New York courts´ injunctions are not welcome in Europe... at all! Not another Normandie and D-Day

There is an European judicial audience now, with respect to Argentine defaulting and perfoming bonds
Eugenio A Bruno
Garrido Law Firm
eab@garridolawfirm.com




The Europeans, as the Americans, want an audience on the Argentina legal case, and they will have it. Particularly on June 25, the Brussels Commercial Court will hold a hearing. The legal proceedings have been initiated by certain holders of Argentine perforning bonds subject to English law (i.e. not Griesa´s laws as they would love to express I guess). The case is denominated Knighthead Capital Management,
LLC et al. v. Bank of New York S.A., et al.

The plaintiffs are from Belgium and hold euro-denominated bonds (“Euro Bonds”) issued in Argentina’s 2005 and 2010 exchange offers. The Euro Bonds are denominated in euros, governed by English law, and payments thereon are made wholly outside the U.S. through foreign entities.

According to the recent petition, the Belgian plaintiffs seek an order directing defendants Bank of New York Mellon S.A., Euroclear S.A., and Euroclear Bank S.A. (“Belgian Defendants”)—all Belgian entities—to
comply with their alleged duties under Belgian law and the Trust Indenture governing Argentina’s
exchange bonds. This means that the eventual injunctions from America, holding the whole BNY group around the world liable of complying with the NY court orders even with respect to foreign bonds, should, according to the Belgian plaintiffs fall somewhere in the Atlantic right before Europe (not another Normandie and D-Day)

On May 30, 2013, the Belgian Court accepted expedited briefing and
scheduled a determinative hearing for June 25, 2013.

The notification to the NY Court of Appeals from the Second Circuit was filed today and expresses that "as the Euro Bondholders have explained, the District Court’s injunction against foreign
parties impermissibly imposes obligations irreconcilable with foreign parties’ duties under local
law. The Belgian proceeding will conclusively determine the Belgian Defendants’ obligations
under Belgian law. We respectfully request that this Court find the injunction inapplicable to
foreign entities altogether, or, at minimum, withhold judgment respecting the injunction’s
applicability to Belgian Defendants pending determination by the Belgian court. By holding the
injunction applicable to Belgian entities acting on Belgian soil, this Court could contravene a
Belgian court’s definitive interpretation of Belgian Defendants’ obligations under Belgian law,
thereby violating the well-established principle that courts cannot require foreign nationals “to
refrain from doing an act in another state that is required by [that state’s] law.”

Therefore if the petition is accepted there will be a dispute among courts, Americans v Europeans, with the Bank of New York as hostage as the European courts will reject the injunctions and order the BNY to continue paying the eurobonds. Of course, the logical questions are what the NY courts will do and what the consequences for the status of the Argentine bonds will be. Additional analysis coming up soon.