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Argentina Says US Violated Its Sovereignty In Rulings On Debt

August 7, 2014

The Hague/Buenos Aires (Alliance News) - Argentina filed a plea with the International Court of Justice (ICJ) on Thursday seeking relief in a long-running dispute over debt repayment.

The issue is decisions made by US courts relating to the restructuring of the Argentine sovereign debt, the ICJ court said.

"(Argentina) contends that the US of America has committed violations of Argentine sovereignty and immunities and other related violations as a result of judicial decisions adopted by US tribunals concerning the restructuring of the Argentine public debt," the ICJ said.

The South American nation's move requests that Washington accept ICJ jurisdiction on the issue, but the court said that would be ultimately up to the US.

"The application by the Argentine Republic has been transmitted to the US government," the ICJ said. No action will be taken, however, unless the US consents to the court's jurisdiction.

In a statement, the Argentine Foreign Ministry described the plea as a "complaint" and accused the US of violating Argentina's sovereign immunity, as well as Washington's own "international obligation not to apply or promote measures of an economic and political nature to forcefully bend the will of another sovereign state."

The contracts of some Argentine bonds stipulated that New York courts would have jurisdiction to resolve any disputes related to them. However, Argentina said Thursday that there was evidence of bad faith in the implementation of such clauses.

The Argentine Foreign Ministry statement made reference to a state's responsibility "for the conduct of all its organs," and said Argentina has submitted the controversy to the ICJ "for its resolution."

The ICJ, which was established in 1945, is the main judicial organ of the United Nations.

Last week Argentina technically defaulted on the repayment of restructured loans, though the country insisted that was not the case because it set aside enough money for the payment.

But it has been barred by a US federal judge's ruling from paying back the restructured debt unless it also pays a group of hedge funds looking to collect more than 1.5 billion dollars in old state debt also dating back to 2001.

The group of creditors, led by the New York hedge fund NML Capital, had rejected the restructuring deals offered by Buenos Aires in 2005 and 2010 and continued to hold the bonds following Argentina's default in 2001.

A verdict, issued by Judge Thomas Griesa in June, granted the hedge funds the right to repayment of 1.5 billion dollars, and subsequent talks to end the stalemate failed.

Argentina argues that paying off the old debt held by the hedge funds creates a risk that other bondholders with unstructured debt who are not part of the suit will demand 15 billion dollars.

Owners of the restructured debt could also demand equal treatment and the full value of their bonds, which would mean an additional cost of 120 billion dollars.

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Source: Alliance News

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