Argentina in Italian Supreme Court Win In Bond Payment Suspension Suit
May 27, 2005
Cleary Gottlieb lawyers won a ruling from the Italian Supreme Court holding that Italian courts lack jurisdiction over claims brought against the Republic of Argentina by its bondholders in response to Argentina’s suspension of payments on its external debts. The decision was a preliminary ruling on jurisdictional issues sought by an Italian bondholder-plaintiff.
The Court sustained Argentina’s argument that Argentine laws suspending payments on bonds constitute exercises of sovereign powers (ius imperii) intended to “protect the basic needs for economic survival of the [Argentine] population in a historic context of grave national emergency.” Applying the internationally recognized principle ”par in parem jurisdictionem non habet,” and Art. 10 of the Italian Constitution, the Court held that the Italian courts lack jurisdiction to review the appropriateness of those laws, notwithstanding the fact they may have adverse effects on Italian residents.
The Court’s decision constitutes the most sweeping statement of the ”par in parem” doctrine in recent Italian jurisprudence, and is the first time the doctrine has been applied in the context of internationally traded securities.
Cleary Gottlieb lawyers are representing Argentina in several hundred claims brought against it in Italian courts by its bondholders in response to the suspension of payments, and in similar actions pending in Germany and the United States. This decision follows eight similar decisions rendered by the courts of Milan, Florence, Vicenza and Rome.
Cleary Gottlieb lawyers represent sovereigns including Argentina, Chile, Colombia, the Dominican Republic, Ecuador, Guatemala, the Ivory Coast, Korea, Malaysia, Mexico, Nicaragua, Peru, the Philippines, Russia, Slovenia, Tanzania and Uruguay in external debt and privatization matters.