A U.S. federal appeals court ruled Friday that Argentina is not required to pay $16 billion to shareholders over the takeover of the country’s largest oil company, YPF, delivering a major legal victory for President Javier Milei.
The ruling lifts a potentially crippling financial burden from Milei’s cash-strapped government, which is pursuing a free-market overhaul and austerity measures to stabilize Argentina’s economy. It allows the administration to continue building U.S. dollar reserves, a key step for economic stability and attracting foreign investment.
“We won the YPF lawsuit,” Milei posted on X, calling the decision “historic, unthinkable, the greatest legal achievement in national history.”
Shares of Burford Capital, the litigation financier backing the lawsuit, plunged 47% in New York trading. Burford said plaintiffs could still seek a rehearing before a larger panel of judges or take the case to the U.S. Supreme Court, or pursue investment treaty arbitration against Argentina. CEO Christopher Bogart described the ruling as “a remarkable abandonment of the rights of minority NYSE shareholders.”
The Second Circuit decision overturns a 2023 ruling by U.S. District Judge Loretta Preska, who had awarded compensation to two YPF shareholders for the 2012 expropriation. The appeals court found that Preska misinterpreted Argentine law and deemed the shareholders’ claims meritless. The $16 billion award would have equaled roughly 45% of Argentina’s 2024 fiscal budget.
The legal victory is rare for Argentina, which has often lost lawsuits over contract breaches, expropriations, and bond defaults. Analysts say it removes a major threat to public finances and signals a more secure environment for investment.
YPF was nationalized in 2012 under then-president Cristina Kirchner, who is currently under house arrest on corruption charges. The government compensated the former majority shareholder, Spain’s Repsol, with $5 billion in bonds, but smaller investors, including the now-defunct U.S. hedge fund Eton Park Capital Management, claimed they were excluded and sued in New York.
Milei praised the ruling as a step toward economic clarity and growth, particularly in Argentina’s energy sector. He criticized leftist opponents who oversaw the expropriation, including former Economy Minister Axel Kicillof, now governor of Buenos Aires province.
“Today, Argentina avoided one of the largest potential expenditures in its history thanks to professional, strategic action aligned with the public interest,” Milei said, emphasizing the decision’s significance for attracting further investments.