Court of Appeal upholds EUR 1.3 billion judgment against the Republic of Argentina

12/06/24

The Court of Appeal (Popplewell, Lewison and Falk LJJ) has today handed down judgment in Palladian Partners LP and others  v  the Republic of Argentina, upholding the Judgment of Picken J in favour of four institutional and corporate investors, in the sum of EUR 1.330 billion (with interest).  Permission to appeal against the Judgment of Picken J was granted by Phillips LJ on 18 January 2024, conditional on payment into Court by the Republic of EUR 330million.

The appeal concerned the proper construction of a provision in certain Euro denominated debt Securities, issued by the Republic of Argentina in two tranches, in 2005 and 2010, following a national financial crisis and sovereign debt default, which resulted in the restructuring of some US$94 billion of debt by way of a debt swap with existing creditors. The Securities provided for payment to holders of an annual coupon, payable if and only if GDP for the calender year in question exceeded that set out in a table which identified a base case figure for each of the calender years from 2005 to 2034 and if the growth in GDP from the previous year exceeded the growth in the base case table. The issue at trial and in the appeal concerned the proper construction of the wording in the Securities which made provision for adjustment of the base case figures in the table in the event that GDP came to be measured by the Republic using a different data methodology from that at the time the Securities were issued.

The Court of Appeal upheld PIcken J’s “full and carefully reasoned Judgment”, rejecting the Republic’s arguments that the Learned Judge had erred in the application of the principles of construction, in particular that Picken J had failed to take proper account of the commercial and economic consequences of the rival arguments. The Court of Appeal agreed with the Respondents and Picken J that the meaning of the words of the Securities was clear and bore the construction meaning advanced by the Respondents, and held that the Republic’s arguments about commercial and economic consequences did not come close to the threshold of rendering the Respondents’ construction arbitrary, absurd, irrational or nonsensical.

The judgment is here.