A U.S. appeals court is set to decide whether Argentina must pay $16.1 billion to investors over the 2012 nationalization of state-controlled oil company YPF. The outcome could have major implications for President Javier Milei’s economic reforms and the country’s already fragile financial stability.
The 2nd U.S. Circuit Court of Appeals in Manhattan is reviewing a September 2023 ruling by Judge Loretta Preska, who ordered Argentina to compensate two minority shareholders — Petersen Energia Inversora and Eton Park Capital Management — after finding that Buenos Aires violated its obligations when seizing control of YPF without offering to buy their shares.
Burford Capital, which financed much of the litigation, could receive billions if the investors prevail. Argentina has warned that losing the appeal could severely strain its economy, already burdened by debt and triple-digit inflation.
Since taking office in December 2023, Milei — a self-proclaimed libertarian — has drastically cut public spending, trimmed government jobs, and achieved Argentina’s first budget surplus in 14 years while reducing monthly inflation to just above 2%. Washington has reportedly considered a $40 billion rescue plan for Buenos Aires, combining a currency swap and debt investment facility.
YPF nationalization at the center of the dispute
The appeal stems from Argentina’s 2012 decision to expropriate 51% of YPF’s shares from Spain’s Repsol for around $5 billion. Then-President Cristina Fernandez de Kirchner justified the move by claiming YPF had failed to meet domestic demand for oil and gas. Petersen and Eton Park, which together were the company’s second- and third-largest shareholders, argued that Argentina’s action caused billions in losses.
Judge Preska ruled in their favor, ordering payments of $14.39 billion to Petersen and $1.71 billion to Eton Park — a total that includes more than $7.6 billion in interest. Argentina’s appeal argues that the case should not have been heard in the United States, that the country did not waive sovereign immunity, and that the damages were exaggerated, amounting to 45% of its entire 2024 budget.
The government further contends that the U.S. court misapplied Argentine law and ignored principles of international comity, which limit one nation’s legal reach over another. Conversely, the investors accuse Argentina of years of deliberate delay to avoid accountability.
Argentina is also appealing a separate order requiring it to turn over YPF shares to partially satisfy the judgment. That order has been temporarily suspended pending appeal. The U.S. government has not taken a position in the current case but previously cautioned that forcing Argentina to surrender its YPF holdings could interfere with U.S. foreign policy and set a precedent for other nations’ courts.
The appellate court’s decision may take several months, and whatever the outcome, it will likely shape both Argentina’s fiscal future and Milei’s push to liberalize the economy.