Argentina has been ordered to pay approximately $16bn following a US federal court ruling in a lengthy dispute over the 2012 expropriation of YPF, an oil and gas company which was renationalised. 

The ruling by the United States District Court for the Southern District of New York represents one of the most significant awards for damages against a foreign state in US legal history. 

The two claimants – Peterson Energia Investors and Eton Park Management Capital – will receive $14.3bn and £1.7bn respectively. Litigation funder Burford Capital, which has been supporting both claimants since 2015, is also due a major windfall.

In a statement, the funder said it was entitled to roughly 35% from damages in the Peterson case and nearly 73% from Eton Park. Burford had sold half of its Peterson entitlement to third-party investors, reducing its net share of the proceeds. However, the funder still expects to recover billions of dollars from the litigation against Argentina. Bloomberg calculates Burford stands to receive $6.2bn, which would amount to a return on invesment of 37,000%.

Both claimants were smaller shareholders in Argentinian corporate YPF, initially controlled by Spanish oil major Repsol. Repsol later received compensation of $5bn of government bonds plus interest for the nationalisation – but the two claimants, and others, went without.

Having previously ruled on liability in March 2023, District Judge Loretta Preska, ruled on the damages to be awarded to both claimants, plus appropriate interest, with challenges to jurisdiction and sovereign immunity failing, and with the US Supreme Court having refused appeals in that instance. 

Preska wrote: “[Argentina] holds up equitable arguments with oil-stained hands. Equity is no refuge for the Republic. [It] forced plaintiffs to give it a massive loan after forcibly expelling the members of the YPF board … leading to the Repsol representatives of YPF fleeing the country.”

She added: “[Argentina] vigorously took with both hands and stood steadfast in its inequitable refusal to satisfy its obligations... It does not offend equity for it to give back now in equal measure.”

Jonathan Molot, Burford’s chief investment officer, said: “There is no aspect of this case, from strategy to minutiae, that did not involve an experienced Burford team spending many thousands of hours getting to this point.”

Christopher Bogart, Burford’s CEO, added that the YPF claim was one of the funder’s main pillars of value, calling it an “extraordinary win” for shareholders once the litigation process was completed, adding this was “a major milestone”.

The court refuted attempts to add Burford to proceedings, with Preska saying: “[Argentina] owes no more or less because of Burford’s involvement. Furthermore, [it] pulled the considerable levers available to it as a sovereign to attempt to take what it should have paid for and has since spared no expense in its defence.”

She added that the claimants had to trade a substantial part of their potential recovery to secure the funding necessary to bring their claims “against a powerful sovereign defendant that has behaved in this manner. This is all the more reason to award plaintiffs the full measure of their damages”.

The claimants instructed a team led by prominent New York litigator Paul Clement of Clement & Murphy, alongside attorneys from Hansen Todd Figel & Frederick, led by name partner Mark Hansen, and others from King & Spalding. 

Argentina, represented by Sullivan & Cromwell, including co-chair Robert Giuffra, said it “respectfully disagrees with the district court’s unprecedented and erroneous decision” in announcing an appeal to the Second Circuit Court of Appeals, which is expected to be heard in a year’s time. Enforcement action would be possible pending appeal. 

Burford said the prospect of a further appeal to the US Supreme Court was low, the court having previously declined to hear the case at an earlier stage, absent an issue of law. The funder said it would seek to negotiate a settlement, and failing that would embark on an extended enforcement campaign, although it declined to provide further details.