Opinion ID: 2832150
Heading Depth: 2
Heading Rank: 1

Heading: The Underlying Debt

Text: In 1994, Argentina began issuing debt securities pursuant to a Fiscal Agency Agreement (“FAA bonds”). In light of Argentina’s “history of defaulting on, or requiring restructuring of, its sovereign obligations,”5 investors demanded that the FAA include a waiver of 28 U.S.C. § 1605(a)(1) states in relevant part that a foreign state shall not 3 be immune from jurisdiction if it “has waived its immunity either explicitly or by implication.” 28 U.S.C. § 1605(a)(2) states in relevant part that a foreign state is not 4 immune from any action “based upon a commercial activity carried on in the United States.” 5 EM Ltd. v. Republic of Argentina, 473 F.3d 463, 466 n.2 (2d Cir. 2007) (“BCRA I”); see also id. (recording Argentina’s “many contributions to the law of foreign insolvency through its numerous defaults on its sovereign obligations, as well as through . . . a diplomacy of default”). 6 Argentina’s foreign sovereign immunity as to “any suit, action, or proceeding against it or its properties, assets or revenues with respect to the” FAA bonds, and any suit brought “for the purpose of enforcing or executing” a judgment obtained in a related proceeding.6 Argentina agreed to include this waiver of sovereign immunity in the FAA. 7 In December 2001, Argentina declared a moratorium on principal and interest payments on more than $80 billion of foreign debt, including the FAA bonds.8 Since then, Argentina has not made principal or interest payments on these bonds. In 2005 and 2010, Argentina successfully restructured over 91% of its debt by launching “global exchange offers,” pursuant to which creditors holding the defaulted bonds could exchange them for new securities with modified terms that substantially reduced their value.9 Plaintiffs EM and NML own FAA bonds that were not restructured. Beginning in 2003, plaintiffs filed multiple actions against Argentina in the Southern District of New York in an effort to recover the full amounts due on their defaulted bonds. Argentina 6 J.A. at 329‐30, 343‐44. 7 Argentina “concedes that in the [FAA] governing the debt instruments owned by plaintiffs it clearly and unambiguously waived its right to assert its sovereign immunity from suit in claims regarding those instruments.” NML Capital, Ltd. v. Banco Central de la República Argentina, 652 F.3d 172, 176 n.3 (2d Cir. 2011) (“BCRA II”). 8 See id. at 175. 9 Id. at 176 & n.4. 7 did not dispute that its sovereign immunity had been waived in the FAA. Plaintiffs eventually obtained numerous final judgments against Argentina, which now total approximately $2.4 billion.10 These judgments remain unpaid.