CEI, Former State Department Officials Defend Freedom of Contract in Supreme Court Case against Argentina

by Hans Bader on April 17, 2014

Can a country seeking to welsh on its debts invoke sovereign immunity to evade not just court orders to pay those debts, but also post-judgment discovery aimed at collecting on those judgments? Can it do so to prevent not just discovery directed at it, but also at third-party banks? Most importantly, perhaps, can it do so even though it contractually waived sovereign immunity? The answer is yes, according to Argentina, which is seeking to stiff many of its bondholders. Thankfully, the U.S. Court of Appeals for the Second Circuit disagreed with this attack on property and contract rights in a 2012 decision.

But amazingly enough, the Obama administration has taken Argentina’s side at the Supreme Court, It is joined by the government of France, which has experienced downgrades in its credit rating due to stubbornly-high government spending under Socialist Francois Hollande that consumes well over half of France’s economy. The willingness of the Obama administration to take Argentina’s extreme position is disturbing given that the Second Circuit’s ruling was unanimous…….  Francis Menton notes in his Manhattan Contrarian blog, if Argentina is successful in welshing on its debts, that will help perpetuate its regime of cronyism and corruption, which diverts money that otherwise could easily be used to pay bondholders:….. The case, Republic of Argentina v. NML Capital, will be argued this coming Monday before the Supreme Court……To Read More….…..