YPF Investors Ask Supreme Court to Review Argentine Legal Win

Former investors in the Argentine state oil company YPF SA have petitioned the United States Supreme Court to review a recent appellate court decision that vacated a $16 billion judgment previously awarded to them. The investors contend that the appellate court's ruling was "egregiously wrong" and are seeking the Supreme Court's intervention to reinstate the original judgment. This legal battle stems from the 2012 expropriation of YPF by the Argentine government, which led to a protracted legal dispute over compensation for the former shareholders.

The original arbitration award, issued in 2023, found that Argentina had failed to make a required offer to buy out minority shareholders of YPF at a fair price following its nationalization. The tribunal had determined that the fair price should have been based on the price offered to Spanish energy company Repsol, which was $11.22 per share, leading to the substantial $16 billion award. This judgment represented a significant victory for the investors, who had argued that Argentina's actions constituted a breach of an investment treaty.

However, in a significant setback for the investors, the U.S. Court of Appeals for the Second Circuit overturned this arbitration award in February 2024. The appellate court ruled that the arbitration tribunal had exceeded its authority by basing the compensation on the Repsol offer, which it deemed was not properly presented to the tribunal. This decision effectively nullified the $16 billion judgment, leaving the investors without the awarded compensation and prompting their appeal to the highest court in the United States.

The investors' petition to the Supreme Court argues that the Second Circuit's decision created a dangerous precedent, potentially undermining international arbitration and investor protections. They assert that the appellate court misapplied established legal principles and that the arbitration award was soundly based on the evidence presented. The outcome of this case could have far-reaching implications for foreign investment in Argentina and the enforceability of international arbitration awards. The Supreme Court has yet to decide whether to hear the case, which would involve a review of the Second Circuit's interpretation of the arbitration agreement and the tribunal's jurisdiction.