Current Month (April 2026)
Argentina’s Fiscal Relief
By Barbara Efraim and Thomas Morante, Pierson Ferdinand
On March 27, 2026, the U.S. Court of Appeals for the Second Circuit gave Argentina and current as well as potential foreign investors in Argentina a reason to celebrate. After more than a decade of litigation involving a case of ownership of shares in a gas company nationalized by Argentina in 2012, the Second Circuit reversed a lower court ruling that would have imposed on Argentina US$16.1 billion in damages and inevitable loss of prospective foreign investment.
Following Argentina’s nationalization in 2012 of its largest oil and gas company, YPF S.A. (“YPF”) through the passage of Law No. 26,741, minority shareholders sued the Argentine government in Petersen Energía Inversora S.A.U. v. Argentine Republic in the U.S. District Court for the Southern District of New York. Then–Argentine President Cristina Fernández de Kirchner seized 51 percent of shares of YPF from the majority stakeholder, Spanish energy firm Repsol, in an apparent effort to increase state control over the economy. The remaining 49 percent of shares in YPF were owned by a group of minority shareholders, including Petersen Energía Inversora S.A.U. (“Petersen”). At the time of the expropriation, shares representing the remaining 49 percent of YPF were distributed equally among the Argentine provinces that comprised the Organización Federal de Estados Productores de Hidrocarburos.
In 2014, Argentina negotiated a settlement payment to Repsol. However, Petersen, one of the minority shareholders in YPF as noted, stopped receiving its dividend payments since it was no longer a shareholder following the government seizure of its shares. The government failed to conduct a tender offer to acquire control of Petersen’s shares, as required by YPF bylaws, and reneged on its pledge to compensate Petersen upon expropriation, and as a result, Petersen ultimately filed for bankruptcy. In 2015, Petersen and other minority shareholders filed the lawsuit in the U.S, alleging that the expropriation of YPF caused them compensable harm.
In September 2023, the District Court ruled in favor of the shareholders, finding that Argentina had breached its obligations under the YPF bylaws, which required a tender offer. More notably, the judge ruled that Argentina did not qualify for protections under the U.S. Foreign Sovereign Immunities Act and entered a judgment of US$16.1 billion—the largest judgment against a sovereign in a U.S. court.
Upon appeal, on March 27, 2026, the Second Circuit reversed the judgment and vacated the damages award, representing significant fiscal relief for Argentina given that further review of the case will be difficult and appears unlikely. Argentina’s economy has been undergoing significant reforms to lower its inflation, increase its credit profile, and generally encourage more business opportunities, backed, in part, by a US$20 billion loan from the International Monetary Fund (“IMF”) in 2025. The prospect of having to pay such a large sum of damages (just under US$4 billion less than the IMF loan) would have significantly impaired Argentina’s progress of the last three years. With the Second Circuit’s reversal of the District Court’s judgment, investors will hopefully be encouraged to initiate new investment projects in the country.
