Amer­i­can court sides with Ar­gentina to limit bond­holder suit

The China Post - - WORLD BUSINESS -

A U.S. ap­peals court sided with Ar­gentina Mon­day and re­stricted the num­ber of plain­tiffs who can sue the coun­try in a class-ac­tion suit to re­cover funds from de­faulted bonds.

The ap­peals court over­ruled a de­ci­sion by U.S. Dis­trict Judge Thomas Griesa that had ex­panded the class and faulted Griesa for not fol­low­ing an ear­lier ap­peals court rul­ing.

“We con­clude that the Dis­trict Court erred,” said U. S. Ap­peals Judge Ch­ester Straub, writ­ing on be­half of the three- judge panel.

“The man­date ... gave the Dis­trict Court spe­cific in­struc­tions that did not per­mit ex­pand­ing the plain­tiff classes,” Straub said. “A dis­trict court must fol­low the man­date is­sued by an ap­pel­late court.”

At is­sue

is par­tic­i­pa­tion in a class-ac­tion suit of bond­hold­ers filed against Ar­gentina fol­low­ing the South Amer­i­can coun­try’s de­fault on nearly US$100 bil­lion in debt in 2001.

If ex­cluded from the class, a bond­holder could still launch an in­di­vid­ual case against Ar­gentina, but that is more costly to lit­i­gate.

Ear­lier rul­ings by the ap­peals court faulted Griesa’s method for cal­cu­lat­ing the size of the clas­s­ac­tion judg­ment and in­structed the dis­trict judge to hold a hear­ing to an­a­lyze bonds sold on sec­ondary mar­kets, among other is­sues.

“The Dis­trict Court, how­ever, did not hold an ev­i­den­tiary hear­ing,” Straub said.

Mon­day’s de­ci­sion does not af­fect another case over­seen by Griesa led by NML Cap­i­tal and other hedge funds that have sought re­pay­ment on US$1.3 bil­lion in bonds.

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