NML Capital, Ltd. v. Republic of Argentina
727 F.3d 230
| 2d Cir. | 2013Background
- Argentina defaulted on FAA bonds and promised equal treatment with Exchange Bonds; district court issued injunctions requiring ratable payments to FAA holders when Exchange Bond payments occur; appeals challenge scope of injunctions and their effect on third parties and payment systems; court previously affirmed some injunctions and remanded for clarification; Rule 65(d) binds agents and participants linked to Argentina’s payment process; non-parties seek standing to appeal though appellate standing limited to those bound or plausibly affected; court considers amici arguments as made by Argentina on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether amended injunctions abuse discretion | Argentina contends inequitable/FSIA issues and third-party harm | NML/others argue injunctions properly remedy pari passu breach | No abuse; affirmed-in-part, stayed enforcement |
| Do non-parties have appellate standing | BNY/EBG/Fintech seek standing | Non-parties must be bound or plausibly affected | BNY has standing; EBG/Fintech/Euro Bondholders/ICE Canyon lack standing; some arguments treated as amici |
| Applicability of U.C.C. Article 4A to injunctions | § 502 creditor process argues improper broader reach | § 503 applies to proper cause; intermediary banks protected | § 503 applies; injunctions exclude intermediary banks; § 502 not controlling |
| Extraterritorial reach and comity concerns | Arguments of extra-territorial impact and comity | Federal courts may bind conduct with substantial US effect | Court has authority to bind Argentina; no reversible error on extraterritorial scope |
| Impact on sovereign debt restructurings and future holdouts | Holdouts could threaten future restructurings | Here, FAA terms govern; CACs may avoid repeat issues; not controlling for others | Not controlling; holdout risk acknowledged but not undermining relief |
Key Cases Cited
- NML Capital, Ltd. v. Republic of Argentina, 699 F.3d 246 (2d Cir. 2012) (affirming injunctions to remedy pari passu breach (NML I))
- NML Capital, Ltd. v. Banco Central de la República Argentina, 652 F.3d 172 (2d Cir. 2011) (standing under Rule 65 for non-parties bound by judgments)
- Weltover, Inc. v. Republic of Argentina, 941 F.2d 145 (2d Cir. 1991) (legitimacy of enforcing payment terms in NY law context)
- Regal Knitwear Co. v. N.L.R.B., 324 U.S. 9 (1945) (equitable relief context; tension with legal remedies)
- Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008) (public consequences in injunctions weighed by court)
- Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., 585 F.3d 58 (2d Cir. 2009) (intermediary liability/creditor process distinctions under 4-A)
- In re Contichem LPG, 1999 WL 977364 (S.D.N.Y. 1999) (intermediary bank status under 4-A-503)
- United States v. Davis, 767 F.2d 1025 (2d Cir. 1985) (principles on extraterritorial reach of injunctions)
- Regal Knitwear Co. v. N.L.R.B., 324 U.S. 9 (1945) (see above)