply disappears we don't have to do that their rights worth billions of dollars have simply gone up in smoke well well talk over precludes that sort of argument providing reasons why they breach the contract those reasons are wrong for weasels we can explain who were developed of love but is the supreme court in this court held  irrelevant why argentina acted as it did it matters that it only breached a commercial obligation and that's directly built into the statute under sixteen zero three d it focuses on the nature of the acts and here under clause three of the commercial activities exception all that matters in judge prescott walks through this very clearly is that it was based on an act outside of the united states they don't it was taken in connection with commercial acts it cannot dispute that because the whole course of issuing the bylaws of conducting the i p o was a commercial act and it caused a direct effect in the united states and of story your honor first of all this case is not like well to over because this involves a formal act of expropriation which this court has dealt with very distinctly most recently in the guard case and dealing with related transactions held that subsequent commercial transactions involving expropriated property do not give rise to subject matter jurisdiction over claims arising from the original expropriation that's exactly what we have here the same argument plaintiffs make it is attempt to focus on the commercial relationship was made in the wrong the province case by the d c circuit there they followed this court in garb and reaffirmed that incidental or subsequent acts relating to an expropriation do not render that fundamental expropriation commercial activity where as here they all quote flow from the express this involve the exercise of sovereign powers unique to a sovereign unlike in well to over where any party could issue debt only a sovereign can express property which is why in every single case it has been dealt differently secondly we've spent a lot of time discussing the effect of the expiration under argentine law that proves two point plaintiffs are challenging the expropriation and two that this court should have deferred to argentina argentinas experts on the effect under the law there is no just as as in the application of our supremacy  clause it reigns supreme without identifying every every action that every state law it preempts similarly here the experts made clear that an act of express relation under the constitution was an act of public law which trumped is if we were to rule against you because we don't find that what you say is a necessary part of it could they come back and say ok we now thank you your honor just a couple of quick points so mr kellogg said that there was no immunity for wipe y p f that's wrong paragraph eight of the complaint says why p f is currently in instrumentality of argentina which owns a majority in controlling interest section sixteen zero three b two defines agent or instrumentality for purposes of the fs out as as something as an entity a majority of whose shares or other ownership interest is owned by a foreign state there's no dispute about that with respect of active state i think not the ally case but is the case the judge winter was on the brock thirty years ago that's really the instructive one here because in allied the us government stepped in with an amicus brief and specifically said there's no comedy concerned so the question of whether the s courts should be passing on on actions of foreign sovereign and whether that implicated comedy issues was resolved there in brocken it was very different and in brock and particularly from y p s perspective there was a bank a mexican bank that could not perform its obligations because the mexican government passed certain laws that compelled the bank to act in a certain way that's exactly what happened here here specifically when you look at the conduct regarding why p f what they're complaining about is that why p f sat by and allowed this to happen what they principally allowed to happen was they allowed argentina to vote the shares even though argentina was not yet a majority shareholder and the law itself section nine of the law which is at page a one sixty seven of the appendix section nine of the la pacifically says that the government is going to be able to exercise the political rights of the share ownership and so to say that y p f was somehow obligated to prevent them from doing that in direct conflict with the foreign law if this is a classic act of state case and particularly from the perspective of why p f there's no conceivable reason why the plaintiff should be able to get around that but if the question doesn't come that may be a closer question examining the claim against argentina examining the claim against white p f your honor what they say why f did was they failed to stop this from happening and with respect to voting and exercising the rights the political rights of being a shareholder which means voting the law itself binds y p f there's no way that y could have acted the way they say y p s should have acted without violating their own national law which is exactly what the brock a decision prohibits thank you thank you let's wait a moment until the crowd clear